INTRODUCTION - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

CHAPTER 1 OVERVIW OF GST 1. INTRODUCTION 1.1 This Chapter provides the scope and extent of GST, for better understanding of the tax structure under the GST law. The topics covered in this Chapter provide the general idea of the taxation policy and the authority of law, which will aid in the daily working of departmental officers. 1.2 The provisions of CGST Act, 2017 and CGST Rules, 2017, relevant to this Chapter are as under Sr. No. Section/Rule Provision pertaining to 1 Section 7 Scope of supply 2 Section 9 Levy of CGST 3 Section 9(3) and 9(4) Reverse Charge Levy 4 Section 10 Composition Levy 5 Rule 3 Intimation of Composition levy 6 Rule 4 Effective date for Composition levy 7 Rule 5 Conditions and restrictions for Composition levy 8 Rule 6 Validity of Composition levy 9 Rule 7 Rate of tax of the Composition levy 10 Section 11 11A Power of Government to exempt 11 Section 12 Time of Supply of goods 12 Section 13 Time of Supply of services 13 Section 15 Valuation of supply of goods and services 14 Rule 27 Value of supply of goods where the consideration is not wholly in money 15 Rule 28 Valuation of supply between related and distinct persons 16 Rule 29 Value of supply of goods made or received through an agent 17 Rule 30 Valuation of supply on cost basis 18 Rule 31 Residual method of valuation 19 Rule 31A Value of supply in case of lottery, betting, gambling and horse racing 20 Rule 32 Determination of value in certain circumstances 21 Rule 32A Value of supply of services where Kerala Flood Cess is Applicable 22 Rule 33 Value of supply of services in case of Pure Agent 23 Rule 34 Rate of exchange of currency, other than Indian Rupees, for determination of value 24 Rule 35 Value of supply inclusive of Integrated tax, Central tax, State tax, Union Territory tax 25 Section 31 Tax Invoice 26 Rule 46 Tax Invoice 27 Rule 46A Invoice-cum-bill of supply 28 Rule 47 Time limit for issuing tax invoice 29 Rule 48 Manner of issuing invoice 30 Rule 50 Receipt Voucher 31 Rule 51 Refund Voucher 32 Rule 52 Payment Voucher 33 Rule 53 Revised tax invoice and credit and debit notes 34 Rule 54 Tax invoice in special cases 35 Rule 55 Transportation of goods without issue of invoice 36 Rule 55A Tax invoice or bill of supply to accompany transport of goods 37 Section 16 Input Tax Credit 38 Rule 36 Documentary requirements and conditions for claiming input tax credit 39 Rule 37 Reversal of input tax credit in the case of non-payment of consideration 40 Rule 38 Claim of credit by a banking company or a financial institution 41 Rule 40 Manner of claiming input tax credit in special circumstances 42 Rule 41 Transfer of credit on sale, merger, amalgamation, lease or transfer of a business 43 Rule 41A Transfer of credit on obtaining separate registration for multiple places of business within a State or Union Territory 44 Section 17 Apportionment of credit and blocked credits 45 Rule 42 Manner of determination of input tax credit in respect of inputs and input services and reversal thereof 46 Rule 43 Manner of determination of input tax credit in respect of capital goods and reversal thereof 47 Section 18 Availability of credit in special circumstances 48 Rule 44 Manner of reversal of credit under special circumstances 49 Rule 44A Manner of reversal of credit of Additional duty of Customs in respect of Gold dore bar 50 Section 19 Taking input tax credit in respect of inputs and capital goods sent for job work 51 Rule 45 Conditions and restrictions in respect of inputs and capital goods sent to the job worker 52 Section 20 Manner of distribution of Input Tax Credit by Input Service Distributor (ISD) 53 Section 21 Manner of recovery of credit distributed in excess 54 Rule 39 Procedure for distribution of input tax credit by Input Service Distributor 55 Section 49 Payment of tax, interest, penalty, etc. 56 Rule 85 Electronic Liability Register 57 Rule 86 Electronic Credit Ledger 58 Rule 86A Conditions of use of amount available in electronic credit ledger 59 Rule 87 Electronic Cash Ledger 60 Rule 88 Identification number for each transaction 61 Rule 88A Order of utilization of input tax credit 62 Section 51 Tax Deducted at Source (TDS) under GST 63 Section 52 Tax Collected at Source (TCS) under GST 64 Rule 138 Information to be furnished prior to commencement of movement of goods and generation of e-way bill 65 Rule 138A Documents and devices to be carried by a person-in-charge of a conveyance 66 Rule 138B Verification of documents and conveyances 67 Rule 138C Inspection and verification of goods 68 Rule 138D Facility for uploading information regarding detention of vehicle 69 Rule 138E Restriction on furnishing of information in Part A of FORM GST EWB-01 70 Section 6 Cross Empowerment 1.3 The relevant Provisions, Forms, Circulars, Notification, etc., wherever mentioned, can be seen by clicking ctrl+click on the respective hyperlink, which will open the https://taxinformation.cbic.gov.in page. On clicking GST option on the menu bar, Information-GST page will appear, below which the option of Act, Rules, Forms, Notification, etc. is provided. The required page of the relevant Provision/Forms/Circular/Notification can be seen by clicking the appropriate option. 1.4 Goods and Services Tax (hereinafter referred to as GST ), introduced in India with effect from 01.07.2017, is a comprehensive destination based indirect Value Added Tax on supply of goods as well as services. 1.5 Prior to introduction of GST, both Centre and States were empowered to impose indirect taxes on goods. Centre was imposing Central Excise duty on manufacture of goods and States were imposing Sales tax/VAT on sale of goods. Besides goods, services were also being subjected to Service tax, which only Centre could levy. 1.6 The idea of one tax for entire nation was conceptualized and an Empowered Committee of State Finance Ministers was formed to design the road map for GST. The Empowered Committee recommended dual GST model for the country, under which GST had two components, viz. the Central GST (CGST) to be levied and collected by Centre and State GST (SGST) to be levied and collected by the respective States, subsuming most of the indirect taxes being levied. For Inter-State transactions (supplies from one State to another State) an Integrated GST (IGST) to be levied by Centre was recommended. 1.7 GST being a uniform tax system for the entire country, required constitutional amendment. As such Bill in this regard was introduced in both the Houses of Parliament. After the Bills were passed by both the Houses, the Bill received assent from the President of India on 08.09.2016 and also notified on the same day as The Constitution (One Hundred and First Amendment) Act, 2016. 1.8 The structure of GST is such that the Central Government and the State Governments have framed GST laws together. Some of the features include - (a) Uniform law across the country: The GST law is based on the Model GST law drafted by the Centre and the States. Therefore, the law is more or less identical throughout the country. (b) Common Procedures: The procedures and formats as prescribed by the CGST and the SGST are identical. (c) Common Compliance Mechanism: GSTN, promoted jointly by the Central and State Governments, is the common compliance portal for GST. 1.9 The aim of GST was tax integration, tax simplification, promotion of Ease of Doing Business and to instill the feeling of One nation, One tax . 1.10 A new Article 279A was inserted in the Constitution of India, which prescribes constitution of a GST Council for making recommendations on the governance of entire law relating to GST Act. 1.11 Broad meaning of the terms used frequently in this Manual is as under Central Tax means tax levied under the CGST Act, 2017. State Tax means tax levied under the SGST Act, 2017. Integrated Tax means tax levied under the IGST Act, 2017. Union Territory Tax means tax levied under the UTGST Act,2017. Assessment means determination of tax liability under the CGST Act, 2017. Common Portal means the common Goods and Services Tax Electronic Portal. 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 taxable supply will be a principal supply (predominant element). Consideration means any payment made or to be made by the recipient or any other person, either in money or otherwise for the supply of goods and/or services and the monetary value of any act or forbearance for the supply of goods and/or services. exempt supply means supply of any goods and/or services which attracts nil rate of tax or wholly exempt or non-taxable. Input means any goods other than capital goods used or intended to be used by the supplier in the course of furtherance of business. Input service means any service used or intended to be used by the supplier in the course of furtherance of business. Input Tax means the Central Tax, State Tax, Integrated Tax or Union Territory Tax charged on any supply of goods and/or services made to a person. Inward supply means receipt of goods and/or services by purchase or acquisition or any other means. Mixed supply means two or more individual supplies of goods or services or any combination thereof, made in conjunction with each other for a single price. Output tax means the tax chargeable on taxable supply of goods and/or services. Output tax does not include the tax payable under Reverse Charge basis. Outward supply means supply of goods and/or services by way of sale, transfer, barter, exchange, licence, rental, lease or disposal or any other mode, made or agreed to be made by a person in the course of furtherance of business. Recipient of supply of goods and/or services means the person who is liable to pay consideration or the person to whom the goods are delivered or to whom the possession or use of the goods is given or the person to whom the service is rendered. Registered person means a person registered under the CGST Act, 2017. Reverse Charge means the liability to pay tax by the recipient of supply of goods and/or services instead of the supplier of such goods and/or services. Taxable Supply means supply of goods or services or both, leviable to tax under the CGST Act, 2017. Taxable person means a person who is registered or liable to register under the CGST Act, 2017. Taxable supply means supply of goods and/or services leviable to tax under CGST Act, 2017.