GST

GST REGISTRATION 

Registration is the most fundamental requirement for the identification of taxpayers to ensure compliance and to obtain a unique registration number for the purpose of collecting tax on behalf of the Government and to avail ITC accrued on the inward supplies)

Benefits of registration

Registration will confer the following advantages to a taxpayer.

(a) He is legally recognized as supplier of goods or services 

(b) He is legally authorized to collect taxes from his customers and pass on the credit of the taxes paid on the goods or services supplied to the purchasers/recipients.

(c) He can claim input tax credit of taxes paid and can utilize the same for payment of taxes due on supply of goods or services

(d) Seamless flow of Input Tax Credit from suppliers to recipients at the national level

Compulsory Registration

The following class of persons shall compulsorily register: -

(a) persons making Inter-State Taxable supply.

(b) Casual Taxable person.

(c) Persons who are required to pay tax under reverse charge.

(d) Persons who are required to pay tax as e-commerce operators.

(e) non-residential taxable person.

(f) Persons required to deduct tax as TDS (Government Agencies, Department etc.,)

(g) Persons required to collect tax as TCS (electronic Commerce operator)

Casual taxa

Goods and services tax (GST)

GST is an indirect tax, which is a transaction-based taxation regime, that has been in effect in India since 1 July 2017

Multiple indirect taxes (except customs duty) have been subsumed within GST, and there is one single tax applicable on supply of goods and services. However, there are a few products that continue to be outside the ambit of GST, such as petrol, diesel, aviation turbine fuel (ATF), natural gas, alcohol for human consumption, and crude oil.

For smooth GST implementation, the government has formed a GST Council. The Council consists of the State Finance Ministers representing their states. The GST Council provides recommendations to the government on various aspects of GST law, such as rate revisions and amendments in GST rules, etc.

GST regime

GST is a comprehensive 'consumption tax' levied on the supply of all goods and services. Indian GST is a dual model:

In case of intra-state supply of goods and services, GST+SGST/UTGST would become applicable, and in case of inter-state supply of goods and services, integrated GST (IGST). The rate of GST varies from 5% to 28% depending upon the category of goods and services being supplied or procured, the general rate of tax being 18% for the majority of supplies. Additionally, some categories of goods/services, such as vehicles, aerated beverages, etc. notified by the government are subject to compensation cess under GST.

Import of goods and services

The import of goods under the GST regime will be subject to IGST and compensation cess (if applicable), along with basic custom duty (BCD)and social welfare surcharge (up to 10% levied on the BCD), BCD and social welfare surcharge paid at the time of imports are not available as credit under GST; consequently, they will always be a cost to the importer.

Similar to erstwhile service tax laws, on import of service, service recipient would be liable to pay IGST under reverse charge. Also, there are specified categories of goods and services notified by the government on which GST needs to be paid by the recipient under reverse charge such as legal services. Goos Transport Agency services, etc.

CBIC vide Notification Nos.11/2023 and 13/2023 and 13/2023 dated 26 September 2023, has exempted the importers from paying IGST on ocean freight in CIF contracts. This is pursuant to the Supreme Court's pronouncement inf the matter of Moth Minerals.

Zero-rated supplies/export of goods and services

Export of goods and services are zero rated under GST. Exporters can claim refund of input tax credit (ITC) of inputs/input services used in export of goods/services, subject to fulfilment of prescribed conditions. To claim the zero, rate on exports, there is a requirement to file a bond/Letter of Undertaking (LUT) to the jurisdictional tax authorities at the beginning of each financial year. Alternatively, the exporter can pay tax on output and claim refund for the same.

Also, the supplies to an SEZ for authorized operations have been made zero rated under GST. Unlike the erstwhile indirect tax regime, which involved a lot of paperwork to claim export refund claims, a simplified online process to claim refund of exports has been speckled under GST.

(A) Bank account for credit of refund means such bank account of the applicant that is in the name of the applicant and obtained on one's Permanent Account Number (PAN)

(B) Option for filing refund of accumulated ITC by taxpayers making exempt/nil-rated supplies, by selecting an option of not having an LUT number is the refund application (to enable a taxpayer making exempt and/or nil-rated supplies, without LUT, to file a refund application as they don't have a valid LUT number to enter in the refund application the Form RFD-01has now been modified

(C) To facilitate exporters, bunching of refund claims across financial years has now been allowed.

(D) Previously to claim a refund of zero-rated supply of services, there was a requirement to receive remittance in foreign exchange within a stipulated time period. Now this requirement has been extended to zero-rated supply of goods as well.

(E) Refund of accumulated ITC is restricted to the amount appearing in Form GSTR-2A/2B. However, the department has now clarified that the restriction will not impact the refund of ITC availed on the invoices/documents relating to imports, input service Distributor (ISD)invoices, and the inwards supplies liable to reverse charge (RC supplies) merely because the same is not reflecting in Form GSTR-

2A

(F) For export of goods, if unutilized ITC is claimed as refund, it is proposed to be mandated to realize the considerations foreign currency within the timelines prescribed in the Foreign Exchanged Management Act (FEMA) guidelines, if the consideration is not realized within the prescribed time, the refund needs to be remitted back to the government along with interest.

(G) Refund of payment wrongly made through electronic credit ledger is allowed (refund amount would be re-credited to credit ledger).

(1) "goods" means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract

(2) "existing law" means any law, notification, order, rule or regulation relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of this Act by Parliament or any Authority or person having the power to make such law, notification, order, rule or regulation.

(3) "family" means-  (I) the spouse and children of the person, and the parents, grand-parents, brothers and sisters of the person if they are wholly or namely dependent on the said person.

(4) "Fixed establishment" means a place (other than the registered place of business) which is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs.

(5) "fund" means the consumer welfare fund established under section 57.

(6) "electronic cash ledger" means the electronic cash ledger referred to in sub section (1) of section 49.

(7) "existing law" means any law, notification order, rule or regulation relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of this Act by parliament or any Authority or person having the power to make such law notification, order, rule or regulation.

GST

 THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 NO. OF 2017

An Act 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 for matters connected therewith or incidental thereto.

BE it enacted by parliament in the sixty-eighth Year of the Republic of India as follows: -  

1. Short title, extent and commencement. -(a) This Act may be called the Central Goods and Services Tax Act, 2017.

(b) It extends to the whole of India (*******)'

(c) It shall come into force on such date as the Central Government may, by notification in the official Gazette, appoint:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision

(2) Definitions - In this Act, unless the context

otherwise requires, (a) " actionable claim" shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882.

(b) " address of delivery" means the address of the recipient of goods or services or both indicated on the tax invoice issued by a registered person for delivery of such goods or services or both.

(c) "address on record" means the address of the recipient as available in the records of the supplier.

(d) " adjudicating authority" means any authority, appointed or authorized to pass order or decision under this Act, but does not include the (Central Board of Indirect Taxes and Customs), the Revisional Authority, the Authority for Advance Ruling the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171)

(e) "agent" means a person, including a factor, broker, commission agent, Arratia, del criadera agent, an auctioneer or any other mercantile agent, by whatever name called who carries on the business of supply or receipt of goods or services or both on behalf of another.

(f) "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), 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.

(g) " agriculturist" means an individual or a Hindu Undivided Family who undertakes cocultivation of land-

(b) by the Laboure of family, or

(c) by servants on wages payable in cash or kind or by hired Laboure under personal supervision or the personal supervision of any member of the family.

(d) "Appellate Authority" means an authority appointed or authorized to hear appeals as referred to in section 107

(1) "Appellate Tribunal" means the Goods and services Tax Appellate Tribunal constituted under section 109

(2) " appointed day" means the date on which the provisions of this Act shall come into force.

(3) "Board" means the (Central Board of Indirect Taxes and customs) constituted the Central Board or Revenue Act 1963

(4) "audit" means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder

"BUSINESS" INCCLUDES - 

(a) any trade, commerce, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit.

(b) any activity or transaction in commotion with or incidental or ancillary to sub-clause 

(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction.

(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business

(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members.

(f) admission, for a consideration, of persons to any premises.

(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation.

(h) {activities of a race club including by way of totalizator or a license to book maker or activities of a licensed book maker in such club; and}

(1) " capital goods" means goods, the value of which is capitalized in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business.

(2) "causal taxable person" means a person who occasionally undertakes transactions involving supply of goods or services or both in the Couse or furtherance of business, whether as principal, agent or in any other capacity, in a state or a Union territory here he has no fixed place of business.

(3) "central tax" means the central goods and services tax levied under section 9.

4. " common working days" in respect of a State or Union territory shall mean such days in succession which are not declared as gazette holidays by the Central Government or the concerned State or Union Territory Government.

5. "commissioner" means the Commissioner of central tax and includes the Principal Commissioner of central tax appointed under section 3 and the commissioner of integrated tax appointed under the Integrated Goods and Services Tax Act.

6. "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.

7. "cess" shall have the same meaning as assigned to it in the Goods and Services Tax (Compensation to States) Act.

8. "chartered accountant" means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949

 

9. "Commissioner in the Board" means the commissioner referred to in section 168.

10. "common portal" means the common goods and services tax electronic portal referred to in section 146.

11. "competent authority" means such authority as may be notified by the Government.

Illustration - Where goods are packed and transported with insurance, the supply of goods, packing material, transport and insurance is a composite supply and supply of goods is a principal supply.

12. "consideration" in relation to the supply of goods or services or both includes-

(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government.

(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods ro services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government.

provided that a deposit given in respect of the supply of goods or services, or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply.

 13. "continuous supply of goods" means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes supply of such goods as the Government may, subject to such conditions, as it may, by notification, specify;

14."continuous supply of services" means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify.

15. "drawback" in relation to any goods manufactured in India and exported, means the rebate of duty, tax or cess chargeable on any imported inputs or on any domestic inputs or input services used in the manufactured of such goods.

16. "document" includes written or printed record of any sort and electronic record as defined in clause (1) of section 2 of the Information Technology Act, 2000

17. "conveyance" includes a vessel, an aircraft and a vehicle.

18. "cost accountant "means a cost accountant as defined in (Clause (b) of sub-section(I) of section 2 of the Cost and works Accountants Act, 1959

19. "credit note" means a document issued by a registered person under sub-section (1) of section 34. 

20. "debit note" means a document issued by a registered person under sub-section (3) of section 34.

GST

 MINISTRY OF LAW AND JUSTICE

 (Legislative Department) 

 New Delhi, the 12th of April 2017/Chaitra 22, 1939 (Saka) The following Act of Parliament received the assent of the President on the 12th of April 2017 and is hereby published for general information: — THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 NO. 12 OF 2017 [12th April 2017.] An Act 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 for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows: — CHAPTER I PRELIMINARY 1. Short title, extent and commencement. — (1) This Act may be called the Central Goods and Services Tax Act, 2017. (2) (3) It extends to the whole of India [*****.]1 It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint: Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be

CHAPTER V INPUT TAX CREDIT 2019.]36 17. 

 Apportionment of credit and blocked credits. — (1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. (2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. (3) The value of exempt supply under sub-section (2) shall be such as may be prescribed and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. [Explanation.— For the purposes of this sub-section, the expression ‗‗value of exempt supply‘‘ shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule;]37 (4) A banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either comply with the provisions of sub section (2), or avail of, every month, an amount equal to fifty per cent. of the eligible input tax credit on inputs, capital goods and input services in that month and the rest shall lapse: Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year: Provided further that the restriction of fifty per cent. shall not apply to the tax paid on supplies made by one registered person to another registered person having the same 

CHAPTER V INPUT TAX CREDIT 

 Permanent Account Number. (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub- section (1) of section 18, input tax credit shall not be available in respect of the following, namely:— (a) [motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:— (A) (B) (C) (aa) further supply of such motor vehicles; or transportation of passengers; or imparting training on driving such motor vehicles; vessels and aircraft except when they are used–– (i) (ii) for making the following taxable supplies, namely:— (A) (B) (C) (D) further supply of such vessels or aircraft; or transportation of passengers; or imparting training on navigating such vessels; or imparting training on flying such aircraft; for transportation of goods; (ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa): Provided that the input tax credit in respect of such services shall be available— (i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein; (ii) where received by a taxable person engaged— (I) in the manufacture of such motor vehicles, vessels or aircraft; or (II) in the supply of general insurance services in respect of such motor

CHAPTER V INPUT TAX CREDIT

 vehicles, vessels or aircraft insured by him;]38 (b) (i) [the following supply of goods or services or both— food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance: Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) (iii) membership of a club, health and fitness center; and travel benefits extended to employees on vacation such as leave or home travel concession: Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.]39 

GST RETURNS

 GST RETURNS

Every person registered under the Goods and Services Tax Act, 2017 has to file return, Under the GST law, a normal taxpayer needs to file monthly returns and one annual return. similarly, there are separate returns for taxpayers registered under the composition scheme, a person liable to deduct or collect the tax (TDS/TCS)

All the returns have to be filed through online by using any of the following methods.

1. Through GSTN portal (www.gst.gov.in)

2. Through offline utilities provided by GSTN

3. Through GST Suvidha providers (GSPs)

GSTR 1 (Statement of outward supplies)

In GSTR -1, supplies made to the registered dealers as well as unregistered dealers has to be entered. If inter-state

 is made to an un- registered person, where invoice value is more than Rs. 250000/-, it has to be separately shown. Consolidated amount of Intra-State supplies made to un-registered persons for each rate of tax, exempted supplies, Nill rated supplies, Exports (including deemed exports) and non-GST, Advance, if any, received by the dealer and supplies made through e- commerce operator has to be shown separately. The supplier also has to mention the HSN (Harmonized system of Nomenclature) for Goods and SAC (Accounting code) for Services.

GSTR -2 (Statement of Inward supplies)

In GSTR-2, the details of inward supplies made from registered persons and unregistered persons has to be entered. Details of debit note/credit notes issued by the supplier, details of inward supplies attracting reverse charge has to be entered. Details of goods, Capital goods and services procured from outside India has to be reported. the details of total eligible input tax credit and input tax credit available in the current tax period has to be disclosed. Supples received from composition taxable persons, unregister persons and other exempt/NIL/non- GST supplies has to be reported separately.

GSTR -3 (Complete Return)

Every registered person, other than an Input Service Distributor, a non-resident taxable person, dealers paying tax under composition scheme and persons liable to deduct or collect tax (TDS/TCS) has to furnish a return electronically (the inward and outward supplies of goods or services or both, input tax credit availed, tax payable and tax paid details) on or before 20th of the month succeeding the tax period

    PROCESS OF RETURN FILLING

When the supplier reports the outward suppliers made by him in GSTR -1 and submit the same, the same will be auto populated in the receiver's inward supply in GSTR -2. However, the receiver can modify, delete or include data submitted by the supplier and re- submit the same from 11th to 15th of the month succeeding the said tax period

The supplier can either accept the modification, deletion or addition of data submitted by the recipient or reject the same. He has to do it on or before 17th, but not before 15th day of the month succeeding the tax period. However, the details furnished by the supplier and the return filed by the supplier is final.

GST

 COMPOSITION LEVY

Small taxpayers can opt to pay tax at a flat rate and opt for composition of tax if their annual aggregate turnover is within 75 lakhs. This option is available for certain special category of manufacturers and service providers also. No input tax credit is available for a compounding dealer. compounding dealer cannot issue a tax invoice but only a bill of supply. Compounding dealers are not permitted to collect tax

Persons not eligible for composition

* Supplier of services other than supplier of Restaurant service

* Neither a Casual Taxable person nor a non-Resident Taxable person.

* An Inter State supplier of Goods

* Persons supplying Goods through e-commerce operator

* Manufacturers of certain notified goods

Composition Rates

* For manufacturers, SGST 1% + CGST 1%

* For hotels other than Liquor SGST 2.5% + 2.5%

* For other SGST 0.5% + CGST 0.5%

Return of a Composition dealer

A composition dealer instead of filing monthly return, has to file return for each quarter in GSTR -4 within 18 days after the end of such quarter. In GSTER -4, invoice wise details of inter-state and intra-state supplies received from registered persons as well as unregistered persons, imports of goods and services, consolidated details of outward supplies, consolidated statement of advances paid/advances adjusted on account of receipt of supplies, debit note, and credit note received and issued have to be reported.

Conditions for composition

* With respect to migrated dealer, the Goods in stock should not have been purchased on Inter-state basis/imports/stock Transfer.

* The Goods in stock must not have been purchased from Un-registered Dealers, and it purchased tax has to be paid under Reverse charge mechanism.

* Composition dealers have to issue Bill of supply instead of Invoice.

* In the Bill of supply, such dealer should mention" Composition Taxable person not eligible to collect tax on supplies"

* In sign boards at prominent place of business he shall mention the words "Composition Taxable person"

Cancellation of registration

Failure to file returns for 3 consecutive tax periods will lead to cancellation of registration.

Transitional Provisions

Dealer paying tax in the composition scheme under the earlier law but decided to pay tax under Section 9 of the GST law (i.e. Regular dealer), shall be eligible for ITC in GST on the closing stock of goods purchased locally.

A dealer availing ITC under the earlier law but decided to become a composition dealer under section 10 of the GST law, shall have to pay an amount equivalent to the credit of input tax.

TIME OF SUPPLY OF GOODS

Under GST, the point of taxation, the liability to pay CGST/SGST will arise at the time of supply as determined for goods & services.

The time of supply of Goods shall be the earlier of the following dates, namely: - 1. The date of issue of invoice by the supplier (or the last date on which he is required to issue the invoice) or 2. the date on which the supplier receives the payment with respect to the supply

The time of supply of goods where tax is to be paid on reverse charge shall be the earlier of the following dates, namely: -

1. The date of receipt of goods, or the date of payment or 30 days from the date of issue of invoice by the supplier (If it is not possible to determine under i,ii) or iii), the date of entry of supply in the books of the recipient)

The time of supply of goods in case of vouchers shall be the earlier of the following dates, namely: -

* The date of issue of voucher; or

* The date of redemption of voucher (If the date could not be determined then the date of periodical return filed or the date on which the CGST/SGST is paid

TIME OF SUPPLY OF SERVICES

The time of supply of services shall be the earliest of the following dates, namely: -

1. The date of issue of invoice or 2. The date of receipt of payment.

The time of supply of services where tax is to be paid on reverse charge shall be the earliest of the following dates, namely: -

(a) The date of receipt of payment or (b) 60 days immediate from the date of invoice. If it is not possible to determine under (i) or (ii), the date of entry

PLACE OF SUPPLY OF GOODS

PLACE OF SUPPLY OF SERVICES

(The place of supply of services would be the location of recipient)

Service provided to

1. Registered person --B2B

2. Person other than a Registered person-B2C

Place of Supply

1. Location of Recipient

2. The location of the recipient where the address on record exists; and (" address on record" means the address of the recipient as available in the records of the supplier) the location of the supplier of services in other cases,

INPUT TAX CREDIT

Uninterrupted and seamless chain of input tax credit (hereinafter referred to as, "ITC") is one of the key features of Goods and Services Tax. ITC is a mechanism to avoid cascading of taxes. Cascading of taxes, in simple language, is tax on tax under the present system of taxation, credit of taxes being levied by central Government is not available as set-off for payment of taxes levied by state Governments, and vice versa.

one of the most important features of the GST system is that the entire supply chain would be subject to GST to be levied by Central and state Government concurrently. As the tax charged by the Central or the State Governments would be part of the same tax regime, the credit of tax paid at every stage would be available as set- off for payment of tax at every subsequent stage.

Under this new system, most of the indirect taxes levied by Central and the State Government on supply of goods or services or both, would be combined to gather under a single levy

GST comprises of the following levies:

1. Central Goods and Services Tax (CGST) (on intra-state supply of goods or services or both)

2. State Goods and Services Tax (SGST) (on intra-state supply of goods or services or both.)

3. Integrated Goods and Services Tax (IGST) (on inter-state supply of goods or services or both. In case of import of goods also, the present levy of countervailing Duty (CVD) and special Additional Duty (SAD) would be replaced by IGST)

Input Tax Credit

 Sec - 16- Eligibility and conditions for taking input tax credit

16.(I) Every registered person shall, subject to such conditions and restrictions as may be prescribed and, in the manner, specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, -

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed.

(b) he has received the goods or services or both. Explanation, - For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise.

(c) Subject to the provision of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and

(d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment:

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon

(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income -tax Act, 1961, the input tax credit on the said tax component shall not be allowed

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Apportionment of credit and blocked credits

17(I) - Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business

(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies.

(3) The value of exempt supply under sub-section (2) shall be such as may be prescribed and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to cluse (b) of paragraph 5 of schedule II, sale of building.

(4) A banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either comply with the provisions or sub-section (2), or avail of, every month, an amount equal to fifty per cent. of the eligible input tax credit on inputs, capital goods and input services in that month and the rest shall lapse:

Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year:

Provided further that the restriction of fifty percent. shall not apply to the tax paid on supplies made by one registered person to another registered person having the same permanent account Number.

(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (!) of section 18, input tax credit shall not be available in respect of the following, namely: -

(a) Motor vehicles and other conveyances except when they are used- (i) for making the following taxable supplies, namely: -

(A) further supply of such vehicles or conveyances; or (B) transpiration of passengers; or

(C) imparting training on driving, flying, navigating such vehicles or conveyances.

(ii) for Transporation of goods.

(b) The following supply of goods or services or both -

(I) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; - 

(ii) membership of a club, health and fitness center.

(iii) rent-a-cab, life insurance and health insurance except were

(A) The Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or  

(B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply: and

(iv) travel benefits extended to employees on vacation such as leave or home travel concession.

(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service.

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or Bothe are used in the course or furtherance of business

Explanation - For the purposes of clause (c) and (d), the expression "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property:

(e) goods or services or both on which tax has been paid under section 10.

(f) goods or services or both used for personal consumption.

(g) goods or services or both received by a nonresident taxable person except on goods imported by him

(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and any tax paid in accordance with the provisions of section 74,129 and 130

(6) The Government may prescribe the manner in which the credit referred to in sub- sections (1) and (2) may be attributed

Explanation. - For the purposes of this Chapter and Chapter VIJ, the expression " plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes-

(i) land, building or any other civil structures:

(ii) telecommunication towers: and

(iii) pipelines laid outside the factory premises.

Sec 18- Availability of credit in special circumstances.

18(I) Subject of such conditions and restrictions as may be prescribed ------------------

(a) a person who has applied for registration under this Act within thirty days from the date on which he becomes liable to registration and has been granted such registration shall be entitled to take credit of input tax in respect of input held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act;

(b) a person who takes registration under sub- section (3) of section 25 shall be entitled to take credit of input tax in respect of input held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration.

(c) Where any registered person ceases to pay tax under section 10, he shall be entitled to take credit or input tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax under section -9

Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed

(d)Where an exempt supply of goods or services or both by a registered person become a taxable supply, such person shall be entitled to take credit of input tax in respect of input held in stock and inputs contained in semi-finished goods held in stock relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the day immediately preceding the date from which such supply becomes taxable: