Introduction to Goods and Services Tax (GST)

GST is the most ambitious and remarkable indirect tax reform in India’s post-
Independence history. Its objective is to levy a single national uniform tax across India
on all goods and services.

GST has replaced a number of Central and State taxes, made India more of a national
integrated market, and brought more producers into the tax net. By improving
efficiency, it can add substantially to growth as well as government finances.
Implementing a new tax, encompassing both goods and services, by the Centre and the
States in a large and complex federal system, is perhaps unprecedented in modern
global tax history.

GST is a tax on goods and services with comprehensive and continuous chain of set-off
benefits up to the retailer level. It is essentially a tax only on value addition at each
stage, and a supplier at each stage is permitted to set-off, through a tax credit
mechanism, the GST paid on the purchase of goods and services. Ultimately, the
burden of GST is borne by the end-user (i.e. final consumer) of the commodity/service.
With the introduction of GST, a continuous chain of set-off from the original producer’s
point and service provider’s point up to the retailer’s level has been established,
eliminating the burden of all cascading or pyramiding effects of an indirect tax system.
This is the essence of GST. GST taxes only the final consumer.
Hence the cascading of taxes (tax-on-tax) is avoided and production costs are cut
down. As already noted, prior to the introduction of GST, the indirect tax system of India
suffered from various limitations. There was a burden of tax-on-tax in the pre-GST
system of Central excise duty and the sales tax system of the States. GST has taken
under its wings a profusion of indirect taxes of the Centre and the States. It has
integrated taxes on goods and services for set-off relief. Further, it has also captured
certain value additions in the distributive trade. There is now a continuous chain of set-
offs which would eliminate the burden of all cascading effects. Presently, services
sector in India constitutes a tax base with vast potential which has not been exploited
as yet. It is in this context that GST is justified as it has subsumed under it almost all the
services for the purpose of taxation. Since major Central and State indirect taxes have
got subsumed under GST, the multiplicity of taxes has been substantially reduced
which, in turn, would decrease the operating costs of the country’s tax system.
In a nutshell, GST is a comprehensive indirect tax levy on manufacture, sale and
consumption of goods as well as services at the national level. GST is an indirect tax for
the whole of India to make it one unified common market. GST is designed to give India
a world class tax system and improve tax collections. It would end the long-standing
distortions of differential treatment of manufacturing sector and services sector. GST
will facilitate seamless credit across the entire supply chain and across all States under
a common tax base.
 Evolution of GST in India
In 2000, the Vajpayee Government started discussion on GST by setting up an
Empowered Committee, headed by Asim Dasgupta (West Bengal Finance Minister) to
design the GST model. Thereafter, the Task Force on Implementation of the Fiscal
Responsibility and Budget Management Act, 2003 (Chairman: Vijay Kelkar)
recommended the removal of all inefficient and distortionary taxes so that India obtains
the efficiencies of a single national tax, and suggested a comprehensive GST based on
VAT principle. The idea of moving towards a GST was proposed in 2005 by the then
Union Finance Minister, P. Chidambaram in his budget speech for the year 2005-06
where he observed that the entire production-distribution chain should be covered by a
goods and services tax that encompasses both the Centre and the States. He reiterated
his idea in 2006-07 budget speech and proposed April 1, 2010 as the date for
introducing GST. Towards this objective, an Empowered Committee (EC) of State
Finance Ministers was to work with the Central Government to prepare a roadmap for
introduction of GST. The final version of the report of EC was presented in the form of ‘A
Model and Roadmap for Goods and Services Tax in India’ on April 30, 2008.

After receiving comments on the report from Government of India and concerned
officials of the State Governments and taking into account their recommendations, the
EC released the First Discussion paper on Goods and Services Tax in India on
November 10, 2009 to obtain the inputs of industry, trade bodies, and people at large.
On 22nd March 2011, the Constitution (115th Amendment) Bill was introduced in the
Lok Sabha to operationalize the GST and enable Centre and States to make laws for
levying of GST. However, the Bill lapsed with the dissolution of the 15th Lok Sabha.
Thereafter, on 19th December, 2014 the Constitution (122nd Amendment) Bill, 2014
was introduced in the Lok Sabha to address various issues related to GST. It is
noteworthy that the introduction of GST required a Constitutional amendment as the
Constitution did not vest express power either in the Central Government or State
Government to levy tax on the ‘supply of goods and services’. While the Centre was
empowered to tax services and goods up to the production stage, the States had the
power to tax sale of goods. Since the GST regime requires goods and services to be
simultaneously taxed by both the Central and State Governments, a Constitutional
amendment was needed.
The Constitution (122nd Amendment) Bill, 2014 was passed by the Lok Sabha on 6th
May, 2015 after which the Rajya Sabha passed the Bill with 9 amendments on 3rd
August, 2016. The Lok Sabha then passed the modified Bill on 8th August, 2016. After
getting approval of half of the States, it was sent to the President for his assent which
was given on 8th September 2016. Thus the road to GST rollout was cleared and the
process of enactment was completed.
 1.1 Literature Review
Poonam, 2017 in her study , she had cleared that GST
would be a very important step in the field of indirect
taxation. The cascading and double taxation effects
can be reduced by combing central and state taxes.
Consumer’s tax burden will approximately reduce to
25% to 30% when GST is introduced. After introduction
of GST concept, Indian manufactured products would
became more and more competitive in the domestic
and international markets. This taxation system would
instantly encourage economic growth.
GST with its transparent features will prove easier to
administer .In this paper the author has tried to
attempt to spot the concept of GST & its current status
in India. Paper has tried to give information about GST
system. The study also aims to be familiar with the
advantages and challenges of GST in Indian scenario.
Shefali Dani has proposed that GST regime is a half-
hearted attempt to rationalize indirect tax structure.
Approximately more than 150 countries have
implemented GST concept. As per
researchergovernment of India must study the GST
regime set up by various Countries and also their
fallouts before implementing gst.
IT is the need of hour that, the government must make
an attempt to insulate the vast poor population of
India, against the inflation due to implementation of
GST. There is no doubt, GST will simplify its existing
indirect tax system and will have to help to remove
inefficiencies created by the existing current
heterogeneous tax system, only if there is a clear
consensus over issues of threshold limit, revenue rate,
and inclusion of petroleum products, electricity, liquor
and real estate .
Research Problem
The concept of Goods and Service Tax (GST)
is one of the biggest revolution in decades
around the world. But it seems that India is
taking very slow steps to meet target. This
research intends to focus on understanding
concept of goods and service tax and its
impact on Indian economy.

Objectives Of The Study

1. To study the concept of Goods and

Services Tax (GST)
2. To study the impact of GST on Indian
Economy
3. To understand how GST will work in India.
Concept Of Goods and Service Tax

GST or Goods and Services Tax is applicable

on supply of goods and services. It will
replace the current taxes of excise, VAT and
service tax. Currently there are different VAT
laws in different states. This creates
problems, especially when businesses sell to
different states. Also, most businesses have
to pay and comply with 3 different taxes –
excise, VAT, and service tax.GST will bring
uniform taxation across the country and
allow full tax credit from the procurement of
inputs and capital goods which can later be
set off against GST output liability. This
reform gives equal footing to the big
enterprises as well as SMEs. The aim of GST
is thus to simplify tax hurdles for the entire
economy. Who will have to pay GST?GST will
be paid by all manufacturers and sellers. It
will also be paid by service providers such as
telecom providers, consultants, chartered
accountants etc.
However, being an indirect tax, GST will be
ultimately borne by the end consumers, just
like in the current process What kind of GST
will be implemented in India? India will
implement the Canadian model of Dual GST,
i.e., both the Centre and State will collect
GST. GST is a destination based tax system.
Supply of goods and services are base for
charging tax. GAT is very comprehensive
indirect taxation system on manufactured
productd and services, sale and
consumptions of goods and services at
national level.GST is going be one of the
biggest tax reform after independence till the
date.
GST is very comprehensive indirect taxation
system on goods manufactured and services
provided.It is one of the biggest tax reform in
country. Clause 366(12A) of the Constitution
Bill defines GST as Dzgoods and services
taxdz means any tax on supply of goods, or
services or both except taxes on the supply of
the alcoholic liquor for human consumption.
Further the clause 366(26A) of the Bill defines
DzServicesdz means anything other than
Goods.
Thus it can be said that GST is a
comprehensive tax levy on manufacture, sale
and consumption of goods and servicesat a
national level. The proposed tax will be levied
on all transactions involving supply of goods
and services, except those which are kept out
of its purview
Objectives and Advantages of Goods and
Services Tax
1. To make tax rate uniform throughout the country: Only
of the main objective of GST is to have uniformity of indirect tax rates
throughout the country. GST rates are same throughout the country.
Earlier there were different rates of Sales Tax/Value Added Tax in the
States. Its motto is One Nation, One Ma rket. The main objective or
advantage of GST is single tax structure right the manufacturing.

2. To remove cascading effect of Taxes: Cascading effect of

taxes means levy of tax on tax. GST is levied only towards the net value
added portion and not towards the full portion of value as the taxpayer
enjoys input tax credit. Goods and services will cost less due to removal
of cascading effect of taxes. Due to input tax credit, GST would be finally
paid by the consumer for the goods and services purchased.

3. To Simplify Taxation Process: GST is a comprehensive indirect

tax. The taxes which have been subsumed in GST include:

(i) Central Excise Duty (except on petroleum products),

(ii) Service Tax,

(iii) Value Added Tax levied by the State Government,

(iv) Central Sales Tax,

(v) Additional Customs Duties,

(vi) Entry Tax,

(vii) Entertainment Tax,

(viii) Luxury Tax,

(ix) Tax on Lotteries, etc.

Thus, GST has integrated different tax line and it prevents multiple tax layers
imposed on goods and services.

GST reduces the burden of taxes and ensure compliance of tax payment. The
number of compliances is lesser. Thus, GST simplifies taxation process and
helps in ease of doing business. This is a huge benefit for the business
enterprises.
4. To make Indirect Tax Management Effective: The State
Government and Central Government has to administer now mainly one
indirect tax, i.e., GST after implementation of GST. Therefore,
administration of GST will be more effective. As a result, tax evasion is
likely to reduce. Previously, management of indirect taxes was a
complicated tax for the Government.

5. To attract more Foreign Direct Investment: Goods and

Services Tax helps in ease of doing business. Therefore, it will attract
more Foreign Direct Investment.

6. Simple and Easy online Procedure: GST returns are filed

online. The online procedure is simple and easy. Online filing of GST
returns helps in making tax administration corruption free.

7. Composition Scheme for Small Businesses: Composition

Scheme is a simple and easy scheme under GST for small tax payers as
they can get rid of GST formalities and pay GST at a fixed rate of turnover.
This scheme can be opted by small tax payer whose turnover is less than
the prescribed limit and is not engaged in making inter-State supplies.

8. Enhanced Productivity of Logistics: After abolition of octroi

and entry tax restriction on inter statement movement of goods has
reduced. This has increased the productivity of logistics companies.

9. Creation of Common National Market: GST has given a

boost to India’s tax to Gross Domestic Product ratio which helps in
promoting economic efficiency and long-term growth. GST has led to
uniform tax law and it has formed a common national market.

10. Regulation of Unregulated and Unorganised Sector

under GST: GST has brought unregulated and unorganised sectors
such as textiles and construction under regulation.
Characteristics of Goods and Services Tax
1. Comprehensive Indirect Tax: GST is a comprehensive indirect tax. It has
subsumed 17 indirect taxes levied by the State Governments and the Central
Government under the earlier indirect tax regime. GST has integrated various taxes on
goods and services into one unified tax. Thus, GST has brought about unified tax
regime.

2. Consumption or Destination Based Tax: GST is payable in the state in which

goods and services are finally consumed. Thus, it is a consumption or destination
based tax.

3. Same GST Rates throughout the country: The motto of GST is One Nation
One Tax One Market. Under the GST regime, the GST rates are same throughout the
country. Earlier, the rates of VAT/Sales Tax were different in the States.

4. Tax on Supply of Goods and Services: GST is a tax on supply of goods and
services, or both, except taxes on supply of alcoholic liquor for human consumption. At
present petroleum products will be out of GST. Petroleum products can be brought into
the GST network if the GST Council so decides. Petroleum products means petroleum
crude, high speed diesel, motor spirit, i.e., petrol, natural gas and aviation turbine fuel.
The word used is “Supply” as against the earlier concept of tax on the manufacture of
goods or on sale. Therefore, stock transfers and branch transfers will also come under
the GST net. GST is charged by the registered person/tax payer from the purchaser of
goods and services.

5. No Tax on due to Input Tax credit: Goods and Services Tax belongs to family of
Value Added Tax. GST is levied on the incremental value of the goods. Further, Input Tax
Credit (in short, ITC) is allowed which avoid cascading effect of taxes. Every registered
taxable person who carries on business at any place in India is entitled to credit of tax
on inputs admissible to him which will be credited to the electronic credit ledger of
such person in the records of the Government. Thus, there is no tax on tax.

6. Collection of GST by Registered Person/Tax payer: GST can be collected

only by a person/tax payer who is registered under the Central Goods and Services tax
Act, 2017.
Person includes:

(a) an individual
(b) Hindu Undivided Family
(c) a company
(d) a firm
(e) a Limited Liability Partnership
(f) an association of persons
(g) any corporation established by or under any Central Act, State Act or a Government
Company
(h) any body corporate
(i) a cooperative society
(j) a local authority
(k) Central Government or State Government

7. GST Collected is Payable to the Government: GST is collected on supply of

goods and services. GST collected on supply of goods and/or services, after deduction
of GST paid on purchases of good and/or services, is payable to the Government.

8. Multiple Rate Structure: GST has multiple rate structure. GST rates for goods include
5%, 12%, 18%, 28% and 3%. GST rates for services are 5%, 12%, 18% and 28%.

Proposed Benefits of GST

1. Dynamic common market: GST would make India a dynamic common
market and result in generation of positive externalities. By ensuring uniformity of
indirect tax rates across the country, it will substantially improve the ease of doing
business.

2. Elimination of cascading effect: Under GST, provision of seamless input

tax credit across transactions will avoid tax cascading, eliminate double taxation and
improve resource allocation.

3. Efficiency: Subsuming of all major indirect taxes will result in the removal of
inefficient taxes. With as single tax to be paid, manufacturers will become more
competitive and this could lead to growth in exports.

4. Reduced compliance costs: Harmonisation of tax rates and laws along

with seamless input tax credits and a sound IT infrastructure is expected to lead to
reduced compliance costs. As all the taxpayer services like registrations, payments,
returns etc. will be available online, the compliance process would become simpler.

5. Reduction in tax evasion: Uniform rates of taxation would reduce the

incentive for tax evasion by eliminating rate arbitrage opportunities between
neighbouring states and that between intra-State and inter-State sales.
6. Improved collection efficiency: GST is also desirable from the point of view of tax
policy and collection. Even if the taxes are lowered, the revenue of the Union and the
states is expected to be buoyant due to less evasion. A single rate across all goods and
services will eliminate classification disputes and make tax assessment more
predictable. Harmonisation of tax assessment, levy and collection procedures across
states will reduce compliance costs, limit evasion, enhance transparency and improve
collection efficiency.

7. Revenue generation: By controlling tax leakage from the system and having a
wider base, GST would generate more tax revenues for both the Central and State
Governments.

8. Encourages savings and investment: As GST is a tax on consumption

and not on income, so the tax system inherently encourages savings and investments
instead of consumption. Further, input tax credit would lead to a decrease in the cost of
capital goods and provide boost to investments.

9. Improved efficiency of logistics: Due to GST implementation, the

restriction on inter-State movement of goods is likely to be lessened and the logistics
sector is anticipated to start consolidating warehouses across the country. In the
erstwhile indirect tax structure, decisions related to logistics and distribution centres
were based on tax considerations as opposed to operational efficiency. With GST in
place, these decisions will now be based on operational efficiency and warehouses
would be set up at locations that would help in reaching customers faster and reduce
costs.

10. Regulation of the unorganized sector: For a large unorganized sector

that exists in business, GST has provisions for online compliances and payments, and
availing of input credit only when the supplier has accepted the amount, thereby
bringing accountability and regulation to these businesses.

11. Export competitiveness: With GST in place, the export industry in India
would be able to have internationally competitive prices due to the smooth process of
claiming input tax credit and the availability of input tax credit on services. The exports
of goods or services would be a zero rated supply under GST implying that GST would
not be levied on export of goods or services. All this, in turn, would provide a push to
government’s ‘Make in India’ campaign. Para 2.3 Introduction to GST 12 taxmann®

12. Higher threshold for registration: As per the current VAT structure, any
business with a turnover of more than ` 5 lakh (in most states) is liable to pay VAT
(different rates in different states). Similarly, for service tax, service providers with
turnover less than ` 10 lakhs are exempted. Under GST this threshold has been
increased to ` 20 lakhs thus exempting many small traders and service providers.

13. Composition scheme for small businesses: The composition

scheme under the GST regime is a method of levy of tax designed for small taxpayers
whose turnover is up to ` 1 crore (` 75 lakhs in case of 9 Special Category States).
Those who opt for this scheme can file returns on a quarterly basis unlike the others
who have to file returns on a monthly basis. Under the scheme, small businesses,
manufacturers and restaurants will be subject to a GST rate of 0.5%, 1% and 2.5%
respectively on turnover. The Composition scheme has been designed to simplify and
reduce the burden of compliance for smaller taxpayers.

14. Benefits to consumers: The final price of goods is expected to be lower

due to seamless flow of input tax credit between the manufacturer, retailer and
supplier of services. Average tax burden on companies is likely to come down which is
expected to reduce prices and hence benefit the consumer.

The Structure of GST in India

In the context of India, it is important to note that both the state and the centre need to
benefit from GST. With this aim in mind, the GSTC introduced a dual GST mode that
distributed powers to both Centre and States to levy the tax concurrently.
Accordingly, the current GST structure comprises of the following components:
1. Central GST (CGST)
CGST is levied by the Central Government of India on the intra-state supply of goods
and services. The transaction value is defined as the price actually paid or payable for
the said supply of goods or services.

2. State GST (SGST)

GST imposed by specific State governments on the intra-State trade and services or
trade within the state is called SGST(State-GST). Here the revenues are earned by the
State govt. due to SGST as the transaction occurred within the state.

3. Union Territory GST (UGST)

In case of Union territories such as Chandigarh, instead of State govt. the GST is
collected by the Central administration and is referred to as UGST

4. Integrated GST (IGST)

IGST would be collected by the central government on the inter-state transactions of
goods and services. Centre would levy IGST (CGST plus SGST) on all inter-state
transactions of taxable goods and services.
With dual GST, it is naturally a matter of concern which component of GST is applicable
to whom and when.
To determine this, it is first important to ascertain the location of the supplier of the
goods/ services and the consumer. Location defines whether a combination of SGST
and CGST will be applicable or only IGST.
 Levy or charging of GST
The following are the provisions regarding levy of GST in summarised form:

1. Levy by registered supplier of goods and/or services: GST is

levied, i.e. charged by the supplier of goods or services, or both, who is registered under
the GST Act. It is levied each time when the goods or services, or both, are supplied and
at the prescribed rate of GST.

2. On intra-State Supply: When the supply is intra-state (e.g., when the

supplier is located in Delhi and place where goods are supplied is also in Delhi), both
CGST and SGST are charged at half the prescribed rate. For example, if the GST rate is
18%, then both CGST and SGST will be charged @ 9% each.

3. On inter-State supply: When the supply is inter-state i.e. outside the state
(e.g., if the supplier is located in Delhi and goods are supplied in Haryana), IGST is
charged at the prescribed rate. For example, if the GST rate is 18%, then IGST will be
charged at 18%.

4. Value on which GST is charged: When goods are sold, GST is levied by
the seller of the goods at the prescribed rate on the net sale value after adjusting trade
discount and also cash discount, if any, given at the time of sale.

5. Input GST and Output GST: Input GST is paid on Inward Supply. Inward
Supply, in relation to a person, means receipt of goods or services or both whether by
purchase, acquisition or any other means with or without consideration. Inward supply
may be good (inputs or capital goods) or of input services. In simple words, Input GST is
the GST paid by the purchaser of goods or services or both on the purchases.
Input GST is paid on Outward Supply. Outward Supply, in relation to a taxable person,
means supply of goods or services or both, whether by sale, transfer, barter, exchange,
licence, rental, lease or disposal or any other mode, made or agreed to be made by
such person in the course or furtherance of business. In simple words, Output GST is
the GST levied and collected by the seller of goods or services or both for and on behalf
of the Government.

6. Input Tax Credit and Set-off of Input GST against Output GST:
GST paid by a registered taxable person on purchase of goods and/or services which
can be set-off against the Output GST is called the Input Tax Credit. GST paid on
purchases, i.e. Input GST is set-off against GST collected on sales, i.e. against Output
GST in the prescribed manner, except where input tax credit is not allowed. Where
Input GST can be set-off against Output GST, Input GST is not treated as cost of the
goods purchased, asset purchased, etc. Similarly, Output GST is not treated as income.
Input GST is treated as an asset until it is set-off against Output GST. After setting-of
Input GST against Output GST the balance of the Output GST is payable to the
Government. Until it is paid, it is shown as liability. Usually Output GST is more than the
Input GST. However, if Input GST is more than the Output GST, the excess of Input GST
over Output GST is receivable from the Government. Until it is received, it is shown as
an asset.

The manner in which Input GST is set-off against Output GST has been ex- plained later
in this chapter.

The Input Tax Credit (In short, ITC) is the tax paid by the buyer on purchase of goods
and/or services which is used to reduce his tax liability on the sale of goods and/or
services. Thus, businesses can reduce their tax liability on sale of goods and/or
services by claiming credit to the extent of GST paid on purchases.
For example, a trader sells goods to consumer and collects GST based on the goods
sold and the place of destination. Let us assume that selling price of the good is `
10,000 excluding GST and the rate of applicable GST is 18%. The consumer will,
therefore, pay a total of ` 11,800 for the goods including GST of ` 1,800. Without, ITC,
the trader will have to pay ` 1,800 to the Government as GST. With ITC, the trader can
reduce the tax that he will have to pay to the Government.

Let us assume further that he has purchased those goods for ` 9,440 including GST `
1,440. The trader can claim ` 1,440 as input tax credit and reduce his original tax
liability of ` 1,800 by ` 1,440. The trader will be required to pay only ` 360 (i.e. ` 1,800 –
` 1,440) to the Government. Thus, Input GST can be set-off against output GST.

7. GST belongs to family of Value Added Tax: As stated above, Input

GST can be set-off against output GST. It means that GST is levied on the incremental
value of the goods and/or services. Thus, it belongs to the family of Value Added Tax.

8. Cases where Input Tax Credit is not available: GST paid is not
allowed to be set-off against Output GST in some cases. In other words, Input Tax
Credit is not allowed in certain cases. Where Input Tax Credit is not allowed, GST paid is
not treated as Input GST. GST paid debited to Expense Account or capitalised,
depending on the circumstances.
In the following cases, Input Tax Credit is not allowed:
(a) Motor Vehicle for transportation of persons having approved seating
capacity of not more than 13 persons (including driver), except when they are used for
making the following taxable supplies:
(i) further supply of such motor vehicles; or
(ii) transportation of passenger; or
(iii) imparting training on driving such motor vehicles.
(b) Vessels and aircraft except when they are used for a purpose similar to those
mentioned in (a) (i), (a) (ii) and (a) (iii) above.
(c) Services of general insurance.
(d) Servicing, repair and maintenance insofar as they relate to motor vehicles referred
to in point (a) or vessels and aircraft referred to in point (b).

(e) Food and beverages

(f) Outdoor catering
(g) Beauty treatment
(h) Health Services
(i) Cosmetic and health surgery

(j) Leasing of motor vehicles, vessels and aircraft referred to in point ( a) except when
used for the purposes mentioned (a) (i), (a) (ii) and (a) (iii).
(k) Life insurance and health insurance.
(l) Membership of clubs.

(m) Membership of health and fitness centres.

(n) Travel benefits extended to employees on vacation such as leave or home travel

9. Reversal of GST Paid: Input GST paid on purchase of goods and/or services
is reversed in the following cases:
(a) Purchases Return;
(b) Goods taken by the proprietor for personal use;
(c) Goods given as charity or donation;

(d) Goods lost by theft or destroyed by fire, floods, or any other natural calamity;
(e) Goods distributed as free samples;
(f) Rebate received on purchases; and
(g) Good used as furniture.

10. Reversal of GST collected: Output GST collected on sale of goods and/or
services is reversed in the following cases:
(a) Sales return;

(b) Cash discount allowed after the invoice has been made.

11. No GST on certain Supplies: GST is not levied on the following supplies:
(a) Education Services;
(b) Health Services (Consulting only);

(c) Electricity and water services;

(d) Salaries and Wages;
(e) Interest;
(f) Supply of Services to the Government;
(g) Supply to Embassies of other countries; and

(h) Supply to United Nations Organisation.

Note: GST Council reviews, from time to time, the GST rates and goods and services on
which GST is to be levied to be abolished. In the GST Council meeting held in July, 2022,
it has imposed GST on hospital rooms where charges are more than ` 5,000 per day.
Thus, on certain health services GST has been imposed.

12. No GST on Advance to Suppliers and from Customers: GST is

not charged when advance is received from customers for supply of goods or services.
Similarly, GST is not paid on advance given to the suppliers for purchase of goods or
services.

13. Reverse Charge: Reverse charge means the liability to pay tax by the
recipient of supply of goods or services or both, instead of supplier of such goods or
services or both.
Recipient of the goods and/or service is liable to pay tax on the notified categories of
supply of goods and/or services.

Example In case of Goods Transport Agency, the Government has given option to it to
deposit the GST or it may ask the factory, etc. to whom the services are supplied to
deposit the GST for supply of service. If the Goods Transport Agency opts not to deposit
GST itself, supply of services by any goods transport agency in respect of goods by road
to any factory is one such supply of services. In this case, supplier of service is goods
transparent agency and recipient of service is any factory registered under or governed
by the Factories Act, 1948. GST will be payable by the factory and not by the goods
transport agency.
Goods on which tax is payable under reverse charge include bidi wrapper leaves (i.e.
tendu leaves), tobacco leaves, silk yarn, etc.
Services on which tax is payable under reverse charge include services by goods
transport agency, legal service, sponsorship service, import of service i.e., payment of
fees outside India, etc.

14. Accounts to be Debited and Credit: It is explained as follows:

(a) When ITC on GST Paid is Allowed

For CGST paid: Input CGST is debited

For SGST paid: Input SGST is debited
For IGST paid: Input IGST is debited

(b) When GST Paid is Reversed

For CGST paid is reversed: Input CGST is credited

For SGST paid is reversed: Input SGST is credited

For IGST paid is reversed: Input IGST is credited

(c) When GST is collected

For CGST collected: Output CGST is credited

For SGST collected: Output SGST is credited

For IGST collected: Output IGST is credited

(d) When GST is collected is Reversed

For CGST collected is reversed: Output CGST is debited

For SGST collected is reversed: Output SGST is debited
For IGST collected is reversed: Output IGST is debited

15. Exempt Supply: Exempt supply means supply of any goods or services or both
which attract nil rate of GST or which is wholly exempt from GST.

16. Electronic Cash Ledger: Electronic Cash Ledger is maintained by the

Government on the GST Portal. It is the Government record of the GST deposited by a
registered taxable person. In this ledger, GST paid is credited by the Government in the
account of the registered taxable person who pays it and GST collected by him/it is
debited in his/its account. The cash register segregates information headwise such as
IGST, CGST, SGST and Cess.
What Becomes costlier, Cheaper:
Will GST help home buyers?

With the introduction of the Goods and Services Tax (GST), the total incidence of tax will
increase from 5.5 per cent to 12 per cent. However, developers will be able to avail of
input credit, on all the goods and services purchased and spent in the construction of
the property.
Shrikant Paranjape, president of CREDAI Pune Metro, maintains that “The impact of the
GST on property prices, will be difficult to gauge at this stage because of the lack of
clarity on abatement for land value. In a product, where the major raw material is not
covered by the GST and the completed unit is also not covered by the GST, the tax input
benefit will be hard to calculate or justify. Only the market forces, the ready reckoner
rates and time, will decide whether and how much benefit will be passed on by the
developers to the purchasers.”

Moreover, the prices of input materials can also be volatile. Cement and steel prices
can soar, without warning. Similarly, sand is always in short supply and not available in
the monsoons. Hence, it is likely that these industries may not pass on the entire
benefit of tax credit.

Another important factor that needs to be examined, is the stage of construction. If the
project is at an advanced stage, where substantial cost has already been incurred
before the application of the GST, very little input credit will be available and very less
benefit will be passed on. If the project is at an early stage, more benefits can be
passed on.

How are banks affected by the GST?

Construction Industry has two major Game Change one in form of RERA and now GST
impact. The old litigation in work contract and many landmark decision on service tax
and vat laws now no more valid. The construction entity to rework on cost structure by
doing post and pre GST impact analysis.
They say ‘Change is the only constant’ but in order to succeed, change is not only
constant but it is also inevitable. After many reforming initiations like “Housing for all”
and RERA, the next thing that Real Estate along with all other sector is looking forward
to is the Goods and Services Tax. GST is set to get implemented on 1st July 2017. There
are various goods and services which will have different rates prescribed by GST, which
may impact their cost. A homebuyer henceforth will have to pay 12% GST to purchase a
under construction house. If we look at the current scenario, real estate sector was
heavily taxed, therefore 12% single tax structure is definitely a welcome move. We
believe that existing multiple indirect taxes on the sector is higher and tax impact under
GST would be neutral. While the impact of GST on various sectors and goods is now
known, industry experts are still divided over how GST will impact real estate going
ahead as clarity on the tax slabs for services is still awaited.

Together with RERA, GST will go a long way in ensuring transparency in the realty sector
and growing buyer confidence. The existing channels include issues of multiple
taxation, amounting to indirect taxes and no uniformity. GST coupled with Real Estate
Regulatory Act that has come into effect on May 1, 2017, would ensure efficiency in the
realty sector. GST will free homebuyers and investors from the hassle of paying several
state taxes at different levels, therefore removing the double taxation impact. Therefore
12% tax rate under GST regime looks favourable to the industry.
If we talk about nitty-gritty’s of the GST for real estate sector, in some cases, even input
credit will be more than the GST levied on the finished product, but a developer can
claim a maximum credit to the extent of the GST he would be paying on the finished
product. As per the provisions of GST, it can be expected that GST may lead to input
cost deflation for construction industry as credit of taxes paid on various inputs used in
the construction activities will be available which is not available in current tax regime.
GST is also likely to boost foreign investment and benefit the NRI community for
investment in real estate because of a seamless all-inclusive channel available. The
simplification of taxation is probably the most positive aspect of GST and it will promise
well for foreign investments. It will also raise the confidence of the NRI market to invest
in Indian real estate. From the consumer point of view, the major advantage would be in
terms of decrease in the overall tax burden on goods. Currently it is estimated about
25%-30%. GST will help in free transport of goods without stopping at the state borders
for long hours for payments of state tax or entry tax from one state to another state. This
will reduce in paperwork to a great extent as well.
Advantages and Disadvantages of GST
Advantages of GST
These are some prominent benefits of GST in India –

• It Eliminated the Cascading Tax Effect

GST is an indirect tax that helps to bring indirect tax regimes under one umbrella. This
eliminates the cascading tax effect or tax on tax process efficiently.

To understand the impact of such elimination, let’s glance through this example below.

- Pre-GST Regime

A business consultant extends services at Rs.50000 and levies a service tax at the rate
of 15%, i.e. Rs.7500 (50000×15%). The consultant purchased office supplies at
Rs.20000 and paid VAT at the rate of 5% without any deduction, i.e. Rs.1000
(20000×5%). The total cash outflow would amount to Rs.8500.

- Post-GST Regime

A business consultant’s cash outflow will amount to –

GST levied on services at the rate of 18%, i.e. Rs.9000 (50000×18). The GST applied to
office supplies is subject to deduction. So, the net GST amounts to Rs.8000 (9000-
1000)

• Higher Threshold Limit

With the implementation of GST norms, the minimum threshold limit for registration
has increased.
Previously, under the VAT regime, all businesses with a turnover above Rs.5 lakh (limit
used to vary among states) had to pay VAT. However, under this new GST regime, this
threshold limit increased to Rs 20 lakh, providing relief to several small service traders.

• Lesser Number of Compliances

Under the previous tax regime, both service tax and VAT extended different
compliances.

For instance, excise returns were filed monthly whereas, in the case of service tax,
companies and Limited Liability Partnership filed them monthly, and partnerships and
proprietorships filed them quarterly.

Conversely, in the case of VAT, the filing of returns varied largely. Nevertheless, with
GST in the picture, taxpayers are now required to file only one return.

• Composition Scheme

Businesses with an annual turnover between Rs.20 lakh and Rs.75 lakh are eligible to
lower their taxes with the help of the Composition Scheme. This option has not only
lowered the applicable tax rate but has also reduced the compliance burden to a great
extent.

This pointer proves a vital parameter to weigh the advantages and disadvantages of
GST.

• Hassle-free Online Process and Reduced Litigation

Taxpayers can now register with GST and file tax returns online.

The simple interface and hassle-free approach have made the process less
cumbersome. It is believed that start-ups are among the most benefited. Also, it has
proved useful in establishing clarity regarding taxation jurisdiction between State and
Central government and, in turn, facilitating smooth assessment.
 • Improved Logistics

Previously, to avoid CST and state entry taxes, the Indian logistic companies used to
maintain multiple warehouses across states. Furthermore, such warehouses had to
operate below their capacity. However, with GST, restrictions on inter-state movement
have reduced significantly.

Resultantly, warehouse operators and e-commerce aggregators are now able to set up
warehouses at the most convenient locations. This has allowed them to get rid of
unwarranted logistic expenses and has increased profitability.

Other than these, GST has brought unorganised industries like textile and construction
under its regulation and has made them accountable. Regardless, to gauge
all advantages and disadvantages of GST successfully, it is crucial to know about its
drawbacks in detail as well.

Disadvantages of GST
The major drawbacks are as follows –

• Increased Operational Cost

GST had directed businesses to update their old accounting to GST-compliant software
or ERP to keep their businesses running.

Nonetheless, the cost of purchasing, installation of software, along training employees

to use GST-compliant software can be quite substantial. Also, adherence to GST norms
has increased the operational cost for small businesses as more firms are now forced
to hire tax professionals to become more GST-compliant.

• A Higher Tax Burden for SMEs

Under the old tax regime, only businesses with an annual turnover of more than Rs.1.5
crore had to pay excise duty. However, under this new tax regime, businesses with an
annual turnover of over Rs.40 lakh must pay GST.

• Compliance Burden

This taxation regime has made it mandatory for companies to register with GST in all
states they operate in. The entire process of registering with the regulating body, issuing
GST-compliant invoices, maintaining digital record keeping, and filing returns have
increased the burden on SMEs and others significantly.

Additionally, the infrastructure of all states in India is not equipped to implement the e-
governance model followed by GST.

• Penalties and Fines

There's a lack of awareness and resources to comply with the GST system. Many GST
taxpayers fail to understand the nuances of the system resulting in no or less payment
of the tax. The ultimately attracts penalties and fines which elevates their costs.

Resultantly, several companies find it challenging to adopt or transition into this

regime. Based on this information, a tax-paying individual can develop a better
understanding of the advantages and disadvantages of GST. In turn, it will help them
develop ways to maximise their GST-related benefits and find ways around its
shortcomings effectively.
 GST impact across sectors-
TECH
GST will eliminate multiple levies. It will also allow deeper penetration of digital
services.
Duty on manufactured goods will increase from 14-15% to 18%, so electronic
products would be expensive.

FMCG
Companies could stir substantial savings in logistics and distribution costs as
requirement for countless sales depots will be eliminated.. FMCG companies have
to pay around 24-25% tax and GST would help in reduction of tax. Reduction of
overall tax rates, is expected to generate saving.

ECOMMERCE
GST will help create a single unified market across India and allow free movement
and supply of goods in every part of the country. It will also eliminate the cascading
effect of taxes on customers which will bring efficiency in product costs. It may
increase the workload for ecommerce firms and push up costs.

TELECOM
Handset prices likely to come down/even out across states. Manufacturers are
further likely to come through with flying colours on to consumers charge benefits
they will earn from consolidating their warehouses and efficiently managing
inventory. For handset makers, GST will require ease of doing job as they take care of
no longer require to strengthen state adamant entities and relinquish stocks to them
and invest heavily into logistics of creating warehouses in each state across the
country.
Call charges, data rates will go up if tax rate in the GST regime exceeds 15%. Tower
 firms won't be able to set off their input duty liabilities if petro-products continue to
stay outside GST framework.

AUTOMOBILES
On road price of vehicles could drop by 8%. Lower price can be construed as indirect
stimulus to boost the volume. The demand for commercial vehicles may increase.
GST will help in reducing the time at check-posts, and will ease logistics hurdles.
With fleet productivity increasing, operators may not feel the need to expand the
midterm.

MEDIA
Service tax and entertainment tax are levied on DTH, film producers and multiplex
players. GST will captivate major critical point and dreariness in businesses. Taxes
could go down by 2-4%.
Multiplex chains will amass on revenues as there will be in a superior way uniform
load, unlike current high outlay of entertainment thorn in one side levied by different
states. It may lower the average ticket price and increase the footfalls in
multiplex.GST will be a carrying a lot of weight boon to silver screen producers and
studios that currently conclude service tax on most of their charge, but cannot
charge input credit on creative services as they fall under the negative list. Under
GST, they will be able to claim credit of these services also, which will help is lowering
the overall cost.

INSURANCE
Insurance policies: life, health and motor will begin to cost more from April 2017 as
taxes will increase.
 AIRLINES
Airlines may become expensive, as service tax will be replaced by GST. Earlier service
tax on air tickets were 5.6% on economy class and 8.4% on business class . Now rate
of GST on economy class would be 5% and 12% on business class.

CEMENT
Currently tax rates on cement are 27% - 32% but GST will bring down the rate to 18-
20%. It will help in reduction in logistics costs. India is second largest producer of
cement in the world.

CONCLUSION
GST will be a very noteworthy step in the field of indirect tax reforms in India. Multiple
taxes are eliminated and there is only a single tax. GST will make taxation easy for the
industries. Customer will also be benefitted as the overall tax burden on goods and
services are reduced. GST will also make Indian products competitive in the global
markets. GST will be easier to administer. Once implemented, the proposed taxation
system holds great promise in terms of sustaining growth for the Indian economy.

GST Rates Around The World

India 5-28%

France 20%

New Zealand 15%

Australia 10%

Canada 13-15%
Malaysia 6%

Singapore 7%

UK 20%

Ukraine 20%

Vietnam 10%

Thailand 7%

Indonesia 10%

Germany 19%

Denmark 25%
An overview on how GST impacts
Business
Understanding the Goods and Services Tax (GST)

The goods and services tax (GST) is an indirect federal sales tax that is applied to the
cost of certain goods and services. The business adds the GST to the price of the
product, and a customer who buys the product pays the sales price inclusive of the
GST. The GST portion is collected by the business or seller and forwarded to the
government. It is also referred to as Value-Added Tax (VAT) in some countries.

Most countries with a GST have a single unified GST system, which means that a single
tax rate is applied throughout the country. A country with a unified GST platform
merges central taxes (e.g., sales tax, excise duty tax, and service tax) with state-level
taxes (e.g., entertainment tax, entry tax, transfer tax, sin tax, and luxury tax) and
collects them as one single tax. These countries tax virtually everything at a single rate.
Dual Goods and Services Tax Structures
Only a handful of countries, such as Canada and Brazil, have a dual GST
structure. Compared to a unified GST economy where tax is collected by the federal
government and then distributed to the states, in a dual system, the federal GST is
applied in addition to the state sales tax. In Canada, for example, the federal
government levies a 5% tax and some provinces/states also levy a provincial state tax
(PST), which varies from 8% to 10%. In this case, a consumer's receipt will clearly have
the GST and PST rate that was applied to their purchase value.

More recently, the GST and PST have been combined in some provinces into a single
tax known as the Harmonized Sales Tax (HST). Prince Edward Island was the first to
adopt the HST in 2013, combining its federal and provincial sales taxes into a single
tax. Since then, several other provinces have followed suit, including New Brunswick,
Newfoundland and Labrador, Nova Scotia, and Ontario.

Critiques of the GST

A GST is generally considered to be a regressive tax, meaning that it takes a relatively
larger percentage of income from lower-income households compared to higher-
income households.8 This is because GST is levied uniformly on the consumption of
goods and services, rather than on income or wealth.

Lower-income households tend to spend a larger proportion of their income on

consumables, such as food and household goods, which are subject to GST. As a
result, GST can disproportionately burden lower-income households.

Because of this. some countries with GST are discussing possible adjustments that
might make the tax more progressive, which takes a larger percentage from higher-
income earners.

Example: India's Adoption of the GST

India established a dual GST structure in 2017, which was the biggest reform in the
country's tax structure in decades. The main objective of incorporating the GST was to
eliminate tax on tax, or double taxation, which cascades from the manufacturing level
to the consumption level.

For example, a manufacturer that makes notebooks obtains the raw materials for, say,
Rs. 10, which includes a 10% tax. This means that they pay Rs. 1 in tax for Rs. 9 worth of
materials. In the process of manufacturing the notebook, the manufacturer adds value
to the original materials of Rs. 5, for a total value of Rs. 10 + Rs. 5 = Rs. 15. The 10% tax
due on the finished good will be Rs. 1.50. Under a GST system, the previous tax paid can
be applied against this additional tax to bring the effective tax rate to Rs. 1.50 – Rs. 1.00
= Rs. 0.50.

In turn, the wholesaler purchases the notebook for Rs. 15 and sells it to the retailer at a
Rs. 2.50 markup value for Rs. 17.50. The 10% tax on the gross value of the good will be
Rs. 1.75, which the wholesaler can apply against the tax on the original cost price from
the manufacturer (i.e., Rs. 15). The wholesaler's effective tax rate will, thus, be Rs. 1.75
– Rs. 1.50 = Rs. 0.25.

Similarly, if the retailer's margin is Rs. 1.50, his effective tax rate will be (10% x Rs. 19) –
Rs. 1.75 = Rs. 0.15. Total tax that cascades from manufacturer to retailer will be Rs. 1 +
Rs. 0.50 + Rs. 0.25 + Rs. 0.15 = Rs. 1.90.

India has, since launching the GST on July 1, 2017,

implemented the following tax rates:
• A 0% tax rate applied to certain foods, books, newspapers, homespun cotton
cloth, and hotel services.
• A rate of 0.25% applied to cut and semi-polished stones.
• A 5% tax on household necessities such as sugar, spices, tea, and coffee.
• A 12% tax on computers and processed food.
• An 18% tax on hair oil, toothpaste, soap, and industrial intermediaries.
• The final bracket, taxing goods at 28%, applies to luxury products, including
refrigerators, ceramic tiles, cigarettes, cars, and motorcycles.

The previous system, with no GST, implies that tax is paid on the value of goods and
margin at every stage of the production process. This would translate to a higher
amount of total taxes paid, which is carried down to the end consumer in the form of
higher costs for goods and services. The implementation of the GST system in India is,
therefore, a measure that is used to reduce inflation in the long run, as prices for goods
will be lower.

Are VAT and GST the Same?

Value-added tax (VAT) and goods and services tax (GST) are similar taxes that are
levied on the sale of goods and services. Both VAT and GST are also indirect taxes,
which means that they are collected by businesses and then passed on to the
government as part of the price of the goods or services.

However, there are some key differences between the two. VAT is primarily used in
European countries and is collected at each stage of the production and distribution
process, while GST is used in countries around the world and is collected only at the
final point of sale to the consumer. VAT is generally applied to a wider range of goods
and services than GST, and the rate of VAT and GST can vary depending on the type of
goods or services being sold and the country in which they are sold.

The Bottom Line

The goods and services tax (GST) is a type of tax levied on most goods and services
sold for domestic consumption in many countries. It is paid by consumers and
remitted to the government by the businesses selling the goods and services. Some
countries have introduced GST exemptions or reduced GST rates on essential goods
and services or have implemented GST credits or rebates to help offset the impact of
GST on lower-income households. The GST is often a single rate tax applied
throughout a country and is preferred by governments because it simplifies the
taxation system and reduces tax avoidance. In dual GST systems, such as those in
Canada and Brazil, the federal GST is applied in addition to a state sales tax. The GST
has been identified by critics as regressive and can potentially place a relatively higher
burden on lower-income households

GSTIN (GST IDENTIFICATION NUMBER)

GSTIN, short for Goods and Services Tax Identification Number, is a unique 15 digit
identification number assigned to every taxpayer (primarily dealer or supplier or any
business entity) registered under the GST regime.

Before GST was introduced, all dealers registered under the state VAT law were issued a
unique TIN number by the respective state tax authorities; the GSTIN number has
replaced the same.

Business entities registering under GST are now provided with a unique identification
number known as the GSTIN.

Obtaining GSTIN and registering for GST is absolutely free of cost.

What is GSTIN Meaning, Format and Structure

Every taxpayer under the GST regime is provided with a State + PAN-based 15-digit
Goods and Services Taxpayer Identification Number (GSTIN).

Here is the breakdown of the GSTIN format-

• GSTIN Full Form: Goods and Services Tax Identification Number

• First 2 Digits: The first 2 digits of the 15 digit GSTIN represents the state code.

• Next 10 Digits: The next 10 digits are the PAN of the person or the business
entity.
 • Thirteenth Digit: The thirteenth digit is based on the number of registrations done
by the firm within a state under the same PAN.

• Fourteenth Digit: The fourteenth digit will be the alphabet "Z" by default

• Last Digit: The last digit is called the check code to detect errors and can be
denoted by either a number of an alphabet

GST Number Example

If any legal entity or business firm has only one registration in the same state, then the
number “1” will be assigned as the 13th digit of GSTIN under its format. If the same
company obtains one more or second registration in the same state itself, the
thirteenth digit of GSTIN will be assigned as number ”2”.

Similarly, the letter “B” will be assigned as the 13th digit of the GSTIN if the entity has
done 11 registrations in the same state. In the same way, any legal entity can have up to
35 business verticals and can be registered within a state using this system.

How to Apply for GSTIN?

Applying for GST comes under the GST enrolment procedure. Once your GST
application is approved by the concerned GST officer, a unique GSTIN is allocated. For
learning how to get GSTIN number, there are 2 ways to apply, viz.

Documents Required

When applying for a GST identification number, you will typically need the following
documents-

• Photographs

• The taxpayer's constitution

• Proof(s) of the business's location

• Account information
 • Form of authorization

- Through GST Portal

1. Log on to GST online

portal https://services.gst.gov.in/services/quicklinks/registration

2. Go to 'New Registration' and fill in the details such as your name, e-mail ID and
mobile number in Part A of the application

3. The portal will then verify your details by sending an OTP to your registered
mobile and email

4. After the completion of the verification process, you will receive an Application
Reference Number (ARN) via mobile or email

5. You can now fill Part B of the application using the ARN. The documents that you
will need in this step include:

• Photographs

• Constitution of taxpayer

• Proof(s) of the location of the business

• Bank account details

• Authorization form

6. In the next step, provide all the information and upload the required documents
in the application and submit the application using DSC or Aadhaar OTP.

Once you have submitted Part B also, the GST officer will verify your application within 3
working days. The officer, after verification, can either approve your application, in
which case you will receive your Certificate of Registration (Form GST REG 06), or the
officer may ask for more information using Form GST-REG-03.
The additional details must be provided within 7 working days. Once you have provided
the details, the officer has the authority to reject the application providing reasons for
the same in the Form GST-REG-05.

If the GST officer finds the details provided by you genuine, then the application will be
processed, and you will receive a Certificate of Registration.

- Through GST Seva Kendra

The second way to register for GSTIN is by visiting a GST Seva Kendra directly. The
government has established a plethora of service centres or “Seva Kendras” to
facilitate all things related to GST and for the ease of taxpayers as well.

The government has set up the Seva Kendras to facilitate the migration to GST for many
taxpayers. These taxpayers are the people who do not have access to or don’t have an
idea of how to make use of the GST’s online portal.

How to Verify GSTIN?

There are many firms that produce invalid and fake GSTIN numbers just to charge extra
money and avoid taxes under GST regulations.

First of all, as per the regulations, every service provider/ trader charging GST to their
customers has to print their GSTIN number on all their produced invoices. You can,
however, check the validity of the GSTIN provided to you in case you are having some
doubts.

Checking the validity of the GSTIN Number is quite easy; just follow the given below
steps-

1. Go to the GST Portal https://www.gst.gov.in/

2. You will see a "Search Taxpayer" option on the menu bar

 3. Enter the GSTIN you wish to verify in the search box, along with the captcha code
provided to you.

4. If the given GSTIN is a valid GST-registered business as per the regulations of

GST, the following details will be in front of you in seconds-

• GSTIN Status

• Registration Date

• Type of Business Structure: Company, Sole proprietorship

• Type of Taxpayer. Regular Taxpayer, Composition, SEZ unit

• If the entered GSTIN is an invalid one, the website will display a message saying
"error”

Benefits of Getting a GSTIN

1. Legal recognition of the business entity as a supplier of goods or services. This,

in turn, helps in attracting more customers and growing business.

2. You will become more competitive than small businesses as purchasing from
them will ensure input credit.

3. A person who has GSTIN can take input credit on their own purchases and input
services.

4. No restrictions on interstate sales (they will be treated as casual taxable

persons). Thus, the potential market for SMEs reaches the next level.

5. You can either register on e-commerce sites or open your own e-commerce
website. This will again enhance the scope of business for a registered person.

6. GST registration will ensure that your business is compliant (because most
returns are automated). This will result in a good GST rating for your firm and
help to boost the business.
Spotting Fake GSTIN

Spotting fake GSTINs can be done simply by having a quick glance or a thorough check.

Alternatively, one of the most helpful ways to identify fake GSTIN numbers is by
checking them via the GSTIN search tool. In addition, many free official and 3rd-party
online tools are available to verify the number.

To verify if a GSTIN is authentic, follow the listed steps-

Step 1: Make a visit to https://www.gst.gov.in/.

Step 2: Click on ‘Search Taxpayer’ and then click on ‘Search by GSTIN/UIN’.

Step 3: Fill in the GSTIN of the business in the field.

Step 4: Click ‘Submit’ after filling out the Captcha.

If the GSTIN is accurate, you will get much information related to the business,
including the place of business, registration date, legal business name, etc. On the
other hand, if the number is fake, no results will be displayed.

Difference Between GSTIN and GSTN

GSTIN number means the Goods and Services Tax Identification Number, whereas
Goods and Service Tax Network (or GSTN) is an organisation that oversees the GST
portal's whole IT system.

The Government of India will use this portal to track every financial activity and to give
taxpayers all services, from registration to submitting taxes and preserving all tax
records.
Time, Place and Value of Supply
Under GST, 3 types of taxes can be charged in the invoice. SGST and CGST in case of an
intra-state transaction and IGST in case of an interstate transaction. But deciding
whether a particular transaction is inter or intrastate is not an easy task.
Think about an online training where customers are sitting in different parts of the
world.
Say in case, hotel services, where the receiver may have an office in another state and
may be visiting the hotel only temporarily, or where goods are sold on a train journey
passing through different states.
To help address some of these situations, the IGST act lays down certain rules which
define whether a transaction is inter or intrastate. These rules are called the place of
supply rules.

Why are time place and value of supply important?

Time of supply means the point in time when goods/services are considered supplied’.
When the seller knows the ‘time’, it helps him identify due date for payment of taxes.
Place of supply is required for determining the right tax to be charged on the invoice,
whether IGST or CGST/SGST will apply.

Value of supply is important because GST is calculated on the value of the sale. If the
value is calculated incorrectly, then the amount of GST charged is also incorrect

Time of Supply
Time of supply means the point in time when goods/services are considered supplied’.
When the seller knows the ‘time’, it helps him identify due date for payment of taxes.
CGST/SGST or IGST must be paid at the time of supply. Goods and services have a
separate basis to identify their time of supply. Let’s understand them in detail.
Time of Supply of Goods

Time of supply of goods is earliest of:

Date of issue of invoice
Last date on which invoice should have been issued
Date of receipt of advance/ payment*.
For example:
Mr. X sold goods to Mr. Y worth Rs 1,00,000. The invoice was issued on 15th January.
The payment was received on 31st January. The goods were supplied on 20th January.

*Note: GST is not applicable to advances under GST. GST in Advance is payable at the
time of issue of the invoice. Notification No. 66/2017 – Central Tax issued on
15.11.2017
Let us analyze and arrive at the time of supply in this case.

Time of supply is earliest of –

Date of issue of invoice – 15th January
Last date on which invoice should have been issued – 20th January.
Thus the time of supply is 15th January.

What will happen if, in the same example an advance of Rs 50,000 is received by Mr. X
on 1st January?
The time of supply for the advance of Rs 50,000 will be 1st January(since the date of
receipt of advance is before the invoice is issued). For the balance Rs 50,000, the time
of supply will be 15th January.

Time of Supply for Services

Time of supply of services is earliest of:
Date of issue of invoice
Date of receipt of advance/ payment.

Date of provision of services (if invoice is not issued within prescribed period)
Let us understand this using an example:
Mr. A provides services worth Rs 20000 to Mr. B on 1st January. The invoice was issued
on 20th January and the payment for the same was received on 1st February.
In the present case, we need to 1st check if the invoice was issued within the
prescribed time. The prescribed time is 30 days from the date of supply i.e. 31st
January. The invoice was issued on 20th January. This means that the invoice was
issued within a prescribed time limit.

The time of supply will be earliest of –

Date of issue of invoice – 20th January
Date of payment = 1st February
This means that the time of supply of services will be 20th January.
 Time of Supply under Reverse Charge
In case of reverse charge the time of supply for service receiver is earliest of:
Date of payment*

30 days from date of issue of invoice for goods (60 days for services)
*w.e.f. 15.11.2017 ‘Date of Payment’ is not applicable for goods and applies only to
services. Notification No. 66/2017 – Central Tax
For example:

M/s ABC Pvt. Ltd undertook service of a director Mr. X worth Rs. 50,000 on 15th January.
The invoice was raised on 1st February. M/s ABC Pvt Ltd made the payment on 1st May.
The time of supply, in this case, will be earliest of –
Date of payment = 1st May

60 days from date of date of invoice – 2nd April

Thus, the time of supply of services is 2nd April.

Place of supply
It is very important to understand the term ‘place of supply’ for determining the right tax
to be charged on the invoice.
Here is an example:

Location of Service Receiver Place of supply Nature of Supply GST Applicable

Maharashtra Maharashtra Intra-state CGST + SGST

Maharashtra Kerala Inter-state IGST

Place of Supply of Goods

Usually, in case of goods, the place of supply is where the goods are delivered.
So, the place of supply of goods is the place where the ownership of goods changes.

What if there is no movement of goods. In this case, the place of supply is the location
of goods at the time of delivery to the recipient.
For example: In case of sales in a supermarket, the place of supply is the supermarket
itself.
Place of supply in cases where goods that are assembled and installed will be the
location where the installation is done.
For example, A supplier located in Kolkata supplies machinery to the recipient in Delhi.
The machinery is installed in the factory of the recipient in Kanpur. In this case, the
place of supply of machinery will be Kanpur.

Place of Supply for Services

Generally, the place of supply of services is the location of the service recipient.
In cases where the services are provided to an unregistered dealer and their location is
not available the location of service provider will be the place of provision of service.
Special provisions have been made to determine the place of supply for the following
services:
Services related to immovable property
Restaurant services
Admission to events

Transportation of goods and passengers

Telecom services
Banking, Financial and Insurance services.
In case of services related to immovable property, the location of the property is the
place of provision of services.
Example 1:
Mr. Anil from Delhi provides interior designing services to Mr. Ajay(Mumbai). The
property is located in Ooty(Tamil Nadu).

In this case, place of supply will be the location of the immovable property i.e. Ooty,
Tamil Nadu.
Example 2:
A registered taxpayer offers passenger transport services from Bangalore to Hampi. The
passengers do not have GST registration. What will be the place of supply in this case?

The place of supply is the place from where the departure takes place i.e. Bangalore in
this case.
Value of Supply of Goods or Services
Value of supply means the money that a seller would want to collect the goods and
services supplied.
The amount collected by the seller from the buyer is the value of supply.

But where parties are related and a reasonable value may not be charged, or
transaction may take place as a barter or exchange; the GST law prescribes that the
value on which GST is charged must be its ‘transactional value’. This is the value at
which unrelated parties would transact in the normal course of business. It makes sure
GST is charged and collected properly, even though the full value may not have been
paid.