FAQ on Goods and Services Tax

1. What is Goods and Service Tax (GST)?

It is a destination based tax on consumption of goods and services. It is proposed to be levied at

all stages right from manufacture up to final consumption with credit of taxes paid at previous
stages available as setoff.

2. What is the concept of destination based taxation on consumption?

The tax would accrue to the taxing authority which has jurisdiction over the place of
consumption which is also termed as place of supply.

3. Which of the existing taxes are proposed to be subsumed under GST?

The GST would replace the following taxes:

(i) taxes currently levied and collected by the Centre:
a. Central Excise duty
b. Additional Duties of Excise (Goods of Special Importance)
c. Additional Duties of Excise (Textiles and Textile Products)
d. Additional Duties of Customs (commonly known as CVD)
e. Special Additional Duty of Customs (SAD)
f. Service Tax
g. Central Surcharges and Cesses so far as they relate to supply of goods and services
(ii) State taxes that would be subsumed under the GST are:
a. State VAT
b. Central Sales Tax
c. Luxury Tax
d. Entry Tax (all forms)
e. Entertainment and Amusement Tax (except when levied by the local bodies)
f. Taxes on advertisements
g. Purchase Tax
h. Taxes on lotteries, betting and gambling
i. State Surcharges and Cessess of relate to supply of goods and services

4. Which are the commodities proposed to be kept outside the purview of GST?

Article 366(12A) of the Constitution as amended by 101st Constitutional Amendment Act, 2016
defines the Goods and Services tax (GST) as a tax on supply of goods or services or both, except
supply of alcoholic liquor for human consumption. Five petroleum products viz. petroleum
crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel have
temporarily been kept out also furthermore, electricity has been kept out of GST.
5. What will be the status in respect of taxation of above commodities after introduction of GST?

The existing taxation system (VAT & Central Excise) will continue in respect of the above
commodities.

6. What type of GST is proposed to be implemented?

It would be a dual GST with the Centre and States simultaneously levying it on a common tax
base. The GST to be levied by the Centre on intra-State supply of goods and / or services would
be called the Central GST (CGST) and that to be levied by the States/ Union territory would be
called the State GST (SGST)/ UTGST. Similarly, Integrated GST (IGST) will be levied and
administered by Centre on every inter-state supply of goods and services.

7. Who is liable to pay GST under the proposed GST regime?

Under the GST regime, tax is payable by the taxable person on the supply of goods and/or
services. Liability to pay tax arises when the taxable person crosses the turnover threshold of
Rs.20 lakhs (Rs. 10 lakhs for NE & Special Category States). The CGST / SGST is payable on all
intra-State supply of goods and/or services and IGST is payable on all inter- State supply of
goods and/or services.

8. How will the goods and services be classified under GST regime?

HSN (Harmonized System of Nomenclature) code shall be used for classifying the goods under
the GST regime. Services will be classified as per the Services Accounting Code (SAC)

9. How will imports be taxed under GST?

Imports of Goods and Services will be treated as inter-state supplies and IGST will be levied on
import of goods and services into the country. The incidence of tax will follow the destination
principle. Full and complete set-off will be available on the GST paid on import on goods and
services.

10. How will Exports be treated under GST?

Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or
services, however credit of input tax credit will be available and same will be available as refund
to the exporters. The Exporter will have an option to either pay tax on the output and claim
refund of IGST or export under Bond without payment of IGST and claim refund of Input Tax
Credit (ITC).
11. What is GSTN and its role in the GST regime?

GSTN stands for Goods and Service Tax Network (GSTN). The GSTN shall provide a shared IT
infrastructure and services to Central and State Governments, tax payers and other stakeholders
for implementation of GST. The functions of the GSTN would, inter alia, include:
(i) facilitating registration;
(ii) forwarding the returns to Central and State authorities;
(iii) computation and settlement of IGST;
(iv) matching of tax payment details with banking network;
(v) providing various MIS reports to the Central and the State Governments based on the
tax payer return information;
(vi) providing analysis of tax payers’ profile; and
(vii) running the matching engine for matching, reversal and reclaim of input tax credit. The
GSTN is developing a common GST portal and applications for registration, payment,
return and MIS/ reports. The GSTN would also be integrating the common GST portal
with the existing tax administration IT systems and would be building interfaces for tax
payers.

12. Is there any provision in GST for tax treatment of goods returned by the recipient?

Yes, Section 34 deals with such situations. Where the goods supplied are returned by the
recipient, the registered person (supplier of goods) may issue to the recipient a credit note
containing the prescribed particulars. The details of the credit note shall be declared by the
supplier in the returns for the month during which such credit note was issued but not later
than September following the end of the year in which such supply was made or the date of
filing of the relevant annual return, whichever is earlier. The details of the credit note shall be
matched with the corresponding reduction in claim for input tax credit by the recipient in his
valid return for the same tax period or any subsequent tax period and the claim for reduction in
output tax liability by the supplier that matches with the corresponding reduction in claim for
ITC by the recipient shall be finally accepted and communicated to both parties.

13. What is the taxable event under GST?

Taxable event under GST is supply of goods or services or both. CGST and SGST/ UTGST will be
levied on intra-State supplies. IGST will be levied on inter-State supplies.

14. Whether supplies made without consideration will also come within the purview of supply
under GST?

Yes, but only those activities which are specified in Schedule I to the CGST Act / SGST Act. The
said provision has been adopted in IGST Act as well as in UTGST Act also.
15. What are composite supply and mixed supply? How are these two different from each other?

Composite supply is a supply consisting of two or more taxable supplies of goods or services or
both or any combination thereof, which are bundled in natural course and are supplied in
conjunction with each other in the ordinary course of business and where one of which is a
principal supply. For example, when a consumer buys a television set and he also gets warranty
and a maintenance contract with the TV, this supply is a composite supply. In this example,
supply of TV is the principal supply, warranty and maintenance service are ancillary. Mixed
supply is combination of more than one individual supplies of goods or services or any
combination thereof made in conjunction with each other for a single price, which can ordinarily
be supplied separately. For example, a shopkeeper selling storage water bottles along with
refrigerator. Bottles and the refrigerator can easily be priced and sold separately.

16. What is the treatment of composite supply and mixed supply under GST?

Composite supply shall be treated as supply of the principal supply. Mixed supply would be
treated as supply of that particular goods or services which attracts the highest rate of tax.

17. What is meant by Reverse Charge?

It means the liability to pay tax is on the recipient of supply of goods and services instead of the
supplier of such goods or services in respect of notified categories of supply.

18. Is the reverse charge mechanism applicable only to services?

No, reverse charge applies to supplies of both goods and services, as notified by the
Government on the recommendations of the GST Council.

19. What will be the implications in case of receipt of supply from unregistered persons?

In case of receipt of supply from an unregistered person, the registered person who is receiving
goods or services shall be liable to pay tax under reverse charge mechanism.

20. What is the taxable event under GST?

The taxable event under GST shall be the supply of goods or services or both made for
consideration in the course or furtherance of business. The taxable events under the existing
indirect tax laws such as manufacture, sale, or provision of services shall stand subsumed in the
taxable event known as ‘supply’.

21. What is the scope of ‘supply’ under the GST law?

The term ‘supply’ is wide in its import covers all forms of supply of goods or services or both that
includes sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be
 made for a consideration by a person in the course or furtherance of business. It also includes
import of service. The model GST law also provides for including certain transactions made
without consideration within the scope of supply.

22. What is a taxable supply?

A ‘taxable supply’ means a supply of goods or services or both which is chargeable to goods and
services tax under the GST Act.

23. Are self-supplies taxable under GST?

Inter-state self-supplies such as stock transfers, branch transfers or consignment sales shall be
taxable under IGST even though such transactions may not involve payment of consideration.
Every supplier is liable to register under the GST law in the State or Union territory from where
he makes a taxable supply of goods or services or both in terms of Section 22 of the model GST
law. However, intra-state self-supplies are not taxable subject to not opting for registration as
business vertical.

24. An individual buys a car for personal use and after a year sells it to a car dealer. Will the
transaction be a supply in terms of CGST/SGST Act?

No, because supply is not made by the individual in the course or furtherance of business.
Further, no input tax credit was admissible on such car at the time of its acquisition as it was
meant for non-business use.

25. What is time of supply?

The time of supply fixes the point when the liability to charge GST arises. It also indicates when a
supply is deemed to have been made. The CGST/SGST Act provides separate time of supply for
goods and services.

26. When does the liability to pay GST arise in respect of supply of goods and Services?

Section12 & 13 of the CGST/SGST Act provides for time of supply of goods. The time of supply of
goods shall be the earlier of the following namely,
(i) the date of issue of invoice by the supplier or the last date on which he is required under
Section 31, to issue the invoice with respect to the supply; or
(ii) the date on which the supplier receives the payment with respect to the supply

27. What is the time of supply of goods in case of tax payable under reverse charge?

The time of supply will be the earliest of the following dates:

a) date of receipt of goods; or

 b) date on which payment is made; or

c) the date immediately following 30 days from the date of issue of invoice by the supplier.

28. What is the time of supply of service in case of tax payable under reverse charge?

The time of supply will be the earlier of the following dates:

a) date on which payment is made; or

b) the date immediately following sixty days from the date of issue of invoice by the supplier.

29. What is the value of taxable supply to be adopted for the levy of GST?

The value of taxable supply of goods and services shall ordinarily be ‘the transaction value’
which is the price paid or payable, when the parties are not related and price is the sole
consideration.

30. What is transaction value?

Transaction value refers to the price actually paid or payable for the supply of goods and or
services where the supplier and the recipient are not related and price is the sole consideration
for the supply. It includes any amount which the supplier is liable to pay but which has been
incurred by the recipient of the supply.

31. Can a person without GST registration claim ITC and collect tax?

No, a person without GST registration can neither collect GST from his customers nor can claim
any input tax credit of GST paid by him.

32. If a person is operating in different states, with the same PAN number, whether he can
operate with a single Registration?

No. Every person who is liable to take a Registration will have to get registered separately for
each of the States where he has a business operation and is liable to pay GST.

33. What is job work?

Job work means undertaking any treatment or process by a person on goods belonging to
another registered taxable person. The person who is treating or processing the goods
belonging to other person is called ‘job worker’ and the person to whom the goods belongs is
called ‘principal’.
34. Whether goods sent by a taxable person to a job worker will be treated as supply and liable to
GST?

It will be treated as a supply as supply includes all forms of supply such as sale, transfer, etc.
However, the registered taxable person (the principal), under intimation and subject to such
conditions as may be prescribed send any inputs and/or capital goods, without payment of tax,
to a job worker for job work and from there subsequently to another job worker(s) and shall
either bring back such inputs/capital goods after completion of job work or otherwise within 1
year/3years of their being sent out or supply such inputs/capital goods after completion of job
work or otherwise within 1 year / 3 years of their being sent out, from the place of business of a
job worker on payment of tax within India or with or without payment of tax for export.

35. Is a job worker required to take registration?

Yes, as job work is a service, the job worker would be required to obtain registration if his
aggregate turnover exceeds the prescribed threshold.

36. What is input tax?

Input tax means the central tax (CGST), State tax (SGST), integrated tax (IGST) or Union territory
tax (UTGST) charged on supply of goods or services or both made to a registered person. It also
includes tax paid on reverse charge basis and integrated tax goods and services tax charged on
import of goods. It does not include tax paid under composition levy.

37. Does input tax includes tax (CGST/IGST/SGST) paid on input goods, input services and capital
goods?

Yes, it includes taxes paid on input goods, input services and capital goods. Credit of tax paid on
capital goods is permitted to be availed in one instalment.

38. What are the conditions necessary for obtaining ITC?

Following four conditions are to be satisfied by the registered taxable person for obtaining ITC:

(a) he is in possession of tax invoice or debit note or such other tax paying documents as
may be prescribed;

(b) he has received the goods or services or both;

(c) the supplier has actually paid the tax charged in respect of the supply to the
government; and

(d) he has furnished the return under section 39.

39. Where the goods against an invoice are received in lots or instalments, how will a registered
person be entitled to ITC?

The registered person shall be entitled to the credit only upon receipt of the last lot or
installment.

40. Can a person take input tax credit without payment of consideration for the supply along with
tax to the supplier?

Yes, the recipient can take ITC. But he is required to pay the consideration along with tax within
180 days from the date of issue of invoice. This condition is not applicable where tax is payable
on reverse charge basis.

41. What would happen of the ITC taken by the registered person if he has not paid the
consideration along with tax within 180 days from the date of issue of invoice?

The amount of ITC would be added to output tax liability of the person. He would also be
required to pay interest. However, he can take ITC again on payment of consideration and tax.

42. Who will get the ITC where goods have been delivered to a person other than taxable person
(‘bill to’- ‘ship to ’scenarios)?

It would be deemed that the registered person has received the goods when the goods have
been delivered to a third party on the direction of such taxable person. So ITC will be available
to the person on whose order the goods are delivered to third person.

43. A taxable person is in the business of information technology. He buys a motor vehicle for use
of his Executive Directors. Can he avail the ITC in respect of GST paid on purchase of such
motor vehicle?

No. ITC on motor vehicles can be availed only if the taxable person is in the business of transport
of passengers or goods or is providing the services of imparting training on motor vehicles.

44. Sometimes goods are destroyed or lost due to various reasons? Can a person take ITC to the
extent of such goods?

No, a person cannot take ITC with respect to goods lost, stolen, destroyed or written off. In
addition, ITC with respect of goods given as gifts or free samples are also not allowed.
45. Is input tax credit allowed only after matching?

No, input tax credit is allowed provisionally for two months. The supply details are matched by
the system and discrepancies are communicated to concerned supplier and recipient. In case
mismatch continues, the ITC taken would be reversed automatically.

46. How can taxpayers file their returns?

As documented and clarified on official GST portal http://www.gstn.org/ecosystem/ ; Taxpayers

would upload their returns through GSPs onto GSTN server. Infor LN will provide the necessary
data to be accessed by GSP’s for filing of the Returns through GSP’s.

47. What is GSTN?

Goods and Services Tax Network (GSTN) is a not-for-profit, non-government company promoted
jointly by the Central and State Governments, which will provide shared IT infrastructure and
services to both central and state governments including tax payers and other stakeholders. The
Frontend services of Registration, Returns, Payments, etc. to all taxpayers will be provided by
GSTN. It will be the interface between the government and the taxpayers.

48. What services will be rendered by GSTN?

GSTN will render the following services through the Common GST Portal:
(a) Registration (including existing taxpayer migration, a process which began on 8th Nov 2016);
(b) Payment management including payment Gateways and integration with banking systems;
(c) Return filing and processing;
(d) Taxpayer management, including account management, notifications, information, and
status tracking;
(e) Tax authority account and ledger Management;
(f) Computation of settlement (including IGST Settlement) between the Centre and States;
Clearing house for IGST;
(g) Processing and reconciliation of GST on import and integration with EDI systems of Customs;
(h) MIS including need based information and business intelligence;
(i) Maintenance of interfaces between the Common GST Portal and tax administration systems;
(j) Provide training to stakeholders;
(k) Provide Analytics and Business Intelligence to tax authorities; and
(l) Carry out research and study best practices.

49. What is GSP (GST Suvidha Provider)

GST System will provide a GST portal for taxpayers to access the GST System and do all the GST
compliance activities. But there will be wide variety of tax payers (SME, Large Enterprise, Micro
 Enterprise etc.) which may require different kind of facilities like converting their purchase/sales
register data in GST compliant format, Integration of their Accounting Packages/ERP with GST
System etc., various kind of dashboards to view Matched/Mismatched ITC claims, Tax liability,
Filing status etc. As invoice level filing is required, so large organizations may require an
automated way to interact with GST system as it may be practically impossible for them to
upload large number of invoices through a web portal. So an eco- system is required, which can
help such taxpayers in GST compliance.
All above reasons require an eco-system of third party service providers, who have access to
GST System and capability to develop such applications. These service providers have been
given a generic name, GST Suvidha Providers or GSP.

50. Will GSTN provide tools for uploading invoice data on GST portal?

Yes, GSTN will provide spreadsheet like tools (such as Microsoft Excel), free of cost, to taxpayers
to enable them to compile invoice data in the same and generate files which can then be
uploaded on GST portal. This will be an offline tool which can be used to input/capture invoice
data without being online and then generate final files in compatible format for uploading to
GST portal