10 Questions
What is one of the advantages to citizens mentioned in the text?
Transparency in taxation system
In relation to the supply of goods or services, what does 'consideration' include?
Any payment made in respect of the supply
Which benefit to governments is mentioned in the text?
Boost to export/manufacturing activity
What advantage to trade and industry is highlighted in the text?
Development of common national market
Which advantage is associated with a unified common national market?
Boost to export/manufacturing activity
What is a key impact of simplified tax regimes according to the text?
Reduction in compliance costs
What is a disadvantage of multiple record-keeping requirements mentioned in the text?
Increase in employment opportunities
'Consideration' in relation to supply does not include which of the following?
'Consideration' does not include subsidies from the government
'Consideration' excludes which type of subsidy?
'Consideration' includes all types of subsidies
'Consideration' involves which aspect in relation to goods or services supply?
'Consideration' involves payments made for supply only
Study Notes
GST on Imported Services
- GST is applicable on import of services under reverse charge mechanism, where service recipient is liable to pay tax.
- Conditions for import of services to be covered under GST: • Supplier of service is located outside India • Recipient of service is located in India • Place of supply of service is in India
- Example: Mr. A pays fees for online coaching from a teacher in USA, and is liable to pay GST under Reverse Charge Mechanism, subject to threshold limit of Rs. 20 lakhs.
Activities Specified in Schedule I
- Activities specified in Schedule I are made or agreed to be made without a consideration.
- Examples include permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
Apportionment of Credit and Blocked Credit (Sec. 17)
- Sec. 17 deals with provisions relating to apportionment of credit and blocked credit.
- Where goods or services are used partly for business and partly for other purposes, credit is restricted to input tax attributable to business purposes.
- Where goods or services are used partly for taxable supplies and partly for exempt supplies, credit is restricted to input tax attributable to taxable supplies.
Advantages of GST
- Advantages to citizens: • Simple tax system • Reduction in prices of goods and services • Transparency in taxation system • Increase in employment opportunities
- Advantages to trade and industry: • Reduction in multiplicity of taxes • Migration of cascading/double taxation • More efficient neutralization of taxes • Simpler tax regime
- Advantages to Governments: • Unified common national market • Boost to export/manufacturing activity • Improving the overall investment climate • Reduction in compliance costs
Important Definitions
- Consideration (Sec. 2(31)): includes any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, but excludes any subsidy given by the Central Government or a State Government.
Test your knowledge on the import of services for a consideration, regardless of whether it is in the course of furtherance of business. Learn about basic customs duty and the implications of GST on imported services under the reverse charge mechanism.
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