Introduction to GST - Class VIII

France was the first country in the world to introduce the Goods and Services Tax (GST) in 1954.

Under the CGST Act, the scope of supply includes both supplies made with consideration (in the course or furtherance of business) and specific supplies made without consideration as listed in Schedule I.

The Model GST Law as originally drafted and presented contained 162 sections, 25 chapters, and 4 schedules.

According to the GST law, if a person pays tax under the wrong head (intra-state instead of inter-state or vice-versa), they are not required to pay interest on the correct tax payment, provided the original tax was paid.

If a taxpayer pays tax under the wrong head, they must pay the correct tax and then claim a refund of the tax paid under the incorrect head.

Under the GST registration process, if no query is raised, the registration is deemed approved within 3 common working days.

The power to issue an order for arrest under the GST Act is vested in the Commissioner of CGST or SGST.

The Central Government notifies the tax rates under the CGST Act, but it must do so based on the recommendations of the GST Council.

While alcoholic liquor for human consumption is kept outside the purview of GST, alcohol used for industrial purposes is taxable under GST.

If tax is paid under the wrong GSTIN, the taxpayer must pay the tax again under the correct GSTIN and then apply for a refund of the amount paid under the incorrect GSTIN.

A standard registered taxable person is required to file GSTR-3 by the 20th of the month succeeding the tax period.

The time of supply (taxable event) is determined by the earlier of the basic tax point (e.g., date of invoice) or the actual tax point (e.g., date of payment).

Unadjusted input tax credit (ITC) from previous tax regimes (like VAT or CENVAT) is allowed to be carried forward as ITC in the GST regime, subject to certain conditions.

If a proper officer needs clarification, they must issue a notice in form GST REG-03 within 3 working days of receiving the application in REG-01.

GST is a consumption based tax which is levied on the basis of “Destination principle.” 

GST is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as set off. 

GST is a consumption based tax which is levied on the basis of “Destination principle.” 

GST is proposed to be levied at all stages right from manufacture up to final consumption, with the credit of taxes paid at previous stages available as set off. In a nutshell, only value addition will be taxed and the burden of tax is to be borne by the final consumer.

GST is a destination-based tax, meaning the tax revenue goes to the state where the goods or services are consumed, rather than where they are produced.

SGST means State Good and Services Tax. It is an abbreviation.

Under GST, IGST is a tax levied on all Inter-State supplies of goods and/or services and will be governed by the IGST Act. IGST will be applicable on any supply of goods and/or services in both cases of import into India and export from India.

Note: 

Under IGST,

• Exports would be zero-rated.
• Tax will go to the Central government.

GST will replace a major part of indirect taxes. This law has replaced many indirect taxes like VAT, Service tax etc. in country. GST is one indirect tax for the entire country.

Integrated Good and Services Tax is the full form of IGST

Under GST, SGST is a tax levied on Intra State supplies of both goods and services by the State Government and will be governed by the SGST Act. 

Taxes collected under CGST are the revenues of the Central Government and not State Government.

Import of goods and services into the country are covered under IGST. Other duties are also levied in addition to IGST.

GST is levied as per dual aspect with Centre and States simultaneously as CGST and SGST.

GST is implemented to accomplish the objective of "one nation one tax". This is the idea behind implementing the GST which was taken into action.

Intra-State supply of goods or services is when the location of the supplier and the place of supply i.e., location of the buyer are in the same state. 
In Intra-State transactions, a seller has to collect both CGST and SGST from the buyer. The CGST gets deposited with Central Government and SGST gets deposited with State Government.

Intra-State supply of goods or services is when the location of the supplier and the place of supply i.e., location of the buyer are in the same state. In Intra-State transactions, a seller has to collect both CGST and SGST from the buyer.

The implementation of GST will help create a common market in India and reduce cascading effects of the tax on the cost of goods and services. Not only the tax, but also the cost of goods and services may be affected in some sectors, and there will be a boost in revenue.

GST is a destination-based tax, which is levied on the consumption of goods and services.

The primary objective of GST is to eliminate the cascading effect of taxes, which is caused by the multiple levies of taxes at different stages of production and distribution.

GST is categorized into CGST, SGST or IGST depending on whether the transaction is Intra-State or Inter-State.

Inter-State supply of goods or services is when the location of the supplier and the place of supply are in different states. 

Inter-State supply of goods or services is when the location of the supplier and the place of supply are in different states. Also, in cases of export or import of goods or services or when the supply of goods or services is made to or by a SEZ unit, the transaction is assumed to be Inter-State. In an Inter-State transaction, a seller has to collect IGST from the buyer.

GST is designed to enhance the manufacturing system (by removing cascading taxes), expand the distribution system (by creating a unified market), and increase tax revenue (by broadening the tax base).

By bringing more businesses into the formal economy and simplifying compliance, GST widens the tax base, which in turn leads to higher tax revenue for the government.

In accounting, GST paid on purchases is recorded as an asset (Input GST), while GST collected on sales is recorded as a liability (Output GST). These represent the two primary categories for tracking tax credits and tax obligations.

GST paid by a business on its purchases is referred to as Input GST, which represents a credit that can be used to offset tax liabilities.

Under the GST law, Input CGST is specifically meant to be set off against Output CGST and Output IGST. It cannot be used to pay off Output SGST.

According to the GST set-off rules, Input IGST must first be utilized to pay off the Output IGST liability before it can be used for CGST or SGST.

• CGST rate or Central GST rate is levied on the consumption and supply of goods and services, the proceeds of which will be attributable to the Centre, as per the CGST Act.
• SGST rate or State GST rate is levied on the consumption and supply of goods and services, the proceeds of which will be attributable to the States, as per the SGST Act – which is passed and recognised by the assemblies of respective States.
• IGST rate of Integrate State rate , also referred to as Inter-State GST is levied on the consumption and supply of goods and services, whenever such supplies are happening across state boundaries, and in terms of imports, as per the IGST Act.

Input SGST is primarily used to set off Output SGST. If any balance remains, it can then be used to set off Output IGST.

GST collected from customers on sales is termed Output GST, representing a liability for the business to pay to the government.

Wef 1.2.2019, the Government has changed the order in which ITC of IGST, CGST & SGST/UTGST can be adjusted from the liability payable of IGST, CGST & SGST/UTGST. Now IGST has to be fully exhausted before other taxes can be utilised. 

After exhausting the Output CGST liability, any remaining Input CGST credit can be utilized to set off Output IGST liability.

The order for utilizing Input IGST is: first against Output IGST, then against Output CGST, and finally against Output SGST.

When purchasing goods within the same state, the business pays both CGST and SGST. These are recorded as Input CGST and Input SGST, which are debit entries.

After setting off against Output SGST, any remaining Input SGST credit can be utilized to set off Output IGST liability.

For interstate sales returns, the Output IGST previously collected must be reversed. This is done by debiting the Output IGST account.

Input SGST and Input CGST are distinct and cannot be used to offset each other under the current GST framework.

True , IGST can be used in setting off all types of output GST.

CGST is an element of Goods and Service Tax. Central Goods and Service Tax has categories under Goods and Service Tax (CGST, IGST and SGST) with a concept of one tax one nation. CGST waterfall under Central Goods and Service Tax Act of 2016. 

As per section 9 (1) Subject to the supplies of sub-section (2), there shall be levy a tax called the innermost goods and services tax on all intra-State provisions of goods or services or both, apart from on the supply of intoxicating liquid for human consumption, on the value strong-minded under section 15 and at such rates, not exceeding twenty per cent  as may be notified by the Government on the recommendation of the assembly and together in such method as may be arranged and shall be waged by the taxable person.

Thus, the correct option is C.

As per Section 2(68) of the CGST Act, 2017, “Job work” means any treatment or process undertakes by a person on goods belonging to another registered person. 

The registered individual on whose goods (inputs or capital goods) job work is performed is called Principal as per section 143 of CGST Act. The registered principal may without the reward of tax sends inputs or capital goods to a Job worker for job work and if required from there then to another job worker.

 Once the conclusion of the job work principal shall either bring back the goods to the place of business or supply the same straight from the place of business/building of the Job worker. If input within 1 year and Capital goods within 3 years.

Thus, the correct option is B.

GST is a destination-based tax that replaced various indirect taxes, most notably the Central Sales Tax (CST) and Central Excise Duty, to create a unified market.

Transitional provisions ensure that legal proceedings initiated under the previous tax regime continue to be governed by that regime until their conclusion.

Goods and Services Tax is an indirect tax used in India on the provider of goods and services. It is an inclusive, multistage, reason-based tax inclusive because it has subsumed approximately all the indirect taxes apart from a few state taxes. 

Multi-staged as it is, the GST is compulsory at each step in the manufacturing process, but is supposed to be refund to all party in a variety of stage of manufacture other than the final customer and as a purpose base tax, it is together from point of utilization and not point of origin like preceding taxes. 

Goods and services are separated into five dissimilar tax slabs for collected works of tax - 0%, 5%, 12%, 18% and 28%.

Thus, the correct option is D.

Under the GST return filing process, GSTR-2A (the statement of inward supplies) is auto-populated for the recipient based on the supplier's GSTR-1 filing by the 11th of the following month.

The GST Act specifies various modes for serving notices, but courier with acknowledgement due is generally not recognized as an official statutory mode under the Act.

According to GST registration rules, once a clarification is provided by the applicant in response to an objection, the officer must approve or reject it within 7 working days.

IGST (Integrated Goods and Services Tax) is collected by the central government but is apportioned between the center and the states as per the destination-based principle.

Time limit for taking ITC has been introduced to prevent people from taking back-dated invoices to reduce their current tax liabilities.

For all general purpose, the time limit for taking ITC in respect of any invoice is given u/s 16(4) to be earlier of:

• Due date of filing return for the month of September in the year following the Financial Year to which such credit relates (20th October, unless extended)
• Actual date of filing the annual return for the Financial Year to which such credit relates.

Input Tax Credit (ITC) or Purchase Tax is one of the most significant aspects in any price added tax organization. This ensures that tax is paid on value-adding only, at each stage from production to final consumer. 

“Input Tax” in relative to a taxable person, means the Goods and Services Tax charge on him for any supply of goods and/or services to him, which are used or are future to be used, for the furtherance of his business. 

Input Tax Credit under GST – Conditions to Claim ITC must be fulfilled and forms one of the most critical activities for every business to resolve its tax liability.

Thus, the correct option is C.

No tax shall be payable on the supply of goods and /or services made before the introduction of GST where a part of consideration for the said supply is received on or after the introduction of GST, but the full duty or tax payable on such supply has already been paid under the earlier law.

Under the GST Act, the input tax credit for both inputs and capital goods can be claimed in one installment, provided the conditions for eligibility are met.

The proposal for a Goods and Services Tax in India was first initiated in the year 2000 by the Vajpayee government with the formation of an empowered committee.

The GST Council is the governing body for GST in India, and by constitutional mandate, the Union Finance Minister serves as its Chairperson.

Under GST law, exporters can claim a refund either by exporting under bond without paying IGST and claiming a refund of unutilized input tax credit, or by paying IGST and claiming a refund of the tax paid. Both methods are valid legal procedures for exporters.

Under the GST framework, if a refund claim is found to be ineligible or if there is an excess amount that cannot be directly refunded to the taxpayer, the law mandates that such amounts be credited to the Consumer Welfare Fund to prevent unjust enrichment.

E-commerce operators are required to register under GST mandatorily, regardless of their aggregate turnover, because they are responsible for collecting tax at source (TCS) or discharging tax on specific supplies made through their platform.