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Indirect tax Imp theory

1. Explain features of Indirect tax

Ans: Article 366 of the constitution goods and service tax (GST) means any tax on supply of goods
and service or both.
Features of GST
1. Tax on consumption :-GST is a tax on consumption of goods and service tax i.e. tax borne by
consumer in the state where goods or service are finally consumed .
2. GST is destination based tax -GST being a destination based tax is levied where goods/ services are
consumed .in destination based tax , zero tax is applicable on exports and imports are taxed the same
rate as on domestic product .
3. Value added tax- Goods and service tax (GST) is nature of a VAT (Value added tax). The business
man pays GST on the price of the product minus the GST previously paid on goods and service tax.
4. Continuous flow of credit-GST aims to eliminate cascading effects of TAX in the supply chain
between the producer and manufacturer and the consumer. That tax burden only the ne tax is passed
on the end of consumer.
5. Tax on supply- GST is a tax supply not on manufacturer or sale . Hence stock transfers / branch
transfers /free gift to be shifted.
2. Advantages and disadvantages of Indirect Tax:
Advantages
1. Gove. revenue – Indirect tax are a major source of tax revenues for government worldwide
2. Low collection of tax- Collection costs of indirect tax as percentage of Tax collected are lower as
compared to direct tax
3. Less evasion – Tax evasion less in indirect tax in organized sector due to convenience of control
4. Higher on luxury /harmful product- Government can levy higher taxes on luxury goods which
reduce the wasteful expenditure .Higher tax are imposed on the consumption of harmful product
Disadvantages of indirect tax-
1. Higher price- Tax imposed on goods and service leads to higher prices of consumer . higher taxes on
capital goods increases cost of machinery and technology .
2. Lower demand and growth – Tax on goods and service increases its practice which reduces demand
of goods and service
3. Regressive in nature- Generally the indirect tax are regressive in nature . the rich and the poor have
to pay the same rate of indirect tax on items of mass consumption .

3.Explain E-way of bill –

Meaning – E-Way bill is an electronic document generated on the GST portal evidencing movement
of goods.
Form-It has two components Part A and Part B
Part A GSTIN of recipient of , place of supply ,invoice or challan number date , value of goods , HSN
code
PartB Comprising of transporter details
Issuer- Every registered person who causes movement of goods of consignment value
 Aim- E-way of bill is a mechanism to ensure that goods being transported comply with GST law and
order
Implementation- The E-way of bill system introduced nation wide for all inter-state and Intra state
supply

4.Define goods

Define goods- According to goods means every kind of movable property other than money and
securities but include actionable claim , growing crops grass and attached to or farming part of land
which are agreed be served or under a contract supply
goods include all movable property
The immovable properties are not goods

5.Reversge charges

The reverse charges means the liability to pay tax by the recipient of supply of goods or service or
both issued of the supplier of such goods or service or both under sub-section (3) and subsection (4)
of section 9 or under sub-section (3) or sub –section (4) of section 5 of the integrated goods and
service tax act.

6.Explain place of supply –

Place of supply of goods other than supply of goods imported into or exported from india shall
be as under:Where the supply involves movement of goods whetherby the supplier or the recipient or
by any other person. The place of supply of such goods shall be the location of the goods at the time
at which the movement of goods terminated for delivery to the recipient .
Analysis of provision of place of supply ,Where the goods are supplied on board a conveyance
Import and export of goods and service within india
Goods and services recipient of location of services is in india
Serives of training and performance appraisal supplied to a registered person will be location of the
recipient

7.Value of Taxable Supply

GST is payable on ad valorem basis. The GST rate is a percentage of value eg. 18% The which this %
is charged is the "value of taxable supply.Section 15 of the CGST Act contains common provisions
for determining the value of g services. It provides the mechanism for determining the value of a
supply which is made unrelated persons and when price and only the price is the sole consideration of
the supply When value cannot be determined under section 15, the same is determined using taxable
supply Determination of Value of Supply of CGST Rules. Provisions of value of supply under the
CGST Act are also made applicable to IGST Act vide of the IGST Act.
8.Aggregate Turnover

(1) Definition [S. 2(6)]: Section 2(6) of the CGST Act states that: "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
Registration Under GST Law [S. 22-30]
 both and inter-State supplies of persons having the same Permanent Account Number, to be computed
on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.
Supply of goods, after completion of job-work, by a registered job worker shall be as the supply of
goods by the principal. treated

(ii) Inward Supplies under RCM: It may be noted that the inward supplies on which the recipient is
required to pay tax under Reverse Charge Mechanism (RCM) do not form part of the 'aggregate
turnover' of the recipient. The law stipulates certain supplies like, Goods Transport Agency services,
services received from outside India, to name a few, where the recipient of service is made to pay the
tax. The value of such supplies on which tax is paid, would not form part of the 'aggregate turnover'
of recipient of such supplies. However, the value of such supplies would continue to be part of the
'aggregate turnover' of the supplier of such supplies.

(iii) Aggregate Turnover v. Turnover in State: The aggregate turnover (ATO) is different from
turnover in a State. The aggregate turnover is used for determining the threshold limit for registration
as well as eligibility for composition scheme. However, the 'turnover in the State' is used to levy the
flat rate of tax under composition scheme.
9. Compensation scheme
The Goods and Services Tax (Compensation to States) Act, 2017 provides for compens commended by
the GST Council, for the loss of revenue arising on of the goods and services tax Compensation will be
provided to a Mate the date on which the State brings its SGST Act into force i.e., upto 12 calculating the
compensation amount in any financial year, year 2015 be the base year, for calculating the revenue to be
protected. The growth re live The purpose State during the five-year period is assumed to be 14% per
annum. The base y the states tax revenues from: (i) state Value Added Tax (VAT), (ii) central sales y sex
octroi, local body tax, (iv) taxes on luxuries, (v) taxes on advertisements, e among these taxes arising
related to supply of alcohol for human consumption specified petroleum products, will not be accounted
as part of the base year revenue
10.Explain import and export of services
Import of Services: "Import of services" means the supply of any service, where re service is located
outside India, (i) the recipient of service is located in to india , and place of supply of service is in
India. (S. 2(11) of IGST Act) Supply of services import the territory of India shall be treated to be a
supply of services in the course of commerce (8.7(4) of IGST Act) Accordingly, IGST would be
levied on import of t IGST on import of services would be payable by the recipient under reverse
charge above [Notification No. 10/2017- Integrated Tax (Rate) Dt. 28th June 2017)
Importer Liable to Pay Tax: The importer located in the taxable territory is able GST on imports

Export of Goods: Export of goods means taking goods out of India to a place of supply of IGST
Act.Export of Services: Export of services, vide S. 2(6) of the IGST Act, the service when,- the
supplier of service is located in India:the recipient of service is located outside India; (i) the place of
supply of service is outside India the payment for such service has been received by the of service
foreign exchange or in Indian rupees wherever permitted by the Reserve Bank.
11.Explain Input tax credit

ITC can be availed on - Goods (Inputs), Services (Input Services) and Capital Goods used or intended
to be used by a supplier in the course or furtherance of business. Input [Sec. 2(59) of the CGST Act,
2017): It means any goods other than capital goods used or intended to be used by a supplier in the
course or furtherance of business.
Capital Goods [Sec. 2(19) of the CGST Act, 2017]: It means goods, the value of which is capitalized
in the books of account of the person claiming the input tax credit and which are used or intended to
be used in the course or furtherance of business. Input Service [Sec 2(60) of the CGST Act, 2017]: It
means any service used or intended to be used by a supplier in the course or furtherance of business.

12.Explain composite supply and Mixed supply

Consist of two or more taxable supply .Naturlly bundled in conjunction with each other one of which
is principal of supply Price may be charged separately Taxed at the rate of principal supply

Mixed supply
Consist of two or more individual supply Not naturally bundled only supplied together A single price
is charged Taxed at higher rate of supply