Unit-4

Levy and Collection of GST

5–6 minutes

Goods and Services Tax (GST) is a comprehensive indirect tax system implemented in India on
July 1, 2017. It consolidates various indirect taxes into a single tax structure, aiming to
streamline the tax system, enhance compliance, and promote economic efficiency. The levy and
collection of GST are governed by the Goods and Services Tax Act, 2017, and associated rules,
regulations, and notifications.

Levy of GST

1. Legal Framework

The levy of GST is regulated under the following key statutes:

 Central Goods and Services Tax (CGST) Act, 2017: Governs the levy of GST on intra-
state supplies by the Central Government.
 State Goods and Services Tax (SGST) Act, 2017: Governs the levy of GST on intra-
state supplies by the State Governments.
 Integrated Goods and Services Tax (IGST) Act, 2017: Governs the levy of GST on
inter-state supplies and imports.

2. Taxable Events

GST is levied on the supply of goods and services. The term “supply” is broadly defined under
Section 7 of the CGST Act, 2017, and includes:

 Sale: Transfer of title in goods.

 Transfer: Movement of goods or services from one place to another.
 Barter and Exchange: Goods or services provided in exchange for other goods or
services.
 Import and Export: Goods and services entering or leaving India.

3. Taxable Person

Under Section 9 of the CGST Act, 2017, any person who makes a taxable supply of goods or
services is considered a taxable person. This includes individuals, firms, companies, and other
legal entities. Registration is mandatory for taxable persons whose turnover exceeds the
prescribed threshold limit.

4. Tax Rates

GST is structured into multiple tax slabs to cater to different categories of goods and services.
The rates are categorized as:

 0%: Essential items like food grains.

 5%: Common goods such as tea, coffee.
  12%: Processed foods and some services.
 18%: Standard rate for most goods and services.
 28%: Luxury goods and certain services.

The rates are determined by the GST Council, which is a body consisting of the Finance
Ministers of both Central and State Governments.

Collection of GST:

GST is collected at various stages of the supply chain through the mechanism of input tax credit
(ITC). The key stages:

 Invoice-Based System:

GST is collected based on invoices issued by suppliers. The tax payable is calculated on the
value of the goods or services supplied, and a tax invoice must be issued for each supply.

 Input Tax Credit (ITC):

Businesses can claim ITC for taxes paid on inputs, which can be set off against the output tax
payable. This mechanism avoids the cascading effect of tax on tax, ensuring that the tax burden
is borne only by the final consumer.

 Reverse Charge Mechanism (RCM):

In certain cases, the recipient of goods or services is liable to pay GST instead of the supplier.
This mechanism is applied in specified cases like import of services or supplies from
unregistered dealers.

Filing of Returns:

GST compliance involves regular filing of returns. The key returns are:

 GSTR-1: Monthly or quarterly return detailing outward supplies.

 GSTR-2: Details of inward supplies (currently suspended).
 GSTR-3B: Monthly summary of inward and outward supplies and payment of tax.
 GSTR-4: Return for composition scheme taxpayers.
 GSTR-9: Annual return.

The due dates for filing vary based on the type of return and the turnover of the taxpayer.
Penalties are imposed for delays or non-compliance.

Payment of GST:

GST payments can be made electronically through the GST portal using various payment
methods such as net banking, credit/debit cards, and other online payment systems. Payments
need to be made by the 20th of the following month for regular taxpayers or as specified for the
composition scheme.

Administration and Enforcement:

GST administration is handled by the Central Board of Indirect Taxes and Customs (CBIC) for
CGST and IGST, and respective State Governments for SGST. The administration involves:
  Assessment: Evaluating the accuracy of returns and tax payments.
 Audit: Conducting audits to ensure compliance and correct reporting.
 Enforcement: Imposing penalties and taking legal action in cases of non-compliance.

Recent Developments:

 E-Invoicing:

A system requiring businesses to generate invoices electronically and upload them to a

government portal to combat fraud and improve compliance.

 GST Council Reforms:

The Council periodically revises tax rates and compliance measures to address economic
conditions and business needs.

Challenges and Remedies:

Businesses face challenges such as complexity in compliance, frequent changes in regulations,

and issues with ITC claims. The government addresses these through simplification measures,
extended deadlines, and advisory support.

GST Taxable event: Supply of Goods and

Services
2–3 minutes

In India, under the Goods and Services Tax (GST) regime, the term “taxable event” refers to the
occurrence that triggers the liability to pay GST. The main taxable events under GST are the
“supply of goods” and the “supply of services.”

1. Supply of Goods

The supply of goods refers to the transfer of ownership or possession of goods for a
consideration. This can include sales, barter, exchange, and other transfers of goods.

 Examples:

Sale of products in a retail store, transfer of goods from a manufacturer to a wholesaler, or even
the movement of goods between branches of the same company.

2. Supply of Services

The supply of services covers any activity that is not a supply of goods, but involves the
provision of a service for a consideration.

 Examples:

Consulting services, legal services, repairs and maintenance services, or any other service
provided to a client or customer.
Key Points:

 Consideration:

For both goods and services, there must be a consideration involved, which means the
transaction should be for some monetary value. However, certain transactions may be considered
“supply” even if they are not for monetary consideration, such as barter transactions or activities
done as a part of a business.

 Time of Supply:

The time of supply determines when the GST is payable. For goods, it is typically when the
goods are delivered or made available, and for services, it is usually when the service is
performed or completed.

 Place of Supply:

This determines the location where the supply is considered to have occurred, which is crucial
for determining the applicable GST rate and whether it should be charged as intra-state or inter-
state supply.

 Rate of GST:

Different goods and services may attract different GST rates. The rates are classified into various
slabs (e.g., 5%, 12%, 18%, 28%) depending on the nature of the goods or services.

Place and Time of Supply

4–5 minutes

Under GST, 3 types of taxes can be charged in the invoice. SGST and CGST in case of an intra-
state transaction and IGST in case of an interstate transaction. But deciding whether a particular
transaction is inter or intrastate is not an easy task.

Think about an online training where customers are sitting in different parts of the world.

Say in case, hotel services, where the receiver may have an office in another state and may be
visiting the hotel only temporarily, or where goods are sold on a train journey passing through
different states.

To help address some of these situations, the IGST act lays down certain rules which define
whether a transaction is inter or intrastate. These rules are called the place of supply rules.

Time of supply means the point in time when goods/services are considered supplied’. When the
seller knows the ‘time’, it helps him identify due date for payment of taxes.

Place of supply is required for determining the right tax to be charged on the invoice, whether
IGST or CGST/SGST will apply.

Value of supply is important because GST is calculated on the value of the sale. If the value is
calculated incorrectly, then the amount of GST charged is also incorrect
1. Time of Supply

Time of supply means the point in time when goods/services are considered supplied’. When the
seller knows the ‘time’, it helps him identify due date for payment of taxes.

CGST/SGST or IGST must be paid at the time of supply. Goods and services have a separate
basis to identify their time of supply. Let’s understand them in detail.

A. Time of Supply of Goods

Time of supply of goods is earliest of:

1. Date of issue of invoice

2. Last date on which invoice should have been issued
3. Date of receipt of advance/ payment*.

B. Time of Supply for Services

Time of supply of services is earliest of:

1. Date of issue of invoice

2. Date of receipt of advance/ payment.
3. Date of provision of services (if invoice is not issued within prescribed period)

2. Place of supply

It is very important to understand the term ‘place of supply’ for determining the right tax to be
charged on the invoice.

Here is an example:

Location of Service Receiver Place of supply Nature of Supply GST Applicable

Maharashtra Maharashtra Intra-state CGST + SGST
Maharashtra Bihar Inter-state IGST

A. Place of Supply of Goods

Usually, in case of goods, the place of supply is where the goods are delivered.

So, the place of supply of goods is the place where the ownership of goods changes.

What if there is no movement of goods. In this case, the place of supply is the location of goods
at the time of delivery to the recipient.

 Import:

The place of supply for imported goods is the location where the goods are imported into India.

Example: Goods imported into Mumbai are subject to GST at Mumbai.

 Export:
The place of supply for exported goods is the location where the goods are shipped out of India.
Exports are generally zero-rated under GST, meaning the tax rate is effectively zero, but
exporters can claim a refund on the input tax credits.

B. Place of Supply for Services

Generally, the place of supply of services is the location of the service recipient.

In cases where the services are provided to an unregistered dealer and their location is not
available the location of service provider will be the place of provision of service.

Special provisions have been made to determine the place of supply for the following services:

 Services related to immovable property

 Restaurant services
 Admission to events
 Transportation of goods and passengers
 Telecom services
 Banking, Financial and Insurance services.

Import:

The place of supply for imported services is the location where the recipient of the service is
located in India.

Example: If a company in India hires a foreign consultant, the place of supply is India.

Export:

The place of supply for exported services is the location where the recipient is located outside
India. Exports of services are also generally zero-rated under GST.

Valuation for GST

5–7 minutes

Valuation under the Goods and Services Tax (GST) regime in India is crucial for determining the
amount of tax payable on a supply of goods or services. Accurate valuation ensures compliance
with GST laws and proper tax calculations.

Basic Principles of Valuation:

The GST Act mandates that the value of supply must be determined in a manner that reflects the
true economic value of the transaction. This ensures that GST is levied on the correct amount,
avoiding disputes and ensuring fairness in the tax system.

Value of Supply:

Under GST, the value of supply is defined as the transaction value, which is the price actually
paid or payable for the supply of goods or services, where the supplier and recipient are not
related, and the price is the sole consideration for the supply. This value forms the basis for
calculating GST.

Components of Transaction Value:

 Price Paid or Payable:

The amount paid or payable for the goods or services.

 Additional Costs:

Any other costs that the recipient is liable to pay, such as packing charges, delivery charges, and
other ancillary charges.

 Exclusions:

Discounts and rebates offered before or at the time of supply are subtracted from the transaction
value.

Valuation Methods:

If the transaction value cannot be determined accurately, GST laws provide alternative methods
for valuation:

Method 1: Transaction Value

This is the primary method where the value of supply is the price actually paid or payable for the
supply of goods or services. It includes:

 Basic Price: The price of the goods or services.

 Additional Costs: Charges for delivery, packaging, etc., if borne by the recipient.

Method 2: Residual Method

If the transaction value is not ascertainable, the residual method can be used, which involves:

 Comparing with Similar Goods/Services: The value can be determined based on the
value of similar goods or services in similar circumstances.
 Adjustments: Making adjustments for factors such as quantity, quality, or location
differences.

Method 3: Cost-Based Method

If neither transaction value nor residual method is applicable, a cost-based method can be
employed:

 Cost Plus: The value of supply is determined based on the cost of production or
acquisition plus a reasonable profit margin.

Special Cases:

 Barter Transactions
In barter transactions where goods or services are exchanged without monetary consideration,
the value is based on the market value of the goods or services supplied.

 Supply between Related Persons

When the supplier and recipient are related, the transaction value must be determined as if they
were not related. The valuation should be based on the price that would be charged in an arm’s
length transaction.

 Discounts and Rebates

Discounts and rebates offered before or at the time of supply are subtracted from the transaction
value. Post-supply discounts that are subject to certain conditions are also considered.

 Import and Export

 Imports: The value for imported goods is based on the transaction value, including
customs duties and other taxes or charges.
 Exports: Exports are generally zero-rated, meaning GST is not levied. However, the
value for exports should be determined as per the transaction value method.

Inclusion of Taxes and Duties:

When calculating the value of supply, GST laws stipulate that certain taxes, duties, or charges
should be included, while others are excluded:

 Included: Any taxes or duties related to the supply, such as VAT, if applicable.
 Excluded: GST itself is not included in the value of supply. Instead, it is calculated based
on the determined value.

Examples of Valuation:

Example 1: Sale of Goods

 Transaction: Sale of a product for ₹10,000.

 Additional Costs: Delivery charges of ₹500.
 Value of Supply: ₹10,500.

Example 2: Service Supply

 Service Provided: Consulting service with a fee of ₹20,000.

 Additional Costs: No additional costs.
 Value of Supply: ₹20,000.

Practical Considerations

Businesses should maintain clear documentation and records to support their valuation
calculations. This includes invoices, contracts, and records of additional costs or discounts.
Proper valuation not only ensures compliance but also helps in efficient financial management
and avoiding potential disputes with tax authorities.

Value of Supply under GST:

The value of goods &/or services supplied is the transaction value, i.e. the price paid/payable,
which is Rs 3,000 in the example. Assuming CGST=9% and SGST= 9%

Power Drill 3,000

Add: CGST @9% 270
Add: SGST @9% 270
Total 3,540

 Discounts

Discounts will be treated differently under GST.Discounts given before or at the time of supply
will be allowed as a deduction from transaction value. Discounts given after supply will be
allowed only if certain conditions are satisfied.

Valuation of Supply when a Transaction is not in INR.

When exports are made the invoice may be raised by the taxpayer in Foreign Currency. The
IGST (if any) charged in the invoice will be converted using RBI Exchange Rate. The exchange
rates are available on the RBI Website.

RBI exchange rates are to be used in case of imports too. When reverse charge is applicable on
imported supplies the invoice amount has to be converted using the RBI Exchange Rate.

GST Valuation Rules

5–6 minutes

Valuation rules are crucial for determining the taxable value of goods and services, which in turn
affects the amount of GST payable. The GST valuation rules are specified under the Central
Goods and Services Tax (CGST) Act, 2017, and apply uniformly across states.

1. Transaction Value

Rule 27: Transaction Value

The transaction value is the price actually paid or payable for the supply of goods or services
where the supplier and recipient are not related, and the price is the sole consideration for the
supply.

 Components Included:
o Basic Price: Price of the goods or services.
o Additional Costs: Delivery charges, packing costs, and other incidental charges.
 Discounts: Discounts provided before or at the time of supply are subtracted from the
transaction value.

2. Special Valuation Rules

Rule 28: Value of Supply of Goods or Services between Related Persons or Distinct Persons
  General Rule: When goods or services are supplied between related persons or distinct
persons, the value is determined as if they were not related, based on the transaction
value.
 Arm’s Length Price: If the transaction value cannot be determined, the value should be
the one at which similar goods or services are sold to unrelated customers.

Rule 29: Value of Supply in Case of Barter or Exchange

 Barter Transactions: For barter transactions (where goods or services are exchanged for
other goods or services), the value is determined based on the market value of the goods
or services supplied.

Rule 30: Value of Supply of Goods or Services where the Consideration is not wholly in
Money

 Mixed Consideration: If the consideration is partly in money and partly in kind, the
value of supply is determined by adding the money value to the market value of the non-
monetary consideration.

Rule 31: Value of Supply of Goods or Services Where the Consideration is not Determined

 Cost-Based Valuation: If the value cannot be determined using the transaction value, the
value is determined based on the cost of production or acquisition plus a reasonable profit
margin.

Rule 32: Value of Supply of Goods or Services Where the Supply is at a Discount

 Pre-Supply Discount: Discounts given before or at the time of supply are subtracted
from the transaction value.
 Post-Supply Discount: Discounts given after the supply but agreed upon in advance and
reflected in the invoice can be deducted.

3. Valuation of Specific Supplies

Rule 33: Value of Supply of Services where the Supplier and Recipient are Not Related

 Transaction Value: When the supplier and recipient are not related, and the
consideration is paid or payable, the transaction value is used as the value of supply.

Rule 34: Value of Supply of Goods or Services where the Supply is Made to a Government
Authority

 Government Contracts: If the supply is to a government authority, the value is

determined based on the terms of the contract, including any statutory requirements or
rules.

4. Import and Export Valuation

Rule 35: Valuation for Import of Goods

 Transaction Value: For imported goods, the value is based on the transaction value plus
any applicable customs duties and other charges.
Rule 36: Valuation for Export of Goods and Services

 Zero-Rated Supply: Exports are generally zero-rated under GST. The value for exported
goods or services is determined based on the transaction value, but the tax rate is zero,
allowing for a refund of input tax credits.

5. Adjustments and Provisions:

Rule 37: Adjustment in the Value of Supply

 Return of Goods: If goods are returned or there is an adjustment in the value post-
supply, the value of supply is adjusted accordingly.

Rule 38: Valuation of Supply of Goods or Services by a Supplier to a Related Person

 Invoice Value: When goods or services are supplied to a related person, the value is the
invoice value, including any adjustments as per GST laws.

6. Documentation and Compliance

Proper documentation is essential to support the valuation:

 Invoices:

Detailed invoices reflecting the transaction value, additional costs, discounts, and other relevant
information.

 Contracts and Agreements:

Documentation supporting the terms of supply, especially for related parties or complex
transactions.

 Records of Discounts:

Evidence of pre-supply or post-supply discounts and their impact on valuation.

7. Practical Examples

 Example 1: Sale of Goods

o Transaction: Sale of goods for ₹50,000 plus delivery charges of ₹2,000.
o Value of Supply: ₹52,000.
 Example 2: Supply of Services
o Service Fee: ₹10,000 with an additional cost of ₹500 for materials.
o Value of Supply: ₹10,500.

GST Excess Tax Credit

4–5 minutes

Excess tax credit under the Goods and Services Tax (GST) regime in India refers to a situation
where a business accumulates more Input Tax Credit (ITC) than what is needed to offset its GST
liability. This excess credit can occur due to various reasons, such as excess GST paid on
purchases or services compared to the GST collected on sales. Managing excess tax credit
effectively is crucial for optimizing cash flow and ensuring compliance with GST regulations.

Understanding Excess Tax Credit

ITC is the credit a business can claim for the GST paid on inputs (goods and services) used in the
course of its business. This credit is used to offset the GST payable on output supplies (sales).

Excess Credit Scenario: Excess tax credit arises when:

 The GST on inputs exceeds the GST collected on outputs, leading to a surplus of ITC.
 Excess ITC might also accumulate due to errors, adjustments, or mismatch in input and
output supplies.

Managing Excess Tax Credit

A. Refund of Excess ITC

Businesses can apply for a refund if they have excess ITC that cannot be utilized within the
prescribed period. The refund process is governed by the GST laws and involves the following
steps:

 Eligibility: Refunds are available if the ITC is in excess due to exports, zero-rated
supplies, or if the business is ineligible to utilize the credit within the allowed period.
 Application Process: Businesses must file a refund application in the prescribed format
through the GST portal. The application should include details of the excess ITC and
supporting documents.
 Types of Refunds:
o Refund of Excess ITC on Exports: For zero-rated supplies and exports,
businesses can claim a refund of the unutilized ITC.
o Refund on Account of Refunds to Consumer: Refunds can also be claimed for
excess ITC accumulated due to refunds issued to consumers or clients.
o Refund on Account of Inverted Duty Structure: If the GST rate on inputs is
higher than the rate on output supplies, resulting in excess ITC.

B. Adjustment of Excess ITC

If a business has accumulated excess ITC, it can adjust this credit against future GST liabilities.
The key points to note include:

 Utilization in Subsequent Periods: Excess ITC can be carried forward and utilized in
subsequent tax periods, subject to the provisions of the GST law.
 Periodicity: Businesses should regularly review their ITC balance and adjust it against
their GST liabilities to manage excess credit effectively.

C. Conditions and Restrictions

Certain conditions and restrictions apply to the utilization and refund of excess ITC:

 Expiry Period: ITC needs to be claimed within a specified time frame. If not utilized
within the prescribed period, it may lapse.
  Input Tax Credit Utilization: ITC can only be used to offset the output tax liability. It
cannot be converted into cash directly.
 Mismatch and Reconciliation: Businesses should regularly reconcile their ITC with
their GST returns to avoid mismatches and ensure accurate utilization.

Practical Examples:

Example 1: Excess ITC Due to Export

 Scenario: A business exports goods worth ₹1,00,000 with a GST rate of 0%. The ITC
accumulated on inputs is ₹20,000.
 Action: The business can apply for a refund of the ₹20,000 ITC as the export is zero-
rated, and no GST is collected on the sale.

Example 2: Inverted Duty Structure

 Scenario: A business manufactures products with an output GST rate of 5% but

purchases raw materials with an input GST rate of 18%. The excess ITC accumulates.
 Action: The business can claim a refund for the excess ITC due to the inverted duty
structure.

Compliance and Documentation:

To manage excess tax credit effectively, businesses should maintain:

 Accurate Records:

Maintain detailed records of all ITC transactions, including purchase invoices, GST returns, and
refund applications.

 Reconciliation:

Regularly reconcile ITC claims with GST returns and statements to ensure accuracy.

 Timely Claims:

Ensure that refund claims are made within the prescribed time limits and comply with GST rules.

How to file Refund under GST

4–6 minutes

GST refunds are a crucial aspect of the Goods and Services Tax (GST) regime in India, designed
to ensure that businesses can reclaim excess tax paid or unutilized Input Tax Credit (ITC).

Eligibility for GST Refund

Businesses and individuals can claim GST refunds under various scenarios:

Excess ITC
  Export of Goods or Services: When goods or services are exported, they are generally
zero-rated. The excess ITC accumulated on inputs used for these exports can be claimed
as a refund.
 Inverted Duty Structure: If the GST rate on inputs is higher than the rate on output
supplies (resulting in excess ITC), a refund can be claimed for the unutilized ITC.

Refund of Taxes Paid on Purchases:

 Refund of Excess Payment: If excess GST is paid either due to clerical errors or on
incorrect invoices, a refund of the excess amount can be claimed.

Refund on Account of Finalization of Provisional Assessment

 Provisional Assessment: When provisional assessments are done, the finalization might
result in a refund of excess tax paid based on the final assessment.

Refund on Account of Export and Zero-Rated Supplies:

 Export and Zero-Rated Supplies: Export of goods and services and supplies made to
Special Economic Zones (SEZs) are zero-rated. The ITC on inputs used for such supplies
can be claimed as a refund.

Refund of CGST and SGST Paid on Supplies to UN Bodies

 UN Bodies and Diplomatic Missions: Refunds can be claimed for CGST and SGST
paid on supplies made to UN bodies and diplomatic missions.

Refund of Taxes Paid on Capital Goods

 Capital Goods Refund: In certain cases, if capital goods are exported or used in zero-
rated supplies, a refund of the ITC on capital goods can be claimed.

Types of Refunds:

 Refund of Unutilized ITC

Zero-Rated Supplies: For supplies that are zero-rated, businesses can claim a refund of the ITC
accumulated on inputs, capital goods, and input services used for such supplies.

 Refund of Excess Tax Paid

Overpayment: Refunds can be claimed for excess tax paid either due to clerical errors or
incorrect GST rates applied.

 Refund on Account of Provisional Assessment

Provisional to Final Assessment: When the provisional assessment results in excess tax
payment, the business can claim a refund.

Application Process for GST Refund:

Filing Refund Application

 1. Eligibility Check: Ensure that you are eligible for a refund as per the GST laws.
2. Prepare Documents: Gather necessary documents such as invoices, proof of payment,
and other supporting documents.
3. GST Portal: File the refund application online through the GST portal (gst.gov.in).
o Navigate to the Refund tab.
o Select the type of refund (e.g., unutilized ITC, excess tax paid).
o Provide details as required and upload supporting documents.
4. Application Submission: Submit the application along with the necessary documents.

Processing and Verification

 Verification by Authorities: The GST authorities will verify the refund application and
the supporting documents.
 Provisional Refund: In some cases, a provisional refund may be granted before final
verification.
 Final Refund: After complete verification, the final refund will be processed and
credited to the applicant’s bank account.

Refund Rejection

 Reasons for Rejection: Refund applications may be rejected due to incomplete

information, discrepancies in documentation, or non-compliance with GST rules.
 Rectification: If rejected, rectify the issues and reapply for the refund.

Key Considerations:

Timeliness

 Claim Period: Refund claims should be filed within the prescribed period (typically two
years from the relevant date, such as the date of export or the date of payment of tax).

Documentation

 Accurate Records: Maintain accurate records of all transactions, invoices, and tax
payments to support refund claims.
 Supporting Documents: Ensure that all required supporting documents are provided
with the refund application.

Reconciliation

 Regular Reconciliation: Regularly reconcile ITC balances and tax payments to identify
potential refunds and address discrepancies promptly.

Compliance

 Adhere to Rules: Ensure compliance with GST rules and regulations to avoid issues
with refund applications.
 Audit Trail: Maintain an audit trail for all refund claims to facilitate smooth processing
and address any queries from tax authorities.
Mechanism of Tax Deducted at Source (TDS)
and Tax Collected at source (TCS)
3–4 minutes

Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are mechanisms under the
Goods and Services Tax (GST) regime in India. They are provisions designed to facilitate the
collection of tax at the source of income, ensuring a steady flow of revenue to the government.

Tax Deducted at Source (TDS):

Applicability of TDS:

TDS under GST is applicable to specific categories of taxpayers, mainly e-commerce operators
and government bodies.

Rules and Regulations:

1. E-commerce Operators:

E-commerce operators are required to collect TDS on the supply of goods or services made
through their platform. This applies to both intra-state and inter-state transactions.

2. Threshold for TDS:

TDS is applicable to e-commerce operators only if their annual turnover exceeds a specified
threshold. As of my last update in January 2022, the threshold is ₹10 crore.

3. Rate of TDS:

The rate of TDS is 1% of the net value of taxable supplies. This means the operator deducts 1%
of the amount payable to the supplier as TDS.

4. Deposit of TDS:

The e-commerce operator is required to deposit the TDS collected with the government within a
specified time frame.

5. TDS Certificate:

The e-commerce operator is required to furnish a TDS certificate to the supplier indicating the
amount of TDS deducted. The supplier can claim credit for this TDS in their returns.

Tax Collected at Source (TCS):

Applicability of TCS:

TCS under GST is applicable to certain categories of e-commerce operators.

Rules and Regulations:

 E-commerce Operators:

E-commerce operators who facilitate the supply of goods or services through their platform are
required to collect TCS.

 Threshold for TCS:

TCS is applicable to e-commerce operators only if their annual turnover exceeds a specified
threshold. As of my last update in January 2022, the threshold is ₹10 crore.

 Rate of TCS:

The rate of TCS is specified based on the type of transaction. For instance, the TCS rate for the
supply of goods is 0.5% (0.25% CGST + 0.25% SGST/UTGST).

 Deposit of TCS:

The e-commerce operator is required to deposit the TCS collected with the government within a
specified time frame.

 TCS Certificate:

The e-commerce operator is required to furnish a TCS certificate to the supplier indicating the
amount of TCS collected. The supplier can claim credit for this TCS in their returns.

Important Points:

 Both TDS and TCS are applicable only to e-commerce operators who meet the
specified turnover threshold.
 The operator is required to obtain a Tax Deduction and Collection Account
Number (TAN) for deducting TDS/TCS.
 The TDS/TCS provisions are designed to ensure that tax is collected at the
source, providing a steady stream of revenue to the government.

Tax laws and rules may evolve, so it’s advisable to consult official government notifications or
seek guidance from tax professionals for the most up-to-date information.

Registration of GST
7–9 minutes

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Registration under the Goods and Services Tax (GST) is a fundamental requirement for
businesses operating in India, allowing them to collect tax on behalf of the government, claim
Input Tax Credit (ITC), and comply with tax regulations.

Who Needs to Register for GST?

Mandatory Registration

Certain categories of businesses and individuals are required to obtain GST registration:

 Turnover Thresholds:
o For Goods Suppliers: If the aggregate turnover exceeds ₹40 lakhs
(₹20 lakhs for special category states).
o For Service Providers: If the aggregate turnover exceeds ₹20 lakhs
(₹10 lakhs for special category states).
 Inter-State Supply: Businesses making inter-state supplies of goods or
services are required to register, regardless of turnover.
 E-Commerce Operators: E-commerce operators and aggregators
facilitating supply of goods or services through their platforms must register.
 Non-Resident Taxable Persons: Non-resident individuals or entities
making taxable supplies in India.
 Casual Taxable Persons: Individuals or entities who occasionally undertake
taxable supplies in a state where they do not have a fixed place of business.
 Reverse Charge Mechanism (RCM): Persons who are liable to pay tax
under the reverse charge mechanism.
 Companies and Corporations: All companies and corporations engaging in
taxable activities, irrespective of turnover.

Voluntary Registration

Businesses with a turnover below the prescribed threshold may opt for voluntary registration to:

 Claim ITC: Avail Input Tax Credit on purchases and services.

 Enhance Business Credibility: Registering can enhance the business’s
credibility and facilitate smoother operations with suppliers and customers.

GST Registration Process

Online Application

GST registration is typically done online through the GST portal (https://www.gst.gov.in). The
steps are as follows:

1. Visit the GST Portal: Go to the GST portal and select the option for “New
Registration.”
2. Provide Basic Details:
o Legal Name: As per the PAN card.
o Permanent Account Number (PAN): PAN is required for registration.
o Email Address and Mobile Number: For communication and
verification.
3. Submit Business Details:
o Business Name: Name of the business or trading name.
o Business Address: Physical address of the business.
o Nature of Business: Type of business activity (e.g., retail,
manufacturing, services).
o Bank Account Details: Details of the bank account used for business
transactions.
4. Upload Documents:
o Proof of Business Registration: Such as Certificate of Incorporation,
Partnership Deed, or other relevant documents.
 o Address Proof: For the business premises (e.g., utility bill, rent
agreement).
o PAN Card: Proof of PAN for the business or owner.
o Identity Proof: For the proprietor or authorized signatory (e.g.,
Aadhaar card, passport).
5. Verification and ARN:
o After submission, an Application Reference Number (ARN) is generated.
This ARN can be used to track the status of the application.
6. GSTIN Issuance:
o Verification: The GST application is verified by the GST authorities.
o GSTIN: Upon successful verification, a GST Identification Number
(GSTIN) is issued, and the registration certificate is made available for
download.

Physical Verification

 In Certain Cases: The authorities might conduct a physical verification of

the business premises before granting registration.

Post-Registration Compliance:

GST Returns

 Filing Returns: Registered businesses must file periodic GST returns

(monthly, quarterly, or annually) depending on their turnover and type of
supply.
 GSTR-1, GSTR-3B: Common returns include GSTR-1 (outward supplies) and
GSTR-3B (summary of inward and outward supplies).

Maintaining Records

 Record-Keeping: Maintain proper records of all transactions, invoices, and

GST-related documents to comply with audit and inspection requirements.

Compliance with Other Regulations:

 Tax Collection: Collect GST on taxable supplies and issue GST-compliant

invoices.
 ITC Utilization: Properly utilize Input Tax Credit and ensure timely
reconciliation with returns.

Amendment of Registration of GST:

Amendment of registration refers to the process of updating or correcting the details provided in
the GST registration certificate. This is necessary when there are changes in business information
such as the business address, contact details, or the nature of business.

Types of Amendments:

1. Business Details: Changes in the business name, address, or contact

information.
2. Legal Structure: Updates related to changes in the legal entity of the
business, such as a change from a sole proprietorship to a partnership.
3. Business Activities: Modifications to the principal place of business or
additional business activities.
 4. Authorized Signatories: Changes in the persons authorized to sign GST
returns and other documents.

Process:

1. Login to GST Portal: The authorized person must log in to the GST portal
using their credentials.
2. Navigate to Amendment Section: Go to the ‘Services’ tab and select
‘Registration’ followed by ‘Amendment of Registration’.
3. Fill Form GST REG-14: Provide the necessary details and documents related
to the amendment.
4. Submit Application: After filling the form, submit it online. The application
will be processed by the tax authorities.
5. Verification: Tax authorities may verify the details and request additional
information if needed.
6. Receive Updated Registration: Once approved, the amended GST
registration certificate is issued.

Cancellation of Registration of GST:

Cancellation of registration is the process through which a GST registration is officially

terminated. This is applicable when a business ceases operations, changes its legal structure, or
no longer meets the threshold requirements for GST registration.

Reasons for Cancellation:

1. Voluntary Cancellation: When a business voluntarily opts to cancel its GST

registration.
2. Closure of Business: When the business is closed or discontinued.
3. Involuntary Cancellation: If a business fails to comply with GST laws or
requirements, such as non-filing of returns.

Process:

1. Login to GST Portal: Access the GST portal using valid credentials.
2. Navigate to Cancellation Section: Select ‘Services’ and then ‘Registration’
followed by ‘Cancellation of Registration’.
3. Fill Form GST REG-16: Provide reasons for cancellation and other required
details.
4. Submit Application: Submit the application online. The tax authorities will
review the request.
5. Settlement of Dues: Ensure that all GST liabilities are cleared before
cancellation is processed.
6. Receive Cancellation Order: Upon approval, a cancellation order will be
issued, and the GST registration will be officially terminated.

Key Considerations:

Registration Amendment

 Change in Details: Businesses must update their GST registration details

(e.g., change in address, business name) through the GST portal.

Cancellation of Registration
  Voluntary Cancellation: A registered business may apply for cancellation of
GST registration if it ceases to be a taxable person or if it falls below the
turnover threshold.
 Mandatory Cancellation: GST registration may be canceled by authorities
in cases of non-compliance or if the business is found to be non-operational.

Complying with Local Laws

 Local Compliance: Ensure compliance with state-specific GST regulations

and requirements, as some states may have additional rules or exemptions.