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PROJECT REPORT

On

“STUDY THE GOODS AND SERVICE TAX (GST) EFFECTS IN

TATA MOTORS”

Submitted towards Partial Fulfillment of

BACHELOR OF BUSINESS ADMINISTRATION
(AFFILIATED TO C.C.S. UNIVERSITY, MEERUT)
(2018-2021)

UNDER THE GUIDANCE OF

Submitted to: Submitted By:

Dr. Geetika Shukla NIDHI TALIYAN
H.O.D. DIMS , BBA Roll No. 180986105055
BBA- VI SEM

DEWAN INSTITUTE OF MANAGEMENT

STUDIES, MEERUT
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STUDENT DECLARATION

I am NIDHI TALIYAN student of B.B.A. – VI Sem, DIMS, Meerut here by declares that

the project report titled “STUDY THE GOODS AND SERVICE TAX (GST) EFFECTS IN

TATA MOTORS.” is completed and submitted under the guidance of “Dr. Geetika

Shukla , H.O.D of BBA Department DIMS, Meerut” is my original work.

The imperial finding in this report is based on the data collected by me. This project has been

submitted to CCS, University , Meerut or not any other university for the purpose of compliance

of any requirement of any examination or degree.

NIDHI TALIYAN

Roll No. 180986105055

BBA- VI SEM
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ACKNOWLEDGEMENT

I take this as an opportunity to thank with bottom of my hear all those without whom the journey of doing

my project would not have been as pleasant as it has been to me. Working on my project was a constant

learning experience with all sweat and tear which was its due but not without being richly stimulating

experience of life time.

I am very thankful to Dr. Geetika Shukla , H.O.D of BBA Department DIMS, Meerut for giving me

their valuable advice and guidance towards fulfillment of the project

For any project to be a success, it is very important to get the right guidance and support which I got from

my Dr. Geetika Shukla , H.O.D of BBA Department DIMS, Meerut. I express my gratitude to my

faculty guide for inspiring me throughout the project.

I want to express my deep gratitude to our institution DIMS Meerut , for giving me the opportunity to

undertake this project and enhance my knowledge.

Finally I would like to convey my heartiest thanks to all my well wishers for their blessing and co-

operation throughout my study. They boosted me up every day to work with a new and high spirit.

NIDHI TALIYAN
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PREFACE

Tax policies play an important role on the economy through their impact on both
efficiency and equity. A good tax system should keep in view issues of income
distribution and ,at the same time , also endeavor to generate tax revenues to
support government expenditure on public service and infrastructure
development .cascading tax revenues have differential impact on firms in the
economy with relatively high burden on those not getting full offsets.

This argument can be extended to international competitiveness of the adversely

affected sectors of production in the economy. Such domestic and international
factors lead to inefficient allocation of productive resources in the economy .This
result in loss of income and welfare of the affected economy.

Value added tax was first introduced by Maurice Laure, a French economist, in
1945. The tax was designed such that the burden is borne by the final consumer.
Since VAT can be applied on goods as well as services it has also been termed as
goods and service tax (GST). During the last four decades VAT has become an
important instrument of indirect taxation with 130 countries having adopted this,
resulting in one fifth of the world’s tax revenue. Tax reform in many of the
developing countries has focused on moving VAT. Most of these countries have
gained thus indicating that other countries would gain from its adoption. For a
developing economy like India it is desirable to become more competitive and
efficient in its resources usage. Apart from various other policy instruments, India
must pursue taxation policies that would maximize its economic efficiency and
minimize distortion and impediments to efficient allocation of resources,
specialization, capital formation and international trade.
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Executive Summary
The differential multiple tax regime across sectors of production leads to
distortions in allocation of resources thus introducing inefficiencies in the sectors
of domestic production. While indirect taxes paid by the producing firmsget offsets
under state VAT and CENVAT, the producers do not receive full offsets
particularly at the state level. The multiplicity of taxes further adds the difficulty in
getting full offsets.

Add to this, the lack of full offsets taxes loaded on the fob export prices. The
export competitiveness gets negatively impacted even further. Efficient allocation
of productive resources and providing full tax offsets is expected to result in gains
for GDP, returns to the factors of production and export of the economy.

The joint working Group of the Empowered Committee of the State Finance
Ministers submitted to its report on the proposed Goods and Service Tax (GST) to
the finance minister in November 2017.A dual GST, one for the entre and other for
the state was to be implemented by 1 April 2010. The new system would replace
the state VAT CENVAT and some other taxes.

The proposed GST would eliminate the cascading effect and would integrate
hitherto disjointed goods and services taxes. It will lead to uniformity in tax rates
and procedures throughout the country.it will ensure better compliance and thus
will increases the revenue of both Centre and state. The export sector will also gain
from his integration of state and Centre taxes. Consumer will be benefited in form
of lower tax rates.

There will be dual tax rate viz. Central GST (CGST) and state GST (SGST).also
for interstate sales there will be an integrated GST. However cross credits among
CGST and SGST are yet to be decided .It is also proposed to keep certain taxes
such as taxes on petroleum products to be kept out of purview ofGST.

However, there are major challenges to introduction of GST like amendment of

constitution of India to alter power of taxation of Centre and state rates of SGST
and CGST, standardization to procedure, compensation for revenue loss to state,
etc.
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CONTENTS
 COVER PAGE
 COLLEGECERTIFICATE
 DECLARATION
 ACKNOWLEDGEMENT
 FOREWORD
 EXECUTIVESUMMARY

CHAPTER– 1
 INTRODUCTION OF RESEARCH………………..12-16

CHAPTER– 2
 COMPANY PROFILE…………………………….. 17 -22

CHAPTER-3
 INTRODUCTION OF TAXATION................ 23-27
a. Meaning of Taxation
b. Characteristics of Taxation
c. Principles of Taxation
d. Tax applicable in India.

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CHAPTER-4

 INTRODUCTION OF GST................ 28-91

A. Meaning of GST.
B. History of GST.
C. Key feature of GST.
D. GST Model.
E. GST Rates
F. GST Council
G. GSTIN
H. SWOT Analysis
I. Impact of GST
J. Result Analysis
K. Registration of GST
L. GST Return
M. Important concept of GST
N. Important concept of GST
O. Works contract Act
P. Audit

CHAPTER-5

 CONCLUSION...........................92-95
 ANNEXURE……………….. 96-101
 REFERENCE..........................102

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TABLES

SR. NO CONTENT PAGE NO

1 Performance for the year 31
2 Operating Turnover 32

3 Operational Performance 33
4 Segment wise Profitability 34

5 Dividend History 35
6 Income tax slab for individual tax payers 76
7 equity structure 93
8 Result Analysis 99-100
9 Place of supply 129-134
10 The Place Of Supply Of Services 137-138
11 Works Contract 144
12 Annual aggregate turnover 156

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CHAPTER– 1
INTRODUCTION
ABOUTRESEARCH.

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INTRODUCTION
Background:-
Internship is the process of working as an assistant to gain practical experience and
skills in an occupation. In order to expose the students to the actual working
environment, internship has been included as a compulsory requirement for the
successful completion of two-year MBA (Finance) under AKTU University. MBA
(Finance) is a management program with the provision of four semester
comprising of two month industrial training. Internship is an opportunity to
observe, learn and understand the corporate culture, acquire knowledge and skills
in the respective field which helps the students in their further carrier development.
It is carried out in the organization which suits the area of specialization. Internship
provides the opportunity to understand how the knowledge acquired through the
lectures, group discussion and formal study is applied in real working situation. It
is the best way of knowledge gaining as it provides as experience. Similarly the
assigned responsibilities during the internship period help to enhance the
interpersonal and communicative skills and boost up the confidence level as well.
Even though the interns are not the employees of the organizations, they are given
an opportunity to work as if they are the employees. The interns do what the staffs
of the organizations have to do. However, they do not have obligations or authority
over anything. The interne did there internship in under Mr. Sudhir Gupta. The
interne was given the opportunity to observe and learn about the GST Registration
and Return process.

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Objectives of the Study :

The general objective of the study is to get practical insights of Goods and Services
Tax.

The specific objectives are as follows:

Figure 1

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Rational of the study

In college we learn the organizational structure only in theoretical basis. Internship
is the place where how theoretical knowledge are useful in real life scenarios. For
that students need to prepare resumes, write cover letters and go through interviews
as if they were applying for the job. This gives students valuable experience in
preparation for employment. The internship allows opportunities for the
development of practical’s skills in contexts where professional criticism is both
immediate and constructive. It also furnishes students with opportunities to observe
and understand connections between coursework and skills needed to perform
effectively in a given profession. Finally, internship aid in the identification of
knowledge and skills essential to doing well in a particular profession.

Scope of the study

Generally, an internship consists of an exchange of services for experience
between the student and an organization Internship program is a good opportunity
to show our learning skills that we get from our school/college. Students can also
use an internship to determine if they have an interest in a particular career. Ithelps
to build Curriculum Vitae (CV) for thestudent.

Methodology
For the preparation of this report both primary and secondary sources of data are
used. The secondary data are collected from annual reports, brochures, website of
GST, different financial magazine, published documents. Most of the information
in this report is written on the basis of experience gained by the internee in the
company during the period of internship. While preparing this report I took help
from company staff and group discussion with friends. I have consulted related
departmental staff as a primary source. For the secondary data I used GST website,
financial express website, and clear tax website.

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Organization Selection
Selection of the organization is one of the most difficult tasks. However the
specialization of the student in finance has made GST a better option for doing
internship. Since GST is related to financial transaction, it would be easy to
understand various dimensions related to services like registration, quarterly return,
monthly return, annual return. Besides this, one should have strong reference to get
enrollment in the organizations. So because of the reference of the college.

Duration
The duration of internship period has been defined for 2 Months by the AKTU
University. The intern has completed internship from 10 thJune to 10thAugust in
TATA MOTORS .

Limitations of the Study

Even though great support was provided by the organization and the staff to the
intern during the internship period to make the work environment conducive, they
had to face various difficulties during the internship period. Due to various
unavoidable constraints, the report could not do complete justice to the study. The
interns in the organization are more focused to assist their supervisors. It restricts
the amount of information and the level of complex work assigned to its interns
owing to the confidentially and competency issues. It is because of this interns get
to learn mostly by observation and some amount of discussion with supervisor
only. The report is limited to the department in which the intern is placed it might
not be able to provide the comprehensive knowledge of the overall functioning of
the company.

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CHAPTER–2

Company Profile

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About TATA MOTORS :

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About TATA MOTORS :

TATA MOTORS (TATA MOTORS), a government company incorporated by the

central government (ministry of railways) under the companies act, 1956 on 28 April,
1976 originally under the name Indian railways construction company limited is the
leading turnkey construction company in the public sector known for its quality,
commitment and consistency in terms of performance. TATA MOTORS has widespread
operations in several states in India and in other countries (Malaysia, Nepal, Bangladesh,
Mozambique,Ethopia, Afghanistan, U.K. Algeria & Sri Lankanow).

TATA MOTORS is a specialized constructions organization covering the entire

spectrum of construction activities and services in the infrastructure sector.
However, Railway and Highway construction, EHP sub- stations (engineering and
constructions), and MRTS are the core competence areas of TATA MOTORS.

TATA MOTORS operates not only in a highly competitive environment but also in
difficult terrains and regions in India and abroad and is an active participant in
prestigious nation building projects .TATA MOTORS has so for complete more than
300 infrastructure projects in India and more than 100 projects across the globe in more
than 31 countries.

The Company has a long standing reputation as a sector leader in Transportation

vichels amongst the public sector construction companies in the Country with
specialization in execution of Railway Projects on turnkey basis or otherwise.
TATA MOTORS is known for its quality, commitment and consistency in terms of
its performance.

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After commencing business as a railway construction company it diversified

progressively since 1985 to roads, buildings, electrical sub-station and distribution,
airport construction, commercial complexes, as well as to metro works. It has been
one of the few construction companies in the public sector to have earned
substantial foreign exchange for the Country and paid dividend without fail every
year to the Government. As a construction organization, the Company operates in
the entire spectrum of construction activities and infrastructure services; Railways
and Highway Construction, Tunnels & Bridges, Railway Workshops, EHP sub-
station (engineering and constructions) and MRTS being the core competence
areas.
The Company has executed many landmark construction projects in the last 41
years both in India and abroad. In India, in particular, it has also been undertaking
projects even in difficult terrains and disturbed regions. The Company has so far
completed more than 120 projects in more than 24 countries across the globe, and
376 projects in India. The Company is an ISO certified Company for Quality,
Environment, and Occupational Health and Safety Management Systems, a
Schedule ‘A’ public sector company, and a Mini Ratna – Category I.

During its 42 years of operation, TATA MOTORS has emerged as front ranking
construction company of international repute having executed several prestigious
projects. TATA MOTORS

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Has been figuring in the list of top 225 International Contractors since 2009-10
consistently, as per Engineering News Record (ENR), published by McGraw-hill
Construction (Financial) USA.TATA MOTORS has so far completed about 378
major infrastructure projects of National importance in India and 127 projects
across globe in more than 21 countries. TATA MOTORS has over 1000 trained
technical personnel having rich experience in execution of infrastructure projects
including Railway Project. TATA MOTORS has capacity to mobilize adequate
resources for large projects due to its strong technical manpower base and financial
position. Besides its own resources TATA MOTORS draws its strength from more
than 150 years of experience of Indian Railways in all aspects of Railway
Construction andmanagement.

Presently, TATA MOTORS is executive projects abroad in Nepal, Bangladesh,

South Africa, Myanmar and Algeria. In India, the Company is executing several
prestigious projects which include J & K Rail Link Project, Road over Bridges in
the State of Rajasthan and Bihar, New rail Coach Factory at Rae Bareilly
(U.P.),Sivok-Rangpo new Rail Line Project, three contract packages on Western
DedicatedFreight Corridor, Coal connectivity Projects in Chhattisgarh, Orissa and
Jharkhand, National Highway projects in Rajasthan, Madhya Pradesh and
Karnataka and Railway Doubling projects in Bihar and Madhya Pradesh. TATA
MOTORS is also executive electrification distribution projects in the state of
Jammu & Kashmir, and UP and railway electrification projects in the state of UP
andMP.

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FOCUS AREAS--

Railways - Track, Railway

Electrification, Workshops and
Signaling&
Telecommunication

Railways - SPV/BOT/Concession

Track & Electrification - Metro

Railways

ROBs

Road/Highways

Electrical Sub Station &

Distribution

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CHAPTER– 3

INTRODUCTION OF TAXATION

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Taxation

The term “Taxation” comes from the Latin word “Taxatio”. It means to determine
the payable quantum on estimate. According to Justice Holmes “The price paid to
the government for living in a civilized society is the tax. According to Taylor
“taxes are the compulsory payments to government without expectation of direct
benefit to the tax payer.

Taxation is a system of raising money to finance government. All governments

require payments of money-taxes-from people. Governments use tax revenues to
pay soldiers and policy, to build dams and roads, to operate schools and hospitals,
to provide food to the poor and medical care to the elderly, and for hundreds of
other purposes. Without taxes to fund its activities, government could not exist.

Taxation is the most important sources of revenue for modern governments,

typically accounting for 90 percent or more of their income.

Taxation is a major instrument for the conduct of public policy. This is true
for both developed and developing countries . Taxation is known to
accomplish a number of objectives revenue generation for government,
economic stabilization and income re-distribution. Taxation as an instrument of
public policy is essentially concerned with the manipulation of financial operation
of both the government anti private sectors with a view of furthering certain
economic objectives.

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CHARACTERISTICS OF TAX

Figure-2

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PRINCIPLES OF A TAXATION

Figure-3
 Principle of certainty: This principle states that the tax should be certain and clear to
everybody concerned; the amount to be paid and the manner of payment should also be
clear and plain to the taxpayer.

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 Principle of equity: This principle states that tax should be paid based on
your abilities, it should be paid without causing undue hardship to thepayers.

 Principle of neutrality: this principle says that a good tax system should
not in any way interfere unnecessarily with the supply and demand forgoods
and service. It studies the effect people’s ability to save, produce and their
willingness to work.

 Adequacy: taxes should be just-enough to generate revenue required

for provision of essential public services.

 Broad Basing: taxes should be spread over as wide as possible section of the
population, or sectors of economy to minimize the individual tax burden.

 Compatibility: taxes should be coordinated to ensure tax neutrality and

overall objectives of good governance.

 Convenience: taxes should be enforced in a manner that facilitates

way to the maximum extent possible.
 Efficiency: tax collection efforts should not cost an inordinately high
percentage of tax revenues.
 Simplicity: tax assessment and determination should be easy
to understand by an average taxpayer.
 Predictability: collection of taxes should reinforce their
inevitability and regularity.

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CHAPTER– 4
ABOUT THE INDIRECT
TAXATION(GOODS
ANDSERVICE TAX)

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Introduction to Goods and Services Tax(GST)

About GST:

The Good and services tax (GST) is the biggest and substantial indirect tax reform
since 1947. The main idea of GST is to replace existing taxes like value-added tax,
excise duty, service tax and sales tax. GST as it is known is all set to be a game
changer for the Indian economy. India as world’s one of the biggest democratic
country follow the federal tax system for levy and collection of various taxes.
Different types of indirect taxes are levied and collected at different point in the
supply chain. The center and the states are empowered to levy respective taxes as
per the Constitution of India. The Value Added Tax (VAT) when introduced was
considered to be a major improvement over the pre-existing Central excise duty at
the national level and the sales tax system at the State level. Now the Goods and
Services Tax (GST) will be a further significant breakthrough - the next logical
step - towards a comprehensive indirect tax reform in thecountry.

Several countries have already established the Goods and Services Tax. In
Australia, the system was introduced in 2000 to replace the Federal Wholesale
Tax. GST was implemented in New Zealand in 1986. A hidden Manufacturer’s
Sales Tax was replaced by GST in Canada, in the year 1991. In Singapore, GST
was implemented in 1994. GST is a value-added tax in Malaysia that came into
effect in2015.

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History of GST in India

 2000: In India, the idea of adopting GST was first suggested by the
AtalBihari Vajpayee Government in 2000. The state finance ministers formed an
Empowered Committee (EC) to create a structure for GST, based on their
experience in designing State VAT. Representatives from the Centre and states
were requested to examine various aspects of the GST proposal and create
reports on the thresholds, exemptions, taxation of inter-state supplies, and
taxation of services. The committee was headed by AsimDasgupta, the finance
minister of West Bengal. Dasgupta chaired the committee till2011.
 2004:AtaskforcethatwasheadedbyVijayL.Kelkartheadvisortothe
finance ministry, indicated that the existing tax structure had many issues that
would be mitigated by the GST system.
 February2005:Thefinanceminister,P.Chidambaram,saidthatthe
medium-to-long term goal of the government was to implement a uniform GST
structure across the country, covering the whole production-distribution chain.
This was discussed in the budget session for the financial year 2005-06.
 February2006: Thefinanceministerset1April2010astheGST
introduction date.
 November 2006: ParthasarthyShome, the advisor to P. Chidambaram,
mentioned that states will have to prepare and make reforms for the upcoming
GSTregime.
 February 2007:The1April2010deadlineforGSTimplementationwas
retained in the union budget for 2007-08.
 February 2008: At the union budget session for 2008-09, the finance
minister confirmed that considerable progress was being made in the preparation
of the roadmap for GST. The targeted timeline for the implementation was
confirmed to be 1 April2010.

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 July 2009: Pranab Mukherjee, the new finance minister of India, announced
the basic skeleton of the GST system. The 1 April 2010 deadline was being
followed then aswell.
 November2009:TheECthatwasheadedbyAsimDasguptaputforththe
First Discussion Paper (FDP), describing the proposed GST regime. The paper
was expected to start a debate that would generate further inputs from
stakeholders.
 February2010:Thegovernmentintroducedthemission-modeprojectthat
laid the foundation for GST. This project, with a budgetary outlay of
Rs.1,133crore, computerized commercial taxes in states. Following this, the
implementation of GST was pushed by one year.
 March 2011: The government led by the Congress party puts forththe
Constitution (115th Amendment) Bill for the introduction of GST. Following
protest by the opposition party, the Bill was sent to a standing committee for a
detailed examination.
 June 2012: The standing committee starts discussion on the Bill.Opposition
parties raise concerns over the 279B clause that offers additional powers to the
Centre over the GST dispute authority.
 November2012:P.Chidambaramandthefinanceministersofstateshold
meetings and set the deadline for resolution of issues as 31 December 2012.
 February 2013: The finance minister, during the budget session, announces
that the government will provide Rs.9,000crore as compensation to states. He
also appeals to the state finance ministers to work in association with the
government for the implementation of the indirect taxreform.
 August2013:Thereportcreatedbythestandingcommitteeissubmittedto
the parliament. The panel approves the regulation with few amendments to the
provisions for the tax structure and the mechanism of resolution.
 October2013:ThestateofGujaratopposestheBill,asitwouldhaveto
bear a loss of Rs.14,000 crore per annum, owing to the destination-based
taxationrule.
 May2014:TheConstitutionAmendmentBilllapses.Thisisthesameyear
ThatNarendraModi was voted into power at the Centre.
 December 2014: India’s new finance minister, ArunJaitley, submits the
Constitution (122nd Amendment) Bill, 2014 in the parliament. The opposition
demanded that the Bill be sent for discussion to the standingcommittee.
 February 2015: Jaitley, in his budget speech, indicated that thegovernment
is looking to implement the GST system by 1 April 2016.

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 May 2015: The LokSabha passes the Constitution Amendment Bill. Jaitley
also announced that petroleum would be kept out of the ambit of GST for the
timebeing.
 August2015:TheBillisnotpassedintheRajyaSabha.Jaitleymentions
that the disruption had no specific cause.

 March 2016: Jaitley says that he is in agreement with the Congress’s

demand for the GST rate not to be set above 18%. But he is not inclined to fix
the rate at18%.

In the future if the Government, in an unforeseen emergency, is required to raise

the tax rate, it would have to take the permission of the parliament. So, a fixed rate
of tax is ruled out.
 June2016:TheMinistryofFinancereleasesthedraftmodellawonGSTto
the public, expecting suggestions and views.
 August 2016: The Congress-led opposition finally agrees to the
Government’s proposal on the four broad amendments to the Bill. The Bill was
passed in the RajyaSabha.
 September 2016: The Honorable President of India gives his consent forthe
Constitution Amendment Bill to become an Act.
 2019:Four Bills related to GST become Act, following approval in the
parliament and the President’sassent:
o Central GSTBill
o Integrated GSTBill
o Union Territory GSTBill
o GST (Compensation to States)Bill.

Goods and Services Tax (GST) is an indirect tax which was launched at midnight
on 1 July 2017 by the President of India, Pranab Mukherjee and Prime Minister of
India, Narendra Modi. The launch was marked by a historic midnight (30 June-1
July) session of both houses of the Parliament convened at the Central Hall of the
Parliament. GST is applicable throughout India which will replace multiple
cascading taxes levied by the central and state governments. It was introduced as
The Constitution (One Hundred and First Amendment) Act 2017, following the
passage of Constitution 122nd Amendment Act Bill.

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Key features of GST

 Dual Goods and Service Tax

 Destination-Based Consumption

 Computation of GST on the basis of invoice credit method

 Payment of GST

 Goods and Services Tax Network (GSTN)

 GST on Imports

 Maintenance of Records

 Administration of GST

 Goods and Service Tax Council

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1. Dual Goods and Service Tax: CGST and SGST

2. Destination-Based Consumption Tax: GST will be a destination-based tax.

This implies that all SGST collected will ordinarily accrue to the State where the
consumer of the goods or services sold resides.

3. Computation of GST on the basis of invoice credit method : The

liability under the GST will be invoice credit method i.e. cenvat credit will be
allowed on the basis of invoice issued by the suppliers.

4. Payment ofGST: The CGST and SGST are to be paid to the accounts of the
central and states respectively.

5. Goods and Services Tax Network (GSTN) : A not-for-profit, Non-

Government Company called Goods and Services Tax Network (GSTN), jointly
set up by the Central and State Governments will provide shared IT infrastructure
and services to the Central and State Governments, tax payers and other
stakeholders.

6. GST on Imports: Centre will levy IGST on inter-State supply of goods and
services. Import of goods will be subject to basic customs duty andIGST.

7. Maintenance of Records: A taxpayer or exporter would have to maintain

separate details in books of account for availment , utilization or refund of Input
Tax Credit of CGST, SGST and IGST.

8. Administration of GST: Administration of GST will be the responsibility

of the GST Council, which will be the apex policy making body of the GST.
Members of GST Council comprised of the Central and State ministers in charge
of the financeportfolio.
9. Goods and Service Tax Council: The GST Council will be a joint forum
of the Centre and the States. The Council will make recommendations to the Union
andtheStatesonimportantissuesliketaxrates,exemptionlist,thresholdlimits,

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etc. One-half of the total number of Members of the Council will constitute the
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quorum of GST council.

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Central Goods and Service Tax.

CGST means Central Goods and Service Tax. CGST is a part of goods and service
tax. It is covered under Central Goods and Service Tax Act 2016. Taxes collected
under Central Goods and Service tax will be the revenue for central Government.
Present Central taxes like Central excise duty, Additional Excise duty, Special
Excise Duty, Central Sales Tax, Service Tax etc. will be subsumed under Central
Goods And Service Tax.

State Goods and Service Tax

SGST means State Goods and Service Tax. It is covered under State Goods and
Service Tax Act 2016. A collection of SGST will be the revenue for State
Government. After the introduction of SGST all the state taxes like Value Added
Tax, Entertainment Tax, Luxury Tax, Entry Tax etc. will be merged under SGST.
For example, if goods are sold or services are provided within the State then SGST
will be levied on such transaction.

Integrated Goods and Service Tax

IGST means Integrated Goods and Service Tax. IGST falls under Integrated Goods
and Service Tax Act 2016. Revenue collected from IGST will be divided between
Central Government and State Government as per the rates specified by the
government. IGST will be charged on transfer of goods and services from one state
to another state. Import of Goods and Services will also be deemed to be covered
under Inter-state transactions so IGST will be levied on such transactions. For
example, if Goods or services are transferred from Rajasthan to Maharashtra then
the transaction will attract IGST.

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 lOMoARcPSD|3749910

GST Rates in India

Figure-8

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GST Council
 It is set up by president under article 279-A. It is chaired by union finance
minister.
 It will constitute union minister of state in charge of revenue and minister in
charge of finance or taxation or of any other field nominated by state governments.
The 2/3rd representatives in council are from states and 1/3rd from union.
 It will make recommendations on:

a. Taxes, surcharge, cess of central and states which will be integrated in GST.

b. Goods and services which may be exempted from GST.

c. Interstate commerce – IGST- proportion of distribution between state and center.

d. Registration threshold limit forGST.

e. GST floorrates.

f. Special rates during calamities.

g. Provision with respect to special category states specially north eaststates

 It may also work as Dispute Settlement Authority for GST.
 The Council would consist of 2/3rd representation of states and 1/3rd
representation of the Centre. The GST Council will take all decisions regarding tax
rates, dispute resolution, exemptions and so on. Recommendations of the GST
Council (75% votes) will be binding on the Centre and the States.

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 lOMoARcPSD|3749910

Goods and Services Tax Network (GSTN)

Goods and Services Tax Network has been set up by the Government as a private
company under erstwhile Section 25 of the Companies Act, 1956. GSTN would
provide three front end services, namely Registration, Payment and Return to
taxpayers. It will also assist some State with the development of back end modules.

Goods and Services Tax Network (GSTN) is a Section 8 (under new companies
Act, not for profit companies are governed under section 8), non-Government,
private limited company. It was incorporated on March 28, 2013. The Government
of India holds 24.5% equity in GSTN and all States of the Indian Union, including
NCT of Delhi and Pondicherry, and the Empowered Committee of State Finance
Ministers (EC), together hold another 24.5%. Balance 51% equity is with non-
Government financial institutions. The Company has been set up primarily to
provide IT infrastructure and services to the Central and State Governments, tax
payers and other stakeholders for implementation of the Goods and Services Tax
(GST). The Authorized Capital of the company is Rs. 10,00,00,000 (Rupees ten
crore only).

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 lOMoARcPSD|3749910

Structure ofGSTN

 The GST System Project is a unique and complex IT initiative. It is

unique as it seeks, for the first time to establish a uniform interfacefor
the tax payer and a common and shared IT infrastructure between the
Centre and States. Currently, the Centre and State indirect tax
administrations work under different laws, regulations, procedures
and formats and consequently the IT systems work as independent
sites. Integrating them for GST implementation would be complex
since it would involve integrating the entire indirect tax ecosystem so
as to bring all the tax administrations (Centre, State and Union
Territories) to the same level of IT maturity with uniform formats and
interfaces for taxpayers and other external stakeholders. Beside ,GST

being a destination based tax, the inter- state trade of goods and
services (IGST) would need a robust settlement mechanism amongst
the States and the Centre. This is possible only when there is a strong
IT Infrastructure and Service back bone which enables capture,
processing and exchange of information amongst the stakeholders
(including tax payers, States and Central Governments, Accounting
Offices, Banks and RBI).

 Prior to this, the Union Ministry of Finance had set up the Technical
Advisory Group for Unique Projects (TAGUP) in March 2010 to
make recommendations on the roadmap to roll out five major
financial projects including GST. TAGUP recommended setting upof
National Information Utilities as private companies with a public
purpose for implementation of large and complex Government IT
projects includingGST.

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 lOMoARcPSD|3749910

 In compliance of the above decision, GST Network was registeredas

a non-government, not-for-profit, private limited company under
section 8 (under new companies Act, not for profit companies are
governed under section 8) of the Companies Act 1956 with the
following equitystructure:

Central Government 24.5%

State Governments & EC 24.5%

HDFC 10%

ICICI Bank 10%

NSE Strategic Investment Co 10%

LIC Housing Finance Ltd 11%

Table-7

 In brief, the decision to structure GSTN in its current form wastaken

after approval of the Empowered Committee of State Finance
Ministers and the Union Government after due deliberations over a
long period oftime

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GSTIN

 Goods and Services Identification Number is a 15 digit alphanumeric

number.
 First two digit shows the Statecode,
 Another ten digit shows the Permanent Account Number(PAN).
 Next number shows the entity number of the same PAN holder in a
state. Next is alphabet Z bydefault.
 Next is the check sumdigit.

GST Identification Number

1 2 3 4 5 6 7 8 9 1 1 1 1 1 1
0 1 2 3 4 5
State PAN Entity
Code Code/
Check
digit

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 lOMoARcPSD|3749910

SWOT Analysis

Strengths
GST provides a comprehensive and a wider coverage of input credit set off service
tax credit could be used for the payment of tax on the sale of goods etc.
 A single GST could be used instead of other indirect taxes at the state
and central level.
 It would end the cascading effects.
 There would be uniformity of tax rates across the states.
 It ensures better compliance as the aggregate tax reduces.
 It helps in the reduction of prices of the goods and services to the consumer
with the reduction of tax.
 It would reduce transaction costs and unnecessary wastage to both
government and individuals.
 It encourages transparency and unbiased tax structure.
 It brings efficiency in the indirect tax mechanism.

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 lOMoARcPSD|3749910

Weaknesses
 It doesn’t include alcohol and petroleum products which would lead to
incurring of huge losses.
 It requires strong IT infrastructure which is not highly developed in India.
 Single GST rate would be high compared to individual indirect tax rate.

Opportunities
 Reduction in tax burden will increase the competitiveness of Indian products
in the international market.
 There would be a gradual increase in the revenues of state and the union.
 Helps reducing corruption as the implementation of GST would result ina
gradual decrease of procedures and formalities.

Threats
 It is entirely dependent on the efficiency and effectiveness of the system.
 Beneficiaries of the system are uncertain. It could be either state or the
Centre. This would create a chaos while preparing budgets and financing
polices.
 Lack of co-ordination between the Centre and the state might affect the
system and also the revenues generated.

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Interpretation of the SWOT Analysis

From the above SWOT analysis it is clear that GST would create uniformity of
taxes and also reduce tax burden. This in turn would increase revenues of the state
and the union at the country level and increase competition at the international
level. But this in reality might appear to be a dual tax system and would also
require a strong IT infrastructure. Besides this, it is entirely dependent on the
efficiency of the system. Co-ordination between the Centre and the state only can
help in its implementation and execution of the proposed plan. Therefore before
implementation of such a tax regime, it should be carefully examined at every
levels to benefit all the stakeholders.

Impact of GST on various sectors

IT
Currently IT sector is paying 14 percent of tax to the authority and subjected to 18-
20 percent after the imposition of GST. Also an important point to notice here, that
the long disputed issue of canned software taxation will also come to end as their
will no difference arise between goods and services after the GST. Overall impact
could be suggested here is neutral or slightly negative.

Telecom
In the current stage, the Telecom sector is paying 14 percent of tax to the
government body, but the scenario takes the shift after the imposition of GST. The
rate arises to 18 percent and the companies expect to pass the burden on the post-

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paid customers. There is also a lower input tax credit in this sector's capex cost.
Overall, it seems that this regime will be negative to the industry and the sector
will also be in state where they can't pass the entire tax burden to the customers
especially their prepaid segment.

Automobiles
Currently, automobile sector pays around 30 to 47 percent tax to the Government
which is now expected to range between 20-22 per cent, after the implementation
of GST. And the overall cost cutting can be expected for the end user by around 10
per cent. Transportation time should also be reduced as the check points and octroi
is cleared hands before. Overall GST will bring a smile into the automobiles sector.

Cement
In the current scenario, cement sector is presenting 27 to 32 per cent of their share
to the tax authority. After the rolling out of GST, this will improve the sector
growth in various terms, like transportation by 20-25 per cent and in the warehouse
scheme as the rationalization would be easy in terms of state wise fragmentation
and also in the transportation cost as reduced transit time.

Pharmacy
Here, the impact could be neutral as the sector only shares 6 per cent of his share
to the tax authority. The sector also avails the incentives in tax benefits of location
wise. There are various concessional benefits and exemptions held for this sector
and will extend till the expiry of the period. The implications of GST would also
try to reduce the logistics cost and would also try to see in to the matter of inverted
duty structure.

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Banking and Financial Institutions

The sector is paying 14 percent right now, but not on the interest part of
transaction. After the GST implied, the tax horizon can expand up to 18 to 20
percent on the fee based transactions. Overall input expense of operations will
likely to increase and also hike in the transactions of financial in nature such as
loan processing fees, debit/credit charges, insurance premiumsetc.

Result Analysis
Basic concept of GST:
How GST Work
Retailer to wholesaler
Gold 100000 100000
Sales Tax (14%) 14000 -
Duty (12.5%) 12500 -
Excise Duty (1%) 1000 -
CGST (18%) - 18000
Grand Total 127500 118000
Table-8

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 lOMoARcPSD|3749910

Wholesaler to retailers

Price 127500 118000

Add margin (10%) 12750 11800
other charges (rent, transport) 15000 15000
Sub Total 155250 144800
Sales Tax (14%) 21735 -
SGST (18%) - 26064
Total Price 176985 170864

Table-9

Effect on IT Industrial

M&G LTD.

Software for school uses 9500 9500

Service Tax (14%) 1330 -
GST (5%) - 475
Grand Total 10830 9975
Table-10

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 lOMoARcPSD|3749910

Effect on Manufactory Industrial

Whirlpool 6.5 kg Fully Automatic Top Load Washing Machine

Price (exclusive Tax) 15490 15490

Sales Tax (14.5%) 2168.6 -
GST (12%) - 1858.8

Grand Total 17658.6 17348.8

Table-11

Impact of GST on Indian Economy

Reduce tax burden on producers and foster growth through more production. This
double taxation prevents manufacturers from producing to their optimum capacity
and retards growth. GST would take care of this problem by providing tax credit to
the manufacturer.
 Various tax barriers such as check posts and toll plazas lead to a lot of wastage
for perishable items being transported, a loss that translated into major costs
through higher need of buffer stocks and warehousing costs as well. A single
taxation system could eliminate this roadblock for them.
 A single taxation on producers would also translate into a lower final selling
price for the consumer.
 Also, there will be more transparency in the system as the customers would
know exactly how much taxes they are being charged and on whatbase.
 GST would add to government revenues by widening the taxbase.
 GST provides credits for the taxes paid by producers earlier in the
goods/serviceschain.Thiswouldencouragetheseproducerstobuyrawmaterial

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 lOMoARcPSD|3749910

from different registered dealers and would bring in more and more vendors and
suppliers under the purview of taxation.
 GST also removes the custom duties applicable on exports. Our competitiveness
in foreign markets would increase on account of lower cost of transaction.
 The proposed GST regime, which will subsume most central and state-level
taxes, is expected to have a single unified list of concessions/exemptions as against
the current mammoth exemptions and concessions available across goods and
services.

The introduction of Goods and Services Tax would be a very noteworthy step in
the field of indirect tax reforms in India. By amalgamating a large number of
Central and State taxes into a single tax, it would alleviate cascading or double
taxation in a major way and pave the way for a common national market.

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GST REGISTRATION
A person is eligible to take registration if his aggregate turnover exceeds Rs.
20 lakhs and for person conducting business in North-East state are required
to take registration if their aggregate turnover exceeds Rs. 9 lakhs.
Aggregate Turnover means the aggregate value of all taxable supplies,
exempt supplies export of goods and/or services and inter-state supplies of a
person having the same PAN to be computed on all India basis.
A person has to take registration in the state from where taxable goods
and/or services are supplied.
Every person who is liable to be registered under Schedule III of this Act,
shall apply for registration in every such State in which he is liable within 30
days from the date of which he becomes liable to registration, in such
manner and subject to such conditions as may be prescribed.
Notwithstanding anything contained in sub-section (1), a person having
multiple business verticals in a State may obtain a separate registration for
each business vertical, subject to such conditions as may be prescribed.
A person, though not liable to be registered under Schedule III, may get
himself registered voluntary, and all provisions of this Act, as are applicable
to a registered taxable person, shall apply to such person.
Every person shall have a Permanent Account Number issued under the
Income Tax Act, 1961 (43 of 1961) in order to be eligible for grant of
registration under subsection (1), (2) or (3).
The registration or the Unique Identity Number, shall be granted or, as the
case may be, rejected after due verification in the manner and within such
periods as may be prescribed.
A registration or an Unique Identity Number shall be deemed to have been
granted after the period prescribed under sub-section (7), if no deficiency
has been communicated to the applicant by the proper officer within that
period.
The Central or State Government may, on the recommendation of the
Council, by notification, specify the category of persons who may be a
exempted from obtaining registration under this Act.

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GST registration page

Figure-9

GST IdentificationNumber

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
State PAN Entity
code Code/
Check digit
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Amendment of Registration

53
lOMoARcPSD|3749910

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 lOMoARcPSD|3749910

Tax Invoice:

A registered taxable person supplying –

 Taxablegoodsshallissue,atthetimeofsupply,atax
Invoiceshowingthe
description,quantityandvalueofgoods,thetaxchargedthereona
nd suchotherparticularsasmaybeprescribed;

 Taxableserviceshallissueataxinvoice,withintheprescribedtime,
showingthedescription,thetax charged thereonandsuchother
particularsasmaybeprescribed.

 Providedthataregisteredtaxablepersonmayissuearevisedinvoice
againsttheinvoicealreadyissuedduringtheperiodstartingfromthe
effectivedateofregistrationtillthedateofissuanceofcertificateof
registration tohim;

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 lOMoARcPSD|3749910

GST RETURNS
Every registered taxable person shall, for every calendar month or part thereof,
furnish, in such form and in such manner as may be prescribed, a return,
electronically, of inward and outward supplies of goods or services, input tax credit
availed, tax payable, tax paid and other particulars as may be prescribed within 20
days after the end of such month:

Provided that a registered taxable person paying tax under the provisions of
Section 8 of this Act shall furnish a return for each quarter or part thereof,
electronically, in such form and in such manner as may be prescribed, within 18
days after the end of such quarter:

Every registered taxable person, who is required to furnish a return under sub-
section (1), shall pay to the credit of the appropriate Government the tax due as per
such return not later than the last date on which he is required to furnish such
return.

A return furnish under the sub-section (1) by a registered taxable person without
payment of full tax due as per such return shall not be treated as a valid return for
allowing input tax credit in respect of supplies made by such person. Every
registered taxable person shall furnish a return for every tax period under sub-
section (1), whether or not any supplies of goods or services have been effected
during such tax period.

Note: Subject to the provisions of Section 25 and 26, if any taxable person after
furnishing a return discovers any omission or incorrect particulars therein, other
than as a result of scrutiny, audit, inspection or enforcement activity by the tax
authorities, he shall rectify such omission in the return to be filed for the month or
quarter, as the case may be, during which such omission are noticed, subject to the
payment of interest, where applicable and as specified in the Act:

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Types of GST

Figure-12

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 lOMoARcPSD|3749910

GSTR-1= GSTR-1 is a monthly return that should be filed by every registered

dealer by the 10th of the following month. It is the first or the starting point for
passing input tax credit to the dealers. It contains details of all outward supplies i.e.
sales. GSTR-1 has to be filed by "all" taxable registered persons under GST.
However, there are certain dealers who are not required to file GSTR-1, instead are
required to file other different GST returns as the case may be. These dealers are
E-Commerce operators, Non-Resident dealers and Tax deductors. It has to be filed
even in cases where there is no business conducted during the reporting month.

GSTR-1 Registration

Figure-13

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 lOMoARcPSD|3749910

File GSTR-1
The Suppliers need to log in to the GSTN portal with the given User
ID and Password, following these steps:
Search for "Services" and then click on Returns, followed
by Returns Dashboard.
In the Dashboard, the dealer has to enter the financial year and the
month for which the return needs to be filed. Click on Search
after that.
All returns relating to this period will be displayed on the
screen. Dealer has to select the tile containingGSTR-1
After this, he will have the option either to prepare online or to
upload the return.
The dealer will now Add invoices or upload all invoices directly.
Once the entire form is filled up, the dealer shall then Click on
Submit and validate the data filled up
With the data validated, dealer will now click on FILE GSTR-1
and proceed to either E-Sign or digitally sign the form.
Another confirmation pop-up will be displayed on the screen with
a yes or no option to file the return.
Once Yes is selected, an Acknowledgement Reference Number
(ARN) is generated.

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Figure-14

Figure-14

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GSTR-2

It is mandatory to furnish details of inward supplies of goods/services

received during a tax period for every registered taxable person. These
details are furnished based on FORM GSTR-2A which is auto populated on
the basis of GSTR 1 filed by your supplier, electronically through the
Common Portal, either directly or from a Facilitation Centre. However,
GSTR 2A does not in itself auto populates a complete GSTR 2, as there are
certain other transactions which are to be mentioned manually in addition to
the data which is generated through GSTR 2A, viz. Details of Inward
Supplies from an Unregistered Persons on which tax is paid on the Reverse
Charge basis and Imports effected during the tax period, etc

Who can file GSTR-2

It is mandatory to file a GST Return for each and every entity registered
under the GST Act. Even in case where there are no inward supplies during
the tax period, NIL return for that period is required to be filed. In case of
failure to file the return within due period, the tax payer is penalized with
the late fees of INR 100 per day up to a maximum limit of INR 5,000/-

When to file GSTR-2 ?

 Every registered taxable person is required to furnish details of
Inward Supply for a tax period i.e. the end of the relevant month.
 This return has to be filed by the recipient of (goods/services)supplies
within 15 days from the end of the relevant tax period.
 However to facility the ease of payment and return filing for small and
medium scale businesses with annual aggregate turnover up to Rs.1.5
crores, it has been decided in the 22nd GST Council meeting dated 06th
October 2017, that such tax payers shall be required to file quarterly
returns in Form GSTR 1,2 and 3 and pay taxes only on quarterly basis,
starting from the third quarter of this financial year, i.e. October to
December2017.

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 lOMoARcPSD|3749910

Figure-15

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 lOMoARcPSD|3749910

GSTR-3B
GSTR-3B is a return to be filed on monthly basis (compounding and ISD
taxpayers are exceptions). GSTR-3B is more like a pooled version of
GSTR- 1 and GSTR-2. The form captures the information of outward and
inward supply information at aggregate level which will be auto populated
through GSTR-1, GSTR-1A and GSTR-2.It will comprise of the entire
turnover related details, including, local sales turnover, export sales
turnover, exempted local sales turnover, turnover except GST and taxable
turnover. A taxpayer just has to validate this prefilled information and make
modifications if required.

Figure-16
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 lOMoARcPSD|3749910

GSTR-4

Compounding taxpayers would have to file a quarterly return called GSTR-4.

Taxpayers otherwise eligible for the compounding scheme can opt against the
compounding and file monthly returns and thereby make their supplies eligible for
ITC in hands of the purchasers. Compounding taxpayer will also file a simple
Annual return (GSTR-9).

Figure-17

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 lOMoARcPSD|3749910

GSTR-5

Non –Resident Taxpayers would have to file GSTR-1, GSTR-2 and GSTR-3
returns for the period for which they have obtained registration. The registration
of Non–Resident taxpayers will be done in the same manner as that of Regular
taxpayers. Non-Resident Taxpayers would be required to file GSTR-5 return for
the period for which they have obtained registration within a period of seven days
afterthedateofexpiryofregistration.Incaseregistrationperiodisformorethanone
month, monthly return(s) would be filed and thereafter return for remaining period
would be filed within a period of seven days as stated earlier.

Figure-18

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GSTR 6
GSTR 6 is a monthly return that has to be filed by an Input Service Distributor.
It contains details of ITC received by an Input Service Distributor and distribution
of ITC.

Figure-19

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GSTR-7
GSTR 7 is a return to be filed by the persons who is required to deduct TDS (Tax
deducted at source) under GST. GSTR 7 contains the details of TDS deducted,
TDS liability payable and paid, TDS refund claimed if any etc.

Figure-20

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GSTR-8
GSTR-8 is a return to be filed by the e-commerce operators who are
required to deduct TCS (Tax collected at source) under GST. GSTR-8
contains the details of supplies effected through e-commerce platform
and amount of TCS collected on such supplies.

Figure-21

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Place of Supply ofGoods

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.

Place of Supply When There is Movement of Goods:

Supply Place of supply

Involves movement of goods, whether Location of the goods when the
by the supplier or the recipient or by movement of goods terminates for
any other person. delivery to the recipient.
Goods are delivered by the seller to a It is assumed that the third person has
recipient on the direction of a third received the goods and the place of
person (whether agent or not) before or supply of such goods will be the
during movement of goods by way of principal place of business of third
transfer of documents of title to the person.
goods or some other way.

Table-13

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 lOMoARcPSD|3749910

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: Intra-state sales

Mr. Raj of Mumbai, Maharashtra sells 10 TV sets to Mr. Vijay of Nagpur, Maharashtra.
The place of supply is Nagpur in Maharashtra. Since it is the same state CGST & SGST
will be charged.

For example –

Deliver to a 3rd party as per instructions

Anand in Lucknow buys goods from Mr. Raj in Mumbai (Maharashtra). The buyer
requests the seller to send the goods to Nagpur (Maharashtra)
In this case, it will be assumed that the buyer in Lucknow has received the goods & IGST
will be charged.
Place of supply: Lucknow (UP GST: IGST)

Figure-25

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No Movement of Goods

Supply is : Place of supply

No movement of Location of such goods at the time of the
goods, either by the delivery to the recipient ( at the
supplier or the time of transfer of ownership)
recipient.
The goods are assembled Place of such installation or assembly.
or installed at
site.
Table-14

For Example: No movement of goods

Sales Heaven Ltd. (Chennai) opens a new showroom in Bangalore. It purchases a

building for showroom from ABC Realtors (Bangalore) along with pre-installed
workstations.

Place of supply: Bangalore

GST: CGST& SGST

There is no movement of goods (work stations), so the place of supply will be the
location of such goods at the time of delivery (handing over) to the receiver.

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Imports & Exports

The place of supply of goods:

Imported into India will be the location of the importer.

Exported from India shall be the location outside India.

Supply is Place of supply GST

Goods imported into Location Of the importer. Always IGST on imports.
India.
Exported from India. Location outside India. Exports are exempted.

Table-15

For Example-Import
Ms. Malini imports school bags from China for her shop (registered inMumbai)

Place of supply: Mumbai

GST: IGST

For Example- Export

Ms. Anita (Kolkata) exports Indian perfumes to UK Place of supply: Kolkata

GST: Exempted

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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.

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Determining The Place Of Supply OfServices

GST is destination based tax i.e. consumption tax, which means tax will belived
where goods and services are consumed and will accrue to that state.

Under GST, there are three levels of Tax, IGST, CGST & SGST and based on the
‘’place of supply’’ so determined, the respective tax will be levied. IGST is levied
where transaction is inter-state, and CGST & SGST are levied where the
transaction is intra-state. For understanding Place of Supply for Services the
following two concepts are very important namely:

location of the recipient of services

location of the supplier of services

The two concepts in detail as they will form the base for determining the place of
supply in case of supply of services are:

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 lOMoARcPSD|3749910

S.No Case Location of

. Recipient of Service
where a supply is received at a place of such place of business
business for which the registration has
A
been obtained
B where a supply is received at a place such fixed establishment
other than the place of business for
which registration has been obtained (a
fixed establishment elsewhere
C where a supply is received at more than the location of the
one establishment, whether the place of establishment most directly
business or fixed establishment concerned with the receipt
of the supply
D in absence of such places the location of the usual
place of residence of the
recipient;

Location of the recipient of services:

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Table-16

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Location of the provider/supplier of services:

S.No Case Location of Recipient

. of Service
where a supply is made from a place of the location of such
business for which the registration has place of business
A
been obtained
B where a supply is made from a place other the location of such
than the place of business for which fixed establishment
registration has been obtained (a fixed
establishment elsewhere
C where a supply is made from more than the location of the
one establishment, whether the place of establishment most
business or fixed establishment, directly concerned with
the provision of the
supply
D in absence of such places, the location of the usual
place of residence of the
supplier;

Table-17

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Category of supply of services:

DOMESTIC
TRANSACTIONS

INTERNATIONAL
TRANSACTIONS

Figure-26

Domestic Transactions;
These are the transactions where both the parties i.e. the supplier as well as
recipient of service are in India. Domestic transactions can be further categorized
as below:

Inter-State(i.e between two different

states)Intra-State (i.e within the same state)

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General Rule

In general, the place of supply for services will be the location of the service
recipient (the recipient needs to be a registered person). In cases, where service is
provided to an unregistered person, the place of supply will be the:

 Location of the service recipient (if the address is available on record);

 Otherwise, location of service provider.

International Transactions
These are the transactions where either of the service recipient or the provider is
outside India. Transactions in which both the recipient as well as provider are
outside India are not covered here.

General Rule

The Place of Supply for services treated as international transactions shall be:

 The location of service recipient

 In case where the location of service recipient is not available, the place of
supply shall be location of the supplier.

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Value of Supply of Goods orServices

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.

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Works Contract under GST

Works Contract As per section 2(119) of CGST Act.

The taxation laws on Works Contracts have changed since the implementation
of GST. Any Immovable property wherein transfer of property in goods
(whether as goods or in some other form) is involved in the execution of such
contract.

In simple words, any contract in relation to an Immovable property where

services are provided along with transfer of goods is known as a “Works
Contract”.

“Work s contract” is defined as a contract for Building, construction

Fabrication Completion, Fitting out, Repair, Maintenance,
Renovation, Improvement, modification,

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Improvement, Building
Modification construction

Repair, Fabricatio
Maintenance,
Renovation n

Fitting Completion
Out

Figure-27

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Works Contract in Pre-GST Regime

Different aspects of an activity were taxed differently in the pre-GST regime as

mentioned below:

Aspect in the Works Tax Applicable

Contract

Provision of Services Service Tax

Transfer of Goods VAT

Goods manufactured in course of Central Excise

contract

Table-17

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Let us understand the complications that a provider of works contract would

encounter previously:

 VAT being a state tax, different States had different VAT rates
 Different VAT composition schemes in every state
 Different abatement rates for new works contract and repair works
contract in service tax
a. Maintenance of large amount of VAT documentation.


Current law
Works Contracts consists of three kinds of taxable activities as per the current law.
It involves supply of goods as well as supply of services. If a new product is
created during the works contract, then such manufacture becomes a taxable event.

Currently, the supply of goods is taxable in the form of VAT and the service is
taxable under service tax.

If a new product appears in the process of completing a works contract, Central

Excise duty is levied.

So, different aspects of one a single activity are taxed by different laws. This
causes a lot of confusion regarding treatment and taxability which is why there are
so many legal disputes in related to works contracts.

GST aims to put an end to the uncertainty for the legislature.

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Works Contract under GST

Supply Of Service or Supply of Goods:

A simpler treatment has been introduced for Works Contract under GST. Schedule
II clearly states that Works Contract amounts to supply of services, hence the
confusion whether it will be categorized as supply of service or goods has been
done away with. A single rate has been fixed for services provided under Works
contract and the entire amount shall be taxed at this rate without any bifurcation
between goods and services.

Contract for Immovable property only:

Under the GST regime the scope of works contract has been restricted to any
activity undertaken in relation to Immovable property only, unlike the previous
regime where works contract for movable properties was also considered.
For example: Any composite supply of paint job done in an automotive body
shop will not fall within the definition of term works contract per se under GST.
Such contracts would continue to remain composite supplies, but will not be
treated as a Works Contract for the purposes of GST.
Separate Works Contract Account

A separate account for works contract must be maintained by a registered taxable

person who is executing work contract. Following information must be maintained
in this account:

 name and address of persons on behalf of whom works contract isexecuted

 description, value and quantity of goods or services received and utilized for
works contract.

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 details of payment received in respect of every works contract undertaken

 Name and address of supplier from whom he received goods or services.

Decentralized Service Registration

As per the rules laid down under CGST Act, every person whose aggregate
turnover crosses the threshold limit of Rs.20 lakh and Rs 10 lakh in Special
Category States) must compulsory take registration. This applies to provider of
Works Contract as well. Thus, every state where a works contractor has a project
office, he will need to obtain a registration.

Composition Scheme

Composition scheme is not available to works contractors as it is treated as service

under GST. Composition scheme is only available to suppliers of goods and the
restaurant industry (not serving alcohol). He will have to register as a normal
supplier on crossing the 20 Lakh threshold. Hence, small sub-contractors will have
to incur increased cost of compliance as they cannot opt for composition scheme.

Abatement

No abatement has been prescribed for works contract under the GST law. Hence it
may lead to significant increase in tax burden, especially if such works contract is
taxed at Standard GST rate (which is 18%) and even if subjected to lower tax rate
(12%).

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Input Tax Credit for Works Contract.

As per section 17(5) of CGST Act, Input tax credit shall not be available in respect
of works contract services availed by a person for constructing an immovable
property (other than Plant and Machinery). ITC for works contract can be availed
only by those who are in the same line of business and is using such services
received for further supply of works contract service (e.g. ITC in respect of bill
raised by sub-contractor is allowed to the main contractor). Plant and Machinery in
certain cases, when affixed permanently to the earth, would constitute immovable
property. Thus, where a works contract is for the construction of plant and
machinery, the ITC of the tax paid to the works contractor would be available to
the recipient.

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Rates of GST for Works Contract

Two GST rates have been prescribed for services provided under Works contract
i.e. 18% and 12%.
GST @ 18%
Construction of complex, building, civil structure or a part thereof, including a
complex or building intended for sale to a buyer, wholly or partly, except where
the entire consideration has been received after issuance of completion certificate
Composite supply of works contract
GST @ 12%
Composite supply of Works contract to the Government, local authority or a
governmental authority by way of construction, erection, commissioning,
installation , completion, fitting out, repair, maintenance, renovation, or alteration
of:
 Historical monument, archaeological site or remains of national importance
 Canal, dam or other irrigation works
 Pipeline conduit or plant for
o Water treatment
o Water supply
o Sewerage treatment/disposal
 a civil structure or any other original works meant predominantly for
use other than for commerce, industry, or any other business or profession
 a structure meant predominantly for use as
o an educational
o a clinical
o an art or cultural establishment
o a residential complex predominantly meant for self-use or the use of their
employees
Composite supply of works contract supplied by way of construction, erection,
commissioning, installation, completion, fitting out, repair, maintenance,
renovation, or alteration of:

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 A road, bridge, tunnel, or terminal for road transportation for use by general
public.
 A civil structure or any other original works pertaining to a scheme under
Jawaharlal Nehru National Urban Renewal Mission or Rajiv
AwaasYojana.
 A pollution control or effluent treatment plant, except located as a part ofa
factory.
 A structure meant for funeral, burial or cremation of deceased.
 Railways, excluding monorail and metro
 A single residential unit otherwise than as a part of a residential complex
 Low-cost houses up to a carpet area of 60 square meters per house in a
housing project approved by competent authority empowered under the
‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of
Housing and Urban Poverty Alleviation, Government of India
 post-harvest storage infrastructure for agricultural produce including a cold
storage for such purposes
 Mechanized food grain handling system, machinery or equipment for units
processing agricultural produce as food stuff excluding alcoholic beverages
A works contract is treated as supply of services under GST. Under the previous
regime, there were issues in tax treatment of works contract. Both the Central
Government (on the services component of a works contract) & the State
Governments (on the sale of goods portion involved in the execution of a works
contract) used to levy tax. Thus, the same contract was subject to taxation by both
Central and State Government. GST aims to put at rest the controversy by defining
what will constitute a works contract (applicable for immovable property only), by
stating that a works contract will constitute a supply of service and specifying a
uniform rate of tax applicable on same value across India. Thus, under GST,
taxation of works contract will be simpler and easier to administer.

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ACCOUNTS AND RECORDS

Every registered person shall keep and maintain, at his principal place of business,
as mention in the certificate of registration, a true and correct accounts of
production or manufacture of goods, of inward or outward supply of goods and
services, of stocks of goods, of input tax credit availed, of output tax payable and
paid, and such other particulars as may be prescribed in this behalf: Provided that
where more than one place of business is specified in the certificate of registration,
the accounts relating to each place of business shall be kept at such places of
business concerned: Provided further that the registered person may keep and
maintain such accounts and other particulars in the electronic form in the manner
as may be prescribed. The Commissioner may notify a class of taxable persons to
maintain additional accounts or documents for such purpose. Every registered
taxable person whose turnover during a financial year exceeds the prescribed limit
shall get his accounts audited by a chartered accountant or a cost accountant and
shall submit to the proper officer a copy of the audited statement of accounts, the
reconciliation statement under sub-section (2) of section 30 and such other
documents in the form of manner as may be prescribed in this behalf.

Period of retention of accounts

Every registered taxable person required to keep and maintain books of account or
other records under sub-section (1) of section 42 shall retain them until the expiry
of sixty months from the last date of filing of Annual Return for the yearpertaining
to such accounts and records: Provided that a taxable person, who is a party to an
appeal or revision or any other proceeding before any Appellate Authority or
Tribunal or Court, whether filed by him or by the department, shall retain the
books of account and other records pertaining to the subject matter of such appeal
or revision or proceeding for a period of one year after final disposal of such
appeal or revision or proceeding, or for the period specified under sub-section (1),
whichever is later.

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AUDIT
Audit by tax authorities

 The Commissioner of CGST/SGST or any officer authority by him, may

undertake audit of the business transactions of any taxable person for such
period, at such frequency and in such manner as may be prescribed.
 The tax authorities referred to in sub-section (1) may conduct audit at the
place of business of the taxable person or in their office.
 The tax able person shall be in for me by wayofnotice,sufficientin
advance, not less than 15 working days, prior to the conduct of audit.
 The audit under sub-section (1) shall be carried out in a transparent manner
and completed within a period of three months from the date of
commencement of audit.
 During the course of audit, the authorized officer may require the taxable
person,
 To afford him the necessary facility to verify the books of accounts or other
documents as he may require.
 To furnish such information as he may require and render assistance for
timely completion of the audit.
 On conclusion of audit, the proper officer shall without delay inform the
taxable person, whose records are audited, of the findings, the taxable
person's rights and the obligations and the reasons for the findings.
 Where the audit conducted under sub-section (1) results in detection of tax
not paid or short paid, the officer may initiate action under section51.

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OFFENCES AND PENALTIES

Offences and penalties: Where a taxable person who –

Supplies any goods or services without issue of any invoice or issue any false
invoice with regard to any such supply;
Issue any invoice or bill without supply of goods or services in violation of
the provisions of this Act ;
Collects any amount as tax but fails to pay the same to the credit of the
appropriate Government beyond a period of three months from the date on
which such payment becomes due ;
Fails to deduct the tax in terms of sub-section (1) of section 37, or deduct the
amount which is less than the amount required to be collected;
Fraudulently obtains refund of any CGST/SGST under this Act ;
Is liable to be registered under this Act but fails to obtain registration ;
Transport any taxable goods without the cover of documents ;
Fails to keep, maintain or retain books of account ;
Issues any invoice by using the identification number of another taxable
person ;
Destroys any material evidence ;
Supplies, transports or stores any goods which he has reason to believe are
liable to confiscation under this Act;

Any person who contravenes any of the provisions of this Act or rules made there
under for which no penalty is separately provided for in this Act, shall be liable to
a penalty which may extend to Rs. 25,000/-

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Conclusion

It can be concluded from the above discussion that GST will provide relief to
producers and consumers by providing wide and comprehensive coverage of input
tax credit set-off, service tax set off and subsuming the several taxes. Efficient
formulation of GST will lead to resource and revenue gain for both Centre and
States majorly through widening of tax base and improvement in tax compliance.It
can be further concluded that GST have a positive impact on various sectors and
industry. Centre has decided to review the existing exemptions from Central
Excise Duty so that list of goods exempt from CGST and SGST list and 99 items
exempted from VAT are taken off from both the components of GST. VAT has to
some extent reduced tax-evasion and frauds. It is encouraging to note that most of
the traders and general public are aware of VAT. GST, the major reforms on
indirect taxes, will reduce tax burden due to cascading effect. The efficiency in tax
administration will be improved, indirect tax revenue will be increased
considerably due to inclusion of more goods and services, and at last the cost of
compliance will be reduced for the dealers. The implementation of GST will be in
favor of free flow of trade and commerce throughout the country. This single most
important tax reform initiative by the Government of India since independence
provides a significant fillip to the investment and growth of our country’s
economy. To get the desired result, it should be assured that the benefit of input
credit is ultimately enjoyed by final consumers. Although implementation of GST
requires concentrated efforts of all stake holders namely, Central and State
Government, trade and industry. GST effect the indirect taxation systems and help
reduce the burden on tax payer. GST help to reduce the burden of record makeand

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file maintain. Because GST cover 10-12 Tax. GST reduce the price of various
goods and increase the sale. After the implementation of GST indirect taxation.

Systems will remove and it easy to all tax payer to pay the tax to government.
Efficient formulation of GST will lead to resource and revenue gain for both
Centre and States majorly through widening of tax base and improvement in tax
compliance. It can be further concluded that GST have a positive impact on
various sectors and industry. Although implementation of GST requires
concentrated efforts of all stake holders namely, Central and State Government,
trade andindustry.

23rd GST Council Meeting Summary:–

Changes in the tax slabs: - Taxes on over 200 items have been squeezed and a
whopping 88% of the items from the highest slab of 28% have been switched to
18%. Out of the 228 items in the 28% category, only 50 have been retained and the
rest 178 have been slid downwards to different tax brackets. 2 items saw a dip
from 28% to 12%, 6 items from 18% to 5%, 8 items from 12% to 5% and 6 items
from 5% tonil.

Changes in the composition scheme:-

 Manufacturers and traders would now operate at a standard rate of1%.

 The threshold to opt GSTR-3B along with payment of tax will now need to
be filed by 20th of the next month till March2018.
 Threshold for the composition scheme has been increased to Rs. 1.5 crores
from the current limit of Rs. 1crore.
Softened fines on late filing:-
 Fine for late returns has been slashed by 90% to a mere Rs. 20 per day
from Rs. 200 per day for a taxpayer with nil ability.
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 Late fine for not submitting the GSTR-3B within due dates for the month
of July, August and September 2017 has been waivedoff.

Relaxed deadlines for filing returns

GSTR-3B along with payment of tax will now need to filed by 20th of the next
month till March 2018.

- Taxpayers divided into two categories for filing GSTR-1 till March 2018.

The categories are:-

Businesses with an annual aggregate turnover of upto 1.5 crores will file
GSTR-1 quarterly.

Period New Due Date

July – September 31 – Dec - 2017
October - December 15 – Feb - 2018
January – March 30 – April - 2018

Table-18

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Business with an annual aggregate turnover of above 1.5 crore will file GSTR-
1 monthly.

Period New DueDate

July – October 31 – Dec – 2017
November 10 – Jan – 2018
December 10 – Feb - 2018
January 10 – Mar - 2018
February 10 – Apr - 2018
March 10 – May - 2018

Table-19

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ANNEXURE
My name is NIDHI TALIYAN . I’m a BBA student at the CCS UNIVRESITY,
MEERUT . My research aims to evaluate and document the understanding and
expectations from the proposed Goods and Services Tax (GST) to be introduced in
India.

You are being invited to take part in this research because your experience with
taxation and the financial services industry coupled with your knowledge of the
proposed GST will greatly expand my understanding of the overall experience of
GST as part of my academic study.

This survey will take about 5 – 10 minutes. Most questions are multiple choice and
we ask that you simply provide us with your best answer.

Completion of the survey will be treated as explicit consent to participate in the

research. Because the survey is anonymous, it is not possible to withdraw from the
participation after the submission of questionnaire.
 lOMoARcPSD|3749910

QUESTIONNAIRE

1. Name and address of the business

2. Name and contact details of the interviewee

3. Number of members in the tax team

□ 0-5
□ 6-10
□ More than 10
4. Whether separate indirect tax team?

□ Yes
□ No
□ Not Applicable

5. If yes number of members in tax team for indirect tax

□ 0-5
□ More than5
□ Not Applicable

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6. % of indirect tax paid to total tax paid by the business – By the

business/by clients

Financial % of IDT 0-10% 11-25% 26-50% More than

year to total tax 50%
FY 2011-
12
FY 2012-
13
FY 2013-
14

7. Does the department apply the existing service tax laws fairly?

□ Yes
□ No

8. Have you faced practical difficulties in compliances under the current

service tax requirements? If yes, give examples

□ Yes
□ No

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Examples-

9. Have you ever encountered technical problems with the tax (eg, uncertainty
as to whether the service tax applied to a transaction you were involved
with/your client was involved with).

□ Yes
□ No
Examples-

10. Is the available legislation in relation to the proposed GST satisfactory or

do you feel need for more clarity?

□ Yes -Satisfactory
□ No – Need more clarity

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11. Can you comment on the following in relation to the existing provisions
of service taxes impacting the financial services industry:

Whether the banking services as included in the negative list is satisfactory or not?
Whether the definition can be amended to reduce litigation? (Discount income to
be specifically included – currently addressed only in the education guide)

□ Yes satisfactory
□ No – Needs to be amended for more clarity

Whether the exclusions to the definition of services are satisfactory or not?

(Secured Debts are not specifically included – currently addressed only in the
education guide)

□ Yes satisfactory
□ No – Needs to be amended for more clarity

Whether the definition of securities is satisfactory? (Securities as defined by

Reserve Bank of India – ‘RBI’ are still not specifically covered – currently
addressed only in the education guide)

□ Yes satisfactory
□ No – Needs to be amended for more clarity

Whether the existing definition of banking services as included in the negative list
is very clear? – (Eg to add Income on securities and services provided to RBI)

□ Yes Very clear

□ No – Not clear

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Reference

www.gst.gov.in
www.gstn.org
www.gstcouncil.gov.in
www.cbec.gov.in

www.financialexpress.com
www.wikipedia.com
www.cleartax.com

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