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CA Jasmeet Singh

Chapter 1: Supply Under GST

Section 7 Meaning Of Supply

Section 7(1) (a)

Supply includes all forms of supply (goods and / or services) and includes agreeing to
supply when they are for a consideration and in the course or furtherance of business. It
specifically includes
(i) Sale (iii) Barter (v) License (vii) Lease
(ii) Transfer (iv) Exchange (vi) Rental (viii) Disposal.

Section 7(1) (aa)

Activities or transactions between an association, club or similar entities and its members
or constituents as ‘supply’. For the purpose of taxability, the members and the entity shall
be deemed to be two distinct persons.
Example:
a) Resident Welfare Association (RWA) of Sanskriti Society supplies air-conditioners to its
members at a concessional price.
b) A RWA collects maintenance charges from its members for services provided.

Section 7(1) (b)

Supply includes import of a service, made for a consideration and whether or not in the
course or furtherance of business.

Section 7(1) (c)

The activities specified in Schedule I, made or agreed to be made without consideration.

Schedule I

1. Permanent transfer of business assets where input tax credit has been availed.
E.g. Infosys limited upgraded their 1000 Laptops and donated their old laptops (ITC
Claimed) to the Government Schools. In this case, such donation is treated as supply as
per Schedule I.

2. Supply of goods and / or services between related person, or between distinct

persons:
E.g. Free supplies to related persons, stock transfers to a unit outside the State/a
different business vertical, etc. will be reckoned as supplies.
Meaning of Distinct person
A person who has obtained/is required to obtain more than one registration, whether
in one State/Union territory or more than one State/Union territory shall, in respect of
each such registration, be treated as distinct persons [Section 25(4) of the CGST Act].
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Meaning of Related Person

"Related persons" means
(i) Such persons are partners in business.
(ii) Any person holds twenty-five per cent or more of shares of both of them.
(iii) One of them controls the other (Holding Subsidiary company)
(iv) Together they directly or indirectly control a third person
(v) Such persons are employer and employee;
(vi) They are members of the same family;

As per section 2(49) "family" means,— (i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or
mainly dependent on the said person.

3. Supply of goods by a principal to his agent or by agent to his principle, where the
agent undertakes to supply or receive such goods on behalf of the principal.
Note:
 Where principal Invoices to Agent and Agent Invoices to customer: then such
Agent will fall under Schedule-I and
 Where principal Invoices directly to customer and the transaction mediated by an
Agent: then such agent will not be covered under Schedule-I

4. Import of services by a
taxable person from a
related person, in the
course or furtherance of
business

Section 7(1A)
Where transaction is considered as supply under sub section (1), they shall be treated
either as supply of goods or supply of service as referred in schedule II.
S. No Activity/ Type Nature of
Transaction Supply
1. Transfer Any transfer of title in goods immediate or in Goods
future date.
Any transfer of right in goods/ undivided share in Services
goods without transfer of title in goods.
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2. Land and Any lease or letting out of land or building services

Building including a commercial, industrial or residential
complex.
3. Treatment or Any treatment or process which is applied to Services
Process another person’s goods
4. Transfer of Goods forming part of business assets are Goods
Business Assets permanently transferred or disposed off
Goods held/used for business are put to private use Services
or are made available to any person for non-
business purpose
Goods forming part of assets of any business Goods
carried on by a person who ceases to be a taxable
person, shall be deemed to be supplied by him, in
the course or furtherance of his business,
immediately before he ceases to be a taxable
person.
Eg. Mr. X, a Electronic trader, is winding up his
business. Any goods left in stock shall be deemed
to be supplied by him.
Exception
1. Business is transferred as a going concern
to another person
2. Business is carried on by a personal
representative who is deemed to be a
taxable person.
5. Following Supply shall be considered as supply of service
a) Sale of under construction building where whole or part of the consideration is
received before issuance of completion certificate.
However, where the entire consideration has been received after issuance of
completion certificate or after its first occupation, whichever is earlier, then
such transaction is neither supply of good nor supply of service.
Eg. DLF has constructed individual residential units for agreed consideration of
Rs. 2 crore per unit. Rs. 1 crore per unit were received before issuance of
completion certificate by the competent authority and balance after
completion

Amendment
Location charges or Preferential Location Charges (PLC) paid along with the
consideration for the construction services of residential
/commercial/industrial complex forms part of composite supply where supply
of construction services is the main service and PLC is naturally bundled with it
and are eligible for same tax treatment as the main supply of construction
service.
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b) Temporary transfer or permitting use or enjoyment of any intellectual

property right
c) Development, design, programming, customisation, adaptation, upgradation,
enhancement, implementation of IT software.
Eg. XYZ software developers developed ERP software for A ltd.
d) Agreeing to obligation to refrain from an act, or to tolerate an act or situation,
or to do an act.
Above three activities must comply with the following Conditions:
I. There must be an expressed or implied agreement or contract.
II. Consideration must flow in return to this contract/agreement.
Taxability of some of the transactions has been discussed in detail later.
6. Following composite supplies :-
a) Works contract services related to immovable property wherein transfer of
property in goods (whether as goods or in some other form) is involved in the
execution of such contract
b) Supply of food or any other article for human consumption or any drink (soft
drink).

Section 7(2)
Certain supplies will be neither a supply of goods, nor a supply of services: The law lists
down matters which shall not be considered as ‘supply’ for GST. This list includes:

A. Activities/ transactions in Schedule III(Negative List)

(a) Services by an employee to an employer in the course or in relation to his
employment.
(b) Services by any Court or Tribunal established under any law for the time being in
force;
(c) Functions performed by MPs, MLAs, etc.;
(d) the duties performed by a person who holds any post in pursuance of the
provisions of the Constitution in that capacity;
(e) the duties performed by specified persons in a body established by the Central
State Government or local authority, not deemed as an employee;
(f) Sale of land and Sale of Building (except sale of under-construction premises
where the part or full consideration is received before issuance of completion
certificate or before its first occupation, whichever is earlier.
(g) Actionable claims, other than lottery, betting, gambling, online gaming, casino &
virtual digital asset.
(h) Services of funeral, burial, crematorium or mortuary including transportation of
the deceased.

“Service by way of grant of alcoholic liquor licence, against consideration in the form of
licence fee or application fee shall be neither supply of Goods nor supply of Services”
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It may be noted that services provided by the Government to business entities including by
way of grant of privileges, licences, mining rights, natural resources such as spectrum etc.
against payment of consideration in the form of fee, royalty etc. are taxable under GST. Tax
is required to be paid by the business entities on such services under reverse charge.

B. Gifts not exceeding Rs. 50,000 in value in a financial year by an employer to employee
shall not be treated as supply of goods or services or both.

Perquisites provided by the employer to the employee not liable to GST if following
conditions are satisfied:
a) It should be as per contractual agreement between employer & employee.
b) Employer should not avail ITC on inward supply of such goods/service. If employer has
already availed ITC, needs to reverse it

Section 7(3)
The Central Government or the State Government may notify such other transactions to
either qualify as ‘supply of goods’ or as ‘supply of services’ This notification must be issued
only upon recommendations from the Council.

Section 8 Composite And Mixed Supplies

As per section 2(30), "composite supply"  Naturally bundled and supplied in conjunction
with each other in the ordinary course of business, one of which is a principal supply.

As per section 2(74), "mixed supply" means two or more individual supplies of goods or
services, or any combination thereof, made in conjunction with each other by a taxable
person for a single price where such supply does not constitute a composite supply:

The tax liability on a composite or a mixed supply

a) a composite supply comprising two or more supplies, one of which is a principal supply,
shall be treated as a supply of such principal supply; and
b) a mixed supply comprising two or more supplies shall be treated as a supply of that
particular supply which attracts the highest rate of tax.

Clarifications

1. Art works sent by artists to galleries for exhibition

Sending artworks to a gallery for exhibition does not entail any financial transaction or
consideration flowing from the gallery to the artist.
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As a result, this does not qualify as a taxable supply. The actual supply occurs when a
buyer buys artwork from the gallery and applicable gst shall be levied at the time of
such supply.

2. Donations / Charity / Gift

GST is not leviable where all the following three conditions are satisfied namely:
a) Gift or donation is made to a charitable organization
b) Payment has the character of gift or donation
c) Purpose is philanthropic (i.e., it leads to no commercial gain) and not advertisement

Bhushan donated a blackboard to Yoganisht Sansthan - a charitable yoga institution.

Yoganisht Sansthan printed underneath the blackboard so donated - “Good wishes from
Mr. Bhushan”.

3. Taxability of ‘tenancy rights’/pagadi under GST

 Transfer of tenancy rights against tenancy premium is a form of lease or renting of
property and such activity is specifically declared to be a service in of Schedule II i.e.
Any lease, tenancy, easement, licence to occupy land is a supply of services.
 The transfer of tenancy rights cannot be treated as sale of land/ building.
 Transfer of tenancy rights to a new tenant against consideration in the form of
tenancy premium is taxable
 Services provided by outgoing tenant by way of surrendering the tenancy rights
against consideration in the form of tenancy premium is liable to GST.

4. Inter-State movement of various modes of conveyance

Inter-State movement of various modes of conveyance, between distinct persons for
i) carrying goods or passengers or both; or
ii) for repairs and maintenance,
shall be treated ‘neither as a supply of goods or supply of service’ and therefore not be
leviable to IGST.
However, where such movement is for further supply of the same conveyance then
such movement shall be treated as supply and GST shall be levied.

5. Supply of printed books, pamphlets, brochures, envelopes, annual reports, leaflets,

cartons, boxes etc., printed with design, logo, name, address or other contents
supplied by the recipient of such printed goods

a) In the case of printing of books, pamphlets, brochures, annual reports, and the like,
where only CONTENT IS SUPPLIED by the publisher or the person who owns the
usage rights to the intangible inputs while the physical inputs including paper used
for printing belong to the printer,
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 supply of printing [of the content supplied by the recipient of supply] is the
principal supply and therefore,
 such supplies would constitute supply of service

b) In case of supply of printed envelopes, letter cards, printed boxes, tissues, pen,
napkins, wall paper etc. by the printer using its physical inputs including paper to
print the design, logo etc. supplied by the recipient of goods,
 predominant supply is supply of goods and
 the supply of printing of the content [supplied by the recipient of supply] is
ancillary to the principal supply of goods and therefore
 such supplies would constitute supply of goods.

6. Retreading of tyres
Pre-dominant element is process of retreading which is a supply of service. Rubber
used for retreading is an ancillary supply.
Supply of retreaded tyres, where the old tyres belong to the supplier of retreaded
tyres, is a supply of goods.

7. Buy one get one free offer

 It may appear at first glance that in case of offers like “Buy One, Get One Free”, one
item is being “supplied free of cost” without any consideration. In fact, it is not an
individual supply of free goods, but a case of two or more individual supplies where
a single price is being charged for the entire supply. It can at best be treated as
supplying two goods for the price of one.
 Taxability of such supply will be dependent upon as to whether the supply is a
composite supply or a mixed supply and the rate of tax shall be determined
accordingly.
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8. Clarification regarding GST Applicability on Liquidated Damages, Compensation and

Penalty arising out of Breach of Contract or Other Provisions of Law.

Nature of Taxability Clarification

transaction
Liquidated Damages Not ‘liquidated damages’ is an amount paid only to
Taxable compensate for loss or damage suffered by the
aggrieved party due to breach of the contract.
There is no agreement by the aggrieved party to
refrain from or tolerate an act or to do anything for
the party paying the liquidated damages.
Hence liquidated damages are merely a flow of
money for suffering loss or damage due to such
breach.
Such payments do not constitute consideration for
a supply.
Penalty imposed for Not The penalty imposed was not for tolerating the act
dishonor of cheque Taxable or situation but for not tolerating and thereby
and violation of law deterring and discouraging such an act or situation.
Hence the fine and penalty is not a consideration
for any supply received and not taxable.
Forfeiture of salary or Not The amount recovered from the employee is not for
payment of bond Taxable tolerating the act of premature quitting of
amount in the event employment, but as penalty for dissuading the
of the employee employees from taking up employment.
leaving the Further, employee does not receive anything
employment before against the payment made to the employer.
the minimum agreed Therefore, the payment does hot constitute a
period consideration for the service of agreeing to
tolerate an act or a situation.
Late Payment Taxable The facility of accepting late payments with
surcharge or fee interest or late payment fee is a facility granted by
supplier naturally bundled with principal supply.
Hence this ancillary supply naturally bundled
should be assessed at the same rate as that of
principal supply.
Fixed charges for Exempt Price charged for electricity has two components -
power minimum fixed charge & variable per unit charge.
Minimum fixed charge which remains at all
situations does not mean that it is a charge for
tolerating act of non-consumption of minimum
threshold.
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Both are charged for sale of electricity and thus not

taxable as sale of electricity is exempt from GST.
Cancellation charges Taxable Cancellation fee can be considered as the charges
for the costs involved in making arrangements for
the intended supply
The facilitation service of allowing cancellation
against payment made is also a natural part of this
bundled service.
Hence the same will be assessed as that of the
principal supply.

9. Clarification related to supply of food and beverages at cinema halls taxable as

restaurant service

 Supply of food or beverages in a cinema hall is taxable as ‘restaurant service’ as

long as: it is supplied independent of the cinema exhibition service.
 Where the sale of cinema ticket and supply of food and beverages are clubbed
together, and such bundled supply satisfies the test of composite supply, the entire
supply` will attract GST at the rate applicable to service of exhibition of cinema, the
principal supply.

10. Clarification on taxability of shares held in a subsidiary company by holding company

It is clarified that securities are considered neither as goods nor as services in terms of
definition of goods under section 2(52) and the definition of services under section
2(102). Further, securities include ‘shares’ as per definition of securities. Therefore, the
activity of holding of shares of subsidiary company by the holding company per se
cannot be treated as a supply of services by a holding company to the said subsidiary
company and cannot be taxed under GST.

11. Clarification on liability to pay GST in respect of warranty replacement of parts and
repair services during warranty period.

Issue 1:
When a manufacturer provides warranty-related replacements or repairs for goods
without charging additional consideration, is GST applicable?

Clarification:
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 The value of the original supply already includes the cost of warranty services, and
GST would have been paid on it at the time of supply.
 Hence, no further GST is payable on replacements or repairs provided during the
warranty period if no additional consideration is charged.
 However, if the manufacturer charges any extra amount for replacements or
services, GST is payable on that additional amount.

Issue 2:
Does a distributor need to pay GST when providing warranty-related replacements or
repairs on behalf of the manufacturer without charging the customer?

Clarification:

 If the distributor provides replacements or repairs under warranty without

charging the customer, no GST is payable by the distributor.

 However, if the distributor charges any additional consideration from the customer,
GST is payable on that amount.

Issue 3:
Does the replacement of parts under warranty involve a taxable supply between the
distributor and manufacturer?

There can be 4 Scenarios in this case:

1. Scenario (a): Distributor Charges Manufacturer

o Clarification: The distributor replaces parts from their stock or buys them
from a third party and issues a tax invoice to the manufacturer for
reimbursement. GST is payable on this supply by the distributor to the
manufacturer.

o Example:
A distributor replaces a refrigerator compressor using their stock and
invoices the manufacturer ₹5,000. GST is payable on ₹5,000 by the
distributor.

2. Scenario (b): Manufacturer Supplies Parts to Distributor Without Charge

o Clarification: The distributor requests the manufacturer for parts to replace

under warranty, and the manufacturer provides the parts at no charge. No
GST is payable on the supply of parts by the manufacturer.
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o Example:
A distributor requests a faulty motor from the manufacturer, which is
provided free of cost for warranty replacement. No GST is applicable.

3. Scenario (c): Credit Note Issued by Manufacturer

o Clarification: The distributor replaces parts using stock received earlier from
the manufacturer. The manufacturer issues a credit note for the replaced
parts, adjusting tax liability under Section 34(2) of the CGST Act.

o Example:
A distributor replaces a fan blade from their stock, which was earlier
purchased from the manufacturer. The manufacturer issues a credit note for
₹2,000, and tax liability is adjusted.

4. Scenario (d): Replenishment of Distributor’s Stock

o Clarification: The distributor replaces parts using their stock and later raises
a requisition to the manufacturer. The manufacturer replenishes the stock
via a delivery challan without charging consideration. No GST is payable on
this replenishment.

o Example:
A distributor replaces a motor from their stock and requests replenishment.
The manufacturer provides the replacement motor via a delivery challan at
no charge. No GST is applicable.

Issue 4:
If a distributor provides repair services, including part replacement, to customers as
part of a warranty (without charging the customer), but bills the manufacturer for
these services via tax invoice or debit note, is GST applicable on this activity?

Clarification:
The distributor is supplying repair services to the manufacturer, who is the recipient as
per Section 2(93)(a) of the CGST Act, 2017. Therefore, GST is payable by the distributor
on the services provided to the manufacturer.

Issue 5: Sometimes companies provide offers of Extended warranty to the customers

which can be availed at the time of original supply or just before the expiry of the
standard warranty period. Whether GST would be payable in both the cases?

Clarification:
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1. At the time of original supply:

o If extended warranty is offered by the same supplier as the goods, it is part

of the composite supply, with the principal supply being the goods. GST is
calculated on the total value, including the extended warranty.

o If provided by a different supplier, it is a separate supply of services, taxable

under GST as a distinct service.

2. After original supply:

o Extended warranty is treated as a distinct supply of services, separate from

the original supply of goods, and GST is payable as applicable on the service.
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PLACE OF SUPPLY

Section 10 Place of Supply Of Goods Other Than Export

Section Scenario Location

10(1)(a) Supply Involve movement Where movement of Goods Terminate
10(1)(c) Supply doesn’t involve Where Goods made available place of Delivery
movement
10(1)(ca) Supply to a person over the POS shall be Address of Recipient recorded in
counter to URP invoice. If Not available then Location of
Supplier.
For supplies of goods to URP through e-
commerce platforms, if the billing address and
delivery address differ then POS Shall be Place of
Delivery.
10(1)d) Assembly or Installation Place of Assembly/ Installation
involved
10(1)(e) Goods supplied on board of Place where Goods taken on board
Conveyance
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Note : Bill to Ship to model Section 10(1)(b)

POS Supply 1 = Location Of 3rd Person on whose instruction goods are delivered.
POS Supply 2 = Location where movement of Goods Terminates.

Place of Supply in case of supply of services

i. Section 12(2) General Rule

Service Recipient Place Of Supply
Registered Location of SR
Unregistered
a) SR Address Available Location of SR
b) SR Address Not Available Location of SP

Specific case section 12

ii. Section 12(3) Service related to immovable property and lodging / Accomodation
 Construction | Agent | Engineering | Survery etc. of immovable propety .
 Lodging | Accommodation by Hotel | Inn | Guest House | House Boat.
 Ancillary Service Related to above
Location Of Property Place Of Supply
In India Location of Property
Outside India (SP/SR in India) Location of SR
Note :
1. Provisions are applicable on already constructed as well as yet to be constructed
property.
2. Location in more than 1 state UT
a) Single Property Is Located @ 2 or more states
POS = Based On Area In each state or UT
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b) Different Property Is located @ 2 or more state

POS = Based on No. Of Nights Stayed in Each Property
3. Boat / Vessel : Based on time spent in each state / UT

iii. Section 12(4) Restaurant | Catering | Personal Grooming | Fitnes | Beauty | Health
Services Including Cosmetic & Plastic Surgery.
POS = Place where service have been performed.

iv. Section 12(5) Training & Appraisal Services

Service Recipient Place Of Supply
Registered Location of SR
Unregistered Place where service have been Performed

v. Section 12(6) Admission to Event | Park | other Place

Location of Place or Where Event is held

vi. Section 12(7) Organizing of Event and Sponsorship Services

Service Recipient Place Of Supply
Registered Location of SR
Unregistered
a) Event Held In India Location Of Event
b) Event Held o/s india Location of SR

vii. Section 12(8) Transportation of Good including mail & Courier

Service Recipient Place Of Supply
Registered Location of SR
Unregistered Location Where goods are handed over to Transporter

viii. Section 12(9) Transportation of Passenger

Ticket Is Issued
Service Recipient Place Of Supply
Registered Location of SR
Unregistered Location Where Passenger Embarks On Journey
Issue Of Passage For Future Journey Where Boarding Point Is Not Known
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Service Recipient Place Of Supply

Registered Location of SR
Unregistered
a) SR Address Available SR Location
b) SR Address Not Available SP Location
Note: Return Journey Is Treated as separate journey Even Ticket for both side is issued
at the same time

ix. Section 12(10) Service provided on Board | Conveyance

First Schedule point of departure of that convince

x. Section 12(11) Telecommunication Services

Note: Leased circuit through more than 1 State | UT

Determine Based on no. of points in each state | UT.

xi. Section 12(12) Banking and Financial services including stock broking services
Location of Recipient  If Not available  Location of Supplier

xii. Section 12(13) Insurance Business – Location of Recipient

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xiii. Section 12(14) Advertisement Services to Government.

Each of state where Advertisement Broadcasted | RUN | Played.
[Determine as per contract if not available below procedure]
a) Advt. in Hoardings - No of Hoardings in each state/UT
b) Advt in television charnel - Each state /UT Based on viewership of charnel in each
State | UT
[viewership Based on BARB published data of last week of Preceding quarter]
if figures Related to Region having >1 states
[Proportion Based on population]
c) Advt. on Internet / through sms.
Each State Based on intent Subscriber (Internet)| telecoms Subscriber (sos)
[Based on TRA2 Data of last evarten of Preceding financial year (in case of
Internet) / of Preceding Quarter (in case of Sis).

Clarification Regarding Place of Supply in Case of Supply of Services in Respect of

Advertising Sector
Issue 1
There may be a case wherein there is supply (sale) of space or supply (sale) of rights to use
the space on the hoarding/structure (immovable property) belonging to vendor to the
client/advertising company for display of their advertisement on the said
hoarding/structure. What will be the place of supply of services provided by the vendor to
the advertising company in such case?

Clarification: As hoardings/structure are fixed to the ground, they're considered part of the
immovable property (like land or buildings). The place of supply in such cases is the place
where the hoardings are located as per section 12(3).

Issue 2:
There may be another case where the advertising company wants to display its
advertisement on hoardings/billboards at a specific location availing the services of a
vendor. The responsibility of arranging the hoardings/billboards lies with the vendor who
may himself own such structure or may be taking it on rent or rights to use basis from
another person. The vendor is responsible for display of the advertisement of the
advertisement company at the said location. During this entire time of display of the
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advertisement, the vendor is in possession of the hoarding/structure at the said location on

which advertisement is displayed and the advertising company is not occupying the space
or the structure. In this case, what will be the place of supply of such services provided by
the vendor to the advertising company?

Clarification: As the advertising company isn't buying the space or rights to the space
directly, but only availing a service to display its advertisements, the place of supply shall be
determined as per Section 12(2). Therefore is SR is registered or if unregistered but address
of SR is available, then place of supply shall be location of SR. Otherwise location of SP.
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INPUT TAX CREDIT

Section 16 Eligibility For Taking ITC
1. Conditions For Claiming the ITC:
a) Every registered person shall be entitled to take ITC.
b) G/S or both must be used or intended to be used in the course or furtherance of his
business.
c) He has received the said goods or services except in the case of Bill to Ship to model
d) The supplier has paid the said amount of tax (as charged in the invoice) to
appropriate Government in cash or by way of utilization of input tax credit, as
admissible.
e) He – claimant of input tax credit – has furnished return under section 39 in FORM-
GSTR 3B
f) No ITC shall be allowed to RP in respect of invoice which is not communicated to RP
in FORM– GSTR 2B.
2. If goods are received in instalments against a single invoice, credit can be taken upon
receipt of last installment of goods.
3. If recipient of G/S has not paid the supplier within 180 days from date of invoice, the
amount equal to input tax credit availed along with the interest u/s 50 shall be paid by
the recipient. The said input tax credit can be re- availed on payment to supplier.
Exceptions
This condition of payment of value of supply plus tax within 180 days does not apply in the
following situations:
(a) Supplies on which tax is payable under reverse charge
(b) Deemed supplies without consideration
(c) Additions made to the value of supplies on account of the supplier’s liability, in
relation to such supplies, being incurred by the recipient of the supply
4. Claim of depreciation on tax component disqualifies a recipient of Capital goods from
availment of ITC.
5. Time limit for availment of ITC extended – Sec 16(4)
ITC on invoices relating to a FY or debit notes issued in any FY can be availed on or
before:-
(a) 30th November of the succeeding FY (after end of FY to which such invoice or debit note
pertains)
(b) Actual Date of filing of annual return (GSTR-9) for the relevant year.
6. Reversal Of ITC by Recipient
a) Supplier has filed the GSTR-1 but has not filed GSTR-3B till 30th September of next
FY
b) Then Recipient has to reverse the ITC for the same till 30th November of succeeding
FY to which such ITC relates.
However, Recipient is eligible to take ITC as and when Supplier files GSTR-3B
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Restrictions on use of amount available in electronic credit ledger [Rule 86B]

A registered person shall not use the amount available in electronic credit ledger to
discharge his liability towards output tax in excess of 99% of such tax liability, in cases where
the value of taxable supply other than exempt supply and zero-rated supply, in a month
exceeds Rs. 50 lakh.
Exceptions
This restriction shall not apply in following cases:-
(a) Where the said person/proprietor/karta/managing director/any of its two partners,
whole- time directors, members of Managing Committee of Associations or Board of
Trustees, as the case may be, have paid more than `1 lakh as income tax1 in each of the
last 2 financial years.
(b) Where the registered person has received a refund of more than `1 lakh in the preceding
FY on account of unutilised ITC in case of (i) zero rated supplies made without payment
of tax or (ii) inverted duty structure.
(c) Where the registered person has discharged his liability towards output tax through
the electronic cash ledger for an amount which is in excess of 1% of the total output tax
liability, applied cumulatively, up to the said month in the current financial year.
(d) Where the registered person is:-
(i) Government Department
(ii) Public Sector Undertaking
(iii) Local authority
(iv) Statutory body

Section 17: Apportionment of Credit and Blocked credit

1. Where the G/S or both are used by the registered person partly for the purpose of any
business and partly for other purposes, the ITC shall be restricted to so much of the
input tax as is attributable to the purposes of his business [Section 17(2)]

2. Where the goods or services or both are used by the registered person partly for
effecting taxable supplies including zero-rated supplies and partly for effecting exempt
supplies, the ITC shall be restricted to so much of the input tax as is attributable to the
said taxable supplies including zero- rated supplies [Section 17 (3)]

3. Blocked Credit [Section 17 (5)]

A. Motor Vehicle/ Vessel / Aircraft

Generally ITC is blocked. However ITC is available in following cases:
i. MV with seating capacity More than 13 Person including driver.
ii. MV/V/A Purchased for further supply
iii. MV/V/A Purchased for providing Transportation of Passenger Service
iv. MV  Driving School
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CA Jasmeet Singh

V  Navigation Training
A  Flying School
v. MV/V/A  Transportation Of Goods
Note: Following shall not be considered as MV & Hence ITC is available.
a) Train (Vehicle Run On Fixed Rail)
b) MV (2/3 wheeler with upto 25CC)
c) Vehicles run within factory/enclosed premises.

B. General Insurance / Repair & Maintenance / Servicing of MV/V/A

Generally ITC is blocked. However ITC is available in following cases:
a) ITC of MV/V/A is available  ITC of GI/RM/S is also available
b) RP is manufacturer of MV/V/A
c) GI/RM/S services availed for Further Supply of such service.

C. Specified Goods & Service

 Food & Beverages No ITC Is available
 Outdoor Catering Exception:
 Beauty Treatment 1. I/W supply for making further
 Health Services supply (either composite or mixed)
 Cosmetic & plastic Surgery 2. Such Supplies provided to EEs
 Leasing & Renting of MV/V/A under statutory Obligation.
 Life Insurance
 Health Insurance
 Membership Of Club/Health/Fitness No ITC is available
Centre Exception: Such Supplies provided to
 Travel Benefit Extended to EEs EEs under statutory Obligation.

D. Works Contract Service (construction of Immovable Property)

Construction of Immovable property ITC Blocked
Construction of Plant & machinery ITC Available
I/W supply of Works Contract service for further Supply ITC Available
Note: Plant & Machinery doesn’t Include
a) Telecommunication Tower
b) Pipelines laid down outside the factory
c) Land & Building
No ITC on above items.

E. Goods or service purchased for construction of immovable property  ITC blocked.

Goods or service purchased for construction of Plant & Machinery  ITC Available.

F. Other cases where ITC is blocked:

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CA Jasmeet Singh

a) No ITC of Tax paid on composition scheme

b) No ITC is available for G/S procured by NRTP in India. However, ITC is available
for GST paid on Import of Goods.
c) G/S purchased for personal consumption
d) Goods Destroyed/disposed off/Gift/Sample/Written-off/Lost/Stolen.
e) G/S or both received by a taxable person which are used or intended to be used
for Corporate Social Responsibility referred to in section 135 of the Companies
Act 2013

Section 18: Special Circumstances for Availing ITC

1. Compulsory Registration

Voluntary Registration

Composition  Normal Scheme

Exempt Supply  Taxable Supply

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CA Jasmeet Singh

2. A registered person shall not be entitled to take input tax credit under sub-section (1),
in respect of any supply of goods or services or both to him after the expiry of one year
from the date of issueof tax invoice relating to such supply

3. ITC in case of Amalgamation/Demerger

Where there is a change in the constitution or transfer of the business with the specific
provisions for transfer of liabilities  Transferor shall be allowed to transfer unutilised
ITC to transferee. For this purpose transferor has to file ITC-02 on the common portal
and on acceptance by transferee such ITC shall be credited to El. Credit ledger of
transferee.

4. Reversal of Credit on shifting to composition scheme or when taxable supply becomes

exempt supply

5. Reversal of Tax credit in case of supply of capital goods on which tax credit has been
taken Section 18 (6)
The registered person shall pay an amount
a) ITC taken on such goods reduced by 5% per quarter of a year or part thereof from
the date of issue of invoice for such goods or
b) the tax on the transaction value of such capital goods, whichever is higher.
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CA Jasmeet Singh

A. Clarification on availability of input tax credit (ITC) in respect of warranty replacement

of parts and repair services during warranty period.

Issue 1: There are cases where the original equipment manufacturer offers warranty for
the goods supplied by him to the customer and provides replacement of goods or its parts
and/ or repair services to the customer during the warranty period, without separately
charging any consideration at the time of such replacement/ repair services.
Whether in such cases, the manufacturer is required to reverse the input tax credit in
respect of such replacement of goods or its parts, as the case may be or supply of repair
services as part of warranty, in respect of which no additional consideration is charged
from the customer?
Clarification: When a manufacturer provides warranty services (e.g., replacement of goods
or parts and/or repair services) without additional charges during the warranty period, the
cost of these services is already included in the value of the original supply.
Such warranty services are not treated as exempt supplies, and the manufacturer is not
required to reverse Input Tax Credit (ITC) on the goods or services used for providing these
warranty services.
Example:
A manufacturer, ABC Ltd., sells a refrigerator to a customer for ₹25,000 with a 1-year
warranty. The warranty covers free replacement of defective parts or repair services.
1. During the warranty period, the compressor is replaced without additional charges to
the customer.

2. The cost of this replacement (e.g., ₹5,000) is considered part of the original supply
value (₹25,000).

3. ABC Ltd. does not need to reverse ITC on the cost of the compressor or repair services
because they are included in the taxable value of the original sale.

Issue 2: Where the distributor provides replacement of parts to the customer as part of
warranty on behalf of the manufacturer, whether the distributor would be required to
reverse the ITC in respect of such replacement of parts?
There are four scenarios for replacement of goods or parts under warranty:
1. Distributor Replaces Parts Using Own Stock or Purchases from a Third Party (Case
a):

o Distributor charges the manufacturer for the parts via a tax invoice.
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CA Jasmeet Singh

o GST is payable by the distributor on this supply, and the manufacturer can
claim ITC.

o No ITC reversal is required for the distributor.

o Example: Distributor XYZ replaces a part worth ₹10,000 (from its stock or
third party) and charges the manufacturer ABC Ltd. via a tax invoice. GST of
₹1,800 is paid by XYZ, and ABC Ltd. claims ITC.

2. Manufacturer Provides Parts to Distributor for Warranty Replacement (Case b):

o Manufacturer supplies parts to the distributor for warranty replacement

without charging any consideration.

o No GST is payable, and no ITC reversal is required by the manufacturer.

o Example: Distributor XYZ requests parts from the manufacturer ABC Ltd.,
who sends them without charging any consideration. No GST applies, and
ABC Ltd. doesn’t reverse ITC.

3. Distributor Uses Manufacturer's Supplied Stock and Manufacturer Issues a Credit

Note (Case c):

o Distributor replaces parts from prior supplies by the manufacturer.

o Manufacturer issues a credit note and adjusts tax liability as per Section 34(2)
of the CGST Act, 2017, provided the distributor reverses ITC on the replaced
parts.

o Example: Distributor XYZ replaces a part worth ₹5,000 from previous

supplies received from ABC Ltd., and ABC issues a credit note for the same.
Tax liability is adjusted if XYZ reverses ITC on the part.

4. Manufacturer Replenishes Distributor's Stock Without Consideration (Case d):

o Distributor replaces parts using his own stock and requests replenishment
from the manufacturer.

o Manufacturer replenishes parts via a delivery challan without charging

consideration.

o No GST is payable, and no ITC reversal is required by the manufacturer.

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CA Jasmeet Singh

o Example: Distributor XYZ replaces a part from its own stock and requests
replenishment from ABC Ltd., who provides the part worth ₹7,000 via
delivery challan without charging consideration. No GST applies, and ABC
Ltd. doesn’t reverse ITC.

Issue 3: Where the distributor provides repair service, in addition to replacement of

parts or otherwise, to the customer without any consideration, as part of warranty, on
behalf of the manufacturer but charges the manufacturer for such repair services
either by way of issue of tax invoice or a debit note, whether ITC is available on such
activity?

When a distributor provides repair services to the customer as part of the warranty,
without charging the customer, but charges the manufacturer for these services
through a tax invoice or debit note, it constitutes a supply of service. The manufacturer,
as the recipient of the service, is liable to pay GST on this supply. Furthermore, the
manufacturer is eligible to claim Input Tax Credit (ITC) on the GST paid for these repair
services, subject to the conditions specified in the CGST Act, 2017.

B. Clarification on time limit under Section 16(4) of the CGST Act, 2017 in respect of RCM
supplies received from unregistered persons

 When a registered person receives supplies from an unregistered person and has to
pay tax under the Reverse Charge Mechanism (RCM), they must issue an invoice
themselves.
 The time limit to claim Input Tax Credit (ITC) under Section 16(4) depends on the
financial year in which this invoice is issued.
 However, ITC can only be claimed if the tax is paid and all other conditions in
Sections 16 and 17 are fulfilled.
 If the invoice is issued after the "time of supply," the recipient will have to pay
interest on the delayed tax payment and might also face penalties

C. Clarification on availability of input tax credit on ducts and manholes used in network
of optical fiber cables (OFCs) in terms of section 17(5) of the CGST Act, 2017

 Input Tax Credit (ITC) on ducts and manholes used in the network of optical fiber
cables (OFCs) for providing telecommunication services is not blocked u/s 17(5).
 Ducts and manholes are considered as "plant and machinery" since they are essential
for laying, upkeep, and maintenance of the optical fiber cable network, and are used
for the outward supply of telecommunication services.
 Therefore, ITC on such ducts and manholes is allowed.
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CA Jasmeet Singh

D. Clarification on ITC of Demo Vehicles

 Demo vehicles (having approved capacity < 13 passengers) promote sale of similar
type of motor vehicles, they can be considered to be used by the dealer for making
‘further supply of such motor vehicles’.
 Accordingly, ITC in respect of demo vehicles is not blocked under u/s 17(5). But when
demo vehicle is ultimately sold by dealer, then provisions of Sec 18(6) shall become
applicable.
 if authorized dealers are using Motor vehicles for other purposes (other than
further supply), say for transportation of its staff employees/ management etc,
then ITC shall be blocked u/s 17(5)
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CA Jasmeet Singh

TIME OF SUPPLY
Time of Supply [TOS] for Goods (Section 12)

Forward Charge Mechanism [Section 12(2)] Reverse charge Mechanism [Section 12(2)]
kl
a) Date of Issue of Invoice a) Date of Receipt of Goods
b) Due date of Issue of Invoice as per b) Date of payment
Section 31 c) 31st Day from Date of invoice
Whichever is earlier Whichever is earlier

Date of Payment:
a) Date of Recording Payment in Recipient's Books or
b) Date of Debit in Recipient's Bank A/c
Whichever is earlier

Note: Registered persons supplying specified actionable claims (betting; casinos; gambling;
horse racing; lottery; or online money gaming), TOS shall be:

a) Date of Issue of Invoice.

b) Due date of Issue.
c) Date of Payment.

Due Date for Raising Invoice [in case of Goods] (Section 31)
(i) Movement of Goods involved → Before or at the time of Removal of Goods
(ii) No Movement of Goods involved → Before or at the time of Delivery of Goods
(iii) Continuous Supply of Goods
Before or at the time of

}
a) Issuance of Periodical Statement
b) Receipt of Payment Whichever is earlier
(iv) Sale of Goods on approval Return Basis
a) Before or at time of supply
b) 6 months from Removal of Goods } Whichever is earlier
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CA Jasmeet Singh

Time of Supply [ToS] for Services (Section 13)

Forward Charge Mechanism Reverse charge Mechanism

[ Section 13(2)] [ Section 13(3)]
↓ ↓
Invoice Issued on time
a) Date of Making Payment
b) 61st day from Date of Invoice
Whichever is earlier
Yes NO ↓
a) Date of Issue of a) Date of Provision of Not Determinable
Invoice Services ↓
b) Date of Reciept of b) Date of Reciept of Date of entry in BOA of
Payment Payment Recipient
Whichever is earlier Whichever is earlier

→ Date of Receiving Payment

a) Date of Recording Receipt in Supplier’s Books
b) Date of credit in Supplier's Bank Alc
Whichever is earlier

→ If Advance is upto Rs. 1000

At the option Of Supplier
 Payment Received date
 Date of Issue of invoice

(iii) Supply by Associated enterprise & Supplies located outside India

 Date of entry in Books of Recipients
 Date of Making Payment } Whichever is earlier

Due Date for Raising Invoice [in case of Services (Section-31)]

(i) Normally Before or within 30 days of Provision of Service
(ii) In Case of Insurance | Banking / FI | NBFC - Within 45 days from Provision of Service
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CA Jasmeet Singh

(iii) Continuous Supply of Services (More than 3 months)

In following order
 Due date of Payment Available - Due date of Payment
 Due date not Available - Actual date of Payment
 Milestone Based [25%, 50%, 75% etc.] - on completion of Milestone
(iv) Supply ceased before Completion - Raise invoice before such cessation

Common Points for Time of Supply of Goods & Services

Time of Supply in case of Voucher for Goods | Services

Whether Supply identifiable at time issue of Voucher

YES NO

 Date of Issue of Voucher Date of Redemption of Voucher

 Eg. Swiggy voucher Eg. Flipkart Voucher

Time of Supply of Addition in Value because of Interest | fees | Penalty etc.

TOS = Day on which addition Received by Supplier

Any other Case (Residual Cases)

→ If Periodical return is filled – Due date of Return
→ Otherwise - Date on which GST Paid.
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CA Jasmeet Singh

VALUE OF SUPPLY
As Per Section 15, Value of Supply = Transaction Value if following Conditions are Satisfied:

1) Supply to unrelated Person

&
2) Price is sole Consideration

Inclusions under Section 15 (2)

1. Tax, duty, cess or Surcharge other than GST i.e. Municipal tax, excise etc. if charged
Separately by Supplier Except TCS under Income Tax Act
2. Supplier obligation met by the recipient.
3. Incidental Expenses i.e. Packing exp. /commission/ loading etc.
4. Amount charged for anything done by Supplier before Delivery i.e., Any Customization,
Modification, Inspection etc.
5. Interest / fee / Penalty for delayed payment
 Only if Actually Recovered, if waived then it is not a part of supply
 Considered as composite Supply  tax rate applicable as applicable on main supply
 Interest usually considered inclusive of GST [unless given in question]. Hence
𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭
Value of Supply : 𝟏𝟎𝟎+𝐑𝐚𝐭𝐞 × 𝟏𝟎𝟎

6. Subsidy should be included in value of supply Only if:

 Provided by other than CG/SG
 Directly linked to Price Otherwise Ignore
Notes:-
 If Specifically Given in question that Value is after considering Subsidy or

Price is charged after considering Subsidy

Given by CG/SG Given by other than CG/SG

No further treatment Add back as already Reduced

Required as already Reduced
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CA Jasmeet Singh

Exclusions U/S 15(3) :

Discount

Before or at the time of Supply Post Supply Discount

(i) Before or at the time of Supply : Discount given before Supply or on making Supply
& Shown in invoice.

(ii) Post Supply Discount: All discount can’t be decided on or before Supply i.e.,
payment discount, volume discount. Post Supply Discount can be reduced from
Value of Supply if following conditions are Satisfied:
 Discount as per Contract existing on Supply
 Can be linked to invoices
 Proportionate ITC reversed by Recipient i.e. credit note is issued by supplier
Special point :
 No claim Bonus By Insurance companies
When Insured makes no claim under Insurance policy in Previous Period, then current
period Gross Premium gets Reduced by Amount called as No claim Bonus
 Whether "No Claim Bonus" is considered as Discount?
Yes, Discount Provided "on or before making Supply" & "Recorded In Invoice" shall
not be included in VOS.
Hence as no claim Bonus reduced from Gross Premium while raising Invoice shall be
considered as discount and hence shall not be included in VOS.
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CA Jasmeet Singh

COMPOSITION SCHEME
Section 10 Composition Scheme

• The composition levy is an alternative method of levy of tax designed for small
taxpayers.
• Small taxpayers with an aggregate turnover in a preceding financial year up to `1.5
crore shall be eligible for composition levy. However, Threshold limit is `75 lakh in
respect of 8 of the Special Category States namely [NUSTA-M3] Nagaland Uttarakhand
Sikkim Tripura Arunachal Pradesh Mizoram Manipur Meghalaya

Section 10(1) & (2) Composition Scheme for Goods & Restaurant Services

• Initially, the scheme was designed to benefit the small traders, manufacturers and
restaurant service providers.
• Subsequently, suppliers availing the composition scheme were permitted to supply
other services also upto higher of following:
(a) 10% of turnover in the state or union territory in the preceding financial year or
(b) `5,00,000 whichever is higher.

Calculation of Aggregate Turnover

Aggregate Turnover includes

1. Taxable supplies
2. Exempt supplies
3. Exports
4. Inter-State supplies of persons having the same PAN be computed on all India basis.

Exclusions
• Value of inward supplies on which tax is payable under reverse charge
• Taxes Under GST (i.e. CGST/SGST/UTGST/IGST/ Compensation Cess)
• Value of supply of exempt services by way of extending deposits, loans or advances in
so far as the consideration is represented by way of interest or discount.
Note: Aggregate turnover includes value of supplies from 1st April of a FY up to the date of
his becoming liable for registration

Withdrawal From Composition Scheme

As per Section 10(3), the option of a registered person to avail composition scheme for
services shall lapse with effect from the day on which his aggregate turnover during a
financial year exceeds the threshold limit of `150 Lakh /75 Lakh.
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CA Jasmeet Singh

Composition Rates

Registered Person Rate

Manufacturer, other than manufacturer of 1% Of Turnover in state or UT
Specified Goods
Person engaged in restaurant services 5% Of Turnover in state or UT
Any other Supplier of goods 1% Of Taxable Turnover in state or UT

Note: for the purposes of determining the Composition tax, turnover in State or UT shall
not include
(i) supplies from 1st April of a FY up to the date when such person becomes liable for
registration under this Act; and
(ii) exempt supply of services provided by way of extending deposits, loans or
advances in so far as the consideration is represented by way of interest or
discount.

Section 10(2A) Composition Scheme for Service Provider

A registered person whose aggregate turnover in the preceding financial year is up to `50
lakh, shall be eligible to pay tax under this scheme @ 6% upto Rs. 50 lakhs made from 1st
April of CFY.

Section 10(2)/(2A) Conditions for Opting to Pay Tax under Composition Scheme

a. Restricted from making supply of goods or services which are not liable to GST
b. Restricted from affecting inter-State outward supplies of goods or services
c. Restricted from making supplies through an e-commerce operator – Only for Service
Providers. Supplier of Goods are now eligible to make supplies through E-COM while
being under Composition scheme.
d. Restriction on manufacture of notified goods-
Notified Goods:
(i) Ice cream and other edible ice, whether or not containing cocoa
(ii) Pan masala
(iii) Tobacco and manufactured tobacco substitutes
(iv) Manufacture of Aerated Water
(v) Fly ash bricks or fly ash aggregate with 90% or more fly ash content; Fly ash
blocks
(vi) Bricks of fossil meals or similar siliceous earths
(vii) Building bricks
(viii) Earthen or roofing tiles
e. Not Available to CTP/NRTP
f. Would be applicable for all transactions under the same PAN
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CA Jasmeet Singh

g. Shall not collect tax also Not entitled to input tax credit.
h. Such supplier shall mention the words “composition taxable person not eligible to
collect tax on supplies” at the top of the bill of supply. (not allowed to issue tax
invoice)

RULES

As per Rule 3, A person applying for registration have the option to opt for composition
scheme in part B of REG01. Such intimation shall be considered only after the grant of
registration to the applicant and his option to pay tax under composition levy shall be
effective from the effective date of registration.

As per Rule 4, A registered person who opts to pay tax under composition scheme shall file
an intimation in prescribed form on the Common Portal, prior to the commencement of
the FY for which said option is to be exercised. Composition schemen shall be effective
from the beginning of the next financial year.
Also such person shall have to furnish statement in ITC-03 for reversal of tax credit within a
period of 90 days from the date of commencement of composition scheme.

As per Rule 6, If turnover exceeds `1,50,00,000/75,00,000/50,00,000 RP shall be shifted to

normal scheme with immediate effect and he will give an intimation in CMP-04 within 7
days of exceeding the limit.
RP can also voluntarily opt out of the scheme at any time and shall file an application in
CMP-04 and he will get shifted to normal scheme with immediate effect.
RP shall be required to submit ITC-01 for availing ITC within 30 days from the date of
withdrawal. Such withdrawal shall be applicable to all the places in all the states/UTs.
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CA Jasmeet Singh

REVERSE CHARGE MECHANISM

Sponsorship Services

Service Provider Any person

Service Recipient Any body corporate or partnership firm

Body Corporate or
RCM
Partnership Firm
Service Provider Sponsorship Service
(Any Person) Services Recipient
Any Other
Person FCM
Example
Mr. Kapil Sharma has provided sponsorship services to Sprite Pvt. Ltd. in
its show. Here, RCM will apply as Sprite Pvt. Ltd. is a body corporate.

Analysis of Sponsorship services

Service Provider Services Recipient Mechanism Person Liable to Pay GST

A Ltd. Mr. X FCM A Ltd.

Mr. A Mr. Y FCM Mr. A
Mr. A XYZ Firm RCM XYZ Firm
ABC Firm C Ltd. RCM C Ltd.

Services of Director

Service Provider Director

Service Recipient Any company or body corporate

Services of Director

Services to Company in Services of Employee Service as a director to company

Independent Capacity to Company (Attending Board meetings)

FCM NO GST RCM

Example
Mr. X, being director of A Ltd, attended board meeting for which A Ltd. Provided Sitting
fees of ₹2,00,000
RCM will be applicable and A Ltd. is liable to pay GST to the government
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CA Jasmeet Singh

1. Mr. X, being whole time director of A Ltd., receives salary of 3,00,000 per
month from company
Here, GST will not be applicable as services by employee to employer is
outside the ambit of GST
2. Mr. X is a director of A Ltd. (Steel almirah manufacturing company) and
also a Interior decorator . He provides interior decoration services to A
Ltd. in which he did interior decoration of Head Office (HO) of A
Ltd. & charged ₹5,00,000
Here, FCM shall be applicable on services of Mr. X as he is providing services in the
individual capacity to A Ltd. , not in the capacity of a Director. Therefore, Mr. X is liable
to pay GST to government

TDS on salary u/s 192

TDS on Director’s remuneration u/s 194J

Example
A Ltd. provided ₹5,00,000 to Mr. X (Director)
• In case of Director remuneration , TDS u/s 194J will be deducted by A Ltd. & RCM will
be applicable
• In case of salary , TDS u/s 192 will be deducted by A Ltd. & GST shall not applicable

Services of Insurance Agent

Service Provider An insurance agent

Service Recipient Any person carrying on an insurance business

Example:

Insurance commission for sale Mr. X Policy

Customer
Company of products (Insurance agent) Sale

RCM will apply

i.e. GST on commission is payable by Insurance Co.

Insurance Co. Insurance services & Customer

(Service Provider) Premium charged as consideration (Service Recipient)

FCM will apply

i.e. GST on premium is payable by Insurance Co.
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CA Jasmeet Singh

Services of Recovery Agent

Service Provider A recovery agent

Service Recipient A banking company or a financial institution or a
nonbanking financial company

Recovery Agent Recovery of Bank/NBFC

(Service Provider) Loan Services (Service Recipient)

Commission/Fees

RCM will apply

i.e. Bank/NBFC is liable to pay GST to government

Services of Business facilitator to Bank

Service Provider Business facilitator

Service Recipient A banking company located in taxable territory

• Business Facilitator is a person who helps bank to grow his business

• They refer clients to Bank, pursue clients for proposal & facilitate bank to
carry out the transaction, but they cannot transact on behalf of Bank

Customer

Bank Business Facilitator

(Service Recipient) (Service Provider)

Commission

Business Facilitator
Services to Bank
In respect of rural branch In respect of urban branch

Exempt from GST Taxable Under RCM

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CA Jasmeet Singh

Business correspondent services

Service Provider Services provided by an agent of business correspondent

to business correspondent
Service Recipient A business correspondent, located in the taxable territory

They are similar to business facilitator, but they are authorized to transact (i.e. accept
deposit or lend money) on behalf of Bank

Bank Service 2 Business Service 1 Agent of Business

Correspondent Correspondent

Urban Rural Rural Urban

Branch Branch Branch Branch

FCM will Exempt Exempt RCM will

apply apply

Temporary Transfer or permitting use of copyright related to Dramatic/Artistic/Music

work

Service Provider Music composer, photographer, artist or the like

Service Recipient A music company or producer
Example
A.R. Rehman Music compose Right to use T-Series
Royalty = ₹50,00,000

Here, RCM will apply i.e. T-Series is liable to pay GST

Suppose, Rate of GST is 18% then, GST = 50,00,000 * 18% = 9,00,000
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CA Jasmeet Singh

Temporary Transfer or permitting use of copyright related to literary work

Service Provider Author

Service Recipient Publisher located in Taxable Territory
Example
Chetan Bhagat Book Publish right XYZ publisher
Royalty = ₹40,00,000

Option 1 (By Default) Option 2

RCM applicable i.e. Author can choose to

Publisher is liable to pay GST under FCM
pay GST

Note: if author has choose to pay GST under FCM then :-

1. Author has to compulsory take registration i.e. registration threshold of Section 22
is not applicable
2. Author has to file declaration that he is agreed to pay GST under FCM
3. Author cannot revoke this option for one year i.e. author has to pay GST under
FCM for one year from date of availing such option

Selling of financial products (Mutual Funds / investment policy / Credit card etc.)

Service Provider Individual Direct Selling Agents (DSAs) other than a body
corporate, partnership or LLP
Service Recipient Bank or NBFCs located in Taxable Territory.

Example

Commission = ₹50,000

Direct Selling Selling of Financial Bank/NBFC

Agent (DSA) Product services

Company/Firm/LLP Any other person

FCM will apply RCM will apply

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CA Jasmeet Singh

Security Services

Service Provider Any person other than body corporate

Service Recipient A person located in taxable territory
Such Services provided to following persons are exempt :-
1. Department or establishment of
• Central Government
• State Government
• Union Territory
• Local Authority
2. Person registered u/s 51 to deduct TDS
3. Person registered u/s 10 (Composition Scheme)

Case 1.
When Service Provider is Non-Body Corporate

Example
M/s Suraj Security Service (Sole proprietor) has provided Security Guard Services for
the following purposes:
S. No. Purpose Treatment
1. Any organization/Company/Business RCM will apply
registered under GST
2. For the security of Alakh sir house FCM will apply
(Unregistered under GST)

Case 2.
When Service Provider is Body Corporate

Example
Secure Ltd. has provided Security Guard Services to the following persons :
1. To Person registered under GST FCM will apply
2. To an unregistered person FCM will apply

Services by GTA (Goods Transportation Agency)

GTA is a person who provides Goods transportation service by road and issues
consignment note / Freight Bill in return

Service Provider Goods transportation agency

Service Recipient Notified persons
However, Services of GTA is exempt if provided to:
• Department/establishment of the Central
Government/State Government/ Union territory; or
Local authority
• To any unregistered person
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CA Jasmeet Singh

• To person registered u/s 51 to deduct TDS

• Any Factory
• Any society registered under societies act , 1860
• Any co-operative society
Notified Persons • Any person registered under GST
• Any body corporate
• Any firm/BOI/AOP
• Any casual taxable person

Option 1 (Default)
RCM will apply on such services
a) GTA shall not be allowed to claim ITC
b) GST rate shall be 5%

Option 2
GTA has option to avail FCM
a) Rate of GST is 12%
b) GTA is eligible to avail ITC on Inward supplies
c) This option shall be deemed to have been exercised for the next and future financial
years unless GTA files an declaration to revert under RCM on or after the 1st Jan of
preceding FY but not later than 31st March of the preceding FY.
d) Further, a GTA who commences new business or crosses threshold for registration
during any FY, may exercise the option to itself pay GST on the services supplied by
it during FY by making a declaration before the expiry of 45 days from the date of
applying for GST registration or 1 month from the date of obtaining registration,
whichever is later.

Conclusion
Goods Transportation GST @ 12% FCM Applicable
Agency Services
GST @ 5% RCM Applicable

Legal services by Arbitral Tribunal / Advocate / Firm of Advocate

Service Provider Arbitral Tribunal/Advocate/Firm of advocate

Service Recipient Any business entity located in the taxable territory if
Turnover exceeds threshold limit.
Note: Services of court and Tribunal set up under any law e.g. NCLT are covered under
negative list (Schedule III) and hence, shall be taxable under GST
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CA Jasmeet Singh

Services of Arbitral Tribunal/Advocate/Firm of advocate

To Government To Non-Business Entity To Business Entity

Exempt Exempt PFY T/O exceeds

registration threshold

Yes No

RCM will apply Exempt

Renting of Immovable property by CG/SG/UT/LA except Ministry of Railways

Service Provider Central Government excluding the Ministry of Railways

(Indian Railways), State Government, UT or local authority
Service Recipient Any person registered under the CGST Act, 2017

Renting of immovable property

To Person registered under GST To an unregistered person

RCM will apply FCM will apply

Renting of immovable property by any person other than CG/SG/UT/LA

Service Provider Any person

Service Recipient Any registered person

Residential property Let Out

To Person registered under GST To an unregistered person

RCM will apply Exempt

Note:
Always FCM will apply in case of letting out of commercial property except where
an unregistered person let out commercial complex to registered person (RCM will
apply here)
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CA Jasmeet Singh

Services by Government or Local Authority

Service Provider Government or Local Authority

Service Recipient Any business entity located in the taxable territory
Such services shall not include:
• Renting of immovable property,
• Services by the Department of Posts and the Ministry
of Railways
• Services in relation to an aircraft or a vessel, inside or
outside the precincts of a port or an airport
• Transport of goods or passengers.

Transfer of goods by Vessel from a place o/s India up to the custom port in India

Service Provider A person located in non-taxable territory

Service Recipient Importer

Goods from USA Port to Mumbai Port

Import of goods Freight on transport of Goods

Custom duty RCM will apply

Security lending services

Service Provider Lender i.e., a person who deposits the securities registered
in his name or in the name of any other person duly
authorised on his behalf with an approved intermediary
for the purpose of lending under the Scheme of SEBI
Service Recipient Borrower i.e., a person who borrows the securities under
the Scheme through an approved intermediary of SEBI

Broker

Security Security
Owner Security Lending Services borrower

Following services are involved under this transaction:-

S. No. Service provider Service recipient Taxability
1. Broker Security owner FCM
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CA Jasmeet Singh

2. Broker Security borrower FCM

3. Security owner Security borrower RCM

Services by overseeing committee to RBI

Service Provider Overseeing committee

Service Recipient Reserve Bank of India

Overseeing Services Reserve Bank

Committee of India

RCM applicable I.e. RBI is liable to pay GST

Import of service (u/s 7(1)(b) & 7(1)(c) read with Schedule I)

Service Provider Any person who is located in a non-taxable territory

Service Recipient Any person located in the taxable territory
Except: No such reverse charge shall be applicable in case
of OIDAR services received by an unregistered person.

Outside Import of Services India

India

RCM applicable I.e. Importer is liable to pay GST

Note: Import of service for personal purpose & Consideration paid (Supply u/s 7(1)(b))
Is exempted from GST

OIDAR : Online Information Database Access or Retrieval Service

Example : NETFLIX / Google drive / Microsoft cloud service

Section 9(4): If registered person purchases Goods/Services from Unregistered person

then in such case RCM shall be applicable

Person liable to pay GST on renting of motor vehicle service

RCM shall be applicable on Service by way of renting of any motor vehicle if following
conditions are satisfied:-
1. Motor vehicle meant to “carry passenger” car/bus
2. Service provider shall be any person other than body corporate
3. Service recipient shall be body corporate
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CA Jasmeet Singh

4. Cost of fuel is included in the amount charged as consideration from the service
recipient (Rent includes cost of fuel)
If above conditions are satisfied then, such services shall be taxable at the following
two rates:
1. @ 5% (2.5% CGST+2.5% SGST/UTGST or 5% IGST) provided supplier of services has
taken only the limited ITC (of input services in the same line of business) or
2. @ 12% (6% CGST+6% SGST/UTGST or 12% IGST) where supplier of services opts to pay
GST at said rate.
In this case, there is no restriction on availing ITC on goods or services used in
supplying renting of motor vehicles service by the supplier of service.

Analysis
Service Service Cost of fuel Taxability
provider recipient included
A Ltd. B Ltd. Yes FCM (A Ltd. is liable to pay GST)
Mr. P Mr. S Yes FCM (Mr. P is liable to pay GST)
Mr. P B Ltd. No FCM (Mr. P is liable to pay GST)
Mr. P B Ltd. Yes RCM (B Ltd. Is liable to pay GST)
Conclusion

Renting of Motor GST @ 12% FCM Applicable

Vehicles GST @ 5% RCM Applicable

Clarifications:
1. It is clarified that where the body corporate hires the motor vehicle (for transport of
employees, etc.) for a period of time, during which the motor vehicle shall be at the
disposal of the body corporate, the service would fall under “renting of motor
vehicle service”, and the body corporate shall be liable to pay GST on the same
under RCM.
2. However, where the body corporate avails the passenger transport service for
specific journeys or voyages and does not take vehicle on rent for any particular
period of time, the service would fall under “transport of passenger service” and
the body corporate shall not be liable to pay GST on the same under GST.

GST Rates in Real Estate Sector [Section 9(4)]

The effective rate of GST on real estate sector for the new projects by promoters are as
follows:
1. 1% without ITC on construction of affordable houses (area 60 m2 in metros/90 m2 in
non-metros and value up to `45 lakh).
2. 5% without ITC is applicable on construction of:
a) All houses other than affordable houses, and
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CA Jasmeet Singh

b) Commercial apartments such as shops, offices etc. in a residential real estate

project (RREP) in which the carpet area of commercial apartments is not more
than 15% of total carpet area of all apartments.

Conditions
Above tax rates shall be available subject to following conditions:
a) ITC shall not be available.
b) 80% of inputs and input services used in supplying the service shall be purchased
from registered persons. Except (i.e. Can be procured from Unregistered Person)
• Services by way of grant of development rights, long term lease of land or Floor
Space Index (FSI) (including additional FSI)
• Electricity, high speed diesel, motor spirit, natural gas.
However, if value of inputs and input services purchased from registered supplier is less
than 80% then,
• The promoter has to pay GST on reverse charge basis, under section 9(4) of the
CGST Act, at the rate of 18% on all such inward supplies (to the extent short of 80% of
the inward supplies from registered suppliers).
• Where cement is received from an unregistered person, the promoter shall pay tax
on supply of such cement on reverse charge basis, under section 9(4), at the rate of
28% (CGST 14% + SGST 14%).
GST on capital goods shall be paid by the promoter on reverse charge basis, under
section 9(4) of the CGST Act at the applicable rates.
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CA Jasmeet Singh
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CA Jasmeet Singh

REGISTRATION UNDER GST

As per Charging Section of GST "Taxes Shall be collected & paid by taxable Person"
• Taxable Person
➢ Any Person who is Registered or liable to Register
➢ Hence even
✓ Unregistered person is also a taxable Person if → liable to Register
✓ Voluntary Registered person shall also be a taxable person even not liable
• Who is liable to Register
➢ Sec-22 - Person liable for Registration
➢ Sec-24- Person liable for Registration Compulsorily

Section 22 Person liable for Registration

1. Every Supplier of Goods / Services obtain Registration

➢ State from where taxable Supplies are made.
➢ If Aggregate T/o Exceed Specified limit in a financial year.

2. Aggregate Turnover:– On all India basis of Person having Same PAN. It Includes
Taxable Supply
Exempt Supply
Export of Goods & Services
Supply to DP having the same PAN
➢ Excludes
• Inward Supplies under RCM Supply
• Taxes including cess under GST

3. Specified limits of Aggregate T/o for Registration

States Limit Limit
Exclusive supply Of Goods Otherwise
other than Notifed Goods
(i) Manipur / Mizoram / Nagaland / 10 Lac 10 Lac
Tripura (MMT-N)
(ii) Arunachal Pradesh / Meghalaya / 20 Lac 20 Lac
Sikkim / Uttarakhand / Puducherry /
Telangana (Arun-STUMP)
(iii) Other States 40 Lac 20 Lac
Notes
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CA Jasmeet Singh

• Person Considered making only Supply of Goods even supply of Services Provided
by way of Interest/Discount
• 40 Lac threshold not available if Person is engaged in making Supplies of following
items
✓ Edible Ice/Ice Cream
✓ PAN masala/Tobacco Products/Substitutes
✓ Fly Ash bricks / Building bricks/ fossil meal bricks/ Earthing roofing tiles
• If Operating from more than one state including Specified State then lower
threshold limit shall be applicable. However if person is engaged in making
exempt supplies from specified state, then lower threshold shall not be applicable.
• Registration required to be taken only from state from where taxable Supplies are
made.

Section 24 Compulsory Registration

Compulsory registration is required in following cases even if Turnover doesn’t exceed the
threshold:
(i) Person making Inter State taxable Supply of Goods
Except: limit of 10 lac/20Lac available for Notified Handicraft goods & Handmade
goods Inter-state Supply. Provided Person must have PAN & generated E-way bill.
(ii) Casual taxable Person making taxable Supply
Except: Limit of 10 Lac/2oLac available for Notified Handicraft goods & Handmade
goods Inter-state Supply. Provided Person must have PAN & generated E-way bill.
(iii) Person liable to Pay tax Under RCM (Inward Supplies).
(iv) Non-Resident taxable Person.
(v) Eco → Required to Collect TCS U/s 52 or liable to pay tax u/s 9(5)
(vi) Person Supplying goods inter state through ECO. (Sec.22 shall be applicable where
person make Intra state supply of goods through ECO).
(vii) Person Required to deduct TDS u/s 51
(viii) Person acting as an agent for taxable Person.

Section 23 Person not liable for Registration

(i) Person engaged Exclusively in non-taxable & Exempt Supply.

(ii) Agriculturist, to extent Supply of Produce from Cultivation of land.
(iii)Person making only RCM Supplies (outward Supplies).
(iv) Person making Inter State Supply of Services upto 20 lac/ 10 lac.
(v) Person / CTP making Inter State Supply of notified Handicraft/Handmade goods upto
20 Lac / 10 lac. Provided Person must have PAN & generated E-way bill.
(vi) Person making Supplies of Services through ECO with Aggregate T/o Upto 20 Lac

Section 25 Registration Procedure

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CA Jasmeet Singh

1. Person who is liable for registration u/s 22 or u/s 24 shall apply for registration within 30
days from the date he becomes liable for registration.
CTP/NRTP shall apply for registration atleast 5 days prior to commencement of business.
2. Registration is to be taken state wise i.e. there is no centralized registration under GST.
3. Within a state an entity having different branches can have single registration wherein
it can declare once place as principal place of business and other branches as Additional
place of business.
4. A person having multiple places of business within a state or UT can apply for separate
registration for each such place of business.
5. Person having separate registration from same PAN shall be treated as Distinct Person
for each such registration.

6. If one unit in SEZ & another in non SEZ area in Same state then Separate Registration is
Required.
7. Person may opt to get voluntarily register even not liable as per section 22 or 24.
8. PAN is mandatory for having the registration under GST except NRTP can get passport
based Registration.
9.
Effective Date of Registration

Liable to Register Voluntary Register


Date of which certificate of
Registration granted
Applied within 30 Not applied
days from liable within 30 days
to Register 
 Date on which
Date on which certificate of
liable to Register Registration
granted

Effective Date of Registration

10. Unique Identification Number

a) Who shall apply:
• Specialized Agency of UN or any financial institution of UN
• Consulate
• Embassies

b) Purpose- To obtain refund of tax paid on Supplies of GIS supplied to them

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CA Jasmeet Singh

Note:
• It is Centralized number not state wise
• UIN Holder not a registered person, hence not a taxable person.

11. Temporary Registration

In a serach, survey, enquiry, inspection or any other proceedings of the act, Proper officer
finds that a person is liable for registration but failed to apply for registration, then such
officer may register the person on temporary basis.

Such person shall either:

(i) Submit an application for registration within 90 days from the date of grant of
temporary registration, or
(ii) File an appeal against such temporary registration.

In case (ii), if the Appellate Authority upholds the liability to registration, application for
registration shall be submitted within 30 days from the date of issuance of such order of
the Appellate Authority.

GSTIN thereafter granted shall be effective from the date of order of the proper officer
granting temporary registration.

GSTIN- Unique No. in GST to identify tax payer as pan in Income Tax
State Code PAN Entity Code Check
0 9 B D I P A 0 8 8 4 Q 1 Z 1

Section 26 Deemed registration

• Registration under GST is not tax specific, which means that there is single registration
for all the taxes i.e. CGST, SGST/UTGST, IGST and cess.
• Grant of registration/UIN under any SGST Act/ UTGST Act is deemed to be
registration/UIN granted under CGST Act provided application for registration has not
been rejected under CGST Act.
• Further, rejection of application for registration/UIN under SGST Act/UTGST Act is
deemed to be rejection of application for registration under CGST Act.
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CA Jasmeet Singh

Procedure of Registration

Note:
Details to be Provided in Part B Includes Bank A/c details. However bank A/c details can be
provided within
a) 30 days from Date of Grant of Registration
b) before filing of GSTR- 1/ IFF – whichever is earlier
If such RP fails to furnish bank details within the time prescribed above then his registration
shall be stand suspended and suspension shall be automatically revoked when valid bank
details are furnished.
However Following Person is required to provide Bank Details at the time of registration
a) TDS deduction
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CA Jasmeet Singh

b) TCS Collector
c) Dept Driven Registration.

Part II

Y where a person fails to undergo

Proper Officer examines the application and accompanying documents.
Aadhaar authentication/does not
opt for Aadhaar authentication

If the same are

found to be in order within 30 days from where PO deems it fit to carry
Proper Officer
application out site verification
issues notice
submission date
thereby seeking
YES YES where a person, who has undergone
clarification,
information or Aadhaar authentication, is identified
Registration Registration is on common portal, based on data
granted within granted within documents from within 7 working analysis & risk parameters, to carry
7 working days 30 days of the applicant days from out site verification
from the date application electronically application
of submission after submission date
Other Cases
of application verification of
without site site &
verification prescribed
documents
If applicant has furnished the clarification,
information or documents within 7 working
days’ time from receipt of notice?
where where a person, who
where PO
applicant has undergone NO Yes
if applicant deem s it
fails to Aadhaar
successfully fit to carry If proper officer is satisfied with it?
undergo authentication, is
validates his out site
Aadhaar identified on NO Yes
aadhaar verification
authenticat common portal,
authentication ion/ does based on data
analysis & risk Proper officer will grant registration
not opt for
parameters, to carry within 7 working days from the date
Aadhaar
out site verification of receipt of information/
authenticati
clarification/ documents
on

Proper officer may reject the application for reasons to be recorded in writing.

Deemed Registration

If the proper officer fails to take any action,

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CA Jasmeet Singh

(a) Within a period of 7 working days from the date of submission of the application in
cases where a person successfully undergoes authentication of Aadhaar number
(b) Within a period of 30 days from the date of submission of the application in cases
where
• a person fails to undergo authentication of Aadhaar number or
• does not opt for authentication of Aadhaar number; or
• where PO deems it fit to carry out site verification
• Person is identified on common portal, based on data analysis & risk parameters, to
carry out site verification
(c) Within a period of 7 working days from the date of the receipt of the clarification,
information or documents furnished by the applicant, the application for grant of
registration shall be deemed to have been approved.

Aadhar Authentication

Section 25(6B) and (6C) Read with Rule 8(4A), require every individual and Karta,
Managing Director, Whole Time Director, partners of firm etc. respectively, to undergo
authentication/furnish proof of possession of aadhaar number in prescribed manner. Such
authentication is mandatory to be eligible for grant of registration.
However Following persons have been exempted from aadhaar authentication :

(i) A person who is not a citizen of India

(ii) Department or establishment of State Government or Central Government
(iii) Local authority
(iv) Statutory body
(v) Public Sector Undertaking
(vi) A person applying for Unique Identity Number

Special Provisions Related to CTP/NRTP:

CTP NRTP
A Person who occasionally undertake A Person who occasionally undertake
transaction transaction
• In state / UT where he has no PoB But no fixed POB or Residence in India
• In course or furtherance of Business
Registration: Registration:
• Compulsory Registration U/s 24 • Compulsory Registration u/s 24
• Form REG -01 • Form REG – 09
• PAN required • Passport Required
• Registration 5 Days before comment of • Registration 5 Days before comment of
Business Business
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CA Jasmeet Singh

Composition Scheme → Not available Composition Scheme → Not available

ITC on Input/Services/Capital Goods available ITC only on Imported Goods
Required to submit Advance tax at time of submitting application
Registration Valid for:
a) Period for which reg is seek
OR
b) 90 Days
(Further extendable by 90 days)

Section 28 - Amendment of Registration

a) Non-core fields: Email Id, Mobile no, Authorised Signatory etc

b) Core fields:
• Legal Name of Business
• Address of
Principal/Additional Place
of Business
• Addition /Detection in main
patterner/ Karta/MD/BOD
etc
c) Submit application within 15
days from change
i. For Core Areas on GST
common Portal. PO may
permit Amendment
within 15 days from
application
ii. For Non-Core areas,
Amendment to be made
on GST Portal without
permission of PO by
doing OTP verification
d) Amended Registration
Certificate granted
e) If there is change in the
constitution (i.e. change in
PAN) or change in state then
existing registration shall be
cancelled and new
registration has to be taken.
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CA Jasmeet Singh

If the proper officer fails to take any action,-

(a) within a period of 15 working days from the date of submission of the application, or
(b) within a period of 7 working days from the date of the receipt of the reply to the
show cause notice, the certificate of registration shall stand amended to the extent
applied for and the amended certificate.

Section 29 Cancellation of Registration

1. Voluntary Cancellation (By registered Person)

Circumstance to cancel Registration (Apply within 30 days)
a) Business Discontinued / Transferred / Armed Granted / Merger / Demerger /
Disposal / Death of properties
b) Change in Constitution of Business
c) No Longer liable to register u/s 22 or 24
d) Opt out of voluntary Registeration.

2. Circumstance when POcancel Registration:

a) If contravened following Provisions:
i) Mismatch of GSTR-1/1A & GSTR-3B
ii) Mismatch of GSTR-2B & GSTR-3B
iii) Doesn’t conduct Business from Registered place.
iv) Violate Provision of anti-Profiteering i.e. benefit of reduction of GST doesn’
v) Doesn’t Provide Bank A/c details within time
vi) Issue Invoice / Bill without supply of Goods & Sources
vii) Avail ITC in Violence of Act
viii) Violates rule 86 B (Maximum ITC allowed 99%)
b) Registration obtained by Means of Fraud/willful misstatement/supersession of
facts
c) Voluntary Registration person not commenced business within 6 months from
Registration
d) Not File return by composition supplier beyond 3 months from due date.
e) Not file return by normal supplier
i) Monthly Return - For continuous 6 months
ii) Quarterly return - For 2 tax periods.

3. Suspension of registration [First proviso to section 29(1) and second proviso to section
29(2) read with rule 21A]

A. Suspension During Cancellation Proceedings:

• If a registered person applies for cancellation, their registration will be
suspended from:
a. The date of submission of the cancellation request, OR
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CA Jasmeet Singh

b. The date from which cancellation is sought, whichever is later.

• If cancellation is initiated by the department (suo-moto), the proper officer
decides the suspension date.

B. Suspension Due to Discrepancies or Non-Compliance:

• Registration can be suspended if there are major mismatches between:
a. GSTR-1/1A vs. GSTR-3B OR GSTR-2B vs. GSTR-3B, indicating violations.
b. Non-compliance with Rule 10A (failure to furnish bank details after
registration).
• The taxpayer will be notified electronically or via email and given 30 days to
explain why registration should not be canceled.
• No refund under Section 54 will be granted during the suspension period.

C. Restrictions During Suspension:

• The taxpayer cannot make taxable supplies during suspension i.e. No tax invoice
can be issued, and no tax can be charged during this period.
• The taxpayer is not required to file GST returns

D. Revocation of Suspension:
• Suspension automatically ends when the cancellation proceedings conclude.
• Revocation is effective from the date the suspension started.
• The proper officer can revoke suspension anytime during cancellation
proceedings if deemed necessary.

E. If registration was suspended due to non-filing of GST returns, suspension will end
once all pending returns are filed.

F. If registration was suspended due to non-compliance with Rule 10A, suspension will
be revoked upon compliance.

G. Effect of Suspension Revocation:

Once suspension is revoked,
a. Revised tax invoices (Section 31(3)(a)) must be issued for supplies made
during suspension.
b. First return (Section 40) provisions will apply for supplies made during this
period.
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CA Jasmeet Singh

4. Amount payable on cancellation of registration [Section 29(5) & (6)]

a) Effective Date & Payment of Dues:

• The cancellation of registration will be effective from the date decided by the
proper officer and mentioned in the cancellation order.
• The officer may direct the taxpayer to pay any outstanding tax, interest, or
penalty, including the amount payable under Section 29(5).

b) Reversal of ITC on Inputs:

The taxpayer must debit their electronic credit/cash ledger by the higher of:
i. ITC on inputs (proportionate to the invoices where ITC was claimed).
ii. Output tax payable on such goods.

c) Reversal of ITC on Capital Goods & Machinery:

The taxpayer must reverse ITC on capital goods or plant & machinery, whichever is
higher of:
i. ITC calculated on the remaining useful life (assuming a 5-year life) as per Rule
44.
ii. Tax on the transaction value of such capital goods as per Section 15.

5. Other Points
a) Even after cancellation, the taxpayer is still liable to pay any pending tax or dues
for the period before cancellation. (Section 29(3))
b) If registration is canceled under the SGST/UTGST Act, it is automatically canceled
under the CGST Act as well. (Section 29(4))
c) The taxpayer will be notified via SMS and email once registration is canceled. The
cancellation order will be sent to the primary authorized signatory through email
and SMS.
d) The taxpayer cannot file returns for periods after cancellation. However, they can
still submit returns for the period before cancellation, when registration was
active.

Revocation of cancellation of registration Section 30/Rule 23

1. Application for Revocation:

• If a proper officer cancels a GST registration suo-motu, the taxpayer can apply for
revocation within 90 days from the date of the cancellation order.
• This period can be extended by the Commissioner or an authorized officer (not
below the rank of Additional/Joint Commissioner) for up to 180 more days (i.e., 90
days + 180 days).
• If cancellation was due to non-filing of returns, the taxpayer must first file all
pending returns and clear dues before applying for revocation.
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CA Jasmeet Singh

2. Approval of Revocation:
If the proper officer is satisfied, he will approve the revocation request within 30 days
of receiving the application and communicate the decision to the applicant.

3. Rejection of Revocation:
• If the officer intends to reject the revocation request, he must first issue a Show
Cause Notice (SCN) to the applicant.
• The applicant must submit a reply within 7 working days of receiving the SCN.
• The proper officer must then dispose of the application (approve/reject) within 30
days of receiving the applicant's response.

4. Filing of Pending Returns After Revocation:

Once cancellation is revoked, the taxpayer must file all pending returns (from the
effective cancellation date to the date of revocation order) within 30 days of the
revocation order.

5. Deemed Revocation Under CGST Act:

If cancellation is revoked under the SGST Act / UTGST Act, it is automatically deemed
revoked under the CGST Act.

Amendment

Sec 29 read with Rule 21 has been amended to provide that if in case of Revocation of
Cancellation u/s 30, Person fails to file his GST returns from the Date of Cancellation Order
(or as the case may be, from Effective Date of Cancellation) till Date of Revocation order
within the prescribed period of 30 days from Revocation Order, then it can become one of
the ground for Suo-moto cancellation of registration by PO

Illustrations

1) The registration of Naman Associates was cancelled by the proper officer by an

order dated 1st June for its failure to furnish returns. The registration was cancelled
with effect from 1st June itself. It applied for revocation of cancellation of
registration and the order for revocation of cancellation of Naman Associates is
passed on 31st July. In this case, Naman Associates shall be required to furnish all the
returns for the period from 1st June to 31st July within a period of 30 days from 31st
July, i.e. by 30th August. In case of failure to do so, PO can again move to suo-moto
cancel the registration of Naman Associates.
 13
CA Jasmeet Singh

2) The registration of Naman Associates was cancelled by the proper officer by an

order dated 1st June for its failure to furnish returns. The registration was cancelled
with effect from 1st January itself. It applied for revocation of cancellation of
registration and the order for revocation of cancellation of Naman Associates is
passed on 31st July. In this case, Naman Associates shall be required to furnish all the
returns for the period from 1st January to 31st July within a period of 30 days from
31st July, i.e. by 30th August. In case of failure to do so, PO can again move to suo-
moto cancel the registration of Naman Associates
1. Charitable Services

Meaning of Charitable Activity (PEER)

E - Education & Skill Development Provided to

(a) Abondoned/Orphan/Homeless children
(b) Physically / Hentaly Abused
(c) Prisoners
(d) Person Age > 65yr I Rural Area.
E- Environment Preserve - Forest/Waterr bodies/Wildlife etc.
R- Advancement of Religion/Spirituality/Yoga

2. Services by way of conduct of Religious Ceremony

PANDIT JI K SERVICE ® EXEMPT

KATHA/KIRTAN/SATSANG ® SERVICES ® EXEMPT

3. Renting of Percents of Religious place (Mandir Masjid Gurudwara etc)

owned or managed by Person Reg 0 s 12AA/10(23)
 EXEMPT TAXABLE
• ROOM Charges Upto 999/day ₹ 1000 or more /day
• Holl/Pandol/Open Area Upto 9,999 /day ₹ 10,000 or more/day
• Shaps Upto 9,999/month ₹ 10,000 or more/Month

4. Religious Piligrimage (DHARMIK YATRA) by

Kumaon Mandal Vikas Nigam Lited → KAILASH MANSAROVAR (CHINA)
Hajj committee or state Hojj committee → HAJ YATRA (Saudi Arabia)

EXEMPT
Religious Pilgrimage Provided by Any other Organization →Taxable

5. Training & Coaching

ART Includes → Singing /Dancing/Painting/Theatre/literature/Script etc.

Run singing → TAXABLE

classes
Eq. xyz charitable entity

Run Cricket
sports → EXEMPT
Academy

Run Dancing → Exempt

classes
Eq. Mr. Viru
Run Cricket
Coaching →Taxable
Class
2. Health Care Services

1. Services by Vetenary clininc → Health Care → Animals/Birds.

2. Health core Services by Authorised Medical Practitioners (Doctors)

Clinical Establishment (Hospital)

Para-Medics
(Nurses)
3. Transportation of Patients in Ambulance

Meaning of Health Care Service

(1)

(2) Include → Transp. of potent to oc From clinical establishment

(3) Exclude → Cosmetic & Plastic surges/Hair Transplant

But Required to Treat/Restore → Anatomy or Function due to Defect/ Abnormality/
Injury/Trauma. → EXEMT
4. IVF Pregnancy Technique → Health Care Service → EXEMPT
5. Foods Service by clinical Establishment (Hospital Canteen)
a) Provided To → In Patients (Admitted In Hospital) → Part of Health Care Service
➔ Hence Exempt
b) Other (Not Admitted Patents/Visitors) → Not a Part of Health Care Service
➔ Hence Taxable
 6. Renting of ROOMS in Hospital

7. Services provided by Doctors/Senior Doctor/Consultant to Hospital

8. Hospital → Let out shops → TAXABLE

9. Hospital → Advertisement Services to pharma companies → TAXABLE

3. Education Services :

Meaning of Educational Institute :

Educational institution means an institution providing services by way of -
(i) Pe-school education and education up to high secondary school o equivalent;
(ii) Education as a pat of a curriculum for obtaining a qualification recognized by any
law for the time being in force; (college/Universities/ICAI/ICSI/MBBS etc.)
Note : Education as a part of a prescribed curriculum for obtaining a qualification
recognized by a law of a foreign country is not covered here. ∴ Taxable
(iii) Education as a part of an approved vocational education course.
 Skill development
Course by ITI - Industrial Training Institute/Approved by
ITC - Industrial Training center /NCVT/SCVT
Designated Trade → Trade occupation subject Approved by CG
It is important to note that the Central and State Educational Boards shall be treated as
'Educational Institution' for the limited purpose of providing services by way of conduct of
examination to the students. Eg. CBSE, UP-Board, ICSE, National Testing Agency

Note:
Private coaching Institutes → Not considered As Ed. Institute → Not Exempt

A. Services Provided By Education Institute

To Student/Faculty/Staff Conducting ENTRANCE EXAM Against ENTRANCE FEES

 
EXEMPT EXEMPT

B. Services Provided To Education Institute

Service Pre-School College
or school University
Transport of Faculty Staff student EXEMPT TAXABLE
Catering Including Mid day Meal EXEMPT TAXABLE
Security, Cleaning & Housekeeping service EXEMPT TAXABLE
performed within Educational Institute
Service related to - Admission to or conduct of EXEMPT EXEMPT
Examination by such Institute (Exam center)
Online Education Jouinal & Periodicals TAXABLE EXEMPT
Notes :
1. Educational Institute → Hotel Facility → Students → Exempt
2. Course In a College → Dual Qualification

One is Recognized by law & other is Not Recognized by law

Mixed Supply is Taxable
3. Inward Centre/State Board NTA Outward

• Online testing service • Conduct of Exam

• Printing of Admit Card/ Against → Exempt Fees
Ques. Paper
• Result Publish • Other Service → Taxable
 like Accreditation Against fees
Exempt

4. Food In a Mess/Canteen

5. Fees charged from Employers/Companies Participating in Campus Recruitment →

Taxable

MIGRATION CERTIFICATE
6. Ed. Institute Student
Fees charge

Exempt
7. Anganwadi (Pre-School) → Mid-Day meal Services To/By Anganwadi → EXEMPT

8.
4. Agriculture Services

• Meaning of Agriculture
- It Includes -
• Culuation of Plants/Crops
• Rearing of All life forms of animal For Food/Fiber/Fuel/Raw Material
except Rearing of Horses. or other Similar Product

Following services are Exempt :

1. Agricultural operations directly related to production of any Agricultural produce
like →Cultivation/Harvesting/Threshing/Plant Protection/Testing

2. Supply of Farm labour

3. Process corned out of Agricultural Farm which do not Altes essential charactes but
makes it Marketable for Primary Market.
Eg → Cutting, Trimming, Cleaning, softing, Bulk pockaging etc.

Agro-Machine
4. Renting/Leasing of
Vacant Land.

5. Looding/Unloading/Packing/Storage/Warehousing/Agriculture Produce

6. Agriculture extension Services (Frames Education/Training)

7. Services by :-

Agricultural Produce Marketign committee (APMC) For Sale/Purch. of

Commission Agent Agricultural Produce

8. Intermediate Prod. Process As Job Work In relation to Agriculture

9. Services by way of loading, unloading, packing, storage or warehousing of rice.
10. Services by way of warehousing of minor forest produce.
11. Services by way of storage/warehousing of Agricultural produce, rice, cereals,
pulses, fruits and vegetables.
12. Services by way of artificial insemination of livestock (other than hourses).

Artificially making female Animal → Pregnant

5. Passenger Transportation Service

Jal
Passenger Transp. Service Thal

Vayu

A. By Road

• Rikshaw → Exempt Bus

• Metered Taxi → Exempt
• Rodio Taxi (OLA/UBER) → Taxable

AC Bus Non-AC

Taxable

Stage Carriage Contract Carriage

(Booking)

Exempt
For the purpose
of Hire/Tourism

STAGE CARRIAGE → Pre-decided Routes & Stoppages

Yes No
Hire → Taken on Rent for a certain period & Manner of
Usage decided by person who has taken on Rent Taxable Exempt
 Note : Hiring of Non-AC Contract Carriage by Firm/Companies for
Transportation of EEs.

Transportation Takes place @ pre- Contract carriage is hired for period of Time &
determined Roots & pre- Manner of usage is decided by Firm/Companies
determined schedule

It is Renting of Motor
Vehicle

Example Taxable

Reliance
Mr. J Non-AC Cabs Hired Transp. Service X Renting of H.V ✓

EEs Transp. Facility

Route Fixed
Running Days By Reliance

Hours of Running

B. By Rail

• AC-Coach Non-AC Coach • Metro

• First Class • Monorail
• Tramway
Exempt
Taxable
Exempt
 C. By Waterways (River/Sea/Lakes etc.)

Inland Waterways Vessel (Ship/Yacht/Boat etc.)

Exempt
Pre-dominantly Public Transport
for Tourism

Exempt
Taxable
Eq. Shikara/Boat house/Cruise

The expression ‘public transport’ used in this Entry only means that the transport should be
open to public. It can be privately or publicly owned. Only exclusion is on transportation
which is predominantly for tourism, such as services which may combine with
transportation, sightseeing, food and beverages, music, accommodation such as in shikara,
cruise etc.

D. By Airway

Passenger Embank/Terminate Otherwise

In Economy class in the state of
BATMAN-MMS
(Bagdogra-WB, Assam, Tripura, Taxable
Manipur, Arunachala Pradesh,
Nagaland, Mizoram, Meghalaya
& Sikkim

Exempt
6. Goods Transportation

1. Transportation of Goods By

By Road Inland Waterways

Exempt
Through Through Others
GTA Courier eg.
Rikshaw loader
bullock cart etc.
Taxable Taxable

Exempt

* GTA → Transp. of Goods by Road + Consignment Note

Risk of Goods → Transporter

2. Transp. of specified Goods through GTA/Rail/Vessel → Exempt


RANDOM

R – Relief Material for Victims of Natural or Non-mode disaster like

flood/famine/earth quack/was etc.
A – Agricultural Produce (Fruit/Vegetable etc.)
N– Newspaper/Magazine → Reg. with Registrar of Newspaper.
D– Defence/Military Equipment
O– Organic Manure
M– Milk/salt/Food grain (Flour/Pulses/Rice)
3. Service provided by GTA → To Unregistered Person

• Dept/Establishment of CG/SG/UT/LA
• Local Authority
• Govt. Agencies → Reg U/S 51 to deduct TDS

Exempt

4. Transport of Minerals from Mine to Railway siding or Transportation within Mining Area.

➔ Vehicle along with Driver is hired by Mine Operator (Adani).

➔ It is not a Transportation of Goods but Renting of Motor Vehicle

➔ Therefore No Ex. Shall be Allowed.

7. Banking & Financial Services.

Money Lend/Advance/Deposit
1. Lender Borrower
Interest/Discount

Any Person
Exempt

Bank Credit Card

Card holder
NBFCs
Interest Charged on Credit Card

Taxable
Note : Any charges by whatever name called (Documentation charge, File charge,
Processing charge etc.) recovered over & above Interest on loan → Taxable

Foreign Currency
2. BANK-1 (ICICI) Foreign Currency
Dealer - 1
Foreign Foreign
Currency Exempt
Currency

BANK-2 (KOTAK) Foreign Currency

Foreign Currency Dealer - 2

Foreign Currency
Bank Mr. Ram (Exporter)

Foreign Currency
Foreign Currency deoler Mr. Shyam (Importer)

Taxable

A/C → Pradhan Mantri Jan Dhan Yojna

3. Bank Account Holder
Services

Basic Saving Bank

Exempt deposit A/c

4. Services of processing of Transaction through Debit/Credit Card or other

payment Card

Upto ₹ 2000 Exceeding ₹ 2000

Exempt Taxable
 Example

POS Mach
PAYTM Acquiring bank
SBI
HDFC
Trans. Upto ₹ 2000 Paytm charge % i.e. ₹ 20

No GST

5. Interest charged by security broker for delayed payment of commission / brokerage /

margin money by client → Exempt

8. Business facilitator/correspondent
Services by the following persons in respective capacities
(a) Business facilitator or a business correspondent to a banking company with respect to
accounts in its rural area branch;
(b) Any person as an intermediary to a business facilitator or a business correspondent
with respect to services mentioned in entry (a); or
(c) Business facilitator or a business correspondent to an insurance company in a rural
area.
BCs/BFs help villagers to open bank accounts and provide other banking services to
them. They act as an intermediary between the bank and its customers. Banks, in turn,
pay commission/fee to the BCs/BFs.
The BCs are permitted to carry out transactions on behalf of the bank as agents, the
BFs can refer clients, pursue the clients' proposal and facilitate the bank to carry out
its transactions, but cannot transact on behalf of the bank.

Insurance
BF/BC
Company Services
provide
In Urban In Rural Area
Area
Taxable (FCM) Exempt
ie BC/BF liable to Pay Tax
 9. Performance By Artist

Performance by Artist

Music/Dance/Theatre
Folk/Classical Others
eq Western Music
TV Performance etc
Consideration Received
Upto Exceed
Always Taxable
₹ 1.5 L ₹ 1.5 L

Exempt Fully Taxable

However, above service provided As Brand Ambassador → Always Taxable

(PROMOTE BRAND)

10. RWA Service (Resident Welfare Association → Housing Society)

Services– Housekeeping/Club house etc.

Maintenance Change
Gokul Dham 
Society upto 7500 p.m./Member (Flat)

Yes No
 
Exempt Taxable
 Inward Supply O/w Supply
RWA Members
ITC-Allowed Charge > 7500 pm

Taxable
11. Sports Service

Participation In Sports Event Recognized Sports

PR-CUT Body
Fees → Exempt

Participate
Sports Event → Taxable

Franchise Owner Eq. RCB/Any other Person eq.

NGO
P = Player R = Refre C = Coach U = Umpire T = Team Manager
Selector/Commentator / Curator etc. ® Services ® Always Taxable

Service Eg. Sponsorship

Recognized Sports Recognized Sports
Body  Body
Exempt

12. Services Provided by Govt.

13. Services Provided To Govt.
 CA Jasmeet Singh 1

New Exemptions Introduced

1.

GTA Any Person

Services Of Transportation
+
Loading / unloading/ Packing/ Unpacking

Composite Supply – Main Supply is Transportation.

Hence to be deal accordingly.

2.

Govt. School Exempt

Central State Board Affiliation

Private School Taxable

3. Services provided by Hostels, Camps, Paying Guest accommodations and the like
Supply of accommodation services having value of supply upto ₹ 20,000 per person per month
provided that the accommodation service is supplied for a minimum continuous period of 90
days.

4. Services provided by Ministry of Railways (Indian Railways) to individuals by way of:

a) Sale of platform tickets;
b) Facility of retiring rooms/waiting rooms;
c) Cloak room services; and
d) Battery operated car services.

5. Services provided by one zone/division under Ministry of Railways (Indian Railways) to another
zone(s)/division(s) under Ministry of Railways (Indian Railways).

6. Any services provided by:

a) the National Skill Development Corporation set up by the Government of India;

b) the National Council for Vocational Education and Training;
c) an Awarding Body recognized by the National Council for Vocational Education and
Training;
 CA Jasmeet Singh 2

d) an Assessment Agency recognized by the National Council for Vocational Education and
Training;
e) a Training Body accredited with an Awarding Body that is recognized by the National
Council for Vocational Education and Training
in relation to:
i. the National Skill Development Programme or any other scheme implemented by
the National Skill Development Corporation; or
ii. a vocational skill development course under the National Skill Certification and
Monetary Reward Scheme; or
iii. any National Skill Qualification Framework aligned qualification or skill in respect of
which the National Council for Vocational Education and Training has approved a
qualification package.

7. Supply of services by way of providing metering equipment on rent, testing for meters/
transformers/capacitors, etc, releasing electricity connection, shifting of meters/service lines,
issuing duplicate bills, etc which are incidental or ancillary to the supply of transmission and
distribution of electricity provided by electricity transmission and distribution utilities to their
consumers.