REGISTRATION UNDER GST

(GOODS AND SERVICE TAX)

A Project submitted to

University of Mumbai for completion of the degree of

Master of commerce under the faculty of commerce

By

MOMIN SIMAR SALMAN RAGHIB

Under the guidance of

PROF.MISS NAZNEEN MOMIN

K.M.E.SOCITY

G.M MOMIN WOMANCE COLLEGE

Rais high school campus , Thana road

Bhiwandi , Dist thane.

 CERTIFICATE

This is to certify that Ms/ Mr has worked and duty completed her/his project work for the
degree of Master in commerce under the faculty of commerce. In the subject of DIRECT
TEX and her/his project is entitle, HEADS OF INCOME under my supervision.

I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for any Degree or diploma of any university.

It is her/his own work and facts reported by her/ his personal findings and investigation.

Seal of college name and signature

Of guidence teacher

Date of submition PROF.NAZNEEN MOMIN

 DECLARATION BY LEARNER

I the undersigned Miss MOMIN SIMAR SALMAN RAGHIB hear by , declare that the work
embodies in this project work title REGISTRATION UNDER GST ,for my own contribution
to the research work carried out under the guidance of PROF . NAZNEEN MOMIN is a
result of own research work and has not been previously submitted to any Degree /Diploma
to this or any other university.

Wherever reference has been made to previous works of others, it has been clearly indicated
as such and included in the bibliography.

I, hear by further declare that all information of this document has been obtain and presented
in accordance with academic rule and ethical conduct of learner SIMAR MOMIN

Certificated by

Name and signature of the guiding teacher

PROF. MISS NAZNEEN MOMIN

 ACKNOWLADGMENT

To list who all have help me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimension in
the completion of this project.

I take this opportunity to thank the university of Mumbai foe giving me chance to do this
project.

I would like to thank to my principal, Dr M.J.KOLET for providing the necessary facilities
required for completion of this project.

I take this opportunity to thank our coordinator PROF.MISS NAZNEEN MOMIN, for her
morale and guidance.

I would also like to express my sincere gratitude towards my project guide PROF.
NAZNEEN MOMIN, guide and care made the project successful.

I would like to thank to my college library for having provided various reference book and
magazines related to my project.

Lastly, I would like to thank each and every person who directly and indirectly help me
incompletion of the project especially my parent and peers who me throughout my project.
 INDEX

Sr.no TITLE pg.no

1 CERTIFICATE 2

2 DECLARATION BY LEARNER 3

3 ACKNOWLADGMENT 4

4 BIBLOGRAPHY 6

5 REWIVE OF LITARURE 7

6 INTRODUCTION 8

7 OBJECTIVES / PURPOSE OF GST 11

8 PERSON LAIBLE FOR REGISTRATION 12
9 PERSON NOT LAIBLE FOR
REGISTRATION 13
10 EXAPMTION UNDER GST
REGISTRATION 17
11 ADVANTAGE AND DIS ADVANTAGE 19
12 BENEFIT OF GST 24

13 IMPACT OF GST IN INDIAN ECONOMY 28

14 REGISTRATION UNDER GST Law 32

15 PROCEDURE OF GST REGISTRATION 33

16 MAJOR DIFFRENCES IN PRE AND POST

GST RULE 36
17 CONCLUSION 39
 BIBLOGRAPHY
Thanulingam, Research Methodology, Himalya Publishing House, Mumbai, 2001
Bhattachariya, Research Methodology, Excel Books, New Delhi, 2003. Paneer selvam,
Research Methodology, Printice Hall of India, New Delhi, 2006. S.P. Gupta, Statistical
Methods, Sultan Chand, New Delhi, 2006. Dr. G. K. Pillai, VAT–A way out of the Indian
Tax Muddle, Rashmi Printers, Mumbai, 2005. Ab Lorweth, Aled and Others, Efficiency
considerations and the exemption of food from sales and value added taxes, Canadian Journal
of Economics, Feb 2002 35(1) pp.166-82. Alm, James A. and Others, Audit Selection and
firm compliance with a broad— based Sales tax, National Tax 57(2) Jun 2004 pp.209-27.
Anderson, John E. and Others, Tax Evasion on Gratuities, Public Finance Review 33(4), July
2005, pp.466-87. Azaria, N.T and Others, The revenue raising capabilities of a VAT system
in Developing Countries, South African Journal of Economic and Management Sciences,
N.S, March 2005, 8 (1), pp.63-76. Chouinard Hayley, Incidence of Federal and State
Gasoline Taxes, Economics Letters, 83 (1), April 2004, pp.55-60. Damania, R., The Impact
of Goods and Services Tax on Product Market Competition, Australian Economic Review,
33(4), December 2000, pp 330-36.
 CHAPTER 1

REWIVE OF LITARURE

Benedict, (2011) The author studies the law provisions dealing with financial services under
the Australian GST law with the intention to verify whether the provisions have been
construed correctly in light of the original purpose of the legislation and how the concerns
identified may be rectified. Bikas, (2013) The authors have studied the VAT rate and the EU
economy and also the link between the VAT and macroeconomic indicators and their
influence on the VAT rate. The authors conclude that there is a positive relation between
macroeconomic indicators like GDP, per capita income and consumption, export, import etc
and the VAT rate applicable. Borec, (2013) The authors have discussed how assessees may
comply with the VAT laws given that the GST is a destination based tax. The authors mainly
deal with B2C cases where the VAT compliances would need to be done in the state where
the customer is located. The authors have discussed the difficulties in this compliance
especially in the e commerce transactions. Bovenberg, (1992) The author uses a general
equilibrium model to assess different instruments of indirect taxation in middle income
countries. The author has specifically studied Thailand and concluded giving various methods
to increase the effectiveness of indirect taxes. Brew, (2012) The authors have studied the
relation between the mode of collection of VAT revenues with the target of VAT collection
for the municipality of Tarkwa – Nsuaem in West Ghana. The authors have used
questionnaires and interviews to collect the data and then analysed it using the regression
analysis and established that the method of VAT collection in the said municipality was
above average. The study is important because VAT is one of the primary revenue generators
for any Government. Ciobanasu (2012) The authors trace the correlation between the types of
taxes and their role in the budgeted revenues and the fiscal development of Romania. Indirect
tax by its very nature is easier to govern, is neutral to status of tax payer, and increases
revenue but leads to inflation. On the other hand direct taxes depend on the tax payer and are
difficult to govern. Further, indirect tax helps the government to an extent to direct
consumption of the public. The authors conclude that both the taxes are important for overall
growth of the economy. Cnossen, (1992) VAT is operative in a number of countries and
primarily in countries where federal government is not in existence. The author has studied
the various VAT systems existing in the world and tried to arrive at an appropriate VAT for
Central and East Europe countries. The author has laid down various requirements to ensure
that the said VAT is completely effective like it should be destination based, the input credit
mechanism should be seamless, the law should be easy to understand, cost of conformity
should be low etc. Crossley, (2009) In 2009, the United Kingdom Government decided to
reduce the VAT rate by a marginal amount in order to boost the consumer spending. The
authors have studied the said relation in his paper and concluded that if the VAT rate is
reduced, the spending by general consumers increases resulting in overall buoyancy in the
economy. Emmanuel, (2013) The author has examined the link between VAT, the increase in
VAT rates and the economic growth and tax revenue in Nigeria. For this study the author has
set out 2 Null hypothesis which are post the research accepted. The author concludes that
given the strong relation between the above, the Government and authorities should actively
educate the public on the benefits of VAT so that they accept changes in VAT rates more
easily. Eugen, (2011) The authors have examined the various methods adopted by assessees
to evade VAT especially in intra country transactions in Romania. The authors have also
recommended the documentation and returns which could be relied upon by both the
authorities and the assessees to ensure that there is no tax evasion. Eva, (2008) The author in
his paper has examined the cost of complying with the indirect tax laws in the Slovak
Republic by doing research of small, medium and large businesses through a questionnaire
and concludes that businesses especially the small ones are not able to and do not make
efforts to quantify the cost of compliance which is quite high due to the complex laws
 CHAPTER 2

INTRODUCTION

2.1WHAT IS GST GST(GoodsandServicesTax)isaindirecttaxleviedongoodsandservices.

GSTisasingletaxonthesupplyofgoodsandservices.

GSTimproveoveralleconomicgrowthofthenation.
GSTisacomprehensiveindirecttaxlevyonmanufacture,saleandconsumptionofgoodsaswellasser
vicesatthenationallevel.
ItwillreplaceallindirecttaxesleviedongoodsandservicesbystatesandCentral. Goods and
Services Tax (GST) is a value-added indirect tax at each stage of the supply of goods and
services precisely on the amount of value addition achieved. It seeks to eliminate
inefficiencies in the tax system that result in ‘tax on tax’, known as cascading of taxes. GST
is adestination-based tax on consumption, as per which the state’s share of taxes on inter-state
commerce goes to the one that is home to the final consumer, rather than to the exporting
state. GST has two equal components of central and state GST.

2.2DEFINITION OF GST
Goodsandservicestax(GST)isataxongoodsandserviceswithvalueadditionateachstagehavingco
mprehensiveandcontinuouschainofsetofbenefitsfromtheproducer’s/serviceprovider’spointupto
theretailerslevelwhereonlythefinalconsumershouldbearthetax.

2.3MEANING OF GOODS
Goodsmeanseverykindofmovablepropertyotherthanmoneyandsecuritiesbutincludesactionable
claim,growingcrops,grassandthingsattachedorformingpartoftheland,whichareagreedtobeserve
dbeforesupplyorunderacontractofsupply.

2.4DUE TO GST WHAT IS EXPENSIVE AND CHEAPER EXPENSIVE:

Mobileservices,bankingservices,Luxuryitemslikehotels,healthcare,diamonds. CHEAPER:
Fruits,vegetables,eggs,milk,twowheeler,tea,coffee.

2.5 Who is liable to pay GST?

Businesses and traders with annual sales above Rs20 lakh are liable to pay GST. The
threshold for
paying GST is Rs. 10 lakh in the case of northeastern and special category states. GST is
applicable
on inter-state trade irrespective of this threshold. Businesses and traders with annual sales
above Rs20 lakh are liable to pay GST. The threshold for paying GST is Rs. 10 lakh in the
case of northeastern and special category states. GST is applicable on inter-state trade
irrespective of this threshold.

2.6 Which taxes will be included in GST?

GST will be substitute all indirect taxes levied by the state and central government. GST
would apply to all goods other than crude petroleum, motor spirit, diesel, aviation turbine fuel
and natural gas and alcoholic liquor for human consumption. Indirect Taxes that are going to
subsume under GST are given below:
 CHAPTER3
3.1OBJECTIVES / PURPOSE OF GST
The Goods and Services Tax which is being implemented from 1st July, 2017 is proposed to
be a unified tax for the entire nation. The intended objective of GST 2017 is to replace a lot
of other indirect and direct taxes like the VAT, service tax, luxury tax etc. GST is aimed at
being comprehensive with most of the goods and services included in the GST bill but
alcohol and petrol exempted. GST rate is proposed to be 27% which is far higher than the
global standard of 16.4% for similar taxes. Our finance minister, Mr. Arun Jaitley on several
occasions has mentioned that the rate is way too high, whereas some of the states want the
rate to be still higher. In this article, we will look at the primary objectives of GST 2017 bill.

 Onecountry–onetax

 ConsumptionbasedtaxinsteadofmanufacturingUniformGSTregistration,paymnt
 Toeliminatecascadingeffectofindirecttaxes/doublingtax/taxontax
 Subsumeallindirecttaxesatcentreandstatelevel
 Reducetaxevasionandcorruption
 Increaseproductivity
GST objectives:

1. Ensuring that the cascading effect of tax on tax will be eliminated.

2. Improving the competitiveness of the original goods and services, thereby
improving the GDP rate too.
3. Ensuring the availability of input credit across the value chain.
4. Reducing the complications in tax administration and compliance.
5. Making a unified law involving all the tax bases, laws and administration
procedures across the country.
6. Decreasing the unhealthy competition among the states due to taxes and revenues.
7. Reducing the tax slab rates to avoid further clarification issues.
With all of these being very significant objectives of GST, it is still facing a lot of
implementation issues. Some of them are:

1. Complete lack of adaptation mechanisms and trained staff.

2. In some cases, the double registration might annoy people. Also, these registrations
result in increase compliances and cost.
3. Unclear estimate of the exact impact of GST.
 CHAPTER 4

Persons liable for registration.

1. Every supplier shall be liable to be registered under this Act in the State or Union
territory, other than special category States, from where he makes a taxable supply of
goods or services or both, if his aggregate turnover in a financial year exceeds twenty
lakh rupees:
Provided that where such person makes taxable supplies of goods or services or both
from any of the special category States, he shall be liable to be registered if his
aggregate turnover in a financial year exceeds ten lakh rupees.
2. Every person who, on the day immediately preceding the appointed day, is registered
or holds a license under an existing law, shall be liable to be registered under this Act
with effect from the appointed day.
3. Where a business carried on by a taxable person registered under this Act is
transferred, whether on account of succession or otherwise, to another person as a
going concern, the transferee or the successor, as the case may be, shall be liable to be
registered with effect from the date of such transfer or succession.
4. Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer
pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case
may be, de-merger of two or more companies pursuant to an order of a High Court,
Tribunal or otherwise, the transferee shall be liable to be registered, with effect from
the date on which the Registrar of Companies issues a certificate of incorporation
giving effect to such order of the High Court or Tribunal.
Explanation.––For the purposes of this section,
i. the expression "aggregate turnover" shall include all supplies made by the
taxable person, whether on his own account or made on behalf of all his
principals;
ii. the 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 section
143, and the value of such goods shall not be included in the aggregate
turnover of the registered job worker;
iii. the expression "special category States" shall mean the States as specified in
sub-clause (g) of clause (4) of article 279A of the Constitution.
 CHAPTER 5
Persons Not Liable For Obtaining GST Registration
Section 23 of the Central Goods and Service Tax Act, 2017 deals with the provisions of
persons who are not liable for GST registration. Section 23 (1) states that persons who are
engaged in supplying goods or services or both that are not liable to be tax or persons who are
engaged in supplying of goods or services or both that are wholly exempted from tax, then,
such persons are not required to obtain GST registration.

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Section 23 of the Central Goods and Service Tax Act, 2017 deals with the provisions of
persons who are not liable for GST registration. Section 23 (1) states that persons who are
engaged in supplying goods or services or both that are not liable to be tax or persons who are
engaged in supplying of goods or services or both that are wholly exempted from tax, then,
such persons are not required to obtain GST registration.

Further, section 23 (2) empowers the government to notify a specific category of persons that
are exempted from obtaining GST registration.

List Of Persons Exempted From Obtaining GST Registration –

Following categories of person are exempted from obtaining Goods and Service Tax (GST)
registration –

1. The person engaged exclusively in providing business of supplying goods or services or

both that are not liable to tax or are wholly exempted from tax under Central Goods and
Service Tax Act, 2017 or under Integrated Goods and Services Tax Act, 2017.

2. An agriculturist. However, the exemption is only to the extent of supply of produce out of
cultivation of land.

3. Individual advocates, including senior advocates.

4. Individual sponsorship service providers, including players.

5. The person engaged in making inter-state supplies of taxable services and having an
aggregate turnover of less than INR 20 Lakhs, INR 10 Lakhs in case of special category
states, in a financial year (as per notification no. 10/2017 – Integrated tax dated 13th
October 2017).

6. The person engaged in the supply of services and having an aggregate turnover of less than
INR 20 Lakhs, INR 10 Lakhs in case of special category states, in a financial year (as per
notification no. 65/2017 – Central Tax dated 15th November 2017).

However above exemption is not available to the person who is engaged in supplies,
specified under sub-section (5) of section 9 of the Act, through an e-commerce operator who
is required to collect tax at source (TCS) under section 52 of the Act.

7. The person engaged in supplying taxable goods or services or both and the total tax on
such supplies is required to be paid by the recipient of goods or services or both under reverse
charge mechanism (as per notification no. 5/2017 – Central Tax dated 19th June 2017
effective from 22nd June 2017).

Also Read- Persons Liable to obtain GST Registration and Compulsory GST Registration

Sharing of cases booked by Customs field formations under Information Sharing Protocol
with MB »
« Taxation of Agricultural Income- Detailed Analysis
Categories: Goods and Services Tax

View Comments (5)

 TRI VIKRAM says:

November 14, 2018 at 2:31 pm

We have a Rural Women Self Help Group with 10 members producing and selling
multiple items including handicrafts, food items, leather products, fancy lightings etc
 & selling their products into SARAS Mela organised by Govt within their own
State(SGST) as well as Inter State(IGST). having total ssales less than 20 lakh. Do
they need a GST registration at all?? Is there any difference between an Individual
and a Group of persons in GST Law? Please help.

 RESHMA says:

January 12, 2019 at 2:52 pm

COULD YOU PLEASE EXPLAIN ALL TOPICS OF GST IN MALAYALAM

LANGUAGE?

 Viren says:

January 15, 2019 at 12:19 pm

You should update your posts after the changes come over the time. Like the
exemption limit for E-Commerce operator is now changed.
Because readers just read posts with full faith. They don't make any further inquiry
about given the information.

o TG Team says:

January 15, 2019 at 12:51 pm

In our opinion Every electronic commerce operator has to compulsorily

register as per provisions of section 24(x) of CGST Act, 2017. The benefit of
threshold limit of Rs. 20 lakh (Rs. 10 lakh for special category states except J
& K) is not applicable to them.

 Krishan Kumar Nagpal says:

January 21, 2019 at 8:43 pm

A Haryana Govt. Deptt. Who is not terms of sale and the deptt. purchase the items
from open market and for official paid the GST to the firms from the deptt. purcgase
the official items. Has the Govt. deptt. compulsary the GST no.
 Changes in CGST Act wef 01.02.2019

1. New GST Portal functionality to Compare Liability Declared & ITC Claimed

2. The Panorama of ITC on Rent-a-cab

3. GST on Sale of Land & Building

4. GSTR 3B Payment and Offset liability, Old Rule or New Rule?

5. Defaults in Vendor payment obligations backfires in GST regime

 CHAPTER 6
EXAPMTION UNDER GST REGISTRATION

This article is all about the exemptions under GST registration mentioned by the
Government of India. GST registrations will start latest by 1st July 2017. There are some
people who are exempted from the GST Registration based on what is the nature of their
supply.

The taxpayers who are exempted from GST Registration are:

 Agriculturists
 Persons falling in Threshold Exemption Limit
 Persons making Nil-Rated/ Exempt supplies of goods and services
 Persons making Non-Taxable/ Non-GST supplies of goods and services
 Activities that are neither Supply of Goods nor Services
 Persons making only supplies covered under reverse charge

Now lets us study the details of each and every person who has been exempted:

 Agriculturists

An agriculturist is a person who supplies the products out of his cultivation land. They will be
given exemptions from GST Registration. Agro-inputs like fertilizers, seeds, irrigation
(electricity is required), machinery and all other agricultural services are also exempted under
GST regime.

 Persons falling in threshold exemptions limit

A business entity with an annual turnover less than Rs. 20 lakh is given exemptions from
GST registration. But there are some special category states (Arunachal Pradesh, Assam,
Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal
Pradesh and Uttarakhand) where this threshold limit is Rs. 10 lakh.

 Persons making Nil-Rated/ Exempt supplies

These are the persons who are engaged in the business of supplying common items which are
in the exemptions list of GST. Some of them are mentioned below :

1. All unprocessed food like rice, wheat, bread, milk, vegetables, cereals, eggs, meat,
fish, salt etc.
2. Train travel by local and sleeper classes
3. Education
4. Healthcare (but not medicines)
5. Hotels, lodges with room rent less than Rs 1,000
6. Kid’s colouring /drawing books
7. Bindis, sindoor, bangles, etc

 Persons making Non-Taxable/ Non-GST supplies

Such items do not come under the purview of GST:

 Activities that are neither Supply of Goods nor Services

These include:

1. Services by an employee.
2. Services by any Court or Tribunal.
3. Functions and duties of –
o MPs, MLAs, Members of Panchayats, Municipalities and other local
authorities;
o Person holding any Constitutional Post;
o Person as a Chairperson or a Member or a Director in a body.
4. Funeral Services.
5. Sale of land and building.
6. Actionable claims (other than lottery, betting, and gambling).

 Persons making only supplies covered under reverse charge

The Central Government has on 19th June 2016 via Notification No. 5/2017 exempted such
persons from obtaining registration who are only engaged in making supplies of taxable
goods or services, the total tax on which is liable to be paid on reverse charge basis by the
recipient of such goods or services. This notification shall come into force on 22nd June
2016.

In case you are confused about GST as a business owner, feel free to consult the GST experts
at LegalRaasta. You can get comprehensive assistance with GST Registration and GST
Return Filing Online. You can also use our GST software online for doing end-to-end GST
compliance.
 CHAPTER 7

ADVANTAGE AND DIS ADVANTAGE

Implementation of Goods and Services Tax (GST) was one of the long awaited fiscal reform
and due to various reasons it was only hanging around and could not circumvent the obstacles
for substantially long period of time so much so that people started saying that the reform
may not see a light of the day. However, all that is history now and we are lucky to witness
the eventual implementation of this tax reform and today we stand at a timeline of 200 days
post GST implementation. At this juncture, we need to understand that GST could eventually
become a reality only because of the various advantages it brought along. Of course, no
reform can be full proof and so is GST and therefore the implementation of GST had its own
dis-advantages with few being inherent and intrinsic to the idea of GST, few due to the
structure in which it is brought and a lot being due to the manner in which it is implemented
which could have been largely avoided. While we take a stock of GST as of today, we need
to acknowledge the efforts taken by government in making it much simpler from the time
first model GST code was released in June 2016 to today when we are at the brisk of 200
days post its implementation. While we take a deeper dive in understanding the advantages
and disadvantages of GST, we need to appreciate the fact that this being a transactional tax its
advantages and disadvantages cannot be equated for all. For instance, it is possible that one
sector or industry is largely benefitted due to implementation of GST while other sector or
industry has taken the exactly opposite position. The point that we need to take home is that
many advantages and disadvantages of GST can be closely understood only when its impact
is measured industry or sector wise. For example, Logistics, Automobile, Construction etc.
are few sectors which have been largely benefitted by implementation of GST whereas
Banking, Tourism, North-East Manufacturers etc. are the sectors which faced a sparely
adverse effect. Without divulging into impact of GST and its advantages/ disadvantages at
sector or industry level, this article brings about the general advantages and disadvantages
that are widely applicable to all the sectors, industries and consumers in common. The list of
advantages and disadvantages in GST can be very long, but herein we look at some of the
major ones as explained below: Advantages under GST: Boosts Foreign Investment and
improves overall investment climate: Tax litigation in certain high profile cases under income
tax act has contributed to a large extent in creating a very downbeat perception of our
country’s taxation system and many allegations were raised over its certainty. Reluctance to
invest was developing due to country’s regulatory and bureaucratic complexities. In this tax
environment, many foreign investors felt it much to better to shut and go rather than to
continue dealing with it. However, GST has given a new hope and the past bad memories are
slowly fading a bit. The mere implementation of GST and the serious efforts made by
government in simplification of GST has developed a strong positive perception of India’s
taxation system world-wide. This is also evident by increasing growth rate of our economy,
increase in FDI’s, stock markets being in consistent boom, Secondary and territory sectors
increased contribution to GDP of the country. Single assessing authority: One of the
important change that businesses will see in the GST regime is that they need not have to deal
with multiple tax authorities. Like in the earlier tax regime, a person would have to approach
multiple tax authorities like Central Excise, VAT, Service Tax etc. Multiple registrations
were required to be taken under each of the laws, returns were to be filed and assessments,
appeals etc. would have to be faced multiple times on the same business transactions over and
over again. In GST, one of the bold steps taken by government is pruning of tax authorities to
one meaning thereby assessee will be either be registered with the Central tax authorities or
with the State tax authorities and not with both, this shall ease the entire tax assessments and
reduce complications that were faced earlier. Increased certainty/ Reduced litigation: Under
earlier indirect tax regime, the main reason for tax litigation was due to lack of clarity in the
law that makes it susceptible to multiple interpretations, Further, the existence of multiple
taxes on the same tax base led to existence of conflicting opinions from both centre and state
tax authorities across the country which has contributed to multiplicity of litigation. Under
GST regime, as majority of the indirect taxes such as Excise, Service Tax, Value Added Tax
(VAT) etc are subsumed and as the tax base of GST regime is kept very wide with much
pruned exemption list, therefore, it will result into a single streamlined taxation and reduce
litigations at large. Erosion of parallel economy: With some bold reforms like submission of
invoice wise information through electronic mode, fairly lower tax rates, system of
compliance ratings being given to all the businesses, a nation-wide e-way bill system,
Concept of auto-matching of vendor/ customers invoices and seamless flow of input taxes
credit etc. could lead to many businesses voluntarily coming into the tax compliant zone
rather than continuing with the ways and means of tax evasion. The structure of GST is such
that non-compliant and unorganized businesses would find it difficult to survive while the tax
compliant businesses will flourish. Under this scheme of things, GST would help in cutting
down the parallel economy to a great extent. Reduced corruption: For the first time in the
history of a taxation system of this country, we have already witnessed that hardly any
assesses had to pay bribe to obtain registration under GST. Now, this the big change that we
are immediately seeing which was just not possible for many in the earlier tax regime. Under
the GST regime, the interaction with the tax authorities would be minimized such that entire
flow of communications would happen electronically through the common portal which
would automatically stem way for reduced corruption. Downslide of prices: Currently,
businesses were not able to avail the credits of various taxes paid. For instance, CST Paid was
becoming fully cost, Excise Duty and Service Tax was not available as credit to traders, VAT
was not available as credit to Service providers and various cesses like SBC etc were only
adding to the cost for the businesses. With implementation of GST, all these cascading of
taxes would come down substantially and the thereby prices of goods/ services should only
slide downwards. Further, not just taxes but if transactions are properly structured and the
benefit derived is properly passed on at each levels then the prices of goods and services can
further trim down. Common national market throughout the country: GST brings in the
common market meaning thereby earlier every state tax law was different and had its own
rules, tax rates, procedures etc. leading to high scope of tax planning and manipulation
practices to avoid/ reduce taxes. In many cases, purchasing from inter-state and paying only
2% CST was more beneficial and in some cases procuring locally even at higher prices with
local VAT was more beneficial which eventually led to high unnecessary purchase planning
such as creation of depots, stock transfers etc. All these planning tools has fall on its foot in
the GST regime and businesses can now plan their purchases purely based on merit of the
transaction and a taxation factor would not have a great influence in procurement decisions to
a large extent. Increase in employment opportunities: After implementation of the new tax
regime, the possibilities of job expansion in the Indian economy has increased as GST is a
promising opportunity. It is learnt that the need for skilled accountants and tax consultants
has increased substantially. The procedural compliances in GST has also given many free-
lancers a main source of occupation.

ADVANTAGE
Single assessing authority: One of the important change that businesses will see in the GST
regime is that they need not have to deal with multiple tax authorities. Like in the earlier tax
regime, a person would have to approach multiple tax authorities like Central Excise, VAT,
Service Tax etc. Multiple registrations were required to be taken under each of the laws,
returns were to be filed and assessments, appeals etc.would have to be faced multiple times
on the same business transactions over and over again. In GST, one of the bold steps taken by
government is pruning of tax authorities to one meaning thereby assessee will be either be
registered with the Central tax authorities or with the State tax authorities and not with both,
this shall ease the entire tax assessments and reduce complications that were faced earlier.
Increased certainty/ Reduced litigation: Under earlier indirect tax regime, the main reason for
tax litigation was due to lack of clarity in the law that makes it susceptible to multiple
interpretations, Further, the existence of multiple taxes on the same tax base led to existence
of conflicting opinions from both centre and state tax authorities across the country which has
contributed to multiplicity of litigation. Under GST regime, as majority of the indirect taxes
such as Excise, Service Tax, Value Added Tax (VAT) etc are subsumed and as the tax base
of GST regime is kept very wide with much pruned exemption list, therefore, it will result
into a single streamlined taxation and reduce litigations at large.Erosion of parallel economy:
With some bold reforms like submission of invoice wise information through electronic
mode, fairly lower tax rates, system of compliance ratings being given to all the businesses, a
nation-wide e-way bill system, Concept of auto-matching of vendor/ customers invoices and
seamless flow of input taxes credit etc. could lead to many businesses voluntarily coming into
the tax compliant zone rather than continuing with the ways
and means of tax evasion. The structure of GST is such that non-compliant and unorganized
businesses would find it difficult to survive while the tax compliant businesses will
flourish.Under this scheme of things, GST would help in cutting down the parallel economy
to a great extent. Reduced corruption: For the first time in the history of a taxation system of
this country, we have already witnessed that hardly any assesses had to pay bribe to obtain
registration under GST. Now, this the big change that we are immediately seeing which was
just not possible for many in the earlier tax regime. Under the GST regime, the interaction
with the tax authorities would be minimized such that entire flow of communications would
happen electronically through the common portal which would automatically stem way for
reduced corruption.Downslide of prices: Currently, businesses were not able to avail the
credits of various taxes
paid. For instance, CST Paid was becoming fully cost, Excise Duty and Service Tax was not
available as credit to traders, VAT was not available as credit to Service providers and
various cesses like SBC etc were only adding to the cost for the businesses. With
implementation of GST, all these cascading of taxes would come down substantially and the
thereby prices of goods/ services should only slide downwards. Further, not just taxes but if
transactions are properly structured and the benefit derived is properly passed on at each
levels then the prices of goods and services can further trim down.Common national market
throughout the country: GST brings in the common market meaning thereby earlier every
state tax law was different and had its own rules, tax rates, procedures etc. leading to high
scope of tax planning and manipulation practices to avoid/reduce taxes. In many cases,
purchasing from inter-state and paying only 2% CST was more beneficial and in some cases
procuring locally even at higher prices with local VAT was more beneficial which eventually
led to high unnecessary purchase planning such as creation of depots, stock transfers etc. All
these planning tools has fall on its foot in the GST regime and
businesses can now plan their purchases purely based on merit of the transaction and a
taxation factor would not have a great influence in procurement decisions to a large extent.
DIS-ADVANTAGE
Not a one nation one tax in spirit: An ideal GST would have been one where only one law
would have been framed and only one authority would have been assigned with the
accountability of framing, governing and regulating the GST law. However, contrary to what
was expected, we presently have 31 legislations governing the entire framework of the law
which is definitely not one nation one tax. In other words, Gujarat GST law is different from
the Maharashtra GST law and if a person is doing business in both the states then he has to
take separate GST registration in both the states, file separate GST returns, maintain multiple
state wise accounts and get the tax assessed by each state authority separately which
compromises the basic structure of the GST that was expected so much so that many experts
have started claiming that this GST is not a tax reform but it is just a old wine in a old bottle
with a new label.
 CHAPTER 8

BENEFIT OF GST

1. GST eliminates the cascading effect of tax

GST is a comprehensive indirect tax that was designed to bring the indirect taxation under
one umbrella. More importantly, it is going to eliminate the cascading effect of tax that was
evident earlier.

Cascading tax effect can be best described as ‘Tax on Tax’. Let us take this example to
understand what is Tax on Tax:

Before GST regime:

A consultant offering services for say, Rs 50,000 and charged a service tax of 15% (Rs
50,000 * 15% = Rs 7,500).

Then say, he would buy office supplies for Rs. 20,000 paying 5% as VAT (Rs 20,000 *5% =
Rs 1,000).

He had to pay Rs 7,500 output service tax without getting any deduction of Rs 1,000 VAT
already paid on stationery.

His total outflow is Rs 8,500.

Under GST

GST on service of Rs 50,000 @18% 9,000

Less: GST on office supplies (Rs 20,000*5%) 1,000

Net GST to pay 8,000

2. Higher threshold for registration

Earlier, in the VAT structure, any business with a turnover of more than Rs 5 lakh (in most
states) was liable to pay VAT. Please note that this limit differed state-wise. Also, service tax
was exempted for service providers with a turnover of less than Rs 10 lakh.

Under GST regime, however, this threshold has been increased to Rs 20 lakh, which exempts
many small traders and service providers.

Let us look at this table below:

Tax Threshold Limits

Excise 1.5 crores

VAT 5 lakhs in most states

Service Tax 10 lakhs

GST 20 lakhs (10 lakhs for NE states)

3. Composition scheme for small businesses

Under GST, small businesses (with a turnover of Rs 20 to 75 lakh) can benefit as it gives an
option to lower taxes by utilizing the Composition scheme. This move has brought down the
tax and compliance burden on many small businesses.

4. Simple and easy online procedure

The entire process of GST (from registration to filing returns) is made online, and it is super
simple. This has been beneficial for start-ups especially, as they do not have to run from pillar
to post to get different registrations such as VAT, excise, and service tax.

Our ClearTax GST software is already on a roll filing GST returns

5. The number of compliances is lesser

Earlier, there was VAT and service tax, each of which had their own returns and
compliances. Below table shows the same:

Under GST, however, there is just one, unified return to be filed. Therefore, the number of
returns to be filed has come down. There are about 11 returns under GST, out of which 4 are
basic returns which apply to all taxable persons under GST. The main GSTR-1 is manually
populated and GSTR-2 and GSTR-3 will be auto-populated.

6. Defined treatment for E-commerce operators

Earlier to GST regime, supplying goods through e-commerce sector was not defined. It had
variable VAT laws. Let us look at this example:

Online websites (like Flipkart and Amazon) delivering to Uttar Pradesh had to file a VAT
declaration and mention the registration number of the delivery truck. Tax authorities could
sometimes seize goods if the documents were not produced.

Again, these e-commerce brands were treated as facilitators or mediators by states like
Kerala, Rajasthan, and West Bengal which did not require them to register for VAT.

All these differential treatments and confusing compliances have been removed under GST.
For the first time, GST has clearly mapped out the provisions applicable to the e-commerce
sector and since these are applicable all over India, there should be no complication regarding
the inter-state movement of goods anymore.
Read a more detailed analysis of the impact of GST on e-commerce.

7. Improved efficiency of logistics

Earlier, the logistics industry in India had to maintain multiple warehouses across states to
avoid the current CST and state entry taxes on inter-state movement. These warehouses were
forced to operate below their capacity, giving room to increased operating costs.

Under GST, however, these restrictions on inter-state movement of goods have been
lessened.

As an outcome of GST, warehouse operators and e-commerce aggregators players have

shown interest in setting up their warehouses at strategic locations such as Nagpur (which is
the zero-mile city of India), instead of every other city on their delivery route.

Reduction in unnecessary logistics costs is already increasing profits for businesses involved
in the supply of goods through transportation.

Visit here to read more about the impact of GST on logistics.

8. Unorganized sector is regulated under GST

In the pre-GST era, it was often seen that certain industries in India like construction and
textile were largely unregulated and unorganized.

Under GST, however, there are provisions for online compliances and payments, and for
availing of input credit only when the supplier has accepted the amount. This has brought in
accountability and regulation to these industries.

Let us now look at disadvantages of GST. Please note that businesses need to overcome these
disadvantages to run the business smoothly.

Disadvantages of GST

1. Increased costs due to software purchase

Businesses have to either update their existing accounting or ERP software to GST-compliant
one or buy a GST software so that they can keep their business going. But both the options
lead to increased cost of software purchase and training of employees for an efficient
utilization of the new billing software.

ClearTax is the first company in India to have launched a ready-to-use GST software called
Cleartax GST software. The software is currently available for free for SMEs, helping them
transition to GST smoothly. It has truly eased the pain of the people in so many ways.

2. Being GST-compliant

Small and medium-sized enterprises (SME) who have not yet signed for GST have to quickly
grasp the nuances of the GST tax regime. They will have to issue GST-complaint invoices, be
compliant to digital record-keeping, and of course, file timely returns. This means that the
GST-complaint invoice issued must have mandatory details such as GSTIN, place of supply,
HSN codes, and others.

ClearTax has made it easier for SMEs with the ClearTax BillBook web application. This
application is available for FREE until the end of September and is an easy solution to this
problem. This will help every business to issue GST-compliant invoices to their customers.
These same invoices can then be used for return filing through the ClearTax GST platform.

3. GST will mean an increase in operational costs

As we have already established that GST is changing the way how tax is paid, businesses will
now have to employ tax professionals to be GST-complaint. This will gradually increase
costs for small businesses as they will have to bear the additional cost of hiring experts.

Also, businesses will need to train their employees in GST compliance, further increasing
their overhead expenses.

4. GST came into effect in the middle of the financial year

As GST was implemented on the 1st of July 2017, businesses followed the old tax structure
for the first 3 months (April, May, and June), and GST for the rest of the financial year.

Businesses may find it hard to get adjusted to the new tax regime, and some of them are
running these tax systems parallelly, resulting in confusion and compliance issues.

5. GST is an online taxation system

Unlike earlier, businesses are now switching from pen and paper invoicing and filing to
online return filing and making payments. This might be tough for some smaller businesses
to adapt to.

Cloud-based GST billing software like the ClearTax GST Billing Software is definitely an
answer to this problem. The process for return filing on ClearTax GST is very simple.
Business owners need to only upload their invoices, and the software will populate the return
forms automatically with the information from the invoices. Any errors in invoices will be
clearly identified by the software in real-time, thus increasing efficiency and timeliness.

6. SMEs will have a higher tax burden

Smaller businesses, especially in the manufacturing sector will face difficulties under GST.
Earlier, only businesses whose turnover exceeded Rs 1.5 crore had to pay excise duty. But
now any business whose turnover exceeds Rs 20 lakh will have to pay GST.

However, SMEs with a turnover upto Rs 75 lakh can opt for the composition scheme and pay
only 1% tax on turnover in lieu of GST and enjoy lesser compliances. The catch though is
these businesses will then not be able to claim any input tax credit. The decision to choose
between higher taxes or the composition scheme (and thereby no ITC) will be a tough one for
many SMEs.
 CHAPTER 9

IMPACT OF GST IN INDIAN ECONOMY

Impact of Goods and Service Tax

I. Food Industry The application of GST to food items will have a significant impact on those
who are living under subsistence level. But at the same time, a complete exemption for food
items would drastically shrink the tax base. Food includes grains and cereals, meat, fish and
poultry, milk and dairy products, fruits and vegetables, candy and confectionary, snacks,
prepared meals for home consumption, restaurant meals and beverages. Even if the food is
within the scope of GST, such sales would largely remain exempt due to small business
registration threshold. Given the exemption of food from CENVAT and 4% VAT on food
item, the GST under a single rate would lead to a doubling of tax burden on food.

II. Housing and Construction Industry In India, construction and Housing sector need to be
included in the GST tax base because construction sector is a significant contributor to the
national economy. III. FMCG Sector Despite of the economic slowdown, India's Fast
Moving Consumer Goods (FMCG) has grown consistently during the past three – four years
reaching to $25 billion at retail sales in 2008. Implementation of proposed GST and opening
of Foreign Direct Investment (F.D.I.) are expected to

fuel the growth and raise industry's size to $95 Billion by 201835.
IV. Rail Sector
There have been suggestions for including the rail sector under the GST umbrella to bring
about significant tax gains and widen the tax net so as to keep overall GST rate low. This will
have the added benefit of ensuring that all inter – state transportation of goods can be tracked
through
V. Financial Services
In most of the countries GST is not charged on the financial services. Example, In New
Zealand most of the services covered except financial services as GST. Under the service tax,
India has followed the approach of bringing virtually all financial services within the ambit of
tax where consideration for them is in the form of an explicit fee. GST also include financial
services on the above grounds only. VI. Information Technology enabled services To be in
sync with the best Internationalpractices, domestic supply of software should also attract
G.S.T. on the basis of mode of transaction. Hence if the software is transferred through
electronic form, it should be considered as Intellectual Property and regarded as a service.
And if the software is transmitted on media or any other tangible property, then it should be
treated as goods and subject to G.S.T. 35 According to a FICCI – Technopak Report.
Implemtayion of GST will also help in uniform, simplified and single point Taxation and
thereby reduced prices.
VII. Impact on Small Enterprises There will be three categories of Small Enterprises in the
GST regime. Those below threshold need not register for the GST Those between the
threshold and composition turnovers will have the option to pay a turnover based tax or opt to
join the GST regime. Those above threshold limit will need to be within framework of GST
Possible downward changes in the threshold in some States consequent to the introduction of
GST may result in obligation being created for some dealers. In this case considerable
assistance is desired. In respect of Central GST, the position is slightly more complex. Small
scale units manufacturing specified goods are allowed exemptions of excise up to Rs. 1.5
Crores. These units may be required to register for payment of GST, may see this as an
additional cost.

Impact of GST on Manufacturers, Distributor, and Retailers

GST is a boost competitiveness and performance in India’s manufacturing sector. Declining

exports and high infrastructure spending are just some of the concerns of this sector. Multiple
indirect taxes had also increased the administrative costs for manufacturers and distributors
and with GST in place, the compliance burden has eased and this sector will grow more
strongly.

But due to GST business which was not under the tax bracket previously will now have to
register. This will lead to lesser tax evasion.

Impact of GST on Service Providers

As of March 2014, there were 12, 76,861 service tax assessees in the country out of which
only the top 50 paid more than 50% of the tax collected nationwide. Most of the tax burden is
borne by domains such as IT services, telecommunication services, the Insurance industry,
business support services, Banking and Financial services, etc. These pan-India businesses
already work in a unified market and will see compliance burden becoming lesser. But they
will have to separately register every place of business in each state.

Sector-wise Impact Analysis

Logistics
In a vast country like India, the logistics sector forms the backbone of the economy. We can
fairly assume that a well organized and mature logistics industry has the potential to leapfrog
the “Make In India” initiative of the Government of India to its desired position.

E-commerce

The e-commerce sector in India has been growing by leaps and bounds. In many ways, GST
will help the e-com sector’s continued growth but the long-term effects will be particularly
interesting because the GST law specifically proposes a Tax Collection at Source (TCS)
mechanism, which e-com companies are not too happy with. The current rate of TCS is at
1%.

Pharma

On the whole, GST is benefiting the pharma and healthcare industries. It will create a level
playing field for generic drug makers, boost medical tourism and simplify the tax structure. If
there is any concern whatsoever, then it relates to the pricing structure (as per latest news).
The pharma sector is hoping for a tax respite as it will make affordable healthcare easier to
access by all.

Telecommunications

In the telecom sector, prices will come down after GST. Manufacturers will save on costs
through efficient management of inventory and by consolidating their warehouses. Handset
manufacturers will find it easier to sell their equipment as GST has negated the need to set up
state-specific entities, and transfer stocks. The will also save up on logistics costs.

Textile

The Indian textile industry provides employment to a large number of skilled and unskilled
workers in the country. It contributes about 10% of the total annual export, and this value is
likely to increase under GST. GST would affect the cotton value chain of the textile industry
which is chosen by most small medium enterprises as it previously attracted zero central
excise duty (under optional route).

Real Estate

The real estate sector is one of the most pivotal sectors of the Indian economy, playing an
important role in employment generation in India. The impact of GST on the real estate
sector cannot be fully assessed as it largely depends on the tax rates. However, the sector will
see substantial benefits from GST implementation, as it has brought to the industry much-
required transparency and accountability.

Agriculture

The agricultural sector is the largest contributing sector the overall Indian GDP. It covers
around 16% of Indian GDP. One of the major issues faced by the agricultural sector is the
transportation of agri-products across state lines all over India. GST will resolve the issue of
transportation.
FMCG

The FMCG sector is experiencing significant savings in logistics and distribution costs as the
GST has eliminated the need for multiple sales depots.

Freelancers

Freelancing in India is still a nascent industry and the rules and regulations for this chaotic
industry are still up in the air. But with GST, it will become much easier for freelancers to file
their taxes as they can easily do it online. They are taxed as service providers, and the new
tax structure has brought about coherence and accountability in this sector.

Automobiles

The automobile industry in India is a vast business producing a large number of cars
annually, fueled mostly by the huge population of the country. Under the previous tax
system, there were several taxes applicable to this sector like excise, VAT, sales tax, road tax,
motor vehicle tax, registration duty which will be subsumed by GST.

Startups

With increased limits for registration, a DIY compliance model, tax credit on purchases, and
a free flow of goods and services, the GST regime truly augurs well for the Indian startup
scene. Previously, many Indian states had different VAT laws which were confusing for
companies that have a pan-India presence, especially the e-com sector. All of this has
changed under GST
 CHAPTER 10

Registration under GST Law

In any tax system registration is the most fundamental requirement for identification of tax
payers ensuring tax compliance in the economy. Registration of any business entity under the
GST Law implies obtaining a unique number from the concerned tax authorities for the
purpose of collecting tax on behalf of the government and to avail Input tax credit for the
taxes on his inward supplies. Without registration, a person can neither collect tax from his
customers nor claim any input tax credit of tax paid by him.
Need and advantages of registration

Registration will confer the following advantages to a taxpayer: • He is legally recognized as

supplier of goods or services. • He is legally authorized to collect tax from his customers and
pass on the credit of the taxes paid on the goods or services supplied to the purchasers/
recipients. 2 GST FLYERS • He can claim input tax credit of taxes paid and can utilize the
same for payment of taxes due on supply of goods or services. • Seamless flow of Input Tax
Credit from suppliers to recipients at the national level.

Liability to register GST

being a tax on the event of “supply”, every supplier needs to get registered. However, small
businesses having all India aggregate turnover below Rupees 20 lakh (10 lakh if business is
in Assam, Arunachal Pradesh, Himachal Pradesh, Uttarakhand, Manipur, Mizoram, Sikkim,
Meghalaya, Nagaland or Tripura) need not register. The small businesses, having turnover
below the threshold limit can, however, voluntarily opt to register. The aggregate turnover
includes supplies made by him on behalf of his principals, but excludes the value of job-
worked goods if he is a job worker. But persons who are engaged exclusively in the business
of supplying goods or services or both that are not liable to tax or wholly exempt from tax or
an agriculturist, to the extent of supply of produce out of cultivation of land are not liable to
register under GST. Also, if all the supplies being made by a supplier are taxable under
reverse charge, there is no requirement for such a supplier to register in light of Notification .
 CHAPTER 11

PROCEDURE OF GST REGISTRATION

a) Details to be furnished:
Before applying for REGISTRATION PROCESS person has to declare the following:

• PAN

• Mobile number

• E-mail address

• State or UT

In Part A of FORM GST REG-01 on the Common Portal, either directly or through a
Facilitation Centre notified by Commissioner.

b) Reference Number:

On successful verification of the PAN, mobile number and e-mail, a temporary reference
number shall be generated and communicated to the applicant.

c) Application:
Using the reference number, the applicant shall electronically submit an application in Part B
of FORM GST REG-01, duly signed or verified through electronic verification code (EVC),
along with documents specified in the form.

d) Specified Documents:
The following specified documents are required to be submitted along with the application:

A. Documents required for Private Limited Company, Public Company (limited

company) / One Person Company (OPC):

i) Company documents
• PAN card of the company
• Registration Certificate of the company
• Memorandum of Association (MOA)/ Articles of Association (AOA)
• Copy of Bank Statement
• Declaration to comply with the provisions
• Copy of Board resolution
ii) Director related documents
• PAN and ID proof of directors
iii) Registered Office documents
• Copy of electricity bill/ landline bill, water bill
• No objection certificate of the owner
• Rent agreement (in case premises are rented)
B. Documents required for Limited Liability Partnerships (LLPs):
i) LLP Documents
• Registration Certificate of the LLP
• LLP Partnership agreement
• Copy of Bank Statement of the LLP
• Declaration to comply with the provisions
• Copy of Board resolution
ii) Designated Partner related documents
• PAN and ID proof of designated partners
iii) Registered Office documents
• Copy of electricity bill, landline bill, water bill
• No objection certificate of the owner
• Rent agreement (in case premises are rented)
C. Documents required for Normal Partnerships
i) Partnership documents
• PAN card of the Partnership
• Partnership Deed
• Copy of Bank Statement
• Declaration to comply with the provisions
ii) Partner related documents
• PAN and ID proof of designated partners
iii) Registered Office documents
• Copy of electricity bill / landline bill, water bill
• No objection certificate of the owner
• Rent agreement (in case premises are rented)• Documents required for Sole proprietorship /
Individual
iv) Individual documents
• PAN card and ID proof of the individual
• Copy of Cancelled cheque or bank statement
• Declaration to comply with the provisions
v) Registered Office documents
• Copy of electricity bill/ landline bill, water bill
• No objection certificate of the owner
• Rent agreement ( in case premises are rented)
 CHAPTER 12

MAJOR DIFFERENCES IN PRE & POST GST RULES

REGISTRATION
Old Regime Single registration PAN India
GST Regime
Each state from where business is done would be required to
get registration under GST
12.1 RETURN FILING
Old Regime
VAT Laws: Depends upon state to state
Service Tax: Return is filed every six months i.e. for the period
of April to September and October to March
GST Regime Returns have to be filed every month
12.2 TAX RATE
Old Regime Rates have been changed
GST Regime
12.3INPUT TAX CREDIT
Input credit means at the time of paying tax on output, you can reduce the tax you have
already
paid on inputs.
Say, you are a manufacturer –
tax payable on output (FINAL PRODUCT) is Rs 450
tax paid on input (PURCHASES) is Rs 300
You can claim INPUT CREDIT of Rs 300 and you only need to deposit Rs 150 in taxes.
Old Regime Credit of all taxes were not available seamlessly (excise, VAT,
service tax, etc)
GST Regime Available (subject to certain condition)
MATCHING OF GST RETURNS OF SELLER & BUYER
In GST if the invoice of the supplier does not match with the details of invoice of the
recipient, the
credit shall not be allowed to that person.
Example: Company A purchases computers from Company B for Rs.2 Lakhs and Rs. 36000
GST
been charged. However if Company B in its GST return, states that goods provided are of
Rs.1 Lac
5
only and GST on it is Rs.18000, then Company A will get credit worth only Rs.18000 and
not Rs
36000. Hence both supplier & recipient should file returns properly.
12.4REVERSE CHARGE
Reverse charge means the liability to pay tax is by the recipient (customer) of goods/services
instead of the supplier (service provider or seller).
Normally, the supplier (service provider) pays the tax on supply. In certain cases, the receiver
(customer) becomes liable to pay the tax, i.e., the chargeability gets reversed which is why it
is
called reverse charge.
In India, this is a partly new concept introduced under GST. The purpose of this charge is to
increase tax compliance and tax revenues. Earlier, the government was unable to collect
service
tax from various unorganized sectors like goods transport. Compliances and tax collections
will
therefore be increased through reverse charge mechanism.
12.5Working with Unregistered Supplier/Vendors
Reverse charge will be applicable in case CCIC is purchasing goods or taking services
(greater than
Rs 5000 in a single day) from unregistered person. In such a case, the registered dealer has to
pay GST on the supply under reverse charge.
Old Regime No reverse charge was there on purchasing goods or taking services from
unregister supplier (person not registered under service/ VAT tax)
GST Regime In case CCIC is taking services or purchasing goods from unregistered supplier
(for value greater than Rs 5000, in a single day), than following would be the
impact on CCIC :
1. Raise tax invoice on yourself and pay GST on it. Also issue payment
voucher to the unregistered supplier.
For e.g. – for even tea/ pen/ pencil purchased from local vendor (not
registered under GST), tax invoice would be required to be raised
and GST would be required to be paid
2. This transaction would be required to be shown in the GST return
12.6Compliance rating
Old Regime No such concept
GST Regime In GST compliance rating will be given to every taxpayer. Compliance rating
will be based on timely filling of return and payment of taxes and will be
shown on GSTN network. So, doing business might become difficult if the
compliance rating goes down
6
IMPACT If returns are not filed properly or in time, rating will be poor and will be
11.7Invoice / documents
Old Regime In GST regime, invoice format are different from the one we are making in
current regime.
New invoice format has been made. So from 1stjuly old formats should not
be used
GST Regime
 CHAPTER 13

CONCLUSION

GST is a destination based tax and levied at a single point at the time of con sumption of
goods or services by the ultimate consumer. GST is based on the principle of value added tax.
Goods and Services Tax (GST) is a comprehensive tax levy on manufacture, traders, sale and
consumption of Goods and Services at national level and is expected to remove the cascading
effect of tax-on-tax which is prevalent presently. The term GST is defined in Article 366
(12A) to mean “any tax on supply of goods or services or both except taxes on supply of the
alcoholic liquor for human consumption” Goods & Services Tax Law in India is
a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

In simple words, Goods and Service Tax is an indirect tax levied on the supply of goods and
services. GST Law has replaced many indirect tax laws that previously existed in India.

GST is one indirect tax for the entire country.

Under the GST regime, the tax will be levied at every point of sale. In case of interstate sales,
Central GST and State GST will be charged. Intra-state sales will be chargeable to Integrated
GST.

Now let us try to understand the definition of Goods and Service Tax – “GST is a
comprehensive, multi-stage, destination-based tax that will be levied on every value
addition.”

Multi-stage

There are multiple change-of-hands an item goes through along its supply chain: from
manufacture to final sale to the consumer.

Let us consider the following case:

 Purchase of raw materials

 Production or manufacture
 Warehousing of finished goods
 Sale to wholesaler
 Sale of the product to the retailer
  Sale to the end consumer
Goods and Services Tax will be levied on each of these stages, which makes it a multi-stage
tax.

GST Rates Finalised, GST Rate Slabs is 5%, 12%, 18% & 28%. the GST Council decided a
four-tier GST tax structure of 5%, 12%, 18% and 28%, with zero rate for essential items and
the highest for luxury and de-merits goods which are also expected to attract an additional
cess. Know more for GST Rates 2018

Consider goods manufactured in Maharashtra and are sold to the final consumer in
Karnataka. Since Goods & Service Tax (GST) is levied at the point of consumption, in this
case, Karnataka, the entire tax revenue will go to Karnataka and not Maharashtra.

GST will mainly remove the Cascading effect on the sale of goods and services. Removal of
cascading effect will directly impact the cost of goods. The cost of goods should decrease
since tax on tax is eliminated in the GST regime.

GST is also mainly technologically driven. All activities like registration, return filing,
application for refund and response to notice needs to be done online on the GST Portal. This
will speed up the processes.