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Main features of
GST Law
 2 Main features of the Law
– Taxable event:
– Tax on supply of goods or services rather than manufacture / production
of goods, provision of services or sale of goods
– Specified supplies made or agreed to be made without a consideration-
Schedule I
– Powers to declare certain supplies as supply of goods or of services –
Schedule II
– Powers to declare certain activities/transactions as neither supply of
goods nor of services - Schedule III
– On Intra-State supplies of goods or services - CGST & SGST shall be levied
by the Central and State Government respectively, at the rate to be
prescribed
– On Inter -State supplies of goods or services - IGST shall be levied by the
Central Government, at the rate to be prescribed
3 Main features of the Law

– Determination of nature of supply:

– Elaborate Rules provided for determining the place of supply
– Intra-State supply of goods or services - where the location of
the supplier and the place of supply are in the same State
– Inter-State supply of goods or services - where the location of
the supplier and the place of supply are in different States
– Liability to pay:
– Liability to pay tax arises only when the taxable person crosses
the exemption threshold
 COMPOSITION LEVY
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– Small taxpayers with an aggregate turnover up to Rs. 1.5 crore in
a previous FY shall be eligible for composition levy.

– Rates specified for Composition Levy:

 Traders – 1% (0.5% for CGST & 0.5% for SGST)
 Manufacturer – 1% (0.5% for CGST & 0.5% for SGST)
 Restaurant Services – 5% (2.5% for CGST & 2.5% for SGST)

– A tax payer opting for composition levy shall not collect any tax
from his customers.

– Eligible taxpayers shall have the option of paying tax without ITC
benefits.
5 Time and Value of supply

– Elaborate principles devised for determining the time of

supply of goods or services with following being crucial
determinants with certain exceptions:
– Date on which supplier issues invoice
– Date on which supplier receives the payment, whichever is
earlier
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Time and Value of Supply
• Tax is to be paid on Transaction value (TV) of supply generally i.e. the price
actually paid or payable for the supply of goods or services and includes
and excludes following from value of supply

Inclusions Exclusions

Other taxes IGST, CGST, UTGST and SGST charged on supply

Subsidies linked directly to supply Subsidy by Government

Discount before supply Discount after supply

Incidental expenses before supply like packing,

testing, weighmnet
Interest, late fee or penalty

Amount paid by recipient by on behalf of supplier

 7 Time and Value of Supply

• ofWhere the value cannot be determined on the basis

transaction value, the same shall be determined in
accordance with the Valuation Rules.
 EXEMPTIONS
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– On the recommendation of the Council, the Central/State Govt. may, by

notification, exempt specified goods and/or services from payment of
CGST/SGST. The exemption should be in public interest.

– Exemptions are of two types: General and specific.

INPUT TAX CREDIT(ITC)
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–ITC is available in respect of taxes paid on any supply of goods or

services used or intended to be used in the course or
furtherance of business (i.e. for business purposes)
–Negative list approach for non-allowance of ITC
–ITC of tax paid on goods or services used for making taxable
supplies by a taxable person allowed subject to four conditions:
–possession of invoice;
–receipt of goods or services;
–tax actually paid by supplier to government;
–furnishing of return
 INPUT TAX CREDIT(ITC)
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–ITC cannot be availed on invoices or debit note after the due

date of return of September of succeeding year or the date of
furnishing of the relevant annual return, which is earlier.

–The taxable person shall take credit and may utilize the same for
payment of output tax.

–Unutilized credit can be carried forward or can be claimed as

refund in certain situations.
 INPUT TAX CREDIT(ITC)
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– Manner of utilization of credit

• ITC on account of CGST shall first be utilized towards payment of CGST; the
amount remaining, if any shall be utilized towards payment of IGST
• ITC on account of SGST shall first be utilized towards payment of SGST; the
amount remaining, if any shall be utilized towards payment of IGST.
• No ITC on account of CGST shall be utilized towards payment of SGST and
vice versa.
• ITC on account of IGST shall first be utilized towards payment of IGST; the
amount remaining, if any shall be utilized towards payment of CGST and
SGST, in that order.
12 INPUT TAX CREDIT(ITC)

– Full ITC allowed on capital goods in one go

– Proportionate credits allowed in case inputs, inputs
services and capital goods are partly used for business and
partly for non-business purposes
– Proportionate credits allowed in case inputs, inputs
services and capital goods are used for taxable including
zero rated and exempt (including non-taxable) supplies
REGISTRATION
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–PAN based Registration
• Required to be obtained for each State from where taxable supplies are
being made

–A person having multiple business verticals in a State may

obtain separate registration for each business vertical
–Liability to be registered:
• Every person whose turnover in a year exceeds Rs.20 lakhs or Rs.10 lakh
in special category states
• Every person who is registered or who holds a license under an earlier
law;
• Every person who is registered under an earlier law and are paying taxes
• Certain traders liable to be registered irrespective of threshold
 REGISTRATION
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– Registration shall be approved by both the Central and State authorities on a

common e-application
– Registration shall be deemed to have been granted if no deficiency is
communicated to the applicant within the prescribed period of 3 Common
working days 
– Cancellation of registration under CGST Act means a cancellation of
registration under SGST Act and vice-versa .
– Persons not liable to registration:
 Those engaged exclusively in supplying goods & services exempted or not
liable to tax.
 An agriculturist to the extent of supply of produce out of cultivation of land.
 Any person to whom the Government, on the recommendation of Council,
exempt from obtaining registration.
 RETURNS
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– Normal taxpayers, compositions taxpayers, Casual taxpayers, non-resident
taxpayers, TDS Deductors, Input service Distributors (ISDs) to file separate
electronic returns with different cut-off dates
– Annual return to be filed by 31st December of the following Financial Year
along with a reconciliation statement
– Short-filed returns not to be treated as a valid return for matching & allowing
ITC and fund transfer between Centre and States
– GST practitioners scheme to assist taxpayers mainly in filing of returns
Taxpayers shall file monthly returns. Return to be filed within 20 days after
the end of tax period. Nil return also to be filed by tax payers.
– Audited statement of accounts and reconciliation statement to be submitted
along with the Annual Return by certain taxable persons.
16 PAYMENT OF TAX

– System of electronic cash ledger and electronic ITC ledger

– Tax can be deposited by internet banking, NEFT / RTGS,
debit/credit card and Over The Counter
– Date of credit to the Govt. account in the authorized bank
is the date of payment for credit in electronic cash ledger
– Payment of Tax is made by way of the debit in the
electronic cash or credit ledger
17 PAYMENT OF TAX

– Cross-utilization of ITC between CGST & IGST, between

SGST/UTGST & IGST allowed
– Hierarchy for discharging payments of various tax liabilities
– Provision for TDS on certain entities
– E-Commerce Operators, facilitating supplies by other
suppliers, to collect Tax at source (TCS), at the time of
supply, out of payments to be made to such suppliers
18 Refunds

– Refund claim along with documentary evidence to be filed

online without any physical interface with tax authorities
– Immediate provisional sanction of 90% of refund claim on
account of zero-rated supplies

Tax refund will be directly credited to the bank account of

applicant
19 Refunds

– Refund can be claimed within 2 years from the relevant

date.
– Refund of ITC allowed in case of exports or where the
credit accumulation is on account of inverted duty
structure.  
– Refund shall be granted within 60 days from the date of
receipt of application.
– Refund of ITC not allowed where the export goods are
subject to export duty.
20 Assessment and Audit

– Self –assessment of tax

– Provisions for assessment of non-filers, unregistered persons &
summary assessments in certain cases
– Provision for provisional assessment on request of taxable
person – to be finalized in six months
– Audit to be conducted at the place of business of the taxable
person or at the office of the tax authorities, after prior
intimation to taxable person
– Audit to be completed within 3 months, extendable by a further
period of 6 months
21 Demand

– Adjudication order to be issued within 3/5 years of filing of annual

return in normal cases & fraud / suppression cases respectively
– SCNs to be issued atleast 3 months prior to expiry of time
specified under sub-section (10)
– Section 10 specifies relevant date for counting as 3 years / 5 years
from the due date of filing of Annual return or date of erroneous
refund
– Taxable person can settle demand at any stage, right from
audit/investigation to the stage of passing of adjudication order
and even thereafter
22 APPEAL

Power of officers and taxpayers right to appeal:

– Officers to have power of search & seizure with inbuilt
safeguards
– Restricted power to arrest and for prosecution
– Elaborate provisions for appeals up to Supreme Court
23 MISCELLANEOUS

– Advance ruling mechanism

– Comprehensive transitional provisions for smooth
transition to GST
– Provision for Job work provided
– Provision for GST Compliance rating of every registered
person
– Anti-profiteering provision made to dis-incentivize non
passing of price reduction benefits to consumers
 Transitional provisions
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– In the Model GST law, elaborate transitional

provisions have been made to enable smooth
migration of tax payers from the present regime
to GST.
(i) Migration of existing taxpayers (registrants)
(ii) Migration of ITC
(iii) Credit of Stock in hand
(iv) Job Work
(v) Pending refund claims
(vi) Departmental proceedings 09/01/2020
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