OVERVIEW ON GST

PRESENTATION BY

CMA R SARATHBABU
B.Com., MBA, ACMA., CA
INTRODUCTION TO GST
Goods and Services Tax (GST) is a
comprehensive indirect tax levied on the
supply of goods and/or services in India.
The Act is called as Goods and Service Tax
Act which applies to the whole of India w.e.f
01.07.2017 except the state of Jammu &
Kashmir where the same is implemented w.e.f
08.07.2017.
Salient Features of GST
One Nation, One Tax: GST replaced multiple
indirect taxes levied by the Central and State
Governments, such as excise duty, service tax, value-
added tax (VAT), and others.
Dual Structure: GST operates under a dual
structure, comprising the Central GST (CGST) levied
by the Central Government and the State GST
(SGST) levied by the State Governments.
In the case of Inter-state transactions, Integrated
GST (IGST) is applicable, which is collected by the
Central Government and apportioned to the
respective State.
Salient Features of GST
Destination-based Tax: GST is a
destination-based tax, levied at each stage of
the supply chain, from the manufacturer to
the consumer.
It is applied to the value addition at each
stage, allowing for the seamless flow of
credits and reducing the tax burden on the
end consumer
Salient Features of GST
Input Tax Credit (ITC): GST allows for the
utilization of input tax credit, wherein
businesses can claim credit for the tax paid
on inputs used in the production or provision
of goods and services. This helps avoid
double taxation and reduces the overall tax
liability.
Components of GST
CGST (Central Goods & Service Tax)
SGST (State Goods & Service Tax)
UTGST (Union Territory Goods & Service Tax)
IGST (Integrated Goods & Service Tax)
At the time of Intra State Supply (Supply with
in the state / union territory), the CGST &
SGST / UTGST will be levied.
Components of GST
The CGST part of Tax is collected & retained by
the Central Government and the SGST / UTGST
will be collected & retained by the respective
State Government / Union Territory
At the time of Inter State Supply (Supply
between one State / Union Territory to other
State / Union Territory, IGST will be levied
which was collected by the CG and one portion
shall be shared with the State / Union Territory
where the supply is being consumed.
 INTER STATE VS INTRA STATE SUPPLY
Parameters Inter - state Supplies Intra - state Supplies
Supply of goods and services
Supply of goods and services between within the same state or union
Applicable on different states and Union Territories. territory.
CGST by the Central Government
and SGST/UTGST by the State
Levied by Central Government Government / Union Territory
CGST and SGST rates are
applied equally and separately at
IGST rate is applicable at the rates in the applicable rate in force based
Tax rate force based on the good or service on the good or service
Receives the full amount of SGST
Destination state Receives a share of the IGST collected collected
Different state than the location of the Same state as the location of the
Place of supply supplier supplier
9
Supply- Basics
Supply of
Goods or
Services
Taxable Supply in
Supply India

SUPP
LY

Taxable Considera
Person tion
In the
course or
furtheranc
e of
business
 .. Supply – Meaning
1 0

‘Supply’
 Includes all forms of supply of goods and/or services such as sale,
transfer, barter, exchange, license, rental, lease, or disposition made or
agreed to be made for a consideration in the course or furtherance of
business
 Importation of service, for a consideration, whether or not in the course
or furtherance of business, and
 Supply specified in Schedule I, made or agreed to be made without a
consideration
 Schedule II, in respect of matters mentioned therein, shall apply for
determining what is, or is to be treated as a supply of goods or a supply of
services
 Schedule III, in respect of activities mentioned therein, which shall
neither to be treated as a supply of goods nor a supply of services

[Section 7 of CGST Act and

Schedules-I, II &III]
 TheSupply
Composite supply
of two or more supplies of goods or
services by a taxable person, which comprises of a
combination of goods and services naturally bundled
and supplied together in the ordinary course of
business, is called as a Composite Supply.
In other words, a Composite Supply comprises
goods and services which are bundled owing to
natural necessities. The elements in a composite
supply of goods and services are generally
bifurcated as:
Principal Supply - the pre-dominant element in the
Composite Supply of goods or services
Dependent Supply - dependent on the principal
supply
Composite Supply
A Composite Supply example could be – a 5
star hotel providing a stay package with
breakfast. This will be a Composite Supply as
the package of accommodation facilities and
breakfast is a natural combination in the
ordinary course of business for a hotel. In this
case, the hotel accommodation is the
principal supply, and breakfast is the
dependent supply.
GST Rate on Composite Supply
The GST rate on Composite Supply will be
equal to the GST rate applicable on the
principal supply of such goods and services,
Mixed Supply
The supply of two or more individual supplies of
goods or services, or any combination of goods and
services, by a taxable person, for a single price, is
called a Mixed Supply.
In Mixed Supply, the combination of goods and/or
services are not bundled due to natural necessities,
and they can be supplied individually in the ordinary
course of business.
A Mixed Supply example could be a kit – which
contains a tie, a watch, a wallet and a pen - which
could be bundled and priced together. However, each
of these items can always be supplied individually,
and hence this supply will be a Mixed Supply.
GST Rate on Mixed Supply

The GST rate on mixed supply will be the

highest GST rate applicable on the goods or
services included in the given combination of
the mixed supply.
INPUT TAX CREDIT (ITC)
Input Tax Credit is the backbone of the GST
regime. GST is nothing but a value added tax
on goods and / or services.
Input tax credit refers to the adjustment of
tax paid on input against the tax payable on
outward supply. Thus the registered person
under GST can reduce the tax liability which
has been already paid on inputs.
ITC avoids cascading effect of taxes and
ensures that tax is collected in the State in
which goods and / or services are consumed.
Effects of ITC on Cash Flow
Particulars Without ITC With ITC

Gross Value of Input 100,000 100,000

Add : GST @ 18% 18,000 18,000
Total Invoice Price 118,000 118,000
Cost to the company 118,000 100,000
Tax Benefit on GST 30% on 18,000 100% of 18000
i.e. 5,400 i.e Rs.18,000
(Income Tax Benefit) (Input Tax Credit)

Effect on Cash
Outflow Rs.5,400/- Rs.18,000/-
Effects of ITC on Cash Flow

Particulars Without ITC With ITC

Gross Value of Capital Goods 100000 100000

Add : GST @ 18% 18000 18000
Total Invoice Price 118000 118000
Cost to the company 118000 100000
30% on 15.33% of
Tax Benefit on GST 18,000 100% of 18000
i.e. Rs.828 i.e Rs.18,000
(Income Tax
Benefit) (Input Tax Credit)

Effect on Cash Outflow Rs.828/- Rs.18,000/-

Documents Required for Claiming ITC
The following documents are required for claiming
ITC:
 Invoice issued by the supplier of goods/services
 The debit note issued by the supplier to the recipient (if
any)
 Bill of entry
 An invoice issued under certain circumstances like the
bill of supply issued instead of tax invoice if the amount
is less than Rs 200 or in situations where the reverse
charge is applicable as per GST law.
 An invoice or credit note issued by the Input Service
Distributor (ISD) as per the invoice rules under GST.
 A bill of supply issued by the supplier of goods and
services or both.
UTILIZATION OF ITC
Order in which the adjustment can be
done
Component
of ITC IGST CGST SGST / UTGST

IGST 1 2 3

CGST 2 1 -

SGST / UTGST 2 - 1
Contact No. 9486104135
mail : [email protected]