Introduction to GST

• GST is a destination based tax and levied at a single

point at the time of consumption of goods and services
by the ultimate consumer.
• GST subsumes a large number of central and state
taxes into a single tax.
• First it was referred in 2006 in the Budget speech of
the FM that GST will be introduced in India from 1 st
April 2010 but postponed year by year.
• Finally implemented from 1st July 2017 by Sh. Narendra
Modi, Hon’ble PM of India.
• The term GST is defined in Article 366(12A) to mean
“any tax on supply of goods or services or both except
taxes on supply of the alcoholic liquor for human
consumption.”
• Acc. To Section 2(52) of the CGST Act “Goods” means
every kind of movable property other than money
and securities but includes actionable claims,
growing crops, grass and other things attached to or
forming part of land which are agreed to be served
before supply or under a contract of supply.
• Acc. To section 2(102) of the CGST Act “Services”
means anything other than goods, money and
securities but includes activity relating to the use of
money or its conversion by cash or by any other
mode, from one form currency or denomination, to
another form.( securities)
• In general, the reference of GST known as centralized
indirect Tax in which tax is to be collected by centre and
then it is to be distributed between centre and States.
This was the standard format of Goods and service Tax.
• But In our country states have also right to collect indirect
taxes on sale of goods hence this “single centralized” form
of GST was rejected by the states at the initial stage itself.
• Hence a compromise is made on Dual GST in this respect
in which both states and centre will impose and collect
tax on a single transaction of sale and service in the form
of State Goods and service tax “SGST” and Central Goods
and service tax “CGST” .
 What is an HSN code
• HSN stands for “Harmonized system of Nomenclature” which
was developed by the World Customs Organization (WCO).
• WCO’s main objective for introducing HSN codes is to classify
all the goods in a systematic manner.
• It clears the confusion and helps in domestic and international
trade between the countries.
• More than 20,000 goods are traded using HSN codes across
the world between the countries.
• More than 90% of world trade is done WCO using the revised
HSN codes.
• India also included in the community by accepting the HSN
codes procedure.
Note: SAC is used for services which is abbreviated as “Services
Accounting code”.
 Contd....
Covers almost all the goods which are in the trade.
(HSN Code: 39 08 90 10)
• The first two digits (39) indicates the chapter under HSN
codes.
• The next two digits (08) indicates the headings under
chapters.
• Next 2 digits (90) indicates the sub-headings, 6 digits HSN
code is accepted worldwide.
• The next 2 digits (10) sub-classify the product tariff
heading during import and export of supply.
The use of HSN codes allows you to save time and money during
GST filing, by filling the HSN codes it allows automation in
GSTR.
 Contd....
Under the HSN module the classification of
the goods is divided into
• 21 Sections  
• 99 chapters
• 1244 headings
• 5244 subheadings
 How does HSN code work?
The use of HSN codes are mainly for dealers and trades. They
must adopt 2 digits, 4 digits, and 8 digits HSN codes
depending upon the following criteria.
• If the business turnover is less than Rs.1.5 crores then there
is no need of adopting the HSN codes.
• If the business turnover is between Rs.1.5 Crs to Rs. 5 Crs
then, they must adopt 2 digit HSN codes for the business
trades.
• If the business turnover is above Rs.5 Crs then, they must
adopt 4 digit HSN codes for the business.
• In the case of Import and export dealings and international
trades, one must adopt 8 digit HSN codes for the business
trades.
 What is GSTIN?
• For any dealer registered under state VAT law, a unique TIN number
is issued by the state tax authorities.
• A service provider is assigned a service tax registration number by
the Central Board of Excise and Custom (CBEC).
• Going forward, in the new GST regime, all these taxpayers will get
consolidated into one single platform for compliance and
administration purposes and will be assigned registration under a
single authority.
• Government has set up GSTIN–a special purpose vehicle to provide
the IT infrastructure necessary to support GST digitally.
• All of these businesses will be assigned a unique Goods and
Services Tax Identification Number (GSTIN).
 Proposed GST Identification Number
(GSTIN)
Each taxpayer will be allotted a state-wise PAN based 15 digit Goods and Services
Taxpayer Identification Number (GSTIN).
• The first two digits of this number will represent the state code as per Indian
Census 2011
• The next ten digits will be the PAN number of the taxpayer
• The thirteenth digit will be assigned based on the number of registration within a
state
• The fourteenth digit will be Z by default
• The last digit will be for check code
 SUPPLY UNDER GST
• A Taxable Event In A Law Is The Event, Happening Of
Which Results In Imposition Of Tax.
• Taxable Event Is That Event Which On Its Occurrence
Activates Tax Liability.
• “Supply” Of Goods or services or both is taxable
event in GST.
• The term “Supply” is defined in CGST Act, 2017 and
the same meaning is applicable under IGST Act and
UTGST Act/SGST Act.
• GST is applicable only if there is supply of
goods/services.
 COMPOSITE SUPPLY
• Composite supply means a supply made by a taxable person
to a recipient consisting of two or more taxable supplies of
goods or services or both, or any combination thereof, which
are naturally bundled and supplied in conjunction with each
other in the ordinary course of business, one of which is
a principal supply.
• For e.g. Machinery (supply of goods) provided along with
warranty and maintenance contract (supply of service). Here,
there are two or more supplies, naturally bundled and supply
of machine is the principal supply.
 MIXED SUPPLY
• Mixed supply means two or more individual supplies
of goods or services, or any combination thereof,
made in conjunction with each other by a taxable
person for a single price where such supply does not
constitute a composite supply.

• For example, supply of stationery pack containing

crayons, paints, brushes, drawing book etc. supplied
at a single price by the seller together as a package is
a mixed supply
 GOODS IN GST
• It is defined by Section 2(52).
• “Goods” means every kind of movable
property.
• It doesn’t include money and securities.
• It includes growing crops, grass and things
attached to the land which are agreed to be
severed before supply or under a contract of
supply.
 SERVICES UNDER GST
• It is defined by Section 2(102).
• “Services” means anything other than goods, money,
securities. (includes facilitating or arranging
transactions in securities.
• Transactions in Money: Transactions only in money
do not constitute service and not chargeable to GST.
(Deposit and withdrawal of principal amount,
advancing and repayment of principal sum on loan to
anybody.)
• Promissory note is not subject to GST.
 Contd….
• If a separate consideration is charged for the
above activities, the consideration separately
charged will be subject to GST. (Foreign
Exchange)
• “Securities”- Securities are neither Goods nor
Services. Consideration received for transfer
of “securities” is not subject to GST. (sale,
purchase, redemption or acquisition of
securities are not subject to GST but
Brokerage charges are subject to GST)
 LEVY AND CHARGE OF GST
• Chapter III of the CGST Act, 2017 and IGST, 2017
contain provisions for Levy and Collection of GST.
• Section 9 of CGST Act and Section 5 of IGST Act are
the charging sections and provide the basis of levying
of GST.
• Section 9 of the CGST Act is the charging section in
respect of intra-state supply of goods or services or
both.
• Section 5 of the IGST Act is the charging section in
respect of inter-state supply of goods or services or
both.
 Contd….
• Section 9 of CGST and section 5 of IGST Act contain similar
provisions.
• GST RATE- IGST is charged at such rates which are notified by
the central government (on the recommendation of GST
council). However, such rate cannot be more than 40%.
• Alcoholic liquor excluded- All inter-state supplies covered.
However, GST is not applicable on the supply of alcoholic
liquor for human consumption.
products-
• GST presently not applicable on petroleum
Inter-state supplies of petroleum crude, high
speed diesel, motor spirit (commonly known
as petrol), natural gas and aviation turbine
LEVY AND CHARGE OF GST
 LEVY AND CHARGE OF GST
• 1) Normal or forward charge U/S 9(1) and 9(2)
of CGST Act, 2017.
 LEVY AND CHARGE OF GST
1) Normal or forward charge U/S 9(1) and 9(2) of CGST
Act, 2017.
• It is the supplier of goods or services or both. Who is
liable to pay CGST to Govt., thus supplier is the
taxable person.
• However, GST is not applicable on the supply of
Alcoholic liquor for human consumption.
• GST presently not applicable on Petroleum
Products- Inter-state supplies of petroleum crude,
high speed diesel, motor spirit (commonly known as
petrol), natural gas and aviation turbine fuel, are
presently not covered by GST.
 Contd….
• GST RATE- Analyzing the phrase “at such rates,
not exceeding 20%” under section 9(1)
provides that CGST rate can be raised up to
maximum of 20% as per the Act. Max. rate of
GST may be increased upto 40% i.e.
CGST@20% and SGST@ 20.
• Section 2(107) defines “taxable person” as a
person who is registered or liable to be
registered under section 22 or section 24 of
CGST Act, 2017.
 LEVY AND CHARGE OF GST(Cont..)
• What is Inter-state supply
Case 1 Where the location of supplier of G/S and the place
of supply of G/S are in 2 different states.
Case 2 Where the location of supplier of G/S and the place
Supply within India of supply of G/S are in 2 different UTs.

Case 3 Where the location of supplier of G/S and the place

of supply of G/S are in a state and a UT.
Import of G/S Case 4 Supply of G/S imported into India.

Export of G/S Case 5 Where the supplier of G/S is located in India and
the place of is outside India.

Supply to SEZ Case 6 Supply of G/S to (or by) a Special Economic Zone
(SEZ) developer or SEZ unit.

Any other Case 7 Supply of G/S In the taxable territory (not being
intra-state supply) not covered in above cases.
 How GST is Levied in the case of
INTRA-STATE SUPPLY
• Dual GST- Intra-state supply of goods/services is chargeable
simultaneously under the following two Acts-
1. Central GST Act (CGST Act) Section 9 of CGST Act
2. State GST Act (CGST Act) or Union Territory Section 9 of SGST Act
GST Act (UTGST Act) Section 7 of UTGST Act

• For SGST provision is same (same rate of GST is application as CGST)

• UTSGT Act has been passed for UT which do not have legislature.
– These UTs are Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli,
Daman and Diu, Chandigarh.
– Delhi and Puducherry are not covered by the list of UT for this purpose. They have their
own legislatures and they have passed their own SGST Acts.
 Reverse Charge mechanism (RCM) as per
Section 2(98) of CGST, 2017
• It is supplier of goods or services or both who is liable to pay
CGST to Govt.
• However, in respect of notified category of supply of goods or
services or both, liability to pay tax shifts from supplier of
goods or services or both to the receiver of goods or services
or both.
• Liability to pay CGST to the Govt. gets reversed from supplier
to recipient this is why It is called reverse charge, thus,
recipient is the taxable person.
• (under sections 9(3) or 9(4) of the CGST Act)
• (under sections 5(3) or 5(4) of the IGST Act)
 Reverse Charge mechanism (RCM) as per
Section 2(98) of CGST, 2017
a) Specified category of supplier of goods or services or both
(Sec.9(3)): grants power to the Central Govt. to specify
categories of supply of goods or services or both, the tax on
which will be paid to Government by recipient of goods or
services or both.
• Registration is mandatory for a person required to pay tax
under reverse charge under GST by virtue of section 24 (iii) of
CGST Act, 2017.
b) Supply of Specified categories goods or services or both by an
unregistered person to registered person (Sec.9(4)): covers
situations where taxable supply of specified categories of
goods or services or both is made by any unregistered person
to a registered person.
 Electronic Commerce Operator (ECO):
Section 9(5) o CGST Act, 2017
a) Where ECO does not have a physical presence in the taxable
territory, any person representing such ECO for any purpose
in the taxable territory shall be liable to pay tax.
b) Where an ECO does not have a physical presence in the
taxable territory and also he does not have a representative
in the said territory, such ECO shall appoint a person in the
taxable territory for the purpose of paying tax and such
person shall be liable to pay tax.
a) Transportation of passengers by radio taxi, motor cycle etc.,
b) Accommodation in hotels, guest houses etc.,
c) Housekeeping like plumbing, carpentering etc.
 Some Important Terms
• Person- includes the following-
– An Individual
– An Hindu Undivided Family
– An company
– An Firm/LLP
– An AOP/BOI, whether incorporated or not, in India or
outside India;
– Any Corporation established by or under any Central
Act, State Act or Provisional Act or a Government
company;
 Contd….
– Any body corporate incorporated by or under laws
of country outside India;
– A Co-operative Society registered under any law
relating to co-operative societies
– A local authority
– Central government or State Government
– Society
– Trust
– Every Artificial Juridical person, not falling within
any of the above.
 Contd….
• Taxable person: means a person who is registered (or liable to be
registered under section 22 or 24).
• Every “supplier” whose aggregate turnover in a FY exceeds Rs. 20
lakh (Rs. 10 lakh in some cases) is required to register under GST
in the state (UT) from where he supplies goods or services or
both.
• Aggregate Turnover: means the aggregate value of:
– All taxable supplies pertaining to intra-State/inter-State
activities;
– Exempt supplies
– Exports of goods or services or both.
• Small taxable person: A person having “aggregate turnover” of
not exceeding Rs. 20 lakh is EXEMPT from GST (this limit is Rs. 10
Lakh for Manipur, Mizoram, Nagaland and Tripura).
 Composition Levy
The composition levy is an alternative method of levy
of tax designed for small taxpayers whose turnover is
up to Rs. 1.5 cr. The objective of composition scheme
is to bring simplicity and to reduce the compliance
cost for the small taxpayers. CBIC has notified the
increase to the threshold limit from Rs 1.0 Crore to
Rs. 1.5 Crores.
In case of these states the limit is now Rs 75* lakh. i.e.
Arunachal Pradesh, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, and Uttrakhand.
Who can opt for Composition Scheme
• An eligible registered person, whose aggregate
turnover in the preceding financial year did not exceed
Rs. 1.50 cr. May opt for Composition levy to pay U/S
10(1) of CGST Act. An amount of tax as prescribed
under rule 7 of the CGST Rules, 2017.
• Further, it provides that the said aggregate turnover in
the preceding financial year shall be Rs. 75 Lakh in the
case of an eligible registered person, registered under
section 25 of the CGST Act in the states(specified in
the previous slide)
Who cannot opt for Composition Scheme
• The following people cannot opt for the scheme-
Manufacturer of ice cream, pan masala, or tobacco
• A person making inter-state supplies
• A casual taxable person or a non-resident taxable
person
• Businesses which supply goods through an e-
commerce operator

• https://cleartax.in/s/gst-composition-scheme
• The taxpayer has to mention the words
‘composition taxable person’ on every notice or
signboard displayed prominently at their place
of business.
• The taxpayer has to mention the words
‘composition taxable person’ on every bill of
supply issued by him.
• As per the CGST (Amendment) Act, 2018, a
manufacturer or trader can now also supply
services to an extent of ten percent of
turnover, or Rs.5 lakhs, whichever is higher.
This amendment will be applicable from the 1st
of Feb, 2019.
 Registration - GST
• The provision of GST registration has been
prescribed under chapter VI of the CGST Act,
2017.

• And Section 22 to Section 30 of the CGST Act,

deals with the registration by the every
supplier of goods and services.
 Advantages of Registration
1. Registration is a basic requirement to run the network of GST.
2. Registration is an Authority available to the Registered Person
to collect tax on behalf of the Government.
3. Registration is a source by which the Registered Person can
claim input Tax Credit.
4. Seamless flow of Input Tax Credit among the Registered
Persons in national level has happened due to this
Registration.
5. Registration is a tool for the Government. By this Tool the
Government analysis the economy through data available in
accounts of Registered Persons.
 A. Liability to Register
1. According to Section to 22 (1) of the CGST Act, 2017
• If the Supplier makes a taxable supply from his State or Union territory
and his aggregate turnover in a financial year exceeds Rs. Twenty lakhs,
he shall be liable to be registered.
• Section 2 (6) of the Act for Aggregate Turnover – “aggregate turnover”
means the aggregate value of all taxable supplies (excluding the value of
inward supplies on which tax is payable by a person on reverse charge
basis), exempt supplies, exports of goods or services or both and inter-
State supplies of persons having the same Permanent Account Number, to
be computed on all India basis but excludes central tax, State tax, Union
territory tax, integrated tax and cess.
• Thus Aggregate Turnover is a total of turnover of all branches all over of
India of the Supplier having same PAN.
 Contd….
2. According to Section to 22 (3) of the CGST Act, 2017 – Where
a business carried on by a taxable person registered under this Act is
transferred, whether on account of succession or otherwise, to another
person as a going concern, the transferee or the successor, as the case
may be, shall be liable to be registered with effect from the date of such
transfer or succession.
3. According to Section to 22 (4) of the CGST Act, 2017 : In a case
of transfer pursuant to sanction of a scheme or an arrangement for
amalgamation or, as the case may be, demerger of two or more
companies pursuant to an order of a High Court, Tribunal or otherwise,
the transferee shall be liable to be registered, with effect from the date on
which the Registrar of Companies issues a certificate of incorporation
giving effect to such order of the High Court or Tribunal.
 Contd….
4. Compulsory registration in certain cases according to Sec. 24
• The following categories of persons shall be required to be
registered under this Act :
(i) persons making any inter-State taxable supply;
(ii) casual taxable persons making taxable supply;
(iii) persons who are required to pay tax under reverse charge;
(iv) persons who are required to pay tax under sub-section (5) of
section 9;
(v) non-resident taxable persons making taxable supply;
(vi) persons who are required to deduct tax under section 51,
whether or not separately registered under this Act;
 Contd….
(vii) persons who make taxable supply of goods or services or
both on behalf of other taxable persons whether as an agent*
or otherwise;
(viii) Input Service Distributor, whether or not separately
registered under this Act;
(ix) persons who supply goods or services or both, other than
supplies specified under sub-section (5) of section 9, through
such electronic commerce operator who is required to collect
tax at source under section 52;
(x) every electronic commerce operator 8[who is required to
collect tax at source under section 52];
 Contd….
(xi) every person supplying online information and data
base access or retrieval services from a place outside
India to a person in India, other than a registered
person; and
(xii) such other person or class of persons as may be
notified by the Government on the
recommendations of the Council.
Agent* – See Circular 57/2018-GST and Circular
73/2018-GST for clarification in regard of Principal-
Agent relationship and Del-Credere Agent.
B. Persons not liable for
Registration – Section 23
1. According to section 23 (1) – The following persons
shall not be liable to registration, namely:—
(a) any person engaged exclusively in the business of
supplying goods or services or both that are not
liable to tax or wholly exempt from tax under this Act
or under the Integrated Goods and Services Tax Act;
(b) an agriculturist, to the extent of supply of produce
out of cultivation of land.
C. Procedure for Registration (Sec.25)
1. MAXIMUM TIME ALLOWED FOR REGISTRATION( Section 25
(1)) –
1. Persons liable to be registered under section 22 or section 24-
shall apply for registration in every such State or UT in w3hich
he is so Liable within thirty days from the date on which he
becomes liable to registration in such manner and subject to
such conditions as may be prescribed.
2. Provision to Section 25(1) – A Casual Taxable Persons or Non-
Resident Taxable Person shall apply for registration at least
five days prior to the commencement of business.
3. Provided further that a person having a unit, as defined in
Special economic zones Act, 2005, in a SEZ or being SEZ
developer shall have to apply for registration, as distinct from
 2. STEPS OF REGISTRATION
STEP 1: Rule 8 (1) of the CGST rules states that:
i. Every person, who is liable to be registered under section 25(1) {other
than • A non-resident taxable person.
• A person required to deduct tax at source under section 51,
• A person required to collect tax at source under section 52 and
• A person supplying online information and database access or recipient
referred to in section 14 of the IGST Act 2017 (13 of 2017) }
ii. Every person seeking registration under section 25(3) shall, before
applying for registration, declare his
• Permanent Account Number
• Mobile number
• E-mail address
• State or Union Territory
 Contd….
STEP 2: Rule 8 (2) states that:
a) The PAN shall be validated online by the common portal
from the database maintained by the CBDT (Central Board
Of Direct Taxes)
b) The mobile number declared shall be verified through an
OTP.
c) The e-mail address declared shall be verified through a
separate OTP.

STEP 3: Rule 8 (3) states that:

• After successful verification of PAN, mobile number and E
Mail ID, temporary reference number (TRN) is issued.
 Contd….
STEP 4: Rule 8 (4) states that:
• Using TRN the applicant shall electronically submit an
application in Part B of FORM GST REG-01, duly
signed or verified through electronic verification
code.
STEP 5: Rule 8 (5) states that:
• After successful submission of Part B an
acknowledgement shall be issued electronically to
the applicant in FORM GST REG-02.
 Contd….
STEP 6: Verification of the Applicable and Approval (Rule 9):
a) Rule 9(1): application is forwarded to the proper officer with
accompanying documents in the same order, approve the
grant of registration to the applicant within a period of 3
days from the date of submission of the application.
b) Rule 9(2): If the application submitted under rule 8 is found
to be deficient or where the proper officer requires any
clarification with regard to any information provided in the
application or documents furnished therewith, he may issue
a notice to the applicant electronically in FORM GST REG-03
within a period of three working days from the date of
submission of the application and the applicant shall furnish
such clarification, information or documents electronically,
in FORM GST REG-04, within a period of seven working days
 Contd….
c) Rule 9(3): Where the proper officer is satisfied with the
clarification, information or documents furnished by the
applicant, he may approve the grant of registration to the
applicant within a period of seven working days from the
date of the receipt of such clarification or information or
documents.
d) Rule 9(4): Where no reply is furnished by the applicant in
response to the notice issued under sub-rule (2) or where
the proper officer is not satisfied with the clarification,
information or documents furnished, he shall, for reasons to
be recorded in writing, reject such application and inform
the applicant electronically in FORM GST REG-05.
 Contd….
e) Rule 9(5): If the proper officer fails to take any
action, —
(a) within a period of three working days from the date
of submission of the application; or
(b) within a period of seven working days from the date
of the receipt of the clarification, information or
documents furnished by the applicant
under sub-rule (2), the application for grant of
registration shall be deemed to have been approved.
 STEP 7: Issue of Registration
Certificate (Rule 10)
a) Rule 10 (1): where the application for grant of registration
has been approved under rule 9, a certificate of registration
in FORM GST REG-06 showing the principal place of
business and additional place or place of business shall be
made available to the applicant on the common portal and
GSTIN shall be assigned.

b) Rule 10 (2): The registration shall be effective from the date

on which the person becomes liable to registration where
the application for registration has been submitted within a
period of thirty days from such date.
 Contd….
c) Rule 10 (3): Where an application for registration has been
submitted by the applicant after the expiry of thirty days
from the date of his becoming liable to registration, the
effective date of registration shall be the date of the grant of
registration under rule 9(1) or 9(2) or 9(5).
d) Rule 10(4): Every Certificate of Registration shall be duly
signed or verified through electronic verification code by the
proper officer under the Act.
e) Rule 10 (5): Where the registration has been granted under
sub-rule (5) of rule 9, the applicant shall be communicated
the registration number, and the certificate of registration
under sub-rule (1), duly signed or verified through electronic
verification code, shall be made available to him on the
common portal, within a period of three days after the
 Payment of GST
• https://www.cbic.gov.in/resources//htdocs-cbec/gst/
Electronic%20Cash%20Ledgers-050819.pdf;jsessionid
=778F661943BA8FE2A95EAA52D63D36D9
• Electronic cash ledger
• Electronic Credit ledger
• Electronic Liability Ledger
– https://integrabooks.co/electronic-ledgers-under-gst/