Indirect
Taxation
Goods
and Services Tax
Basic Study Notes
GST is divided
into three parts:
1.
CGST
(Central GST),
2.
SGST
(State GST)/UTGST (Union Territory GST), and
3.
IGST
(Integrated GST).
CGST
As per the
Central Goods and Services Tax Act, 2017 CGST is levied
and collected by the Central Government on intra-state
supplies of taxable goods or services or both. It is a revenue source to the
Central Government of India.
SGST/UTGST
As per the
State Goods and Services Tax Act, 2017 SGST is levied
and collected by the State Governments/Union Territories on intra-state supplies of taxable goods or
services or both. It is a revenue source to the respective State
Governments/Union Territories.
IGST
As per the
Integrated Goods and Services Tax Act, 2017 IGST is levied
and collected by the Central Government on all inter-state transactions of taxable goods or
services or both. It is a mechanism to monitor the
inter-state trade of goods and services and to ensure that the SGST component
accrues to the Consumer State.
The revenue of GST from inter-state sales will not accrue to the
exporting state and the exporting state will be required to transfer to the
Central Government the credit of SGST used in payment of IGST.
Different rates of taxes under GST
Different GST
rates are: 0% (nil-rated), 0.25%, 3%, 5%, 12%, 18% and 28%.
Let in an
Intra-State supply rate of GST is 18% - In this case 9% will be shared by the
Central Government as CGST and 9% will be shared by the respective State
Government as SGST.
Let in an
Inter-State supply rate of GST is 12% - In this case 6% will be shared by the
Central Government as CGST and 6% will be shared by the respective Consumer
State Government as SGST.
The difference between zero rated
supplies and exempted supplies
|
|
Exempted Supplies |
Zero rated Supplies |
|
1 |
“Exempt supply” means supply of any goods or services or both which attracts
‘nil rate of tax’ or which may be specifically exempt from tax u/s 11 of CGST
Act or u/s 6 of the IGST Act, and includes non-taxable supply. |
“Zero-rated supply” means supply which is meant for export or supply
of goods or services or both for authorised operations to Special Economic
Zone (SEZ) developer or a SEZ unit. |
|
2 |
No tax on the outward supplies: But the input supplies used for making
exempt supplies to be taxed. |
No tax on the outward supplies; Input supplies also to be tax free. |
|
3 |
No ITC is available. |
ITC can be claimed. |
|
4 |
Any person engaged exclusively in the business of supplying goods or services
or both which are wholly exempt from tax under the CGST or IGST Act shall
have no liability of registration. |
A person exclusively making zero rated supplies may have to register as
refunds of unutilised ITC or integrated tax paid shall have to be claimed. |
|
5 |
A registered person supplying exempted goods or services or both shall
issue, instead of a tax invoice, a bill of supply |
Normal tax invoice shall be issued |
GST will not be applicable and levied on the following goods:
a) Petroleum crude,
b) High
speed diesel,
c) Motor
spirit (commonly known as petrol),
d) Natural gas,
e) Aviation turbine fuel, and
f) Alcoholic liquor for human consumption.
GST Number
GST Number assigned to registered
businesses/individuals follow a specific structure. Key facts about the GST
Number Format are as follows:
1.
The
GSTIN consists of 15 digits.
2.
The
first 2 digits can range from 01-35 and indicate the state code for the
registration as per the Indian Census of 2011.
3.
The
next 10 digits are the PAN number of the GST registered entity.
4.
The
13th digit of the GST Number is the entity code. It refers to the order in
which registrations was made by a legal entity that has multiple registrations
within the same state. In case a single legal entity has 2 business verticals
registered within the same state, the first registration will have 1 as the
13th digit while the second registration will have 2 as the
13th digit.
5.
The
14th digit for current registrations is “Z” by default according to the
current GST number format however this digit is essentially being retained for
future use.
6.
The
last digit (15th) is currently used as a check code and may be a number or
alphabet that has been assigned randomly.
For getting a GST Number having PAN Card
is essential. For
every State there must be one separate GST Number for a dealer having branches
in different States. For different branches within the State having one single
GST Number is sufficient. Therefore, inter-state stock transfer within the same
business will attract IGST, whereas intra-state stock transfer within the same
business will not be liable for GST.
Exemption from GST for small taxable persons
As per Section 22(1) of the CGST Act, 2017 and Notification No. 10/2019, suppliers of goods and services exempted from obtaining registration w.e.f. 1st April, 2019 are:
|
Sl.
No. |
States
or UTs from where the supply of goods or services or both are made |
Aggregate
turnover not exceeding (Rs) |
|
|
For suppliers engaged exclusively in
“supply of goods” : |
|
|
1 |
Manipur, Mizoram, Nagaland, Tripura |
10 Lakh |
|
2 |
Uttarakhand, Meghalaya, Sikkim, Arunachal Pradesh,
Puducherry, Telangana |
20 Lakh |
|
3 |
All the States and UTs of India other than those
mentioned under serial numbers 1 and 2 above |
40 Lakh |
|
|
For suppliers engaged exclusively in
“supply of services” : |
|
|
4 |
Manipur, Mizoram, Nagaland, Tripura |
10 Lakh |
|
5 |
All the States and UTs of India other than those
mentioned under serial number 4 above |
20 Lakh |
Important notes:
1.
A
supplier may obtain voluntary registration, even though his turnover does not
exceed applicable threshold limit. In this case, he is required to pay tax
without considering the aforesaid limits.
2.
In
case of supplier of
a)
Ice-cream
and other edible ice, whether or not containing cocoa;
b)
Pan
Masala;
c)
Tobacco
and manufactured tobacco substitutes;
d)
Fly
ash bricks, fly ash aggregate with 90% or more fly ash content;
e)
Fly
ash blocks;
f)
Bricks
of fossil meals or similar siliceous earth;
g)
Building
bricks; or
h)
Earthen
or roofing tiles
The threshold limit applicable
is Rs 20 Lakh (Rs 10 Lakh in case of Manipur, Mizoram, Nagaland and Tripura).
3.
For
the purpose of registration under GST four states Manipur, Mizoram, Nagaland
and Tripura are considered as “Special
Category States”.
Reverse Charge
U/s 9(3) and 9(4) of the CGST Act and
U/s 5(3) and 5(4) of the IGST Act
Generally, the supplier of goods or services is liable
to pay the GST to the Government. However, in specified cases like imports and
other notified supplies, the liability to pay the GST may be cast on the
recipient of goods or services under the reverse charge
mechanism.
U/s 2(98) of
the CGST Act, “reverse charge” means the liability to pay tax by
the recipient of supply of goods or services or both instead of the supplier of
such goods or services or both in respect of notified categories of supply.
U/s 9(3) of the CGST Act and u/s 5(3) of the IGST Act, there are certain goods
and services with respect to which GST is always payable by the buyer of such
goods and services.
U/s 9(4) of the CGST Act, The Government may, on the recommendations of the Council
(i.e. the Goods and Services Tax Council established under article 279A of the
Constitution), by notification,
specify a class of registered persons who shall, in
respect of supply of specified categories of goods or services or both received
from an unregistered supplier, pay the tax on reverse charge basis
as the recipient of such goods or services or both, and all the provisions of
this Act shall apply to such recipient as if he is the person liable for paying
the tax in relation to such supply of goods or services or both.
Class of registered recipients of specified goods and services and the categories of specified goods and services notified by the Government u/s 9(4) of the CGST Act are:
|
Registered recipients of specified goods and
services |
Categories of specified goods and services |
|
Promoter |
Specified goods and
services [other than services by way of grant of (i) development rights, (ii)
long term lease of land, (iii) Floor Space Index (FSI), and (iv) additional
FSI] required for construction of project. |
|
Promoter |
Cement required for
construction of project. |
|
Promoter |
Capital goods
required for construction of project. |
Time of payment of GST
Normally GST is payable when supply is made or when
payment is received, whichever is earlier in case of supply of service, and
when supply is made in case of supply of goods. GST of current month is payable
by 20th day of the following month (by 18th day of the
month following the quarter under composition scheme).
Composition scheme (Section 10 of the CGST Act, 2017)
Under composition scheme a taxable person is not required to maintain elaborate records and file
detailed returns. Such a person (Seller/Supplier) is not allowed to charge GST in his Invoice although he will
have to pay GST on his total turnover out of his own pocket at the rates as
given in the following table:
Rates of GST under Composition Scheme
|
Type of business |
Rate of GST |
|
If he is a manufacturer |
1% |
|
If he is a trader |
1% |
|
If he is a provider of restaurant service |
5% |
|
If he is a provider of any service other than
restaurant service |
6% |
Any dealer registered under Composition Scheme will not be eligible to
take credit of Input Tax on purchases at the time of paying output GST on his
supply of goods. Also, the buyer of these goods will not get the credit of
input taxes paid on such goods at the time of paying his output GST.
A registered person can opt for a
composition scheme if his aggregate turnover in the preceding financial year
did not exceed –
|
Case |
Limit |
|
If the registered person is engaged in supply of
goods and/or restaurant service |
Rs 1.5 Crore (This limit is Rs 75 Lakh for the following states: 1. Arunachal Pradesh, 2. Manipur, 3. Meghalaya, 4. Mizoram, 5. Nagaland, 6. Sikkim, 7. Tripura, and 8. Uttarakhand). |
|
If the registered person is engaged in supply of
service other than restaurant service |
Rs 50 Lakh |
As per Section 10(3) of the CGST Act, 2017 the option
availed of by a registered person for composition scheme shall lapse with
effect from the day on which his aggregate turnover during a financial year exceeds
the threshold limit.
As per Section 10(2) of the CGST Act, 2017 the benefit
of composition scheme shall not be granted if a taxable person is:
1) Engaged in the supply of other services along with supply of goods and/or restaurant service where turnover of such other services exceeds higher of the following two:
(a)
10%
of turnover in a State or UT in the preceding financial year, and
(b)
Rs
5,00,000;
2)
Engaged
in the making any supply of goods or services which are not taxable under GST;
3)
Engaged
in making any inter-state outward supplies of goods or services;
4)
Engaged
in making any supply of goods or services through an e-commerce operator who is
required to collect tax at source u/s 52;
5)
Either
a casual taxable person or a non-resident taxable person;
6)
A
manufacturer of
(a)
Ice
cream and other edible ice, whether or not containing cocoa; or
(b)
Pan
masala; or
(c)
Tobacco
and manufactured tobacco substitutes; or
(d)
Aerated
water; or
(e)
Fly
ash bricks, fly ash aggregate with 90% or more fly ash content; or
(f)
Fly
ash blocks; or
(g)
Bricks
of fossil meals or similar siliceous earth; or
(h)
Building
bricks; or
(i)
Earthen
or roofing tiles.
Form and manner of submission of return and payment of GST under the
Composition Scheme u/s 10 of the CGST Act, 2017 [Rule 62]
A person opting for composition scheme is required –
(a)
To
file GST Return annually for every financial year (or part of the financial
year), on or before 30th April following the end of such financial
year;
(b)
To
make payment of self-assessed GST quarterly for every quarter (or part of the
quarter), by 18th day of the month succeeding such quarter
Aggregate turnover as per Section 2(6) of
CGST Act, 2017:
The term “aggregate turnover”
means the aggregate value of all taxable supplies (excluding the value of
inward supplies on which tax is payable by a person on reverse charge basis),
exempt supplies, exports of goods or services or both and inter-state supplies
of persons having the same Permanent Account Number (PAN), to be computed on
all India basis but excludes central tax, state tax, union territory tax,
integrated tax and cess.
|
Aggregate turnover includes |
Aggregate turnover excludes |
|
The value of exported goods or
services or both. |
The value of inward supplies on
which the recipient is required to pay the tax under Reverse Charge Mechanism
(RCM). |
|
The value of exempted supply of goods
or services or both which attracts nil rate of tax or wholly exempt from tax
and includes non-taxable supply. |
(a)
Central tax (CGST), (b)
State tax (SGST), (c)
Union territory tax, (d)
Integrated tax (IGST), and (e)
Cess |
|
The values of inter-state supplies
between persons having the same PAN (i.e. stock transfer between branches,
etc.) |
The value of exempt supply of
services provided by way of extending deposits or loans or advances in so far
as the consideration is represented by way of interest or discount. |
Important
points:
i.
The turnover will be computed PAN-wise.
ii.
The partner and partnership firm will have different
PAN Nos. Thus the turnover of the partner and partnership firm will not be
aggregated.
iii.
The HUF and individual coparcener of the family have
different PAN Nos. Hence, turnover of Karta of HUF in his individual capacity
and turnover of Karta as a Karta of HUF will not be aggregated.
iv.
Supply of goods, after completion of job work, by a
registered job worker shall be treated as the supply of goods by the principal
referred to in Sec. 143 of the CGST Act, 2017, and the value of such goods
shall not be included in the aggregate turnover of the registered job worker.
It will be included in the turnover of principal.
Aggregate turnover
|
Particulars |
Rs |
|
Value of all taxable supplies of goods and services
pertaining to intra-state and inter-state trading activities |
××× |
|
ADD: Value of all exempt supplies |
××× |
|
ADD: Value of all exported goods and services |
××× |
|
ADD: Value of all stock transfers between branches,
etc. (if not included above) |
××× |
|
LESS: Value of all inward supplies on which tax is
payable by a person on reverse charge basis |
(×××) |
|
LESS: Output CGST, SGST, IGST and Union Territory
Tax |
(×××) |
|
LESS: GST Compensation
Cess |
(×××) |
|
LESS: The value of exempt supply of services provided by
way of extending deposits or loans or advances in so far as the consideration
is represented by way of interest or discount |
(×××) |
|
Aggregate turnover |
××× |
Example: 1
A of Kolkata sells goods to B of Siliguri for Rs
59,000 including 18% GST and B sells the same to C of Patna after adding 12%
mark-up and 18% IGST. Calculate turnover and GST payable for both A and B.
Solution:
A’s
Turnover and GST Payable
|
Particulars |
Rs |
|
Invoice value of taxable supplies under SGST |
59,000 |
|
LESS: Output GST [Rs 59,000 × (18 ÷ 118)] |
(9,000) |
|
A’s turnover |
50,000 |
|
GST
Payable (Rs 50,000 × 18%) |
9,000 |
|
SGST (Rs 50,000 × 9%) |
4,500 |
|
CGST (Rs 50,000 × 9%) |
4,500 |
B’s
Turnover and GST Payable
|
Particulars |
Rs |
|
Cost of purchase excluding Input GST |
50,000 |
|
ADD: Profit (Rs 50,000 × 12%) |
6,000 |
|
B’s turnover |
56,000 |
|
Output GST Liability (Rs 56,000 × 18%) |
10,080 |
|
LESS: Input Tax Credit |
9,000 |
|
Net
GST Payable |
1,080 |
|
IGST |
540 |
|
CGST |
540 |
Illustration of computation of GST payable
|
Particulars |
Dealer A |
Dealer B |
Dealer C |
Consumer |
|
|
Rs |
Rs |
Rs |
Rs |
|
A buys from manufacturer ADD: GST @ 18% Total
amount payable by A |
10,000 1,800 11,800 |
|
|
|
|
B buys from A (A sells at 10% mark-up) ADD: GST @ 18% Total
amount payable by B |
|
11,000 1,980 12,980 |
|
|
|
C buys from B (B sells at 15% mark-up) ADD: GST @ 18% Total
amount payable by C |
|
|
12,650 2,277 14,927 |
|
|
Retail customer buys from C (C sells at 12% mark-up) ADD: GST @ 18% Total amount payable by Consumer |
|
|
|
14,168 2,551 16,719 |
|
GST Liability (Output GST) LESS: Input tax credit Net GST payable |
1,980 1,800 180 |
2,277 1,980 297 |
2,551 2,277 274 |
|
Important points to be noted:
Total GST collected by the Government = 1,800 + 180 +
297 + 274 = Rs 2,551
Total GST paid by the consumer = Rs 2,551
The burden of GST to each of the manufacturer and
dealers = Nil
Input tax credit priorities
|
Particulars |
IGST |
CGST |
SGST |
Total |
|
|
Rs |
Rs |
Rs |
Rs |
|
Output GST (GST Liability) |
××× |
××× |
××× |
××× |
|
LESS: Input GST (Input Tax Credit): |
|
|
|
|
|
Input IGST credit (Priority-wise) |
First |
Second |
Third |
××× |
|
Input CGST credit (Priority-wise) |
Second |
First |
NA |
××× |
|
Input SGST credit (Priority-wise) |
Second |
NA |
First |
××× |
|
Net GST payable |
××× |
××× |
××× |
××× |
Input Tax Credit – Important Points
1.
Input
tax credit on capital goods can be availed at the time of capitalisation of the
capital goods in the books of accounts.
2.
Input
tax credit of one State cannot be used to set off output GST liability of
another State.
3.
A supplier cannot take Input Tax Credit of GST paid on
goods or services used to make supplies on which the recipient is liable to pay
tax under reverse charge mechanism.
4.
Recipient of supply of goods or service while paying GST under reverse
charge mechanism is not eligible to avail the input tax credit. This is because
any amount payable under reverse charge shall be paid by
debiting the electronic cash ledger. In other words, reverse charge liability
cannot be discharged by using input tax credit.
5.
After discharging reverse
charge liability, credit of the same can be taken by the recipient of such goods
or services at the time of paying his output GST, if he is otherwise eligible
i.e. if such goods or services are used for his business or
furtherance of his business.
6.
A person registered under the Composition Scheme is not eligible for
input tax credit.
7. A buyer of goods who buys such goods from a person registered under the
Composition Scheme is also not eligible for input tax credit at the time of
selling of such goods and paying his output GST on such goods.
8.
Input tax credit is not available on exempt supplies. But input tax
credit is available on goods and services for which applicable GST rate is 0%. Examples of
goods and services for which GST rate is 0% are:
a) Export goods and services,
b) Supply of goods and services to Special
Economy Zone.
9. Input
tax credit is available as soon as inputs of goods and services are received.
In other words, there is no need to wait for taking input tax credit till these
inputs are actually used in production. In practice, entire input tax credit
forms a common pool which is used as adjustment at the time of paying the
output GST liability as and when goods and services are sold.
Conditions for taking input tax credit
1. As per Section 16(1) of the CGST Act, 2017, a registered person is not entitled to take credit of the input tax charged to him on any supply of goods or services or both, if such goods or services or both are neither used nor intended to be used in the course or furtherance of his business.
2.
To
take input tax credit the dealer should be registered under the GST Law.
3.
To
avail the benefit of input tax credit the dealer should be in possession of a
tax invoice or debit note or bill of entry issued by a registered supplier of
goods or services or both.
4.
No
input tax credit can be availed by a registered supplier in respect of any tax
that has been paid in pursuance of any ‘order’ where any demand has been
confirmed on account of any fraud, wilful miss-statement or suppression of
facts.
5.
Input
tax credit is available only if the registered dealer has actually received the
goods or services or both.
6. As per the first proviso to Section 16(2), where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit of input tax paid on such goods only upon receipt of the last lot or instalment.
7.
Input
tax credit can be availed by the dealer only if the input tax has actually been
paid to the Government by the supplier of goods/services either in cash or
through utilisation of input tax credit as might be admissible to the supplier.
8.
Input
tax credit is available to a registered person as soon as the goods or services
are received by him. But a registered person shall not be entitled to take
input tax credit in respect of any invoice or debit note for supply of goods or
services or both after the date which is earlier of the following two dates:
a.
The
30th November following the end of financial year to which such
invoice or debit note pertains; or
b.
Actual
date of filing the annual return in form GSTR–9 relating to the same financial
year.
9.
Input
tax credit on any inward supply of goods or services or both is available to a
registered person, if he pays to the supplier of such goods or services or both
the value of such supply along with the tax payable thereon within 180 days
from the date of issue of invoice by the supplier. If
the payment is not made within 180 days, the input tax credit, if already taken
by the registered person on such inward supply of goods or services or both, shall
be reversed.
10.
Where
a registered dealer has claimed depreciation on GST component of the cost of
capital goods and plant and machinery under the provision of Income Tax Act,
1961, the input tax credit with respect to the said GST component shall not be
allowed to the said registered dealer u/s 16(3) of the CGST Act, 2017.
Example: 2
Dealer A buys a machine from B
at a price of Rs 10, 00,000 + GST @ 18%. Therefore, total capitalised value of
the machine = Rs 10, 00,000 + 18% of Rs 10, 00,000 = Rs 10, 00,000 + 1, 80,000 =
Rs 11, 80,000. Here,
Rs 1, 80,000 is the input GST on the machine bought.
Option: 1
If Mr. A charges depreciation
u/s 32 of the Income Tax Act, 1961 @ 15% of the capitalised value of the
machine, total depreciation charged = Rs 11, 80,000 × 15% = Rs 1,77,000, which
includes depreciation
on the GST component of the capitalised value of the machine = Rs 1,80,000 × 15%
= Rs 27,000. Therefore, in this case, Mr. A shall not be entitled to
take input tax credit of the input GST paid Rs 1, 80,000 on the machine bought.
Option: 2
On the other hand, if Mr. A
charges depreciation @ 15% u/s 32 of the Income Tax Act, 1961 on the purchase
price of the machine only, total depreciation charged = Rs 10,00,000 × 15% = Rs
1,50,000. In
this case, Mr. A shall be entitled to take the input tax credit of the input GST
paid Rs 1, 80,000: Credit of input CGST Rs 90,000 and credit of input SGST Rs
90,000.
Apportionment of input tax credit [Section 17]
1.
Where
the input goods/services are used by the registered person partly for the
business purpose and partly for other purposes, the input tax credit shall be
restricted to so much of the input tax as is attributable to the inputs used
for the business purpose.
2.
Where
the input goods/services are used by the registered person partly for affecting
taxable output goods/services including zero-rated supplies and partly for
affecting exempt output goods/services, the input tax credit shall be
restricted to so much of the input tax as is attributable to the inputs used
for the taxable output goods/services including zero-rated supplies.
Example: 3
Mr. M. P. Agarwal, a registered person, provides the
following information for the month of March, 2022:
|
Particulars |
Rs |
|
Input tax in respect of inward supply |
2,00,000 |
|
Taxable outward supply (excluding zero-rated supply) |
10,00,000 |
|
Export i.e. zero-rated supply |
5,00,000 |
|
Exempt outward supplies |
3,00,000 |
|
Outward supplies on which the recipient is liable to
pay tax on reverse charge basis |
2,00,000 |
In this case, ITC available to Mr. Agarwal shall be
calculated as follows:
|
Particulars |
|
Rs |
|
Taxable outward supply (excluding zero-rated supply) |
|
10,00,000 |
|
Export i.e. zero-rated supply |
|
5,00,000 |
|
Exempt outward supplies |
|
3,00,000 |
|
Outward supplies on which the recipient is liable to
pay tax on reverse charge basis |
|
2,00,000 |
|
Total outward supply |
A |
20,00,000 |
|
Total taxable outward supply including zero-rated supplies [Rs 10,00,000 + Rs 5,00,000] |
B |
15,00,000 |
|
Input tax in respect of inward supply |
C |
2,00,000 |
|
ITC available for the month of March, 2022 [C × B/A] |
|
1,50,000 |
Example: 4
M/s Munot Industries Limited has given the following
information for the month of May, 2022:
|
|
Particulars |
Rs |
|
1 |
Total input tax credit (ITC) on inputs and input
services |
2,00,000 |
|
2 |
ITC (out of total ITC as in Sl. No. 1) attributable
exclusively for non-business purposes |
20,000 |
|
3 |
ITC (out of total ITC as in Sl. No. 1) attributable
exclusively for effecting exempt supplies |
20,000 |
|
4 |
ITC (out of total ITC as in Sl. No. 1) in respect of
inputs on which credit is not available u/s 17(5) |
10,000 |
|
5 |
ITC (out of total ITC as in Sl. No. 1) attributable
exclusively for effecting taxable supplies (including zero-rated supplies) |
1,00,000 |
|
6 |
Total turnover |
40,00,000 |
|
7 |
Aggregate value of exempt supplies |
10,00,000 |
a) State the quantum of common credit.
b) State the amount of ITC to be reversed as per Rule
42.
In this case, quantum of common credit and amount of
ITC with respect to the exempt supplies to be reversed for the month of May,
2022 shall be calculated as follows:
|
Particulars |
|
Rs |
|
Total input tax credit (ITC) on inputs and input
services |
T |
2,00,000 |
|
ITC (out of total ITC as in Sl. No. 1) attributable
exclusively for non-business purposes |
T1 |
20,000 |
|
ITC (out of total ITC as in Sl. No. 1) attributable
exclusively for effecting exempt supplies |
T2 |
20,000 |
|
ITC (out of total ITC as in Sl. No. 1) in respect of
inputs on which credit is not available u/s 17(5) |
T3 |
10,000 |
|
Total |
T1 + T2 + T3 |
50,000 |
|
ITC credited to Electronic Credit Ledger |
C1 = T – (T1 + T2 + T3) |
1,50,000 |
|
ITC (out of total ITC as in Sl. No. 1) attributable
exclusively for effecting taxable supplies (including zero-rated supplies) |
T4 |
1,00,000 |
|
Common Credit |
C2 = C1 – T4 |
50,000 |
|
Aggregate value of exempt supplies |
E |
10,00,000 |
|
Total turnover |
F |
40,00,000 |
|
Proportion of common credit not allowed |
D1 = C2 × E/F |
12,500 |
|
5% of common credit not allowed |
D2 = C2 × 5% |
2,500 |
|
ITC to be reversed out of common credit |
D1 + D2 |
15,000 |
|
Net ITC available after reversal |
C1 – (D1 + D2) |
1,35,000 |
Indirect
Taxation
GST
Problems
Illustration:
1
M/s X Ltd. being a registered person supplying taxable goods in the
following manner:
|
Particulars |
Rs |
|
Intra-State
supply of goods |
18,00,000 |
|
Inter-State
supply of goods |
13,00,000 |
|
Intra-State
purchases |
13,00,000 |
|
Inter-State
purchases |
1,50,000 |
|
ITC
at the beginning of the relevant tax period: |
|
|
CGST |
1,30,000 |
|
SGST |
1,30,000 |
|
IGST |
1,70,000 |
1.
Rate of CGST, SGST and IGST is 9%, 9% and 18%
respectively.
2. Inward and outward supplies are
exclusive of taxes.
3. All the conditions necessary
for availing the input tax credit have been fulfilled.
Compute the net GST payable by
M/s X Ltd during the tax period. Make suitable assumptions.
Illustration: 2
Mr. A has output Tax Liability of Rs 1, 00,000 towards
CGST & SGST/UGST, Rs 20,000 towards IGST and Rs 1,800 towards interest
payable. Explain the manner of discharge of tax liability by Mr. A in the
following two independent cases:
1. Input tax credit available of
CGST & SGST is Rs 25,000 each & IGST is Rs 25,000; and
2. Input tax credit not available
Illustration: 3
Y Ltd. is operating in two states Andhra Pradesh and
Tamil Nadu. The tax liability for the month of August, 2022 is as follows:
|
Sl.
No. |
Tax
Liability |
Andhra
Pradesh (Rs) |
Tamil
Nadu (Rs) |
|
1 |
Output
CGST Payable |
25,000 |
10,000 |
|
2 |
Output
SGST Payable |
10,000 |
5,000 |
|
3 |
Output
IGST Payable |
3,000 |
2,500 |
|
4 |
Input
CGST |
8,000 |
13,000 |
|
5 |
Input
SGST |
15,000 |
1,500 |
|
6 |
Input
IGST |
12,000 |
16,000 |
Calculate the tax payable for the month of August, 2022.
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