GST stands for Goods and
Services Tax, which is levied on supply of goods or services. “Supply” is a
legal term which has very broad
sweep and various types of economic activities are covered by it. For example,
sale of goods is a type of supply.
2: On what supply is GST
GST is levied on all
types of supplies which are –
made for a consideration and (ii) are for the purpose of furtherance of
business. There are some exceptions when these conditions are not met, yet
supply is considered to have been made, for example, interstate stock transfer
of goods even without consideration or importation of services even if not in
the furtherance of business.
3: Will GST be levied on
all goods or services or both?
No, GST will not be
levied on alcohol for human consumption. GST on Crude, Motor Spirit (Petrol),
High Speed Diesel, Aviation Turbine Fuel and Natural Gas will be levied with
effect from a date to be decided by the GST Council. Electricity and sale of
land and building are exempted from levy of GST. Securities are neither goods
nor services for the purposes of the CGST Act, 2017 and therefore supply of
securities is not taxable.
4: How many types of GST
will be levied on different kinds of supply of goods or services?
GST is a dual levy to be
simultaneously levied by both Center and State. On every supply within a State/
Union Territory without legislature (intra-State supply), GST levied will have
two components - Central Tax and State Tax/Union Territory Tax popularly called
CGST and SGST/UTGST. On every supply across States (inter-State), Integrated Tax
popularly called IGST will be levied. The rate of CGST and SGST/UTGST would be
equal. IGST would be levied at a rate equal to the sum total of CGST and
5: Whether a registered
person will have to approach two authorities - Center as well as State for
various permissions, audit etc. under the Act?
No, a registered person
will have to approach only one tax authority for all practical purposes. Each
registered person would have one tax administration office, either of the Centre
or of the State. Legal provisions (called cross empowerment) have been made to
ensure that one officer can discharge all functions under CGST, SGST and IGST
6: What is destination
based consumption tax?
When a supply originates
in one State and is consumed in another State, tax can accrue to either of the
two States. In a destination based consumption tax, taxes accrue to the State
where the supply is consumed. In origin based tax, the tax accrues to the State
where the supply originates. GST is basically a destination based consumption
tax. For example, if a car is manufactured in Chennai but is purchased
eventually by a consumer in Mumbai, SGST (or the State component in IGST) would
accrue to Maharashtra and not to Tamil Nadu.
7: Who will pay GST?
GST is generally paid by
the supplier, i.e. the one who makes the supply after collecting it from the
recipient. The supplier collects GST from the recipient of the supply as part of
the consideration. However, in a few exceptional cases, the recipient, would be
liable to pay GST to the Government on reverse charge basis.
8: What is Input Tax
A person doing business
will be purchasing goods/ availing services for making further supplies in the
course or furtherance of business. When such purchases are made by him, tax
would have been charged by his supplier and collected from him. Since tax is
collected from him, he can avail credit of the tax paid by him to his supplier
(that is to say, he can use this amount for making payment of tax due from him
on further supply made by him). This is known as input tax credit for the
9: Is GST going to
increase compliance burden on the trade?
No. On the contrary GST
will result in streamlining of processes and reduction of compliance burden. GST
is a simple tax which uniformly applies across the country. GST has been
designed to have minimal human interface and would be implemented through strong
IT platform run by GSTN. Also, in the earlier regime there were multiple
compliances required for taxes such as Central Excise, Service tax, VAT etc.
with Centre and State. GST makes it single and uniform compliance for indirect
taxes across the country. Under GST, there is just one interface with no
face-to-face meeting between taxpayers and tax authorities and practically every
activity will be done online.
10: What is the threshold
for registration in GST?
A person having business
which has aggregate turnover of more than Rs. 20 lakhs calculated for a given
PAN across the country would need to register under GST. There are some
exceptions to this rule as mentioned in section 24 of the CGST Act, 2017.
Aggregate turnover is defined in section 2(6) of the said Act. For example,
assume that a taxable person’s
business is in many States on same PAN. All supplies are below Rs. 10 lakhs but
collectively they are above Rs. 20 lakhs. He would be required to register under
11: Is an agriculturist
liable to registration?
Answer: No. An agriculturist, to the extent of supply of produce out of cultivation of land, is not liable to registration.
12: What is the most
important precaution to be taken to avail the facility of threshold exemption?
An MSME availing
threshold exemption should not make any inter-State supply whatsoever, though
the MSME may receive supply from other States.
13: I am engaged
exclusively in the business of supplying goods or services which are exempt from
GST. Am I liable for registration?
14: How do I make supply,
if I have not applied for registration?
You should apply for
registration at the earliest on the GST common portal and obtain application
reference number (ARN). You need not disrupt your business and may continue to
make supplies on invoices without GSTIN. The application for registration must
be made within 30 days of the turnover crossing Rs.20 lakhs or attracting any of
the conditions mentioned in section 24 of the CGST Act, 2017. After
registration, you can issue revised invoices as permitted nder
section 31(3)(a) of the said Act. These supplies should be shown in the return
and taxes paid on them.
15: How can an
application for fresh registration be made under GST? Within what time will
registration be granted?
Application for fresh
registration is to be made electronically on the GST common portal (www.gst.gov.in)
in FORM GST REG-01. If
the details and documents are in order,registration will be granted within 3
working days, except in cases where an objection has been raised within this
period in which case registration will be granted within a maximum period of 17
16: I was registered
under VAT but not under Central Excise. Do I need to apply for new registration?
No. Existing registrants
of VAT having valid PAN have been issued Provisional ID and password. If you
have not received provisional ID, please contact your tax administration to
obtain the same. This Provisional Identity Number (PID) would eventually be your
GSTIN, when the migration process is completed.
17: If I have obtained
provisional GSTIN (PID), can I use the same on the invoice to make supply
without waiting for final GSTIN?
Provisional GSTIN (PID)
would eventually be your final GSTIN. The number would remain the same. Yes, you
can use this PID on invoice for making supply without waiting for final GSTIN.
18: I am a SME selling
printed books after printing and have a turnover of twenty-five lakhs rupees per
annum. I print only Children’s picture, drawing or colouring books which are
exempt from GST. Do I need to register?
No. A person dealing with
only exempted supplies is not liable to registration irrespective of his
turnover. Section 23(1)(a) of the CGST Act, 2017 refers.
19: If I register
voluntarily though my turnover is less than Rs. 20 lakhs, am I required to pay
tax on supplies made post registration?
Yes. If you obtain
voluntary registration despite the turnover being below Rs. 20 lakhs, you would
be treated as a normal taxable person and would need to pay tax on supplies even
if they are below the threshold for registration. You will also be entitled to
take input tax credit.
20: How will taxpayer get
the certificate of registration?
The taxpayer can himself
download the certificate of registration online from the GST common portal (www.gst.gov.in).
21: Can registration
particulars once furnished be amended?
Answer: Yes, request for amendment has to be made online. All amendments in registration particulars, except some core fields, can be amended in the system without the intervention of any official by merely filing the details of the amendment. Also for some amendments, approval may be needed. Examples of fields which require approval are-
name of business, address of the place of business and addition, deletion or
retirement of partners or directors etc. responsible for day to day affairs of
the business. Examples of fields which can be amended without any approval are-
change of telephone number, email ID, bank account etc.
22: In which State will a
person be registered?
A person liable to be
registered has to apply for registration in each State from where he makes or
intends to make outward supplies under GST. Within each State, generally only
one registration is required to be obtained.
23: Are all manufacturers
necessarily required to be registered under GST?
No, there is no provision
requiring that a manufacturer irrespective of threshold or nature of supply to
register himself under GST. For example, a manufacturer dealing only in exempted
goods or where his turnover is only intra-State and below Rs. 20 lakhs, is not
required to be registered.
24: Who is liable to
issue a ‘tax invoice’ and how many copies are required to be issued?
Every registered person
(other than a registered person availing the benefit of composition or a
registered person supplying exempted goods or services) supplying goods or
services or both is required to issue ‘tax invoice’. Invoice should be
issued in triplicate in case of supply of goods. The original copy is meant for
buyer, duplicate for transporter and triplicate copy for record of the seller. A
registered person under composition scheme or supplying exempted goods or
services shall issue a bill of supply instead of a tax invoice.
25: What details are to
be contained in a ‘tax invoice’?
The tax invoice shall
contain details as specified in the rule in this regard. The key details
specified in the rules are - name,
address and GSTIN of the supplier and the recipient (if registered), a unique
number of the invoice and the date of issue, description of goods, value of
goods, rate of tax, amount of tax and signature.
26: Is it necessary to
issue invoices even if the value of transaction is very low?
A registered person may
not issue a tax invoice if the value of the goods/services supplied is less than
Rs.200/-, subject to the condition that the recipient is not a registered person
and the recipient does not ask for such invoice (if the recipient asks for the
invoice then the same must be issued, irrespective of the value). In such cases,
the registered person shall issue a consolidated invoice at the end of the day
in respect of all such supplies.
27: When should a tax
invoice be issued for goods?
Tax invoice for goods
shall be issued on or before the time of removal/delivery of goods. In case of
continuous supply of goods, it shall be issued on or before the time of issue of
statement of accounts /receipt of payment.
28: In case of supply of
exempt goods or when tax is paid under Composition Scheme, is the registered
person required to issue a tax invoice? How a bill of supply is different from a
No. In such cases, the
registered person shall issue a Bill of Supply and not a tax invoice. The bill
of supply is different from a tax invoice both in name and details contained.
While most of the details to be provided in a bill of supply are
similar to tax invoice, the bill of supply does not contain the rate of tax and
the amount of tax
29: If goods are
transported in semi-knocked down condition, when shall the complete invoice be
When goods are
transported in semi-knocked down condition, the complete invoice shall be issued
before dispatch of the first consignment. Delivery challan shall be issued for
subsequent consignments. Original copy of invoice shall be sent along with the
30: Is there any scheme
for payment of taxes under GST for small traders and manufacturers?
Yes. Composition levy is
an alternative method of levy of tax designed for small taxpayers whose turnover
is up to Rs. 75 lakhs (Rs.50 lakhs for special category States, excluding
J&K and Uttrakhand). It is a kind of turnover tax. The objective of the
scheme is to provide a simplified tax payment regime for the small tax payers.
The scheme is optional and is mainly for small traders, manufacturers and
31: What is the
eligibility criteria for opting for composition levy? Which are the Special
Category States in which the turnover limit for Composition Levy for CGST and
SGST purpose shall be Rs. 50 lakhs?
Composition scheme is a
scheme for payment of GST available to small taxpayers whose aggregate turnover
in the preceding financial year did not cross Rs.75 Lakhs. In the case of 9
special category States, the limit of turnover is Rs.50 Lakhs in the preceding
financial year, namely – Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, Tripura and Himachal Pradesh. However, if you are a
manufacturer of ice-cream, pan masala or tobacco or tobacco products or if you
are a service provider other than a restaurant, you are not eligible for
32: What is the form in
which an intimation to pay tax under the composition scheme needs to be made by
the taxable person?
Composition scheme is
optional and intimation that option has been availed should be made
electronically in FORM
GST CMP-01 by
the migrating taxable person. A person who has already obtained registration and
opts for payment under composition
levy subsequently needs to give intimation electronically in FORM
Composition rate for
manufacturers is 2% (1% CGST and 1% SGST).
A manufacturer is
eligible to avail composition scheme except manufacturers:
whose aggregate turnover in the preceding financial year crossed Rs. 75 lakhs;
who have purchased goods or services from unregistered suppliers unless they
have paid GST on such goods or services on reverse charge basis;
who make any inter-State outward supplies of goods;
who make supply of goods through an electronic commerce operator;
who manufacture the following goods.
cream and other edible ice,
or not containing cocoa
A registered person will
have to pay GST on monthly basis on or before 20th of the succeeding month and
if he has opted for composition levy he will have to pay GST on a quarterly
basis on or before the 18th day of the month after the end of the quarter.
36: A person availing
composition scheme during a financial year crosses the turnover of Rs. 75 Lakhs
/ Rs. 50 Lakhs during the course of the year i.e. say, he crosses the turnover
of Rs. 75 Lakhs/Rs. 50 Lakhs in December? Will he be allowed to pay tax under
composition scheme for the remainder of the year i.e. till 31st March?
No. The option to pay tax
under composition scheme shall lapse from the day on which his aggregate
turnover during the financial year
exceeds Rs. 75 Lakhs/ 50 Lakhs. Once he crosses the threshold, he shall file an
intimation for withdrawal from the scheme in FORM
GST CMP-04 within seven
days of the occurrence of such event. He shall also furnish
a statement in FORM
GST ITC-01 containing
details of the stock of inputs and capital goods as per the rules in this
regard. This would help him join the input tax credit chain and avail credit of
tax that he has paid on his inputs/goods lying in stock on the day he crosses
37: For the purpose of
availing composition how will aggregate turnover be computed for the purpose of
Aggregate turnover shall
be computed on the basis of turnover on all India basis. It includes aggregate
value of all taxable supplies (excluding the value of inward supplies on which
tax is payable by a person on reverse charge basis), exempt supplies, exports of
goods or services or both and inter-State supplies of persons having the same
Permanent Account Number but excludes GST and cess.
38: Can a person who has
opted to pay tax under the composition scheme avail Input Tax Credit on his
No, a taxable person
opting to pay tax under the composition scheme is out of the credit chain. He
cannot take input tax credit on the supplies received.
39: How is a manufacturer
under the composition scheme required to bill his supply? Can a registered
person, who purchases goods from a composition manufacturer take input tax
A manufacturer opting to
pay tax under the composition scheme cannot issue a tax invoice to his buyer but
would issue a Bill of Supply. He cannot collect any tax supplies made by him on
his Bill of Supply and is required to show only the price charged for the
the registered person buying goods from a composition manufacturer cannot take
input tax credit.
40: How would a
manufacturer under the composition scheme who receives inputs or input services
from an unregistered person pay GST? What will be the tax rate if the purchase
is from a person availing composition?
GST will have to be paid
on inputs and input services received by such manufacturer under reverse charge
at normal rates and not at the composition rates. Purchase from a person under
the composition scheme is purchase from a registered person and hence will not
attract tax under reverse charge under section 9(4) of the CGST Act, 2017. Any
person migrating from the existing law to a composition scheme and holding stock
of goods purchased from unregistered persons is required to pay tax on such
41: In case a person has
registration in multiple States, can he opt for payment of tax under composition
levy only in one State and not in other States?
No. An intimation that
composition scheme has been availed in one State shall be deemed to be an
intimation in respect of all other places of business registered on the same
Permanent Account Number in other States.
42: What is the effective
date of composition levy?
Answer: There can be three situations with respective effective dates as shown below:
date of composition levy
who have been granted provisional registration and who opt for composition
levy (Intimation is filed under Rule 3(1) in FORM
opting for composition
levy at the ti me of making application for new registration in the
same registration application itself (The intimation under Rule 3(2) in FORM
date of registration; Intimation shall be considered only after the grant
of registration and his option to pay tax under composition scheme shall
be effective from the effective date of registration.
opting for composition levy after obtaining registration (The intimation
is filed under Rule 3(3) in FORM
beginning of the next financial year.
43: What is the validity
of composition levy?
The option exercised by a
registered person to pay tax under the composition scheme shall remain valid so
long as he satisfies all the conditions specified in the law. The option is not
required to be renewed.
44: What are the other
compliances which a provisionally registered person opting to pay tax under the
composition levy need to make?
Such person is required
to furnish the details of stock, including the inward supply of goods received
from unregistered persons, held by him on the 30th day of June,
2017electronically, in FORM
GST CMP-03, on the common
portal, either directly or through a Facilitation Center notified by the
Commissioner, within a period of sixty days from the date
on which the option for composition levy is exercised or within such further
period as may be extended by the Commissioner in this behalf. Further, if on 1st
July, 2017 such person holds in stock goods that have been received from outside
the State or imported from outside the Country, he is not eligible to opt for
45: Can a person paying
tax under composition levy, withdraw voluntarily from the scheme?
Yes, the registered
person who intends to withdraw from the composition scheme can file a duly
signed or cerified application in FORM
GST CMP-04. In case he
wants to claim input tax credit on the stock of inputs and inputs contained
in semi-finished or finished goods held in stock by him on the date of
withdrawal, he is required to furnish a statement in FORM
GST ITC-01 containing the
details of such stock within a period of thirty days of withdrawal.
46: Will withdrawal
intimation in any one place be applicable to all places of business?
Yes. Any intimation or
application for withdrawal in respect of any place of business in any State or
Union territory, shall be deemed to
be an intimation for withdrawal in respect of all other places of business
registered on the same Permanent Account Number.
47: Can a person paying
tax under composition scheme make exports or supply goods to SEZ?
No, because exports and
supplies to SEZ from Domestic Tariff Area are treated as inter-State supply. A
person paying tax under composition scheme cannot make inter-State outward
supply of goods.
48: Can a manufacturer
under composition scheme do job-work for other manufacturers?
Job-work is a supply of
service and not eligible for composition scheme. Any manufacturer or processor
who wishes to carry out job-work for others would not be eligible for
49: How can tax payments
be made by a registered person under the composition scheme?
A registered person under
composition scheme would not have input tax credit and he would make all his tax
payments by debit in the electronic cash ledger maintained at the common portal.
The taxpayer can deposit cash anytime in the electronic cash ledger at his
convenience. The payment in electronic cash ledger can be made through all
modes available like e-payment through net-banking,
credit card and debit card, over the counter of banks, RTGS or NEFT.
50: Does a registered
person under the composition scheme pay his taxes every month?
No, registered person
under the composition scheme will not pay taxes every month. He would file
return and pay taxes on a quarterly basis i.e. for each quarter of the financial
year. Due date for payment of tax for them would be on or before the 18th day
after the end of such quarter.
51: What are the accounts
a manufacturer under the composition scheme needs to maintain?
Rules on Accounts and
Records provide details of the accounts to be maintained. They are maintained
under normal course of business by any small manufacturer. The details to be
maintained in accounts inter-alia consists of goods supplied, inward supplies
attracting reverse charge, invoices, bills of supply, delivery challans, credit
notes, debit notes, receipt vouchers, payment vouchers, refund vouchers etc.
52: Does a manufacturer
under the composition scheme need to maintain details of accounts of every
supply received and made?
No, the requirement to
maintain detailed accounts of stocks in respect of goods received and supplied,
work in progress, lost, destroyed etc. does not apply to a manufacturer under
the composition scheme. Such a person shall maintain a true and correct account
of production or manufacture of goods, inward and outward supply of goods, stock
of goods, tax payable and paid.
53: Does a manufacturer
under the composition scheme needs to maintain account of inputs tax credit?
A manufacturer under the
composition scheme need not maintain account of input tax, input tax credit
claimed etc. as he is neither allowed to avail of input tax credit nor can he
issue an invoice showing tax using which buyer can avail input tax credit.
54: Can a manufacturer
under the composition scheme maintain his accounts manually? And can he issue
his bill of supply manually?
Yes, a manufacturer under
the composition scheme can maintain his accounts in registers serially numbered
and also issue bill of supply manually following the conditions specified in
rules in this regard.
55: Whether a registered
person under the composition scheme needs to learn HSN code of any input
purchases and output supplies?
No, a registered person
under the composition scheme would not need to specify HSN code of their
products in bill of supply or return.
56:. What return a
registered person under the composition scheme needs to file and at what
A registered person under
the composition scheme of GST is required to furnish quarterly return called
GSTR-4 between the 11th day and 18th day of the month succeeding the quarter.
57: What details are
required to be furnished in the return to be filed by the registered person
under the composition scheme?
GSTR-4 may be referred
for details required to be filled in the return. It is a very simple return
containing consolidated details of outward supplies, details of import of
services or other supplies attracting reverse charge and inward
supplies which shall be auto-populated.
Reference to CGST Act, 2017 includes reference to SGST Act, 2017 and UTGST Act,