GST Unit 1 Ch -2 & 3 PDF

## Levy and Collection of GST under CGST Act, IGST Act and UTGST Act - Section 9 of CGST Act/SGST Act and Section 5 of IGST Act are the Charging Sections for the purposes of levy of GST ### Levy and Collection of GST under CGST Act. #### Levy of central goods and service tax [Section 9(1)] - Un...

## Levy and Collection of GST under CGST Act, IGST Act and UTGST Act - Section 9 of CGST Act/SGST Act and Section 5 of IGST Act are the Charging Sections for the purposes of levy of GST ### Levy and Collection of GST under CGST Act. #### Levy of central goods and service tax [Section 9(1)] - Under CGST Act, central tax called as the central goods and services tax (CGST) shall be levied on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. - It shall be levied on the value determined under Section 15 and at such rates, not exceeding 20%, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. [Similar rates have been prescribed under SGST/UTGST] #### Central tax on petroleum products to be levied from the date to be notified[Section 9(2)] - The central tax on the supply of petroleum crude, high speed diesel, motor spirit ( commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council. #### Tax payable on reverse charge basis [Section 9(3)] - The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both. - Further, all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. #### Tax payable on reverse charge if the supplies are made to a registered person by unregistered person [Section 9(4)] - The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. [Section 9(4) has been deferred till 30.6.2018] #### Tax payable on intra-State supplies by the electronic commerce operator on notified services [Section 9(5)] - As per section 2(45) of the CGST Act, 2017, “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. - Further, “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network. - Thus, Electronic Commerce Operators (ECO), like flipkart, uber, makemy-trip, display products as well as services which are actually supplied by some other person to the consumer, on their electronic portal. The consumers buy such goods/services through these portals. On placing the order for a particular product/service, the actual supplier supplies the selected product/service to the consumer. The price/consideration for the product/service is collected by the ECO from the consumer and passed on to the actual supplier after the deduction of commission by the ECO. - The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator (ECO), if such services are supplied through it. - Further, all the provisions of this Act shall apply to such electronic commerce operator (ECO) as if he is the supplier liable for paying the tax in relation to the supply of such services. - However, where an electronic commerce operator (ECO) does not have a physical presence in the taxable territory, any person representing such electronic commerce operator (ECO) for any purpose in the taxable territory shall be liable to pay tax. - Where an electronic commerce operator (ECO) does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax. - The Government vide Notification No. 17/2017 CT (R) dated 28.06.2017 has notified the following categories of services supplied through ECO for this purpose- - services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; - services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under Section 22(1) of the CGST Act. ### Levy and Collection of GST Under IGST Act. (Section 5) - The provisions under Section 5 of the IGST Act are similar to Section 9 of CGST Act except- - the word CGST has been substituted by IGST under IGST Act - under IGST Act, tax called integrated tax is to be levied on all interState supplies and on goods imported into India. - maximum rate under Section 5(1) of the IGST Act is 40% (i.e. 20% CGST + 20% UTGST). ### Levy and Collection of GST Under UTGST Act. (Section 7) - The provisions under Section 7 of the UTGST Act are similar to Section 9 of CGST Act except- - the word CGST has been substituted by the word UTGST under the UTGST Act. - under UTGST Act, tax called UT tax is be levied on all intra-State supplies, - maximum rate 7(1) of UTGST_Act is 20%. ### GST Composition Scheme - Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover. This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 crore. - *CBIC has notified the increase to the threshold limit from Rs 1.0 Crore to Rs. 1.5 Crores.* #### Who can opt for Composition Scheme - A taxpayer whose turnover is below Rs 1.5 crore can opt for Composition Scheme. In case of North-Eastern states and Himachal Pradesh, the limit is now Rs 75 lakh. - As per the CGST (Amendment) Act, 2018, a composition dealer can also supply services to an extent of ten percent of turnover, or Rs. 5 lakhs, whichever is higher. This amendment will be applicable from the 1st of Feb, 2019. Further, GST Council in its 32nd meeting proposed an increase to this limit for service providers on 10th Jan 2019. - Turnover of all businesses registered with the same PAN should be taken into consideration to calculate turnover. - *CBIC has notified the increase to the threshold limit from Rs 1.0 Crore to Rs. 1.5 Crores.* #### Conditions for availing Composition Scheme - No Input Tax Credit can be claimed by a dealer opting for composition scheme - The dealer cannot supply goods not taxable under GST such as alcohol. - The taxpayer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism - If a taxable person has different segments of businesses (such as textile, electronic accessories, groceries, etc.) under the same PAN, they must register all such businesses under the scheme collectively or opt out of the scheme. - The taxpayer has to mention the words 'composition taxable person' on every notice or signboard displayed prominently at their place of business. - The taxpayer has to mention the words 'composition taxable person' on every bill of supply issued by him. - As per the CGST (Amendment) Act, 2018, a manufacturer or trader can now also supply services to an extent of ten percent of turnover, or Rs. 5 lakhs, whichever is higher. This amendment will be applicable from the 1st of Feb, 2019. #### Opting for Composition Scheme - To opt for composition scheme a taxpayer has to file GST CMP-02 with the government. This can be done online by logging into the GST Portal. - This intimation should be given at the beginning of every Financial Year by a dealer wanting to opt for Composition Scheme. #### Raising a bill as a Composition Dealer - A composition dealer cannot issue a tax invoice. This is because a composition dealer cannot charge tax from their customers. They need to pay tax out of their own pocket. - Hence, the dealer has to issue a Bill of Supply. - The dealer should also mention “composition taxable person, not eligible to collect tax on supplies" at the top of the Bill of Supply. #### GST rates for a composition dealer | Type of Business | CGST | SGST | Total | |:---|:---|:---|:---| | Manufacturer and Traders (Goods) | 0.5% | 0.5% | 1.0% | | Restaurants not serving alcohol | 2.5% | 2.5% | 5.0% | | Other service Providers | 3.0% | 3.0% | 6.0% | - *The 32nd GST Council meeting proposed for the inclusion of Service Providers under the Composition Scheme, with the above-mentioned rates of tax. However, a notification is yet to be issued in this regard.* - As per notification dated 01.01.2018, turnover in case of traders has been defined as 'Turnover of taxable supplies of goods'. #### GST payment by a composition dealer - GST Payment has to be made out of pocket for the supplies made. - The GST payment to be made by a composition dealer comprises of the following: - GST on supplies made. - Tax on reverse charge - Tax on purchase from an unregistered dealer - *Only on the specified categories of goods and services and well as the notified class of registered persons with effect from 1st Feb 2019 but is yet to be notified. Hence, not applicable until then.* #### Returns to be filed by a composition dealer - A dealer is required to pay tax in a quarterly statement CMP-08 by 18th of the month after the end of the quarter. Also, a return in form GSTR-4 has to be filed annually by 30th April of next financial year from FY 2019-20 onwards. GSTR-9A is an annual return to be filed by 31st December of the next financial year. It was waived off for FY 2017-18 and FY 2019-20. - Also, note that a dealer registered under composition scheme is not required to maintain detailed records. #### Advantages of Composition Scheme - Lesser compliance (returns, maintaining books of record, issuance of invoices) - Limited tax liability - High liquidity as taxes are at a lower rate #### Disadvantages of Composition Scheme - A limited territory of business. The dealer is barred from carrying out inter-state transactions - No Input Tax Credit available to composition dealers - The taxpayer will not be eligible to supply non-taxable goods under GST such as alcohol and goods through an e-commerce portal. #### Payments under GST - Under GST the tax to be paid is mainly divided into 3 - IGST - To be paid when interstate supply is made (paid to center) - CGST - To be paid when making supply within the state (paid to center) - SGST - To be paid when making supply within the state (paid to state) | CIRCUMSTANCES | CGST | SGST | IGST | |:---|:---|:---|:---| | Goods sold from Delhi to Bombay | NO | NO | YES | | Goods sold within Bombay | YES | YES | NO | | Goods sold from Bombay to Pune | YES | YES | NO | - Apart from the above payments a dealer is required to make these payments - Tax Deducted at Source (TDS) – TDS is a mechanism by which tax is deducted by the dealer before making the payment to the supplier #### Example of TDS - A government agency gives a road laying contract to a builder. The contract value is Rs 10 lakh. - When the government agency makes payment to the builder TDS @ 1% (which amounts to Rs 10,000) will be deducted and balance amount will be paid. - Tax Collected at Source (TCS) – TCS is mainly for e-commerce aggregators. It means that any dealer selling through e-commerce will receive payment after deduction of TCS @ 2%. - This provision is currently relaxed and will not be applicable to notified by the government. - Reverse Charge – The liability of payment of tax shifts from the supplier of goods and services to the receiver. To know more about reverse charge check out our article ‘Know all about Reverse Charge under GST‘ #### Calculating GST payment - Usually, the Input Tax Credit should be reduced from Outward Tax Liability to calculate the total GST payment to be made. - TDS/TCS will be reduced from the total GST to arrive at the net payable figure. Interest & late fees (if any) will be added to arrive at the final amount. - Also, ITC cannot be claimed on interest and late fees. Both Interest and late fees are required to be paid in cash. - The way the calculation is to be done is different for different types of dealers #### Regular Dealer - A regular dealer is liable to pay GST on the outward supplies made and can also claim Input Tax Credit (ITC) on the purchases made by him. - The GST payable by a regular dealer is the difference between the outward tax liability and the ITC. #### Composition Dealer - The GST payment for a composition dealer is comparatively simpler. A dealer who has opted for composition scheme has to pay a fixed percentage of GST on the total outward supplies made. - GST is to be paid based on the type of business of a composition dealer. #### Penalty for non-payment or delayed payment - If GST is short paid, unpaid or paid late interest at a rate of 18% is required to be paid by the dealer. - Also, a penalty to be paid. The penalty is higher of Rs. 10,000 or 10% of the tax short paid or unpaid. #### What is GST refund? - Usually when the GST paid is more than the GST liability a situation of claiming GST refund arises. Under GST the process of claiming a refund is standardized to avoid confusion. The process is online and time limits have also been set for the same.. #### When can the refund be claimed? - Excess payment of tax is made due to mistake or omission. - Dealer Exports (including deemed export) goods/services under claim of rebate or Refund - Refund of tax paid on purchases made by Embassies or UN bodies - ITC accumulation due to output being tax exempt or nil-rated - Tax Refund for International Tourists - Finalization of provisional assessment #### How to calculate GST refund? - Let's take a simple case of excess tax payment made. - Mr. B's GST liability for the month of September is Rs 50000. But due to mistake, Mr. B made a GST payment of Rs 5 lakh. - Now Mr. B has made an excess GST payment of Rs 4.5 lakh which can be claimed as a refund by him. The time limit for claiming the refund is 2 years from the date of payment. #### Time limit for claiming a refund - The time limit for claiming a refund is 2 years from relevant date. - The relevant date is different in every case. | Reason for claiming GST Refund | Relevant Date | |:---|:---| | Excess payment of GST | Date of payment | | Export or deemed export of goods or services | Date of despatch/loading/passing the frontier | | ITC accumulates as output is tax exempt or nil-rated | Last date of financial year to which the credit belongs | | Finalisation of provisional assessment | Date on which tax is adjusted | - Also if refund is paid with delay an interest of 24% p.a. is payable by the government. #### How to claim GST refund? - The refund application has to be made in Form RFD 01 within 2 years from relevant date. - The form should also be certified by a Chartered Accountant. #### What is GST Registration? - In the GST Regime, businesses whose turnover exceeds Rs. 40 lakhs *(Rs 10 lakhs for NE and hill states) is required to register as a normal taxable person. This process of registration is called GST registration.* - For certain businesses, registration under GST is mandatory. If the organization carries on business without registering under GST, it will be an offence under GST and heavy penalties will apply. - GST registration usually takes between 2-6 working days. We'll help you to register for GST in 3 easy steps. - *CBIC has notified the increase in threshold turnover from Rs 20 lakhs to Rs 40 lakhs. The notification will come into effect from 1st April 2019.* #### Who should register for GST? - Individuals registered under the Pre-GST law (i.e., Excise, VAT, Service Tax etc.) - Businesses with turnover above the threshold limit of Rs. 40 Lakhs *(Rs. 10 Lakhs for North-Eastern States, J&K, Himachal Pradesh and Uttarakhand)* - Casual taxable person / Non-Resident taxable person - Agents of a supplier & Input service distributor - Those paying tax under the reverse charge mechanism - Person who supplies via e-commerce aggregator - Every e-commerce aggregator - Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person - *CBIC has notified the increase in threshold turnover from Rs 20 lakhs to Rs 40 lakhs. The notification will come into effect from 1st April 2019.* #### GST Registration Process - The Goods And Services Tax (GST) Registration services at ClearTax helps you to get your business GST registered and obtain your GSTIN. #### Documents Required for GST Registration - PAN of the Applicant - Aadhaar card - Proof of business registration or Incorporation certificate - Identity and Address proof of Promoters/Director with Photographs - Address proof of the place of business - Bank Account statement/Cancelled cheque - Digital Signature - Letter of Authorization/Board Resolution for Authorized Signatory #### GST Registration Fees - GST Registration is a tedious 11 step process which involves submission of many business details and scanned documents. You can opt for ClearTax Goods And Services Tax (GST) Registration services where a GST Expert will assist you, end to end with GST Registration. #### Penalty for not registering under GST - An offender not paying tax or making short payments (genuine errors) has to pay a penalty of 10% of the tax amount due subject to a minimum of Rs.10,000. - The penalty will at 100% of the tax amount due when the offender has deliberately evaded paying taxes #### Person not liable to register under GST | Section 23 | CGST Act 2017 | GST series part 15 - Section 23 of the CGST Act 2017_explains about the person not liable to be registered under GST. The article covers the statutory provisions under sec 23 and its simplified analysis along with relevant notifications. - Section 23(1)(a) of CGST Act – Statutory Provision:- Any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or are wholly exempt from tax under this Act or under IGST Act does not require registration. #### Examples of persons not liable to register under GST - For example, Mr. X is engaged exclusively in the supply of alcohol for human consumption. He is not liable to obtain registration as per sec. 23(1)(a) even if his turnover exceeds Rs 20 Lakhs - Analysis: - Section 23 is specifically granting exemption from registration to persons exclusively engaged in exempt supplies or supplies not liable to tax even if the aggregate turnover is more than Rs. 20 Lakhs whereas section 22 mandates to take registration if the aggregate turnover in a financial year exceeds Rs. 20 Lakhs Irrespective of the fact whether such turnover includes taxable supplies or exempt supplies. - Section 23 overrides section 22, wherein section 22 is concerned about the persons whose aggregate turnover is more than Rs 20 Lakhs while section 23 is exempting entities engaged exclusively in making exempt supplies. - From the above discussion, it is clearly understood that the person who is engaged exclusively in making exempt supplies is not liable for registration even if his aggregate turnover exceeds Rs 20 Lakhs. - Section 23(1)(b) of CGST Act – Statutory Provision: An agriculturist, to the extent of supply of produce out of cultivation of land, does not require registration. - "Agriculturist" means an individual or a Hindu Undivided Family who undertakes cultivation of land - (a) by own labour, or (b) by the labour of family, or (c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family – section 2(7) of CGST Act. - Only those who are directly engaged in the cultivation of land are eligible for the exemption. - Section 23(2) of the CGST Act Statutory Provision: The government can grant an exemption to other categories of persons on the recommendation of the GST Council by issuing the notification. CBIC has issued following notifications for granting exemptions to other categories of persons:- - Notification No. 5/2017-CT dated 19-6-2017– Persons providing services where the service recipient is liable to pay GST under reverse charge Persons who are making supplies of taxable goods or services or both, where total tax is payable on the recipient of goods or services (under Reverse Charge Mechanism) are exempt from registration under GST Act. - Notification No. 7/2017-IT dated 14-9-2017 – Job worker making Inter-State supplies: A job worker with turnover less than 20/10 lakhs is exempt from registration, even if he makes inter-State supplies to the registered person. This exemption is not available to Jewellery, goldsmiths' and silversmiths' wares and other articles manufactured on job work basis - Notification No. 10/2017-IT dated 13-10-2017 – Interstate supply of taxable services if the aggregate turnover of supplier of service, including inter-state supplies is less than Rs 20/10 lakhs, he is not required to register under GST under section 23(2) of CGST Act. - Notification No. 65/2017-CT dated 15-11-2017 – Persons supplying services through e-commerce operator Persons who are suppliers of service and supplying services through e-commerce operator are not required to register under GST if their aggregate turnover is less than Rs 20 lakhs per annum (Rs 10 lakhs in case of specified States) - Notification No. 3/2018-IT dated 22-10-2018 – Interstate supply of handicraft goods: Persons engaged in the supply of handicraft goods making inter-state supply are exempt from registration. They are also not required to obtain casual registration if they supply goods outside the State where they are having their fixed establishment – They are required to have income tax PAN and are required to generate e-way bill – - E-way bill even if the value of consignment is much below Rs 50,000 e-way bill should be generated irrespective of the value of consignment i.e. even if the value of consignment is below Rs 50,000 in case of handicraft goods transported inter-state under the exemption if the turnover of the person below 20/10 lakhs and enjoying exemption under Notification No. 32/2017-CT dated 15-9-2017 - Notification No. 10/2019-IT dated 07.03.2019: Exclusive supply of goods: person engaged in the exclusive supply of goods and whose aggregate turnover in the financial year does not exceed Rs 40 lakhs is not required to take registration - Section 24(1) of CGST specified the persons requiring registration without a threshold limit of 20/10 lakhs. However, Section 24(1) of CGST is not applicable to persons who are not liable for registration under section 23 of Act. However, if he is liable under reverse charge, registration under GST will be required. - Section 24 of the CGST Act is not subject to section 23 of the CGST Act. Hence, a person dealing only in exempted products is not required to be registered under GST, if he is not liable under reverse charge. - In case the person is liable under reverse charge, he needs to take GST registration even if engaged in exempted supplies. - AAR MAHARASHTRA held it in Jalaram Feeds that person engaged exclusively in the manufacture of exempted product receiving GTA service which is under reverse charge would require registration under CGST Act to discharge his duty liability under reverse charge. #### GST Registration Procedure Guide - The structure of GST stands on the foundation of the registration system, for it is a registered person who is liable to pay tax and who is eligible to avail the benefits of the input tax credit mechanism. A registered person can also collect GST from his recipients. An unregistered person is not taxed and is also kept outside the input tax credit mechanism. - The GST law gives a limited option to certain categories of persons to avoid registration and thus avoid the tax liability lawfully. However, if one falls within the reach of an extensive list of statutorily prescribed criteria requiring compulsory registration, the supplier must get registered. #### Persons Liable for GST Registration – Section 22 of the CGST Act: - State or UTs: - Every supplier of the goods or services or both needs to register in a State or a Union Territory, if his turnover exceeds Rs.20 lakhs. - Special Category States: - In case of special category states namely AP, J&K, Assam, Nagaland, Mizoram, Sikkim, Uttarakhand, etc., the person shall be liable to be registered if his turnover exceeds Rs.10 lakhs. - Aggregate Turnover: - Means aggregate value of all taxable supplies, exempt supplies, Exports, and inter-State supplies of persons having the same PAN but excludes taxes. - Registration: - Any person who is registered before the appointed day i.e. 1st July 2017 is liable to be registered under the CGST Act. - Registration of Transferee or Successor: - If a registered business by a taxable person is transferred to another person, then such a person, be it successor or a transferee, shall be liable to be registered under the Act. - Registration in case of amalgamation or demerger: - A transfer due to sanction of a scheme or an arrangement for amalgamation or a demerger takes place of two or more companies in accordance with the order of the High Court or Tribunal, the transferee shall be liable to be registered. #### Persons Not Liable to be Registered – Section 23 of the CGST Act: - Exempted Goods or Services: - Any person who is engaged exclusively in supply of those goods or services which are wholly exempted from tax or are not liable to pay tax under CGST or under IGST Act. - An Agriculturist: - For those supply only which is produced out of cultivation of land. - Notified Person: - Furthermore, the government on the recommendation of the GST council may issue notification & specify special category of persons who are not liable for registration. #### Procedure for GST Registration: - Details to be furnished: - Before applying for registration process, person has to declare the following: - PAN - Mobile number - E-mail address - State or UT - In Part A of FORM GST REG-01 on the Common Portal, either directly or through a Facilitation Centre notified by Commissioner. - Reference Number: - On successful verification of the PAN, mobile number and e-mail, a temporary reference number shall be generated and communicated to the applicant. - Application: - Using the reference number, the applicant shall electronically submit an application in Part B of FORM GST REG-01, duly signed or verified through electronic verification code (EVC), along with documents specified in the form. - Specified Documents: - The following specified documents are required to be submitted along with the application: - Documents required for Private Limited Company, Public Company (limited company) / One Person Company (OPC): - Company documents - PAN card of the company - Registration Certificate of the company - Memorandum of Association (MOA)/ Articles of Association (AOA) - Copy of Bank Statement - Declaration to comply with the provisions - Copy of Board resolution - Director related documents - PAN and ID proof of directors - Registered Office documents - Copy of electricity bill/ landline bill, water bill - No objection certificate of the owner - Rent agreement (in case premises are rented) - Documents required for Limited Liability Partnerships (LLPs): - LLP Documents - PAN card of the LLP - Registration Certificate of the LLP - LLP Partnership agreement - Copy of Bank Statement of the LLP - Declaration to comply with the provisions - Copy of Board resolution - Designated Partner related documents - PAN and ID proof of designated partners - Registered Office documents - Copy of electricity bill, landline bill, water bill - No objection certificate of the owner - Rent agreement (in case premises are rented) - Documents required for Normal Partnerships - Partnership documents - PAN card of the Partnership - Partnership Deed - Copy of Bank Statement - Declaration to comply with the provisions - Partner related documents - PAN and ID proof of designated partners - Registered Office documents - Copy of electricity bill / landline bill, water bill - No objection certificate of the owner - Rent agreement (in case premises are rented) - Documents required for Sole proprietorship / Individual - Individual documents - PAN card and ID proof of the individual - Copy of Cancelled cheque or bank statement - Declaration to comply with the provisions - Registered Office documents - Copy of electricity bill/ landline bill, water bill - No objection certificate of the owner - Rent agreement ( in case premises are rented) - Acknowledgement: - On the receipt of an application, an acknowledgement shall be issued to the applicant in FORM GST REG-02.