Practical Question Bank

Theory and Practice of GST

Q1.Draw a chart showing tax structure in India.

The tax structure in India primarily consists of direct and indirect taxes, but with the introduction of
GST in India on 01 July 2017 the tax structure has undergone a significant change.

TAX STRUCTURE IN INDIA

Q2.Draw a chart and write a note on Pre-GST Indirect tax structure in India.

Tax structure in India is a three tier federal structure. The central government, state governments, and
local municipal bodies make up this structure.

Post-independence the newly-established Indian Government strengthened the system to propel the
economic development of the country. After this period, the Indian tax structure has been subject to a
host of changes.

Tax System in India:

The tax system in India allows for two types of taxes—Direct and Indirect Tax.
The tax system in India for long was a complex one considering the length and breadth of India.

Indirect Tax:

Indirect taxes are taxes which are indirectly levied on the public through goods and services. The sellers
of the goods and services collect the tax which is then collected by the government bodies.

 Value Added Tax (VAT) – A sales tax levied on goods sold in the state. The rate depends on the
government.

 Octroi Tax– Levied on goods which move from one state to another. The rates depend on the
state governments.

 Service Tax– Government levies the tax on service providers.

 Customs Duty– It is a tax levied on anything which is imported into India from a foreign nation.

Tax Collection Bodies:

The three bodies which collect the taxes in India have clearly defined the rules on what type of taxes
they are permitted to collect.

 The Central Government: income tax, custom duties, central excise duty.
 The State Governments: tax on agricultural income, professional tax, value- added tax, state
excise duty, stamp duty.
 Local Bodies: property tax, water tax, other taxes on drainage and small services.

Q3.Write any five limitations of Pre-GST Indirect taxes.

Pre GST Indirect taxes suffers with various shortcomings such as

1. Tax Dropping: The most significant contributing factor to tax cascading is the partial
coverage by Central and State taxes. Sectors that are exempted are not allowed to claim
credit for the Cenvat or the Service Tax paid on the inputs.

2. Levy of Excise Duty on manufacturing point: The CENVAT is levied on goods

manufactured or produced in India. Restricting the tax to the point of manufacturing is a
severe obstruction to an effective and unbiased application of tax. For example, valuation as
per excise valuation rules of a product, whose consumer price is Rs. 100/-, is, say, Rs. 70/-.
In such a case, excise duty as per the present provisions is payable only on Rs.70/-, and not
on Rs.100/-.
 3. Complexity in determining the nature of transaction – Sale vs. Service

4. States are unable to levy taxes on services: they have no powers to collect tax on
incomes or the fastest growing constituents of consumer expenditures, the States have to
rely almost exclusively on compliance improvements or rate increases for any flexibility in
their own-source revenues.

5. Lack of Uniformity in Provisions and Rates

6. Interpretational Issues: whether an activity is sale or works contract; sale or service, is not
free from doubt in many cases.

Q4.What was the significance of Introduction of VAT in Indirect Taxes

IMPORTANCE OF VALUE ADDED TAX IN INDIA

If a well-administered system comes in, it will not only close options for traders and business men to
evade paying their taxes, but also make sure they will be compelled to keep proper records of sales and
purchases. At the macro level, two issues make the production of VAT critical for India. Industry watchers
believe that the value added tax system, if enforced properly, will help in addressing issues like fiscal
deposits problems in India and create a high price market for the public

Summarization of the current advantages of value added taxes

1. Covering all the states in India,

2. It leads to revenue security for the government,
3. Selection of rates varies state to state due to diversified markets.
Disadvantages of the value added taxes at present:

1. VAT is recognized as an integral activity,

2. VAT is difficult to operate from the position of both administration and business,
3. Leads to business inflation,
4. It has been identified that value added tax favours capital-intensive firms that can meet the global
challenges.
Q5.The Need for GST:

The proposed GST seems to be based on this very principle. Firstly, while the present system allows for
multiplicity of taxes being collected through an inefficient and non transparent system, the introduction of
GST is likely to rationalize it and thereby plug the loop holes in this system. This will enable the
government to stop pilferage and rationalize the overall taxation regime. While many areas are either
under-taxed or non-taxed or over-taxed, the GST will help reduce overall tax burden of many
organizations.

Introduction of an integrated Goods and Services Tax (GST) to replace the existing multiple tax structures
of Centre and State taxes is not only desirable but imperative in the emerging economic environment.
Increasingly, services are used or consumed in production and distribution of goods and vice versa.
Separate taxation of goods and services often requires splitting of transactions value into value of goods
and services for taxation, which leads to greater complexities, administration and compliances costs.

In recent times, a number of Free Trade Agreements (FTAs) have been signed, which will allow imports
into India duty free or at very low duties. Hence, there is need to have a nation-wide simple and
transparent system of taxation to enable the Indian industry to compete not*only internationally, but also
in the domestic market.
Integration of various Central and State taxes into a GST system would make it possible to give full credit
for inputs taxes collected. GST being a destination-based consumption tax based on VAT principle, would
also greatly help in removing economic distortions caused by present complex tax structure and will help
in development of a common national marked.

VAT rates and regulations differ from state to state. And it has been observed that states often resort to
slashing these rates for attracting investors. This results in loss of revenue for both the Central as well as
State government.

On the other hand, GST brings in uniform tax laws across all the states spanning across diverse
industries. Here, the taxes would be divided between the Central and State government based on a
predefined and pre-approved formula. In addition, it would become much easier to offer services and
goods uniformly across the nation, since there won’t be any additional state-levied tax.
Q6.What are the important stages in implementation of GST?

Step-1 Registration:-

Every business carrying out a taxable supply of goods or services under GST regime and whose turnover
exceeds the threshold limit will be required to register as a normal taxable person. This process is of
registration is referred as GST registration.

Now that we know who needs to register, the question arises that are there any benefits for registration?
GST registration is critical because it will enable you to avail various benefits that are available under the
GST regime.

Step-2 Organization realignment:–

GST is going to affect each business in one way or other, so a proper information should be found out
about the supply chain of the organization i.e. which area will be most affected by GST and which area
will be least affected and according to this proper organization realignment should be done.

Step-3 Alignment of invoicing:–

We know how important invoices are , there importance will increase after the implementation of GST ,

There are certain guidelines that needs to be followed when making this invoices. To know format of tax
invoice please refer article “GST tax invoice”

other invoices like debit, credit notes and other accounting formats should also be aligned according to
GST requirements.

Step- 4 IT systems:

with GST comes a large number of challenges for various organization like detail record keeping has
become necessary, input credit rules are complicated, large number of compliances , a good IT
infrastructure can help the organizations in tackling this challenges hence an updated IT system should
be put into place before GST.

Step-5 Update GSTIN to your trade network:-

GST registration is required to be obtained for each state from where taxable supplies are being made.
Each taxpayer will be allotted a State wise PAN-based 15-digit Goods and Services Taxpayer
Identification Number (GSTIN). This number will serves as an identification prove for businesses and
have to use while making invoices, hence GSTIN of both vendors and customers have should be found
out to make invoices therefore it is necessary for businesses to update GSTIN to Vendors and customers
which will be different in different states.
Step-6 Input tax credit arrangement:–

A taxable person can accumulate credits of taxes paid and carry them forward in a return. With the
introduction of the GST, the last set of credits will have to be transferred. To do this, you must furnish
proof of his/her last return filed under the old regime. You will, therefore, need to make sure that all input
taxes paid are included in it; by doing so, you will be claiming the credit of the same under the new
regime.

Step-7 Understanding various GST tools and its working:-

When GST rolls out, each registered taxpayer will get a profile created on the government’s GST website.
The taxpayer using the login credentials will be able to access all features along with a dashboard. All the
taxpayers will also get three electronic ledgers namely E-cash Ledger, E-credit Ledger & E-liability
Ledger. These ledgers will reflect the amount of tax payable, input credit balance, and on adding money
to the cash ledger the taxpayer will also be able to settle the tax liability online.

Step-8 Monitor progress and keep your employees informed:-

Getting ready for GST compliance is a huge challenge. Companies need to keep on monitoring their
progress from time to time so as not to fall back. For this proper flow of information is required as fast
information about status can make you make right decisions at right time.

Step-9 Review and validate results:-

GST is much more stringent than our old taxation system hence even when it seems that your
organization is completely prepared for GST reviewing the rules and your preparedness for GST possess
no harm. Keep reviewing may result in detection of some error which can cause the company to dodge
many difficulties in the future. Hence reviewing and validating the results will be an important

Q7.What were the taxes subsumed in GST

GST is commonly described as indirect, comprehensive, broad based consumption Tax. The Dual GST
which would be implemented in India will subsume many consumption taxes. The objective is to remove
the multiplicity of tax levies thereby reducing the complexity and remove the effect of Tax Cascading. The
objective is to subsume all those taxes that are currently levied on the sale of goods or provision of
services by either Central or State Government. Subsumetion of large number of taxes and other levies
will allow free flow of larger pool of tax credits at both Central and State level.

1. Principles of tax subsumation

The various Central, State and Local levies were examined to identify their possibility of being subsumed
under GST. While identifying, the following principles were kept in mind:
• Taxes or levies to be subsumed should be primarily in the nature of indirect taxes, either on the
supply of goods or on the supply of services.
• Taxes or levies to be subsumed should be part of the transaction chain which commences with
import/ manufacture/ production of goods or provision of services at one end and the
consumption of goods and services at the other.
 The subsumation should result in free flow of tax credit in intra and inter-State levels.
 The taxes, levies and fees that are not specifically related to supply of goods &
services should not be subsumed under GST.
 Revenue fairness for both the Union and the States individually would need to be
attempted.

2. Central taxes to be subsumed in gst

On application of the above principles and various papers which have been released in this regard, it is
deduced that the following Central Taxes should be, to begin with, subsumed under the Goods and
Services Tax:
• Central Excise Duty (CENVAT)
• The Excise Duty levied under (Excise Duties) Act 1955
• Service Tax
• Additional Customs Duty, commonly known as Countervailing Duty (CVD)
• Special Additional Duty of Customs – 4% (SAD)
• Central Sales Tax to be phased out.

3. State taxes to be subsumed in gst

Following State taxes and levies would be, to begin with, subsumed under GST:
• VAT / Sales tax
• Entertainment tax (unless it is levied by the local bodies)
• Luxury tax
• Taxes on lottery, betting and gambling
• State Cesses and Surcharges in so far as they relate to supply of goods and services
• Octroi and Entry Tax
4. Taxes subsumed under IGST CVD and SAD CST

Q8.Visit CBIC Website and make a note of important contents.

CBEC is playing an active role in drafting GST laws and procedures particularly in CGST & IGST laws
which is exclusive domain of central government. Apart from this CBIC has prepared itself for meeting
implementation challenges, the number of tax payers has gone up significantly the existing IT
infrastructure of CBIC has been updated to handle such a large volumes of data.

 SAKSHAM project launched under CBIC which lays down procedure and provisions for GST
content workflow
 Training of officers of CBEC
 Administration of GST laws
  Administration of Excise and customs duty
 Monitoring of GST implementation

Are some of the key areas where CBIC is working actively?

Q9.What is the major difference in incidence of tax during pre and post GST implementation with
respect to inter-state transfer? Explain with example.
S No Issues Pre GST regime Post GST Regime
1 Broad scheme There were separate There will be only one
laws for each levy law
2 Point of taxation Thx is levied as GST is destination
manufacture and sale of based tax levied at
goods and provision of place of consumption
services
3 Tax on goods and services Goods and services Goods and services
taxed separately are subjected to single
tax
4 Cascading effect Problem of tax on tax is Tax on tax is
there eliminated as input tax
credit is allowed
5 Tax rates There will be separate One integrated tax
tax rates
6 Tax burden Tax burden his high Tax burden is expected
to reduce because of
elimination of
cascading effect
7 Tax credit Only intra state ITC set off is available
transaction can get ITC across all levies

Q10. What are the exclusive products not included in the purview of GST. Why?
At present three items do not fall under the purview of GST. The items proposed to be kept outside the
purview of GST in India they are as follows:

Alcohol for human consumption

Alcohol for human consumption does not fall under the purview of GST in India at present. The taxes

imposed to Alcohol for human consumption are continued as per the structure before GST

implementation.

 Since, Alcohol is huge revenue earners, the state and union government will be at a loss of
revenue. and

 The use of alcohol is associated with an increased risk of injuries and accidents.

excessive drinking can lead to a negative outcome. Hence to keep alcohol prices high

government uses high taxes to curtail consumption

Petroleum Products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and

aviation turbine fuel

Petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel etc. are not

attracted GST. However, the taxes for these products are attracted as per the structure before

introduction of GST.

 Since, petroleum products are huge revenue earners, the state and union government will be at a
loss of revenue.
 Fuel prices are generally kept high in order to discourage its use as it will contribute to more
pollution if the prices kept low

Electricity.

The category, Electricity has been kept aside under the purview of GST at present. So, electricity does

not fall under GST at present. Hence, GST is not applicable for electricity. However, the taxes applicable

at present for electricity is continued as before.

At present, the above items are kept outside the purview of GST in India.

The above information answers below clarifications:

What is the GST rate for Alcohol for human consumption in India? Is GST attracted for Petroleum

Products in India? How much GST for petroleum crude? Any GST for motor spirit in India? Is GST

charged for diesel in India? GST rate for electricity, is GST payable for aviation turbine fuel? Is GST

exempted for natural gas?

Q11. When GST council was notified and what is its composition.
Goods & Services Tax Council is a constitutional body for making recommendations to the Union and
State Government on issues related to Goods and Service Tax. The GST Council is chaired by the Union
Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers
in-charge of Finance or Taxation of all the States.

The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2016, for introduction of Goods
and Services tax in the country was introduced in the Parliament and passed by RajyaSabha on 3rd
August, 2016 and by LokSabha on 8th August, 2016. Consequent upon this, the Hon’ble President of
India accorded assent on 8th September, 2016, and the same was notified as the Constitution (One
Hundred and First Amendment) Act, 2016. As per Article 279A (1) of the amended Constitution, the GST
Council has to be constituted by the President within 60 days of the commencement of Article 279A. The
notification for bringing into force Article 279A with effect from 12th September, 2016 was issued on
10thSeptember, 2016.

As per Article 279A of the amended Constitution, the GST Council which will be a joint forum of the
Centre and the States, shall consist of the following members: -
the Union Finance Minister................................................................ Chairperson;

the Union Minister of State in charge of Revenue or Finance................. Member;

the Minister in charge of Finance or Taxation or any other

Minister nominated by each State Government...................................... Members.

Q12. What are different types of taxes levied under GST.

India adopted a dual GST where tax imposed concurrently by the Central and States.
Dual GST model
SGST ● State GST ● Collected by the State Government
CGST ● Central GST ● Collected by the Central Government
IGST ● Integrated GST ● Collected by the Central Government on inter-state supply of Goods and
Services
Central Goods and Services Tax Act, 2017 (CGST): CGST levied and collected by Central
Government. It is a revenue source to the Central Government of India, on intra-state supplies of
taxable goods or services or both.
State Goods and Services Tax Act, 2017 (SGST): SGST levied and collected by State
Governments/Union Territories with State Legislatures (namely Delhi and Pondicherry) on intra-state
supplies of taxable goods or services or both. It is a revenue source of the respective State
Government.

Union Territory Goods and Services Tax (UTGST): UTGST levied and collected by Union
Territories without State Legislatures, on intra-state supplies of taxable goods or services or both.
Note: India is a Union of States. The territory of India comprises of the territories of the States and
the Union Territories. Currently, there are 29 States and 7 Union Territories; of which, two (Delhi and
Pondicherry) are having Legislature.

GST – in Union Territories without Legislature: Supplies within such Union territory, Central GST
will apply to whole of India and hence, it would be applicable to all Union Territories, with or without
Legislature. To replicate the law similar to State GST to Union Territories without Legislature, the
Parliament has the powers under Article 246(4) to make such laws. Alternatively, the President of
India may use his general powers to formulate such laws. Hence, law same as similar to State GST
can be formulated for Union Territory without Legislature, by the Parliament. The following are Union
Territories without Legislature: 1. Chandigarh 2. Lakshadweep 3. Daman and Diu 4. Dadra and Nagar
Haveli 5. Andaman and Nicobar Islands

Integrated Goods and Services Tax Act, 2017 (IGST): IGST is a mechanism to monitor the inter-
state trade of goods and services and ensure that the SGST component accrues to the Consumer
State. It would maintain the integrity of ITC chain in inter-state supplies. The IGST rate would broadly
be equal to CGST rate plus SGST rate. IGST would be levied and collected by the Central
 Government on all inter-State transactions of taxable goods or services. The revenue of inter-state
sales will not accrue to the exporting state and the exporting state will be required to transfer to the
Centre the credit of SGST/UTGST used in payment of IGST.

Q13. What are the laws supporting the levy of GST. Explain with examples or rules.

There are total 35 GST Acts in India:

The Central Goods and Service Tax Act, 2017

The Central Goods and Services Tax Act, 2017 has been enacted to make a provision for levy and
collection of Tax on Intra-State Supply of Goods or Services or both by the Central Government and
the matters connected therewith or incidental thereto.
Salient Features of CGST Act, 2017

1. Every supplier shall be liable to be registered in the state or union territory (other than special
category states) from where he makes supply of goods or services or both, if his aggregate
turnover in a financial year exceeds? 40 lakhs.

2. In case of special category states viz., Tripura, Nagaland, Uttarakhand, Sikkim, Himachal
Pradesh, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram and Jammu and Kashmir,
registration is required, if his aggregate turnover exceeds ? 20 lakhs.

3. A business entity with turnover up to? 1 Crore can avail the benefit of a composition scheme
under which it has to pay a much lower rate of tax and has to fulfil very minimal compliance
requirements.

4. In order to prevent cascading of taxes, ITC would be admissible on ail goods and services
used in the course or furtherance of business

5. The liability to pay CGST in relation to supply of goods and services will arise on the date of: (i)
issue of invoice, (ii) receipt of payment, whichever is the earlier.

6. Every taxpayer shall be assigned a GST compliance rating score based on his record of
compliance. The compliance rating score will be updated at periodic intervals and be placed in
the public domain.

7. Any taxpayer may apply for refund of taxes in cases including: (i) payment of taxes in excess
or (ii) unutilized input tax credit. Upon such application, the refund may be credited to the
taxpayer or to a Consumer Welfare Fund. The Fund will be used for the purpose of consumer
welfare

8. Every taxpayer would have to self-assess and file tax returns on a monthly basis by submitting:
(i) details of supplies provided, (ii) details of supplies received and (iii) payment of tax. In addition
to the monthly returns, an annual return will have to be filed by each taxpayer.

State Goods and Service Tax Act, 2017 for imposing SGST by respective state on intra-State
supply of goods and services.

Each state has passed its own SGST Act, 2017. The SGST Act of each state is virtually a copy of
CGST Act. Even section numbers and sub-section numbers are same. Rules and notifications
are also identical. The only change is in respect of mention of state authority instead of central
authority and state tax instead of central tax.
 The Union Territory Goods and Services Tax Act, 2017

UTGST is levied on the supply of goods and services within the boundary of a union territory.
Further, the union territories, which do not have legislature, UTGST for levying UTGST in 5 union
Territories without State Legislatures on intra-Territory supply of goods and services. (Andaman
and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu and Chandigarh)

The provisions of the Central Goods and Services Tax Act, 2017 apply to this Act. Such
provisions include: (i) time and value of supply, (ii) composition levy, (iii) registration, (iv) returns,
(v) payment of tax, (vi) assessment, (vii) refunds, (viii) inspection, (ix) search and seizure, (x)
advance ruling, (xi) appeals and offences.

The Integrated Goods and Service Tax Act, 2017

Integrated Goods and Services Tax (IGST) is levied by the centre on inter-state supply of goods and
services.
Features of IGST Act

1. Existing CST (Central state tax, tax on interstate movement of goods) shall be discontinued.

2. The center will levy IGST in the case of (i) inter-state supply of goods and services, (ii) imports and
exports and (iii) supplies to and from special economic zones. Supply includes sale, transfer, exchange
and lease made for a consideration to further a business. In addition, IGST will be levied on any supply
which will not fall under the purview of the Central and State GST Acts.

3. The IGST revenue collected by the centre will be apportioned between the center and to the state
where the supply of goods or services was received.

4. IGST is intermediary tax mainly on B2B transactions. It is not envisaged as final tax, since input tax
credit of IGST will be available to recipient in another state.

5. If IGST is paid on B2C transaction, the state where goods/services/both are consumed will get their
share of SGST.

6. IGST rate is double the CGST rate and will be uniform all over India

The provisions of the CGST Act with respect to registration, valuation, time of supply of goods and
services, returns, refunds, prosecution, appeals will be applicable to the IGST Act.

IGST will be payable on inter-state stock transfers, branch transfers etc

Q14. What is RNR?

Focus under GST is to arrive at such rates which would not decrease the current revenue generation by
Central & State government. Revenue neutral rate(RNR) is a structure of different rates established in
order to match the current revenue generation with revenue under GST. RNR calculation has to include
the cascading effect on certain goods having no excise or sales tax implications.

For example-: Wheat would get costlier due to RNR fixed for diesel being higher than current tax rate
even though wheat does not have any excise or sales tax implications.
RNR recommendation from Subramanian committee

The government of India had appointed a committee which is headed by Dr.Arvind Subramanian.
Committee had released a detailed report on the calculation of RNR and the tax structure. RNR is
calculated by the committee with three different approaches-:

 Macro approach-:

RNR is calculated on basis of total data for domestic output/net imports and consumption of capital
inputs. GST has a positive rate and zero rates on exports are two assumptions under this approach. RNR
found to be 11.6% after factoring compliance of GST at 80%.

 Indirect tax turnover approach-:

This Approach was shared by NIPFP(National Institute of Public Finance Policy). There are three
steps under this approach-:

1. Estimate goods revenue base at the state level.

2. Estimate the services revenue base at the national level.
3. Adjustments for certain goods & services not to be taxed under GST.

This approach puts the RNR at 18.86%.

 Direct tax turnover approach

The approach was shared by the Thirteenth Finance Commission. RNR is calculated on the basis of
input tax data of all the registered entities. This approach puts the RNR at 11.98 %.

RNR is likely to be selected around 18% after making few changes to the indirect tax turnover approach.

Ratio for Distribution of RNR

One of the biggest hurdle in deciding the RNR is the distribution ratio among the central and state
government. The ratio has to include the effects of the loss to be borne by different state governments.
Two different ratios were selected for assessment. Central to state ratio of 60:40 or the reverse ratio of
40:60.

“Coming up with an RNR is as much soft judgment as hard science” as quoted by the Subramanian
committee on the report shared by them with CBEC on RNR and GST rates. The drawback of setting a
RNR low would lead to decrease in growth rate of the economy in long term.

Conclusion

RNR is one of the biggest hurdles in the implementation of GST. It is probable that a higher RNR is fixed
by India when compared to the international RNR. We will share furthermore articles around GST rates
and tax calculation.
Q15. Briefly explain the important components of Supply
Place of supply is the place where final delivery of goods took place under GST, deciding whether a
particular transaction is inter or intrastate is not an easy task.
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*.

For example:

Mr. X sold goods to Mr. Y worth Rs1,00,000. The invoice was issued on 15th January. The payment was
received on 31st January. The goods were supplied on 20th January.

Let us analyse and arrive at the time of supply in this case.

Time of supply is earliest of –

1. Date of issue of invoice = 15th January

2. Last date on which invoice should have been issued = 20th January

Thus the time of supply is 15th January.

What will happen if, in the same example an advance of Rs 50,000 is received by Mr. X on 1st January?
The time of supply for the advance of Rs 50,000 will be 1st January(since the date of receipt of advance
is before the invoice is issued). For the balance Rs 50,000, the time of supply will be 15th January.

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)

Let us understand this using an example:

Mr. A provides services worth Rs 20000 to Mr. B on 1st January. The invoice was issued on 20th January
and the payment for the same was received on 1st February.

In the present case, we need to 1st check if the invoice was issued within the prescribed time. The
prescribed time is 30 days from the date of supply i.e. 31st January. The invoice was issued on 20th
January. This means that the invoice was issued within a prescribed time limit.

The time of supply will be earliest of –

1. Date of issue of invoice = 20th January

2. Date of payment = 1st February

This means that the time of supply of services will be 20th January.

C. Time of Supply under Reverse Charge

In case of reverse charge the time of supply for service receiver is earliest of:

1. Date of payment*

2. 30 days from date of issue of invoice for goods (60 days for services)

For example:

M/s ABC Pvt. Ltd undertook service of a director Mr. X worth Rs. 50,000 on 15th January. The invoice
was raised on 1st February. M/s ABC Pvt Ltd made the payment on 1st May.

The time of supply, in this case, will be earliest of –

1. Date of payment = 1st May

2. 60 days from date of date of invoice = 2nd April

Thus, the time of supply of services is 2nd April.

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.

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.

For example: In case of sales in a supermarket, the place of supply is the supermarket itself.

Place of supply in cases where goods that are assembled and installed will be the location where the
installation is done.

For example, a supplier located in Kolkata supplies machinery to the recipient in Delhi. The machinery is
installed in the factory of the recipient in Kanpur. In this case, the place of supply of machinery will be
Kanpur.

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.

In case of services related to immovable property, the location of the property is the place of provision of
services.

Example 1:

Mr. Anil from Delhi provides interior designing services to Mr.Ajay(Mumbai). The property is located in
Ooty(Tamil Nadu).

In this case, place of supply will be the location of the immovable property i.e. Ooty, Tamil Nadu.

Example 2:
A registered taxpayer offers passenger transport services from Bangalore to Hampi. The passengers do
not have GST registration. What will be the place of supply in this case?

The place of supply is the place from where the departure takes place i.e. Bangalore in this case.

3. Value of Supply of Goods or Services

Value of supply means the money that a seller would want to collect the goods and services supplied.

The amount collected by the seller from the buyer is the value of supply.

But where parties are related and a reasonable value may not be charged, or transaction may take place
as a barter or exchange; the GST law prescribes that the value on which GST is charged must be its
‘transactional value’.
This is the value at which unrelated parties would transact in the normal course of business. It makes
sure GST is charged and collected properly, even though the full value may not have been paid.

Q16. What activities are included in supply

Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange,
license, rental, lease or disposal made or agreed to be made for a consideration by a person in course of
or furtherance of business.

1. It is an inclusive definition.

2. Supply can be supply of goods or services or both.

3. Supply should be made for consideration.

4. Supply should be made in the course or furtherance of business.

5. Supply should be of goods or services. Supply of anything other than goods or services like money,
securities etc. does not attract GST.

Supply of Goods or Services

Sale means a sale of goods made within the State for cash or deferred payment or other?:' valuable consideration
but does not include a mortgage, hypothecation, charge or pledge. (Example: mortgage, hypothecation, charge or
pledge is not supply and hence GST will not be levied).

Barter means the exchange of goods and productive services for other goods and productive services,
without the use of money

In case of License one person grants to another, or to a definite number of other persons, a right to do or
continue to do, such right is called a license.
Rentals mean Periodical payment for use of another's property. Rent is to pay on monthly basis
A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of
payments the right to use an asset for an agreed period of time. A lease may be financial lease or
operating lease
Disposal normally considered as selling of assets, when the organization is about to close down and
various assets are required to be disposed of. Such transactions will also be considered as supply.
Hence, liable to tax under GST Law.

2. Supply should be made for a Consideration

Activities to be treated as Supply even if made without Consideration

a) Permanent transfer or disposal of business assets, where input tax credit has been availed on such
assets.

b) Supply of goods or services or both between related persons or between distinct persons as specified
in section 25, when made in the course or furtherance o business: Provided that gifts are not exceeding ?
50,000 in value in a financial yea* by an employer to an employee shall not be treated as supply of goods
or service or both.

3. Supply should be made in the course or furtherance of business

4. Supply should be made by a taxable person.

5. Supply should be a taxable supply.

6. Supply should be made within the taxable territory.

Q17. Brief registration process of GST

In the GST Regime, businesses whose turnover exceeds Rs. 40 lakhs* (Rs 10 lakhs for NE and hill
states) is required to register as a normal taxable person. This process of registration is called GST
registration.

For certain businesses, registration under GST is mandatory. If the organization carries on business
without registering under GST, it will be an offence under GST and heavy penalties will apply.

GST registration usually takes between 2-6 working days. We’ll help you to register for GST in 3 easy
steps.

*CBIC has notified the increase in threshold turnover from Rs 20 lakhs to Rs 40 lakhs. The notification will
come into effect from 1st April 2019.

Who Should Register for GST?

 Individuals registered under the Pre-GST law (i.e., Excise, VAT, Service Tax etc.)
 Businesses with turnover above the threshold limit of Rs. 40 Lakhs* (Rs. 10 Lakhs for North-
Eastern States, J&K, Himachal Pradesh and Uttarakhand)
 Casual taxable person / Non-Resident taxable person
 Agents of a supplier & Input service distributor
 Those paying tax under the reverse charge mechanism
  Person who supplies via e-commerce aggregator
 Every e-commerce aggregator
 Person supplying online information and database access or retrieval services from a place
outside India to a person in India, other than a registered taxable person

Documents Required for GST Registration

 PAN of the Applicant

 Aadhaar card
 Proof of business registration or Incorporation certificate
 Identity and Address proof of Promoters/Director with Photographs

 Address proof of the place of business

 Bank Account statement/Cancelled cheque
 Digital Signature
 Letter of Authorization/Board Resolution for Authorized Signatory

Penalty for not registering under GST

An offender not paying tax or making short payments (genuine errors) has to pay a penalty of 10% of the
tax amount due subject to a minimum of Rs.10,000.

The penalty will at 100% of the tax amount due when the offender has deliberately evaded paying taxes

Q18. Ram Enterprises purchased goods from Shyam Enterprises. The goods were
supplied on 15/01/2018. Ram Enterprises paid an advance of Rs. 1,00,000 for
purchases on 10/01/2018. The invoice was raised on 30/01/2018. Explain with respect
to supply.
An advance payment is that part of a contractually due that is paid in advance for goods or
services. Under the current article we would look into the provisions affecting the advance
payment under Goods and Service Tax (GST) like the time of supply, receipt voucher, refund
voucher, applicable exemption and reflection of advance payment entries in the Goods and
Service Tax Return.
PROVISIONS RELATING TO THE TIME OF SUPPLY IN CASE OF ADVANCE PAYMENT –
The time of supply is the base to determine the time of payment of tax and as per provisions of
section 12 (2) of the Central Goods and Service Tax Act, 2017 the time of supply shall be
earliest of the following –
 Date of issuance of the invoice or the last date on which invoice should have been issued; and
 Date of receipt of the payment;

Thus from the above it is clear that the tax needs to be paid if the supplier receives the payment
first. Hence the tax liability will arise on the date of advance received that is on 10/01/2018
Q19. Mr. Y was travelling from Hyderabad to Bengaluru on flight. During his journey he
purchased some books. Determine the incidence of tax. Identify place of supply.
As per the GST definition, the liability to pay taxes arise at the time and place of supply. And
both time and place of supply depend upon whether the supply is intra-state or inter-state.
Hence, to guide the taxation under GST, the law lays down provisions regarding the nature of
supply, place of supply of goods, place of supply of services, time of supply and value of
supply.
Place of Supply
Place of Supply is nothing but the place of delivery of goods or consumption of service. In other
words, it is the registered location of recipient of a good or service. Thus, Place of supply under
GST is divided into the following categories:
 Place of supply of Goods
 The place of supply of Services
 where location of supplier and recipient is in India
 where location of supplier and recipient is outside India
 Place of supply in case of Imports/exports

Goods Supplied On Board a Conveyance

Next, there are cases when a supplier supplies goods on board a conveyance. Such a
conveyance includes a vessel, an aircraft, a train or a motor vehicle. Hence the place of supply
in such cases is the location at which the goods are taken on board.

Hence from above it is clear that place of supply is Hyderabad and tax liability will arise at
Hyderabad.

Q20. What is Composite supply and Mixed Supply? What is the rate of tax applied?

This is a new concept introduced in GST which will cover supplies made together whether the supplies
are related or not. Supplies of two or more goods or services can be either ‘composite supply’ or ‘mixed
supply’. The concept of composite supply in GST regime is similar to the concept of naturally bundled
services under Service Tax Law. However, the concept of mixed supply is entirely new.

The concept of mixed supply & composite supply

Specific rates for goods and services have been defined by the GST Council. GST Rate for each type of
goods and services have been defined in the GST Law. So if you are supplying a particular good or a
service rates are easy to identify. However, sometimes supply of a good and service may be connected
or may be done together even though not connect. Say for example, an AC is supplied and AC
installation services are also supplied along with it. The GST Act defines how such supply must be rated.

Therefore, the concept of composite supply and mixed supply becomes important. It helps to determine
the correct GST rate and provides uniform tax treatment under GST for such supplies.
What is composite supply under GST?

Composite supply means a supply is comprising two or more goods/services, which are naturally bundled
and supplied in with each other in the ordinary course of business, one of which is a principal supply.

It means that the items are generally sold as a combination.

The items cannot be supplied separately.

How to determine if it is a composite supply?

A supply of goods and/or services will be treated as composite supply if it fulfils the following criteria:

 Supply of 2 or more goods or services together AND

 It is a natural bundle, i.e., goods or services are usually provided together in the normal
course of business.

 They cannot be separated..

Example:

Goods are packed and transported with insurance. The supply of goods, packing materials, transport and
insurance is a composite supply. Insurance, transport cannot be done separately if there are no goods to
supply. Thus, the supply of goods is the principal supply.

Tax liability will be the tax on the principal supply i.e., GST rate on the goods.

If the second condition is not fulfilled it becomes a mixed supply.

What is mixed supply under GST?

 Mixed supply under GST means a combination of two or more goods or services made together
for a single price.

 Each of these items can be supplied separately and is not dependent on any other.

Under GST, a mixed supply will have the tax rate of the item which has the highest rate of tax.

For example-

A Diwali gift box consisting of canned foods, sweets, chocolates, cakes, dry fruits, and aerated drink and
fruit juices supplied for a single price is a mixed supply. All are also sold separately. Since aerated drinks
have the highest GST rate of 18%, aerated drinks will be treated as principal supply and 18% will apply
on the entire gift box.

How to determine if it is a mixed supply or a composite supply?

You have to rule out that the supply is a composite supply. A supply can be a mixed supply only if it is not
a composite supply.
If the items can be sold separately, i.e., the supplies not naturally bundled in the ordinary course of
business, then it would be a mixed supply.

For example:

If a person buys canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices
separately and not as a Diwali gift box, then it is not considered a mixed supply. All items will be taxed
separately.

Differences between mixed and composite supplies

Particulars Composite Supply Mixed supply

Main item Principal item Item with highest tax rate

Tax rate applicable Tax rate of principal item Highest tax rate of all the items

Q21. Write a short note on the process of GST.

GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act
was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; 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 (GST) is an indirect tax levied on the supply of goods and
services. This 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 is levied at every point of sale. In the case of intra-state sales, Central
GST and State GST are charged. Inter-state sales are chargeable to Integrated GST.

Q22. What are the types a dealer can opt at registration

GST Department has introduced numerous types of GST return and GST registration forms. In order to
clear any kind of misconception or confusion regarding GST return and registration form. We have
enlisted in various procedures to get the required forms applicable to individual dealers.

We have provided a small flow chart depicting the methods and directions to be used for the fulfilment of
the GST compliances:

 Regular Dealer

 Composition Dealer

 Tax Deductor

 Input Service Distributor

  UN Bodies / Embassies

 Non-Resident Assessee

 Temporary Registration

 E-Commerce Dealer

GST Registration & Return Process for Regular Dealers

Assessees who do not fall under any specific category like composition scheme or foreign taxpayer etc.
will be liable to fall under the following procedure.

The Registration Process

 Apply form is REG-01: Fill all the dealers and attach the required documents
 After Uploading the same an acknowledgement will be generated in REG—02 Form
 Authority either rejected the application in REG-05 after given the opportunity of being heard or
give notice in REG-03 for additional information for additional information.
 Assesse can fill the additional information in REG-04 in the proper time which is mention in the
notice
 If authority is satisfied then he can give the registration certificate in form REG-06

GST Registration & Return Process for Composition Dealers

Assesses who fall under the category of composition/compounding dealers won’t have to maintain
invoices and do not need to deal with the interstate transaction and will have to follow the below
procedure.

The Registration Process

For the registration, he will have to apply in REG-01, and after the acknowledgement as REG-02, there
might be two cases.

If the application rejected, the form will be REG-05 and if accepted, the notice of additional information
will be demanded in REG-03.

Then the application for additional info will be demanded in REG-04, after which registration certificate will
be available in filling REG-06.

GST Registration & Return Process for Tax Deductor’s

An Assesse who will register himself as a Tax Deductor will be liable to follow these compliances.

The Registration Process

For the registration, he will have to apply in REG-07, and after the acknowledgement as REG-02, there
might be two cases.
If the application rejected, the form will be REG-08 and if accepted, the notice of additional information
will be demanded in REG-03.

Then the application for additional info will be demanded in REG-04, after which registration certificate will
be available in filling REG-06

GST Registration & Return Process for Input Service Distributor

An assesse who is an input service distributor and distributes input tax credit to his branches will be
covered under this category.

The Registration Process

For the registration, he will have to apply in REG-01, and after the acknowledgement as REG-02, there
might be two cases.

If the application rejected, the form will be REG-05 and if accepted, the notice of additional information
will be demanded in REG-03.

Then the application for additional info will be demanded in REG-04, after which registration certificate will
be available in filling REG-06.

GST Registration & Return Process for Non-Resident Assessee

Other than UN bodies and Embassies, if a non-resident assessee either company or individual is liable to
register themselves in the GST System too. After registration, they are liable to fill the following forms.

The Registration Process

For the registration, he will have to apply in REG-10, and after the acknowledgement as REG-02, there
might be two cases.

If the application rejected, the form will be REG-08 and if accepted, the notice of additional information
will be demanded in REG-03.

Then the application for additional info will be demanded in REG-04, after which registration certificate will
be available in filling REG-06.

GST Registration & Return Process for Temporary Taxpayers

If any assessee wants to register themselves in GST on a temporary basis then, they must follow these
steps mentioned below.

The Registration Process

For the registration, he will have to apply in REG-13, and after the acknowledgement as REG-02, there
might be two cases.

If the application rejected, the form will be REG-05 and if accepted, the notice of additional information
will be demanded in REG-03.
Then the application for additional info will be demanded in REG-04, after which registration certificate will
be available in filling REG-21.

GST Registration & Return Process for E-Commerce

Today is the world of e-commerce trading. So here in GST, there is a facility given by the department that
the assessee can register himself as e-commerce assessee. An assessee who registers themselves as
e-commerce entity will be following these simple steps.

The Registration Process

For the registration, he will have to apply in REG-20, and after the acknowledgement as REG-02, there
might be two cases.

If the application rejected, the form will be REG-08 and if accepted, the notice of additional information
will be demanded in REG-03.

Then the application for additional info will be demanded in REG-04, after which registration certificate will
be available in filling REG-21.
Q23. What is the threshold limit for composite dealers & Registered dealers
GST Registration Threshold Limits

The GST Council, on considering the demands raised by MSME, increased the threshold limits for GST
registration. This helps to ease compliance under GST. The states have an option to opt for a higher limit
or continue with the existing limits.

Overview of earlier limits, new limits and the date of applicability

Aggregate Turnover Registration Required Applicability

Earlier Limits – For the sale of Goods/Providing Services

Exceeds Rs.20 lakh Yes – For Normal Category States Up to 31st March 2019

Exceeds Rs.10 lakh Yes – For Special Category States Up to 31st March 2019

New Limits – For Sale of Goods

Exceeds Rs.40 lakh Yes – For Normal Category States From 1st April 2019

Exceeds Rs.20 lakh Yes – For Special Category States From 1st April 2019

New Limits – For Providing Services

There has been no change in Threshold limits for Service Providers

Other amendments in the threshold limits under the Composition Scheme

1. Changes in the composition scheme: The threshold of annual turnover for composition scheme was
increased to Rs.1.5 crores from 1st April 2019. The taxpayers registered under the scheme have to pay
tax quarterly and file returns annually from 1st April 2019. The limit remains unchanged at Rs.75 lacs for
North Eastern states & Uttarakhand.

2. Composition scheme was made available to service providers: New scheme introduces a fixed tax
rate of 6% with 3% CGST and 3% SGST. Independent service providers, as well as mixed suppliers of
goods and services with an annual turnover of up to Rs.50 lacs in the preceding financial year can opt for
this scheme.
Q24. Draw a specimen of Invoice, Tax Invoice and Bill of Supply.
Q25. What is Supplementary invoice.

Supplementary tax invoice has to be issued by a taxable person in case where any deficiency is found in
a tax invoice already issued by a taxable person.

A supplementary invoice makes good all deficiencies related to an original tax invoice under GST. There
can be some situations where taxable value of the goods or services has been undermined in the original
tax invoice, resulting in lesser amount of tax being charged or other such deficiencies.
In these cases, the supplier can issue a supplementary invoice to accommodate such incremental
changes. It also includes debit and credit notes. Hence, any upward revision or downward revision can be
taken care of in a supplementary invoice.

Apart from taking care of such changes, there are a certain number of particulars to be mandatorily
mentioned in the invoice. There is no pre-defined format mandated by the GST law, but these pointers
must be a part of the same in the paper or digital document. The particulars are as follows:

• Name and address of the supplier

• GSTIN of the supplier

• Nature of invoice, i.e. "Debit Note," "Credit Note," "Revised Invoice" or "Supplementary Invoice." It has
to be mentioned in bold to display the nature of the invoice.

• An alpha-numeric serial number for the invoice, specific to an accounting year

• The invoice date

• Name and address of the recipient

• GSTIN of the recipient

• Where a recipient is an unregistered person, then name and address of place of delivery, along with its
respective State and code, of such person has to be mentioned

• The original invoice serial number against which the supplementary invoice is being issued

• The differential amount of tax, taxable value of the goods or services or rate of tax

• Signature of authorized person in case of physical document, or digital signature in case of electronic
invoice.
Q26. What is the Input 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.
See here:

Input Credit in GST

Input Credit Mechanism is available to you when you are covered under the GST Act.

Which means if you are a manufacturer, supplier, agent, e-commerce operator, aggregator or any of the
persons mentioned here, registered under GST, You are eligible to claim INPUT CREDIT for tax paid by
you on your PURCHASES.

How to claim input credit under GST?

To claim input credit under GST –

 You must have a tax invoice(of purchase) or debit note issued by registered dealer

Note: Where goods are received in lots/instalments, credit will be available against the tax invoice upon
receipt of last lot or instalment.

 You should have received the goods/services

Note: Where recipient does not pay the value of service or tax thereon within 3 months of issue of
invoice and he has already availed input credit based on the invoice, the said credit will be added to his
output tax liability along with interest.
  The tax charged on your purchases has been deposited/paid to the government by the
supplier in cash or via claiming input credit
 Supplier has filed GST returns

Possibly the most path breaking reform of GST is that input credit is ONLY allowed if your supplier has
deposited the tax he collected from you. So every input credit you are claiming shall be matched and
validated before you can claim it.

Therefore, to allow you to claim input credit on Purchases all your suppliers must be GST
compliant as well.

There’s more you should know about input credit –

 It is possible to have unclaimed input credit. Due to tax on purchases being higher than tax on
sale. In such a case, you are allowed to carry forward or claim a refund.

If tax on inputs > tax on output –> carry forward input tax or claim refund

If tax on output > tax on inputs –> pay balance

No interest is paid on input tax balance by the government

 Input tax credit cannot be taken on purchase invoices which are more than one year old. Period is
calculated from the date of the tax invoice.
 Since GST is charged on both goods and services, input credit can be availed on both goods and
services (except those which are on the exempted/negative list).
 Input tax credit is allowed on capital goods.
 Input tax is not allowed for goods and services for personal use.
 No input tax credit shall be allowed after GST return has been filed for September following the
end of the financial year to which such invoice pertains or filing of relevant annual return,
whichever is earlier.

Type of Taxes under GST

All existing taxes such as VAT, CST, Excise Duty, Service Tax, Entertainment Tax shall go away and
GST will replace them.

There are 3 types of taxes under GST

SGST – State GST

CGST – Centre GST

IGST – Integrated GST

Now let’s understand how INPUT CREDIT works under GST

Suppose there is a seller Mr A and he sells his goods to Mr B. Here Mr B i.e the buyer will be eligible to
claim the credit on purchases based on the invoices. Let’s understand how:

Step 1: Mr A will upload the details of all tax invoices issued in GSTR 1.

Step 2. The details with respect to sales to Mr B will auto populate/ get reflected in GSTR 2A, the same
data will be pulled when Mr B will file GSTR 2 (i.e details of inward supply).

Step 3: Mr B will then accept the details that the purchase has been made and reported by the seller
correctly and subsequently the tax on purchases will be credited to ‘Electronic Credit Ledger’ of Mr B and
he can adjust it against future output tax liability and get the refund.
Q27. What is the eligibility for availing Input Tax Credit?

A registered person will be eligible to claim Input Tax Credit (ITC) on the fulfilment of the following
conditions:

1. Possession of a tax invoice or debit note or document evidencing payment

2. Receipt of goods and/or services

3. Goods delivered by supplier to other person on the direction of a registered person against a document
of transfer of title of goods

4. Furnishing of a return

5. Where goods are received in lots or instalments ITC will be allowed to be availed when the last lot or
instalment is received.

6. Failure of the supplier towards supply of goods and/or services within 180 days from the date of
invoice, ITC already claimed by recipient will be added to output tax liability and interest to paid on such
tax involved. On payment to supplier, ITC will be again allowed to be claimed

7. No ITC will be allowed if depreciation has been claimed on tax component of a capital good

8. Time limit to claim ITC against an Invoice or Debit Note is earlier of below dates:

The due date of filing GST Return for September of next Financial year
OR
Date of filing the Annual Returns relevant for that Financial year

For instance, XY Corp, a buyer has a Purchase Invoice was dated 8th July 2017( FY 2017-18), wants to
claim GST paid on that purchase. As per the criteria laid down to reckon the time limit:

The Due date of filing GST return for September 2018( FY 2018-19) is 20th October 2018 and the Date of
filing GST Annual Return for FY 2017-18 is 31st December 2018, whichever is earlier will be the time
period within which XY Corp has to claim ITC. Therefore, the date is 20th October 2018 and XY Corp can
claim this ITC in any of the months between July 2017 to September 2018.
Q28. With the help of diagram show Input Credit Mechanism.

In GST we have three types of taxes CGST, IGST, and SGST/UTGST.

For the inter-state supply of goods/ services, IGST is charged.
and for the intra-state supply of goods/services CGST and SGST/UTGST are charged.
While making payment for the above taxes, input tax credit will be allowed in the following manner-
1st to be utilized for
Credit Balance if any
payment of
CGST CGST IGST
CGST and then
IGST IGST
SGST/UTGST
SGST/UTGST SGST/UTGST IGST

Q29. List out masters to be created to effect GST in tally.

You can account for different taxes under GST (central tax, state tax, UT tax, integrated tax, and
cess), by creating a tax ledger for each tax type.
Create central tax ledger

1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create.

Following are the important ledgers required to effect GST in tally

 Purchases, under purchases Account

 Sales ,under sales account

 CGST Account under Duties and taxes

 SGST Account under Duties and taxes

 IGST Account under Duties and taxes

 UTGST Account under Duties and taxes

 Customer’s and

 Supplier’s Accounts
Q30. Give details of GSTR-1, GSTR-2, and GSTR-3.

What is GSTR-1?
GSTR-1 is a monthly or quarterly return that should be filed by every registered dealer. It contains details
of all outward supplies i.e. sales. The return has a total of 13 sections.

GSTR-1 due
The CBIC has notified the due dates for filing GSTR-1 for the months of April, May and June 2019.
The due dates for GSTR-1 are based on your turnover.
Businesses with sales of up to Rs. 1.5 crore will file quarterly returns.
Other taxpayers with sales above Rs. 1.5 crore have to file monthly return.

Who should file GSTR-1?

Every registered person is required to file GSTR-1 irrespective of whether there are any transactions
during the month or not.

The following registered persons are exempt from filing the return:

 Input Service Distributors

 Composition Dealers
 Suppliers of online information and database access or retrieval services (OIDAR), who have to
pay tax themselves (as per Section 14 of the IGST Act)
 Non-resident taxable person
 Taxpayer liable to collect TCS
 Taxpayer liable to deduct TDS

How to revise GSTR-1?

Return once filed cannot be revised. Any mistake made in the return can be rectified in the next periods
(month/quarter) return. It means that if a mistake is made in September GSTR-1, rectification for the
same can be made in October’s GSTR-1.

e. Late Fees and Penalty

Late Fees for not filing GSTR-1 is Rs. 200 per day of delay (Rs. 100 as per CGST Act and Rs. 100 as per
SGST Act. The late fees will be charged from the date after the due date.

Latest Update: The late fees have been reduced to Rs. 50 per day and Rs 20 per day (for nil return)

GSTR-2

Every registered taxable person is required to give details of Inward Supply, i.e., purchases for a tax
period in GSTR-2.

GSTR-2 contains details of all the purchases transactions of a registered dealer for a month. It will also
include purchases on which reverse charge applies.
The GSTR-2 filed by a registered dealer is used by the government to check with the sellers’ GSTR-1 for
buyer-seller reconciliation.

Buyer-seller reconciliation

Buyer-seller reconciliation or invoice matching or is a process of matching taxable sales by the seller with
the taxable purchases of the buyer.

It is vital because ITC on purchases will only be available if the details of purchases filed in GSTR-
2 return of buyer matches with the details of sales filed in GSTR-1 of the seller..

GSTR 2 due date

As per the Act: GSTR-2 due date for Filing GSTR-2 is 15th of next month.

There is a 5-day gap between GSTR-1 & GSTR-2 filing to correct any errors and discrepancies.

For businesses with turnover less than 1.5 crores, quarterly returns are applicable whose due dates will
be announced later.

As per 22nd GST Council meeting of 6th October 2017

 Businesses with annual turnover up to 1.5 crores will submit quarterly returns. Taxes will
be paid quarterly.
 Due dates of Aug & Sep will be declared later.
 Switch over to quarterly will happen from Oct-Dec 2017 cycle

If GSTR-2 return is not filed then the next return GSTR-3 cannot be filed. Hence, late filing of GST return
will have a cascading effect leading to heavy fines and penalty.

If you delay in filing, you will be liable to pay interest and a late fee.

Interest is 18% per annum. It has to be calculated by the taxpayer on the amount of outstanding tax to be
paid. The time period will be from the next day of filing (16th of the month) to the date of payment.

The late fee is Rs. 100 per day per Act. So it is 100 under CGST & 100 under SGST. Total will be Rs.
200/day. The maximum is Rs. 5,000.There is no late fee on IGST.

Who should file GSTR-2?

Every registered person is required to file GSTR-2 irrespective of whether there are any transactions
during the month or not.

However, these registered persons do not have to file GSTR 2 –

 Input Service Distributors

 Composition Dealers
 Non-resident taxable person
 Persons liable to collect TCS
  Persons liable to deduct TDS
 Suppliers of online information and database access or retrieval services (OIDAR), who have to
pay tax themselves (as per Section 14 of the IGST Act)

Revising GSTR 2

GSTR 2 once filed cannot be revised. Any mistake made in the return can be revised in the next month’s
return. It means that if a mistake is made in September GSTR 2, rectification for the same can be made in
October’s GSTR 2.

What is GSTR-2A?

When a seller files his GSTR-1, the information is captured in GSTR-2A. GSTR-2A is a purchase-related
tax return that is automatically generated for each business by the GST portal.

It takes information from the seller’s GSTR-1. You are required to verify (and amend) this return before
filing in on GST Portal.

Details to be provided in GSTR-2

There are 13 headings in GSTR-2 format prescribed by the government.

We have explained each heading along with the details required to be reported under GSTR-2.

GSTR-3 is a monthly return with the summarized details of sales, purchases, sales during the month
along with the amount of GST liability. This return is auto-generated pulling information from GSTR-
1 and GSTR-2.

GSTR-3 will show the amount of GST liability for the month. The taxpayer must pay the tax and file the
return.

GSTR-3 due?

As per 22nd GST Council meeting of 6th October 2017

 Businesses with annual turnover up to 1.5 crores will submit quarterly returns. Taxes will
be paid quarterly.
 Due dates of Aug & Sep will be declared later.
 Switch over to quarterly will happen from Oct-Dec 2017 cycle

If GSTR-3 return is not filed then the GSTR-1 of the next month cannot be filed. Hence, late filing of GST
return will have a cascading effect leading to heavy fines and penalty.

What happens if GSTR-3 is filed late?

If you delay in filing, you will be liable to pay interest and a late fee.
Interest is 18% per annum. It has to be calculated by the tax payer on the amount of outstanding tax to be
paid. Time period will be from the next day of filing (16th of the month) to the date of payment.

Late fee is Rs. 100 per day per Act. So it is 100 under CGST & 100 under SGST. Total will be Rs.
200/day. Maximum is Rs. 5,000.There is no late fee on IGST.

6. Who should file GSTR-3?

Every registered person is required to file GSTR-3 irrespective of whether there are any transactions
during the month or not.

However, these registered persons do not have to file GSTR-3–

 Input Service Distributors

 Composition Dealers
 Non-resident taxable person
 Persons liable to collect TCS
 Persons liable to deduct TDS
 Suppliers of online information and database access or retrieval services (OIDAR), who have to
pay tax themselves (as per Section 14 of the IGST Act)

Revise GSTR-3?

GSTR-3 once filed cannot be revised. Any mistake made in the return can be revised in the next month’s
GSTR-1 and GSTR-2 returns. Direct revision in GSTR-3 is not possible as GSTR-3 is auto-generated
without provision for editing.

GSTR-3 and GSTR-3B be reconciliation

GSTR 3B is a simple return form introduced by the CBEC for the month of July and August 2017. GSTR-
3 will also have to be filed for July & August 2017.

On filing the GSTR 3, if actual liabilities are different from those declared in GSTR 3B, the system will
update the (difference) between GSTR 3B and GSTR 3 automatically. In case, actual liabilities in GSTR-3
are higher than those declared and paid with GSTR-3B, you will have to pay the extra amount tax along
with interest on the extra amount.

Note: GSTR-3 must be filed only after paying entire tax liability otherwise it will not be treated as valid
return. If taxpayer has filed an invalid return and later on he wants to pay the remaining liability then he
has to file the Part B of GSTR-3 again.

Details to be provided in GSTR-3

There are 15 headings in GSTR-3 format prescribed by the government.

We have explained each heading along with the details required to be reported under GSTR-3.
Q31. Who files GSTR-6A

GSTR-6A is a system generated ‘draft’ Statement of Inward Supplies for a Receiver Taxpayer.

GSTR-6A is a read only form. Taxpayer cannot take any action in GSTR-6A. GSTR-6A for a particular tax
period changes based on the details uploaded by the counter party supplier till ISD taxpayer submits the
GSTR-6 for the same tax period.

When the counterparty has not submitted/filed GSTR-1: Any/all invoices uploaded by Supplier Taxpayers
in their GSTR-1 will be visible in the GSTR-6A in near real time and the same can also be viewed in the
GSTR-6 of the recipient.

2. When the counterparty has submitted/filed their return: When the counterparty has submitted/filed their
return, the invoices available in the GSTR-6A will continue to be available for viewing. Additionally,
Receiver Taxpayers will be able to take action on the invoices in GSTR-6. The ACCEPT/REJECT buttons
against invoices will be enabled for action. The information available in GSTR-6A will also be available in
GSTR-6.

Q32. What type of GST Returns, e-commerce operators need to file.

E-commerce operator is any person who owns or manages the digital or electronic facility or platform for
electronic commerce such as Amazon, Flipkart, etc. The e-commerce operator provides a platform
whereby the sellers can reach out to a large number of customers by getting registered online on their
platform. Customers also get benefits as they get access to multiple sellers and competitive prices for
the desired product.

GSTR-8 is a return to be filed by the e-commerce operators who are required to deduct TCS (Tax
collected at source) under GST. GSTR-8 contains the details of supplies effected through e-commerce
platform and amount of TCS collected on such supplies.

Every e-commerce operator registered under GST is required to file GSTR-8. E-commerce operator has
been defined under GST Act as any person who owns or manages a digital or electronic facility or
platform for electronic commerce such as Amazon etc. All such e-commerce operators are mandatory
required to obtain GST registration as well as registered for TCS (Tax collection at source).
Q33. GSTR-8 importance

GSTR-8 shows the details of supplies effected through the e-commerce platform and the amount of TCS
collected on such supplies. Currently, the Government has put the TCS provisions on hold. It is going to
be applicable from 1st Oct 2018 onwards. In case of TCS being applicable, the supplier can take the input
credit of such TCS deducted by the e-commerce operator after filing of GSTR-8 by the e-commerce
operator. The amount of such TCS will be reflected in Part C of Form GSTR-2A of the supplier.

For instance, consider that Shanta Enterprises supplies garments worth Rs 20,000 through Amazon. Now
Amazon being the e-commerce operator will deduct the TCS @ 1% and deposit Rs 200 with the
Government. The amount of Rs 200 will get reflected in GSTR-2A of Shanta Enterprises after filing of
GSTR-8 by Amazon.

GSTR-8 filing for a month is due on 10th of the following month. For instance, the due date for GSTR-8
for October is on the 10th of November.

Details to be provided in GSTR-8

GSTR-8 has a total of 9 sections:

1. Provide GSTIN (provisional id can also be used as GSTIN if you do not have a GSTIN)

2. Legal name of the registered person: Name of the taxpayer will be auto-populated at the time of
logging into the common GST Portal.

3. Details of supplies made through e-commerce operator: Mention the gross value of supplies made
to registered persons and unregistered persons and value of supplies returned by such registered and
unregistered persons. The difference between the supplies made and supplies returned will be the net
amount liable for TCS.

4. Amendments to details of supplies in respect of any earlier statement: Any correction to data
submitted in the return of previous months can be done by filling in this section.

5. Details of interest: If the amount of TCS is not paid on time by the e-commerce operator, then
interest is levied on account of late payment of TCS amount.

6. Tax payable and paid: This head includes the total amount of tax payable under each head i.e
SGST, CGST and IGST and how much tax has been paid till date.

7. Interest payable and paid: Interest @ 18% is levied for the late payment of GST.The interest is
calculated on the outstanding tax amount

8. Refund claimed from electronic cash ledger: Refund from electronic cash ledger can only be
claimed only when all the TCS liability for that tax period has been discharged.

9. Debit entries in cash ledger for TCS/interest payment [to be populated after payment of tax and
submissions of return: Amount of tax collected at source will flow to Part C of GSTR-2A of the taxpayer
on filing of GSTR-8
 Q34. What Is Reverse Charge Mechanism?

Normally, suppliers of goods or services collect GST from the receivers and deposit it with the tax
authorities.

But under the reverse charge mechanism, receivers of goods or services pay the tax instead of suppliers.
Thus, if you are a recipient of goods or services under reverse charge, you must remit only the purchase
payments to suppliers. As for GST, you as a recipient must deposit the tax directly with the tax authorities.
This tax collection mechanism is aimed at reducing tax evasion, particularly from the unorganized sectors.

Following are the cases where Reverse Charge Applicable

 Supply from Unregistered Dealer to Registered Dealer- If you are a registered dealer who purchases
goods/services from an unregistered dealer, you as a registered dealer must pay the GST. However,
you are exempt from paying GST if your purchases from the unregistered seller do not exceed Rs. 5,000.
 Supply of Goods and Services Specified by CBEC- If you are purchasing goods/services which are
specified by the CBEC under reverse charge, you as a recipient must pay GST. These include: (i) goods
transport services, (ii) insurance agencies, (iii) recovery agencies, (iv) legal services, (v) transportation
services for imported goods etc.
 Services Provided By An E – Commerce Operator – In case you are an e-commerce operator
supplying services, reverse charge will apply to you. Hence, you as an e-commerce operator are
responsible to pay the GST.

For example, in case of transport service provided by taxi aggregator OLA, OLA is liable to pay the GST.
OLA will collect tax from passengers instead of the registered service providers. There are cases where
an e-commerce operator does not have a physical presence in the taxable territory. In such a case, a
person representing such e-commerce operator for any purpose will be liable to pay tax. If there is no
such representative, the operator would appoint a representative. He will be held liable to pay GST.
Time of Supply under Reverse Charge Mechanism
Tax for goods under the reverse charge mechanism should be paid on the earliest of the below dates:
 The Date on which the goods and services are received

 Date of payment as entered in the books of accounts of the recipient or the date on which the payment is
debited in his account, whichever is earlier

 Date after 30 days of issuing the invoice by the supplier

Where it is not possible to determine the time of supply, under the above mentioned cases,

– the time of supply shall be the date of entry in the books of accounts of the recipient of supply.

Tax for services under the reverse charge mechanism should be paid on the earliest of the below
dates:
 Date of payment as entered in the books of accounts of the recipient or the date on which the payment is
debited in his account, whichever is earlier
 Date after 60 days of issuing the invoice by the supplier

Where it is not possible to determine the time of supply, under the above mentioned cases,

– the time of supply shall be the date of entry in the books of accounts of the recipient of supply.

Conclusion:

Thus, reverse charge mechanism requires registered recipients of goods and services to remit tax directly
to the authorities if : – transacting with unregistered dealers or

– purchasing specific goods and services listed by the CBEC.

Q35. What are the activities specified as Negative List according to Schedule -III
Provisions under the ‘Third Schedule (III)’ to the CGST Act 2017 regarding “Activities/ Transactions which
shall not be treated as Supply of Goods or Services”, are as under:
Schedule III to CGST Act 2017: Activities or Transactions which shall be treated neither as a Supply of
Goods nor a Supply of Services (See Section 7)

1. Services by an employee to the employer in the course of or in relation to his employment.

2. Services by any court or Tribunal established under any law for the time being in force.

3. (a) the functions performed by the Members of Parliament, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of other local authorities;

(b) The duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity; or
(c) the duties performed by any person as a Chairperson or a Member or a Director in a body established
by the Central Government or a State Government or local authority and who is not deemed as an
employee before the commencement of this clause.

4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.

5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.

6. Actionable claims, other than lottery, betting and gambling.

7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory
without such goods entering into India.

8. (a) Supply of warehoused goods to any person before clearance for home consumption; (b) Supply of
goods by the consignee to any other person, by endorsement of documents of title to the goods, after the
goods have been dispatched from the port of origin located outside India but before clearance for
home consumption.
Q36. Mr. Ankur purchased goods for Rs. 8,00,000 and paid tax @ 5% from a dealer in same
locality. He sold Rs. 4,00,000 worth goods to Raj and collected tax from him. Record the
following transaction with the help of accounting Software.

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name : Ankur Financial

Year : 1-4-2018
Address : Hyderabad
Country : India
State : Telangana
Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes

State : Telangana

Registration type : Regular

Assessee of Other Territory : No

GSTIN / UIN : 36AJCPS0057J1Z5

Applicable form : 1-4-2018.

Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : GST - Purchase

Under : Purchase Account

Is GST Applicable ? : Applicable

Set / alter GST details ? : Yes and

press F12 and make Yes to All columns

Description : Goods

HSN / SAC : 1234

Nature of Transaction : Purchase Taxable

Integrated Tax : 5%

Central Tax : 2.5%

State Tax : 2.5%

Cess : 0%

Type of Supply : Goods

Ctrl +A to save

Name : GST- Sales

Under : Sales Account

Is GST Applicable ? Applicable

Set / alter GST details ? Yes and

press F12 and make Yes to All columns

Description : Goods

HSN / SAC : 1234

Nature of Transaction : Sales Taxable

Integrated Tax : 18%

Central Tax : 9%

State Tax : 9%

Cess : 0%

Type of Supply : Goods

Ctrl +A to save

Name : Supplier

Under : Sundry Creditor

State : Telangana

Registration type : Regular

GSTIN/UIN : 36AADCR6508A1ZQ
Ctrl + A to save

Name : Raj

Under : Sundry Debtor

State : Telangana

Registration type : Regular

GSTIN/UIN : 36AABFJ9848C2Z8
Ctrl + A to save

Name : CGST

Under : Duties & Taxes

Type of Duty /Tax : GST

Tax Type : Central Tax

Ctrl + A to save

Name : SGST

Under : Duties & Taxes

Type of Duty /Tax : GST

Tax Type : State Tax

Ctrl + A to save

Step 4 Voucher Entry

Gate of Tally > Accounting Voucher > on F9 Purchase

Click on right side button bar or press F9

Press Alt + I to convert into Accounting Invoice. And give the below particulars

Supplier Invoice No:25 Date:1-4-18

Party Name : supplier

Purchase ledger : GST Purchase

Amount 80000

Tab twice and select cgst and sgst it will automatically display tax CTRL + A to save

Click on F8 Sales on right side button bar or press F8

Press Alt + I to convert into Accounting Invoice. And give the below particulars
Reference No:1
Party Name: Raj
GST Sales 40000

Tab twice and select cgst and sgst it will automatically display tax CTRL + A to save

Step 5 Reports Gateway of Tally > Display > Statutory Reports > GST > GSTR3B
Q37. Mahesh Enterprises of Hyderabad purchased goods from Ashish Enterprises of Chennai,
he paid GST @ 28%. Record the transaction in Accounting software.
Particular IGST Purchase 10000
Tab twice and select IGST it will calculate tax automatically Ctrl+A to save
Step 5 Reports Gateway of Tally > Display > Statutory Reports> GST > GSTR2> Select B2B
invoices -3, 4A

Q38. Create 3 stock items named milk, bread and Ice creams. Opening balances of these 3
stock items would be milk – 10 litres, Bread– 20 Pkts and Ice creams – 25 numbers. Create 1
sundry debtor and 1 sundry creditor within state. Record a purchase entry of 5 litres of milk at
5% GST rate for ₹80 per litre, 10 Pkts of Bread for Rs.25 per pktat 5% GST rate and 30 numbers
of Ice creams for ₹30 per Ice cream at 18% GST rate. A sale entry 10liters of milk Rs.90 per
litre, 15Pkts of Bread for Rs.40 per pkt and 35 numbers of Ice creams for ₹50 per Ice cream.
 Press Alt+ A for Tax Analysis and press Alt F1 for detail information

Step 7 Report
Gateway of Tally > Display > Statutory Report > GST > GSTR3B
Q39. What is the value in GST invoices when Rs. 10000 worth of goods are purchased,
GST tax rate @ 5%. In second invoice two purchases of Rs 5000 worth goods GST
rate @ 5% and another Rs 5000 GST @ 18%. Both the transactions are intra state and
show the GST Tax ledgers.
Step 1. Create company in the name of Reeha Enterprises
Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Step 3 Creation of Ledger Accounts.

Supply invoice number date

Select party name Supplier

Particulars Purchase account 10000 CGST and SGST will be automatically calculated
Press Ctrl + A for Tax Analysis you will get the below screen

Press ESC button on key board and save Ctrl + A

Q40. Mr. A sold goods to Mr. B for Rs. 20,000. Mr. A is charging packing charges of Rs.
800. And also paying freight of Rs. 2800 from Mr. A’s premises to Mr. B’s premises.
Mr. A also charged interest of Rs. 750 for delay in payment. Determine the taxable
value for levy of GST. Whether packing charges or freight, Interstate required to
include in the invoice to determine taxable value? Show Tax Invoice GST@ 12% (
intra state supply).or freight, Interstate required including in the invoice to determine
taxable value? Show Tax Invoice GST@ 12% (intra state supply).

Solution: As per GST law any additional expenses are charged in the invoice along with the
stock items the additional expenses are included in calculation of taxable value.
GST- Sales @ 12% 20000
Packing Charges 800
Freight Charges 2800
Interest on delay payment 750
CGST 1461
SGST 1461
Total 27272

Press Alt + A for tax analysis and press Alt + F1 for detail you will get the following screen

Q41. Mr. X sold 1000 units of goods to Mr. Y for Rs. 20,000 and total unit sold during the year to
Mr. Y after including these units is 2500 unit. As per terms of the agreement if Mr. Y is
purchasing more than 2000 unit of goods in a year then Mr. X is allowing 10% discount in all
the supplies. Assuming IGST rate is 18%. How discount will be recorded?

Here in the given problem it is understand that there are some terms and conditions
between Mr X and Mr Y. as per terms if Mr Y is purchasing more than 2000 No’s in the
financial year then he will be getting the 10% discount on all the purchases made in the
whole financial year.
The calculation of discount is below
Total discount = number of units purchase in financial year * Rate per No’s *10%
Number of units purchased = 2500
Rate per unit = 20000/1000 = 20
Total discount = 2500*20*10%
Total discount = 5000
GST is levied on Discounts also. In tally discount should be posted in Debit Note
Let we see how to post the transactions in tally
Ctrl + A to Save
Step 7 Report
Gateway of Tally > Display > Statutory Report > GST > GSTR3B

Q42. Mr. Ajay (Hyderabad) provides consultancy services to Mr. Vijay (unregistered,
address on record shows Tamil Nadu) and charged Rs.10000, levied GST @18%. Even
provided consultancy services to Mr. Anand (unregistered and address is not
available) Rs.15000, GST @ 12%. Show the transactions in Tally.

According to GST Law if there is any sale of services to unregistered persons in such case
we have to see the address of the service receiver if address is provided or available in the
records then the place of supply of services will be the place of residence of unregistered
dealer. If the address is not available in records the place of supply will be location of supply
of service.
In the given problem services rendered to Mr. Vijay will be the interstate sale transaction
because the place of supply and receiver of service are different states and to Mr. Anand
will be intrastate sale because place of supply and receiver of suppler are same because
the address is not in the record
Q43. Mrs Rani, resident of Hyderabad has a Bank account and with draws money from
ATM in Hyderabad. She went on tour and withdrawn Rs50000 from ATM in Kerala.
Identify place of service, type of taxes levied in both the cases
It is very important to understand the term 'place of supply' for determining the right tax to be
charged on the invoice.

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.

In case of services related to immovable property, the location of the property is the place of
provision of services.

In the situation 1 Mrs Rani has with draws money from ATM in Hyderabad the place of
service is Hyderabad as the place of service is in Hyderabad and location of service is also
Hyderabad in the same state so the charge of tax will be CGST and SGST

In the situation 2 Mrs Rani has withdrawn Rs. 50000 from ATM in Kerala. The place of
service is Kerala. Because the service is done in Kerala and location of service is also in
Kerala in the same state so the charge of tax will be CGST and SGST (the taxes will be
charged by the Kerala)
Q44. M/s Pooja sold 250 laptops to M/s.Raj for Rs. 50,000 each.Tax Invoice was raised.
They were given discount of Rs.5000. M/s Raj returned 250 laptops .Assuming GST
rate is 18%. Show discount and GST ledger.

In the given problem it is assumed that discount will not have any effect of GST discount is
assumed as on account.
 Step 4 Accounting voucher
Gateway of Tally > Accounting Vouchers > press ctrl +F8 for Debit Note and enter the below
particulars

Q45. Assume five intra state purchase and sale transactions and show Input tax credit
in Tally.

Step 1. Create company in the name of Villa Computers Solutions Pvt. Ltd.

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name: Villa Computers Solutions Pvt. Ltd. Financial Year : 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana
Press Ctrl + A to Save the company
Reports

Gateway of Tally >> Display >> Statutory Reports >> GST >> GSTR3B
Q46. Out ward supplies, B2B, Goods sold to R dealer Rs. 120000, Goods sold to
Customer (B2C) Rs.15000, Goods sold to Interstate dealer Y Rs. 150000. Assuming
GST @ 18% show the effect of outward supplies in GST Return.

Step 2. Configuration of GST in Tally

Q47. Purchased goods from registered dealer M/s Modern, Rs. 50000 and Rs. 5000 was
paid as advance, Purchased goods from unregistered dealer M/s. Ram Rs. 40000.
Purchased goods from interstate dealer M/s Jyothi. Rs. 75000. Goods returned to M/s
Jyothi Rs.5000, after raising tax invoice. Record Inward supplies in Tally.