GST Tip – 245

As per Final GST Returns, in Table 6 of GSTR – 1, data for exports / deemed exports and supplies to SEZ should be shown in this table. The columns related to CGST & SGST rates and amount, tax paid on the provisional basis, HSN Code and identification of line as the supply of goods or services have been dropped. Grouping of the data is to be done on the basis of exports / deemed exports or SEZ supplies in the new returns unlike the previous formats of exports with payment of GST and without payment of GST.

GST Tip – 217

As per the Determination of Value Supply, Open Market Value has to be considered for some transactions and OMV is “open market value” of a supply of goods or services or both means the full value in money, excluding the integrated tax, central tax, State tax, Union territory tax and the cess payable by a person in a transaction, where the supplier and the recipient of the supply are not related and price is the sole consideration, to obtain such supply at the same time when the supply being valued is made.

GST Tip – 216

As per the Determination of Value of Supply Rules, the formula is given to derive the tax amount from the total value of supply in cases where the value of supply includes GST taxes.  Tax amount= Value inclusive of taxes X tax rate in % of IGST or as the case may be CGST, SGST or UTGST divided by (100+ sum of tax rates, as applicable, in %).


GST Tip – 63

In the proposed Goods and Service Tax, the returns are to be filed on monthly basis and same return for all the taxes i.e CGST (Central Goods and Service Tax), SGST (State Goods and Service Tax) and IGST (Integrated Goods and Service Tax) in case of regular tax payers and quarterly for tax payers under composite scheme.

GST Tips

54 – As per the revised GST Law, while determining the turnover, supply of non-taxable goods and services is excluded, previously the same was included in determining the turnover.

53 – Composition levy under revised Model GST Law has been redefined and as per this, if the tax payer is having any interstate supplies or  supplies to e-commerce operators, he will not be eligible to be registered as a composite tax payer.

52 – In the revised Model GST Law, the definition of input has been simplified, it says “means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business;” means any input used directly or indirectly for furtherance of business will be eligible for input tax credit. The usage of the word furtherance of business reduces litigation’s in future.

51 – As per the provisions of the revised Model GST Law, GST is not applicable or not to be levied on free goods.

50 – Input tax credit in case of telecommunication tower fixed to earth by foundation or structural support including foundation and structural support and pipelines can be taken in three equal installments spreading over a period of  three years.

49 – The definition of Captial goods has been widened and made simple, now as per the Revised MGL Captial Goods means, the value of which is capitalized in the books of accounts of the person claiming the credit and which are used or intended to be used in the course or furtherance of business; This replaces the existing definition of Captial goods as per Cenvat Credit Rules 2002 in the first draft of the Model GST Law released in June 2016.

48 – As per section 65 of the revised Model GST Law, the Comptroller and Auditor General is also empowered to call for information through its authorized representative.

47 – Service tax reversal provision is back in the revised Model GST Law, if the supplier of goods and services is not paid within three months, the input tax credit availed has to be added to the output tax liability.

46 – In the revised Model GST Law, the time limit for matching for provisional credit has been increased to three months from two months.

45 – As per the revised GST Law, the time limit for return of goods from the job worker has been increased from 180 days to one year for inputs and for capital goods from two years to three years.

44 – In the revised GST Law put in the public domain, securities have been dropped from the definition of Goods, it means on sale and purchase of securities GST will not be applicable and existing Securities Transaction Tax continues to be levied.

43 – In the revised Model GST Law, in the time of supply for the goods continuous supply of goods and supply of goods on sale or approval provisions have been dropped.

42 – In the revised draft CGST Bill, a new cause Anti Profiteering clause has been added… It mean the reduction of tax rate benefit and uninterrupted input Tax Credit benefits have to passed on. More clarity is awaited on how it works…

41 – Time of Supply under Revesre Charge for Services is earliest of the following dates, Date Of Accounting, Date of Receipt of services  or date of payment.

40 – Time of Supply of Services is the earliest date of the following dates, date of issue of invoice or date of receipt of payment if invoice is issued within 30 days of completion of service.

39 – The time of supply for services under forward charge or regular services  will be the earliest of the following dates, date of completion of service, date of issue of the invoice within 30 days or date of completion of service or the date on which the recipient shows the receipt of services in his books of account.

38 –  If goods are removed on sale or approval basis, the time of supply shall be at the time when it becomes known that the supply has taken place or six months from the date of removal, whichever is earlier.

37 – In the case of continuous supply of goods like piped gas etc the time of supply will be the earliest date of issue of invoice or payment. In the case of issue of the statement of account, the date of expiry of the statement of account or payment date whichever is earlier.

36 – Time of supply for the reverse charge of goods is the earliest of the following dates 1. date of receipt of goods 2. the date on which payment is made, 3. date of receipt of invoice  and 4. date of debit in the books.

35 – Time of Supply for the supply of goods under forward charge is earliest of the following dates, 1. issue of tax invoice, 2. moment of goods, 3. receipt of the advance, 4. making goods available to the buyer and 5. buyer shows the goods in his books of accounts.

34 – Time of Supply for Goods is divided into three categories broadly first is regular supply or forward charge, second is reverse charge and third is miscellaneous provisions.

33 – The time of supply for goods and services is different, but the overall logic is very simple, time of supply is the earliest of all the dates of the transaction like issue of invoice, supply of goods, completion of service, receipt of money etc.,

32 – Time of Supply is the event during which the supply of goods or services takes place or deemed to take place and at this point, the tax invoice has to be issued and the tax liability has to be accounted.

31 – The officer may grant cancellation of registration within 30 days and the tax payer has to pay all the amounts due like interest, penalty etc along with the tax amount based on computation for input credit or capital goods whichever is higher and in case of capital goods based on the process defined in law.

30 – If a tax payer has to cancel registration under GST, he has to file FORM GST REG-14 and also Final Return Form GSTR-10, which shows details of input tax on closing stock, market value of the goods and tax on it.

29 – Registration Number under GST is required under the following cases irrespective of turnover, All tax payers registered under the current tax regimes  Any person who is required to pay tax under reverse charge mechanism, Any person marking interstate supplies, Casual taxable person, Non-Residential taxable person, Person needed to deduct tax under Sec 37, A person who provides goods or services on behalf of a principal has to be obtained irrespective of the threshold, Input service distributor & E-Commerce operators.

28 – Threshold limit under GST as per the GST Council is Rs 20 lacs across India expect north eastern states where it is Rs 10 Lakhs.

27 – The concept of payment of tax on  manufacture of goods, on sales, provision of service is replaced by a single tax point called “Time of Supply”  in GST.

26n – Under GST,  Unique Identifaction Number (UIN) has to be obtained by bodies registered under United Nations and foreign embassies for claiming refund of GST on their purchases.

25 – For imports SAD and CVD is replaced by IGST and importer can avail full credit of IGST.

24 – Cancellation of Registration under GST is very complicated. The taxpayer has to file an application for cancellation along with the closing stock and pay all the taxes due and file valid returns for cancellation of application to be accepted.

23 – The portal for GST registration is allowing only one GST registration per PAN, in case if anyone has multiple businesses under same PAN have to approach their concerned Jurisdictional Authority.

22 – Suo moto registration – During survey, search, inspection, enquiry if an concerned officer finds business is not registered, he can issue temporary registration number and this process is called suo moto registration under GST.

21 – A Tax Payer can have up to 35 registration numbers in the same state based on his line of business / business vertical

20 – According to Draft Registration Rules, all registered tax payers have to display their GST Registration Number i.e GSTIN on the name board in all the locations of the place of business.

19 – Under GST each and every location of business has to be registered as an additional place of business. Registration number has to be displayed in a prominent place for each place of business.

18 – Three basic requirements for obtaining registration under GST are, PAN Number, e-mail id and mobile number. PAN will be validated online for information with CBDT Servers, Mobile number is required for sending OTP (one-time password) and email id for verification through a separate OTP

17 – For existing tax payers under Central Excise, VAT or Service Tax the data will be migrated and the tax payer will be given 6 months for furnish all the required information.

16 – Registration Number under GST is called GSTIN and it is 15 digit number,the  first two digits are for the state code, next 10 digits PAN, 13th digit is for business vertical, 14th digit is blank and 15th digit is check digit.

15 – Under GST there is no concept of a manufacturer, first stage dealer,registered dealer, service provider etc., anyone who registers under GST is called a tax payer.

14 – Under GST all tax payers have to file single return for the state and the central taxes (SGST, CGST & IGST)

13 – In India we have adopted dual GST i.e the Central Government and the State Government will be levying and collecting taxes due to constitutional provisions in our constitution.

12 – GST is a destination based tax i.e taxes will go to the state where the goods are consumed.

11 – Under GST there is no concept of Tax on Tax like VAT computed on item price + Excise duties

10 – Under GST there is uninterrupted input tax credit in the supply chain process i.e input tax credit can be taken in each and every stage

9 – GST Is applicable to whole of India including Jammu and Kashmir

8 – Under GST, Goods and Services share the same taxes

7 – Integrated Goods and Service Tax (IGST) will replace Central Sales Tax for all inter-state transactions under GST

6 – Taxes which are not subsumed  under SGST are Stamp Duty, Electricity Duty,Vehicle Tax, Royalty, State taxes on petroleum and alcoholic products and Entertainment Duty levied by local bodies.

5 – State Goods and Service Tax (SGST) – taxes merged with SGST are Value Added Tax, Entry Tax, Purchase Tax, Luxury Tax,Entertainment Tax,Octroi, Various Surcharges & Cess

4 – Taxes which are not subsumed under CGST are Basic Customs Duty, other import duties, excise duties on petroleum products and tobacco products

3 –  Central Goods and Service Tax (CGST) to replace Central Excise, Service Tax, Additional Excise Duty, Special Additional Customs Duty (SAD), Countervailing Duty (CVD) along with various cesss and surcharges

2 – There are three taxes under GST ; Central Goods & Service Tax (CGST), State Goods & Service Tax (SGST), Integrated Goods and Service Tax (IGST).

1 – under GST, there is only one registration number per state called GSTIN – Goods and Service Tax Identification Number

Demystifying Collection of Tax at Source under the Model GST Law

e-commerce is a booming industry and this is enabling the local and small sellers to sell their products in wider markets and from the consumer perspective he is having a wide range of products at his door step at a competitive price.  In this process, the buyer and seller are getting benefited and in between the e-commerce operator who does not own any stocks but sells on behalf of the seller by providing his infrastructure and reach, for this services the e-commerce operator charges some amount from the seller. So far it is so good but the real issue starts from the taxman’s perspective.  In the whole game, the e-commerce operator issues an invoice on behalf of the seller to the buyer and on this respective taxes are collected. Now the question raised by the taxman is the transaction between the e-commerce operator and the seller is taxable, there are various disputes on this matter and the interpretation is even more complex like does the transaction between the e-commerce operator and the seller amounts to sale of goods and VAT is applicable on the commission or is it a service or is it a composite contract. Various state governments have taken different views on the same and started collecting VAT.

Now let’s see what is there in the store in Model GST Law for the e-commerce. Section 43B lays down the definitions in context to the above services.

Aggregator has been clearly defined in the sub-section ( a)  of Section 43B. it literally nails down who is an aggregator, it says any person who provides services either by an application or communication device which enables a buyer and seller to connect and procure goods or services under any brand / trade name is termed as an aggregator. This means that cab operators like Ola or Uber or selling of goods electronically like Amazon, Flipkart or food delivery mobile applications like Swiggy or Tinmen all are defined as aggregators. And they are required to take registration under GST as per Section 19 of the Model GST Law.

Sub-section (b) defines what is brand or trade name clearly. It says any brand or trade name, registered or not, for using a name or mark or symbol or monogram or writing or logo or symbol or signature which is used for service or furtherance of business. That means all the brand / trademarks are also under the purview of the GST.

Sub-section (c) defines what is branded service. It says branded service is service which is supplied by an e-commerce operator under his name whether registered or unregistered is a branded service like Amazon or Flipkart etc.

The final nail in the coffin is given in Sub-section (d), where it defined what is electronic commerce. It did not spare a word which used in the today’s’ internet era like download, File transfer, shopping cart, electronic data interchange (EDI), download, messaging in any form, web services, services for transmitting funds or data, etc are termed as e-commerce. This means any entity which provides any of the above services falls under the definition of electronic commerce operator and has to obtain registration under GST irrespective of the turnover refer to Schedule III of the Model GST Act. This means all the startups have to register themselves under GST. What is left over in the definition of electronic commerce operator is Internet of things (IOT).

Section 43C gives in details about the process of collecting money from the supplier of goods or service provider by the e-commerce operator before paying them.

Section 43 (C) sub-section 1

(1) Notwithstanding anything to the contrary contained in the Act or in any contract, arrangement or memorandum of understanding, every electronic commerce operator (hereinafter referred to in this section as the “operator”) shall, at the time of credit of any amount to the account of the supplier of goods and/or services or at the time of payment of any amount in cash or by any other mode, whichever is earlier, collect an amount, out of the amount payable or paid to the supplier, representing consideration

towards the supply of goods and /or services made through it, calculated at such rate as may be notified in this behalf by the Central/State Government on the recommendation of the Council.

Illustration 1

XYZ is an e-commerce operator and many sellers are registered with them for selling their products on the portal. A, who is small time seller of handicrafts also places his products on B, an end consumer places an order for few handicrafts items from supplied by A. B Pays an amount for his order of Rs 15,000 to has to pay A for the item being purchased by B. As of now is paying Rs 15,000 less commission charged by them. Going forward under GST, xyz has to deduct certain percentage as specified by the GST council and then only pay the net amount to A.

Now the question here arises is does have to recover the tax after deducting commission or on the full amount? If we go by the valuation under Model GST Law as given in section 15, is clearly says on the gross amount, so has to recover tax on Rs 15,000 but not on Rs 15,000 net of commission if any.

The amount collected from the supplier of goods and service provider by the e-commerce operator has to be deposited with the tax authorities by 10th of the next month.

Every operator has to submit a report electronically within 10 days from the end of the month, this report is to be filed separately other than the regular returns filed. The format of the report will be announced in due course and it should contain the details of all the suppliers of goods / services from whom the amount is being withheld and paid to the respective governments like supplier name, amount, date, tax recovered etc.,

The details filed by the e-commerce operator are verified with the returns filed by the sellers and if there is any mismatch, the same is informed to both the parties for correction. In case if there is any discrepancy and which is communicated to the supplier and no corrective action is taken, then the same is added as a liability to the suppliers return in the month in which it is communicated. The supplier is liable to pay tax along with interest, as determined by the concerned officer to the department.

The operator may be asked to furnish information relating to the details of his suppliers like quantity of goods held by him under his custody along with other places of business of the supplier.

From the above, it is clear that government does not want to lose a single penny in form of tax revenue. This process is ensuring that all the suppliers who are dealing with e-commerce are registered, in order to utilize the amount deducted by the e-commerce operator while receiving his payments. The amount deducted by the e-commerce operator one paid to the tax authorities is reflected in the electronic cash ledger of the supplier and he can utilize the same for payment of GST taxes.

Though it is titled as “Collection of Tax At Source” it is technically “tax deducted at source”, the reason is when the e-commerce operator is paying to the supplier of services or goods, certain amount is withheld and then only paid, it is similar to the tax deduction at source in direct taxes. In a way now TDS is applicable on goods also in indirect taxes for e-commerce transactions.

This provision has put an end to all the confusions which are there for the e-commerce currently.

The amount deducted by the e-commerce operator will be reflected in the GSTR -2 return of the seller on the e-commerce website as well as in the electronic cash ledger maintained by the common portal for the seller on the e-commerce website.

The amount to be paid by the e-commerce operator will be part of the monthly outward supplies in GSTR – 1 and also will be shown in the Electronic Liability Register maintained in the common portal. The E-commerce operator has to file another return separately called GSTR – 8 under GST with all the relevant details as required.

The taxes applicable will be of CGST and SGST for TCS in the case of intra state transaction and in the case of interstate transactions it will be IGST for TCS. This is based on the information provided in the Draft Invoice Formats.

Any views or opinions represented above are personal and belong solely to the author and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

These examples are based on the model law and may change based on the actual law passed.