1. GST BASIC CONCEPTS SUPPLY Levy & Composition
PRESENTED BY
CA VIRENDRA PARWAL

2. Services no longer required
WHY GST : BENEFITS
To Trade
Reduction in multiplicity of
taxes
Mitigation of cascading/ double taxation
More efficient neutralization of
taxes especially for exports
Development of common
national market
Simpler tax regime
Fewer rates and exemptions
Distinction between Goods &
Services no longer required
To Consumers
Simpler Tax system
Reduction in prices of goods & services due to elimination of cascading
Uniform prices throughout the country
Transparency in
taxation system
Increase in employment opportunities

3. EXISTING INDIRECT TAX STRUCTURE
Entry Tax & Octroi
Customs
Duty
Excise
Duty
Entertainment Tax
Electricity Duty
Central Levies
Luxury Tax
Sales Tax
Service
Tax
VAT
State
Levies

4. CONSTITUTION AMENDMENT
CAB passed by Rajya Sabha on & Lok
Sabha on
Notified as Constitution (101st on
Key Features:
Amendment ) Act,
Concurrent jurisdiction for levy & collection of GST by the Centre & the States – Article 246A
Centre to levy & collect IGST on supplies in the course of inter-State trade or commerce including imports – Article 269A

5. GST COUNCIL GST Council constituted w.e.f. 12.09.2016
FOURTEEN meetings held so far
Decisions:
Threshold limit for exemption to be Rs. 20 lakh (Rs lakh for special category States)
Compounding threshold limit to be Rs. 50 lakh – not available to inter-State suppliers, service providers (except restaurant service) & specified category of manufacturers
Government may convert existing area based exemption
schemes into reimbursement based scheme

6. ….GST COUNCIL…. Decisions:
To ensure single interface – all administrative control
over
90% of taxpayers having turnover below Rs. 1.5 cr. would vest with State tax administration
10% of taxpayers having turnover below of Rs. 1.5 cr.
would vest with Central tax administration
taxpayers having turnover above Rs. 1.5 cr. would be divided equally between Central and State tax administration
Same arrangement would be applicable for IGST Act with few exceptions

7. GSTN Incorporated on 28.03.2013 as Section 25 private
limited company with authorized equity of Rs. 10 crore
Strategic control to remain with Government
Equity Holders
Central Government %
EC and all States together %
Financial Institutions – 51%

8. …GSTN…. To function as a Common Pass-through portal for taxpayers-
submit registration application
file returns
make tax payments
To develop back end modules for 27 States (MODEL –II)
Infosys appointed as Managed Service Provider (MSP)
Appointed 34 GST Suvidha Providers (GSPs)
to develop simple applications to be used by taxpayers for interacting with GSTN

9. ROLE OF CBEC
Prominent role as custodian of Centre’s fiscal destiny in relation to indirect taxes
Role in Policy making: Drafting of GST Law, Rules & Procedures
CGST, UTGST & IGST Law
Assessment, Audit, Anti-evasion & enforcement under CGST &
IGST Law
Levy & collection of Central Excise duty on products outside GST
Five specified Petroleum Products & Tobacco
Levy & collection of Customs duties
Developing linkages of CBEC - GST System with GSTN
Training of officials of both Centre & States

10. Central & State Taxes to be subsumed in GST
VAT /
Sales Tax
Central
Excise
duty
Entertainment
Tax (not levied
by local bodies)
Surcharges &
Cesses
Additional
duties of
excise
Surcharge &
Cesses
State
Taxes
Central
Sales
Tax
Central
Taxes
Purchase
Tax
Excise duty
levied under
Medicinal &
Toiletries
Preparation
Act
Service
Tax
Taxes on
lottery,
betting &
gambling
Entry
Tax
Additional
duties of
customs (CVD
& SAD)
Luxury
Tax

11. Major Taxes to be retained Post-GST
Local Body Taxes
Central Taxes
State Taxes
Central Excise on:
Tobacco products
Petroleum Products
Basic Custom Duty
State Excise on Alcohol liquor
State VAT on:
Alcohol liquor
Petroleum Products
Stamp Duty
Electricity Duty
Profession tax
Road tax
Taxes on Mineral Rights
Property Tax
Entertainment Duty
Gram Panchayat Tax

12. GST- FEATURES…. Destination-based consumption tax.
Applies to all supplies of goods/services (as against manufacture, sale or provision of service) made for a consideration except:
Exempted goods / services – common list for CGST & SGST
Goods / services outside the purview of GST
Transactions below threshold limits
Dual GST having two concurrent components-
Central GST (CGST) levied & collected by Centre
State GST (SGST) levied & collected by States [including Union territories with legislature]
Union territory GST (UTGST) levied and collected by Union territories without legislature
CGST, SGST and UTGST on intra-State supplies of goods / services in India

13. GST- FEATURES…. IGST levied and collected by the Centre applicable to:
Inter-State supplies of goods / services in India
Inter-state stock transfers of goods
Import of goods / services
Export of goods / services
Export of goods/services- Zero rated
Tobacco Products – under GST + Central Excise
GST would apply to all goods and services except Alcohol for human consumption.
GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural gas) would be applicable from a date to be recommended by the GSTC.

15. Whom to pay (Jurisdiction) What compliance to be done
Broad Framework of GST
Taxable Event
- Supply
When to pay
- Time of Supply
Whom to pay (Jurisdiction)
- Place of Supply
How much to pay
- Valuation
- Rate of tax
- Input Tax Credit
What compliance to be done
- Registration
- Payment
- Returns

16. Person [Section 2(84) of CGST Act]
“Person” includes -
Individual
HUF
Company
Firm
LLP
AOP or BOI, whether incorporated or not, in India or outside India
Corporation established by or under Central, State or Provincial Act
Government company
Local Authority
body corporate incorporated by or under the laws of a country outside India
co-operative society registered under any law relating to cooperative societies
society as defined under the Societies Registration Act, 1860 (21 of 1860)
Trust
Central or state government
every artificial juridical person, not falling within any of the preceding sub-clauses

17. Taxable Person and Registered Person
Taxable person means [Section 2(107) of CGST Act]:
a person who is registered; or
liable to be registered under section 22 or section 24;
Registered person means [Section 2(94) of CGST Act]:
a person who is registered u/s 25 of CGST Act; but
does not include a person having a Unique Identity Number

18. Distinct Person Distinct person u/s 25(4) and (5) of CGST Act:
A person having registration in more than one state or union territory to be treated as distinct person in respect of each such registration
Different establishments of same person in more than one state or union territory to be treated as establishments of distinct persons
Distinct person means [explanation 1 to section to section 8 of IGST Act]:
An establishment in India and any other establishment outside India
An establishment in a State or Union territory and any other establishment outside that State
An establishment in a State or Union territory and business vertical registered within that state or union territory

19. Definition of ‘Goods’ Goods means [section 2(52) of CGST Act]:
Every kind of movable property
Other than:
Money [Sec. 2(75)]
Securities [Sec. 2(101)]
But includes
Actionable claim [sec 2(1)];
Growing crops, grass and things attached to or forming part of land which are agreed to be severed before supply or under contract of supply
In addition to above, Schedule II deems certain supply to be that of goods
Whether electricity is liable to GST?
Clause 6 of Schedule III:
Actionable claims other than lottery, betting and gambling are neither to be treated as supply of goods or nor supply of service

20. Definition of ‘Service’
Services means anything other than[section 2(102) of CGST Act]:
Includes:
activities relating to the use of money; or
its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination
for which a separate consideration is charged
Goods
Money
Security
In addition to above, Schedule II deems certain supply to be that of services

21. Aggregate Turnover [Section 2(6) of CGST Act]
Means
Excludes
Aggregate value of:
Taxable supplies
Exempt supplies u/s 11
Nil rated supplies
Non-taxable supplies
Export supplies
Inter-state supplies
computed on all India basis of person having same PAN
Value of inward supply on which tax is payable under RCM
CGST, SGST, UTGST, IGST and cess
Exempt Supplies u/s 2(47)

22. Supply – Broad Concept Concept of a supply is broader than a sale :
Transfer of title in goods is required for Sales
Supply doesn’t require transfer of title in goods
Presence of two persons for “taxable supply”:
Pre-requisite for VAT and Service tax
Not pre-requisite for Excise
Will not be a pre-requisite for GST
Even self-supplies may be a taxable supply in GST
Presence of Consideration for “taxable supply”:

23. Definition of Supply Section 7 defines “Supply” to Include………………….
Definition of “Supply” is inclusive definition and hence one has to understand normal meaning of Supply
Apart from what is provided in the section 3, the transactions covered under the general meaning of supply can also be covered
Dictionary meanings of “Supply”:
“Make(something needed or wanted) available to someone; provide”- Oxford Dictionary
“To provide materials, goods and services- an act of providing something” – Cambridge Dictionary
“To make (something) available to be used : to provide someone or something with : To make available”- Merriam- Webster Dictionary

24. Relevant extracts of definition of “Supply” under foreign laws
Australia GST Act u/s 9 and 10 defines “Supply” to mean:
A supply is any form of supply whatsoever
Without limiting subsection (1), supply includes any of these…………………….
United Kingdom u/s 5(2) of VAT Act, 1994:
Subject to any provisions made by that Schedule and to Treasury orders under sub-sections (3) to (6) below-
“supply” in this Act includes all forms of supply.
Malaysian GST Act u/s 4 defines “Supply” to mean:
All forms of supply, including supply of imported services, done for a consideration and anything which is not a supply of goods but is done for a consideration is a supply of services

25. SCOPE OF SUPPLY -SECTION 7
All forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business
Import of services for a consideration whether or not in the course or furtherance of business
The activities specified in Schedule I, made or agreed to be made without a consideration
The activities to be treated as supply of goods or supply of services as referred to in Schedule II.

26. TAX LIABILITY OF COMPOSITE & MIXED SUPPLIES -SECTION 8
A composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply.
A mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax.
Composite or Mixed Supply

27. RELEVANT DEFINITIONS
2(30) 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.
Example: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is the principal supply.
2(66) Mixed Supply: means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.
Example: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately.

28. SCHEDULE – I : SUPPLY WITHOUT CONSIDERATION
Permanent transfer/disposal of business assets where ITC has been availed –
E.g. Permanent transfer of Air conditioner by a dealer of air conditioner from his stock in trade to personal use at residence.
Supply of goods or services or both between related persons or between distinct persons as specified in Section 25, when made in the course or furtherance of business.
E.g. Electronic appliance dealer transferring such appliances to his other establishment in another state will constitute a supply..
Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.
3. Supply of goods: by a principal to his agent where the agent undertakes to supply such goods on behalf of his principal and vice versa.
E.g. Principal provided goods to agent and agent supply such goods on behalf of his principal will be supply.
4. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business.
E.g. Any sponsorship services taken from related person outside India will be supply.

29. SCHEDULE-II Supply of Goods Supply of Services
Transfer of Title in goods.
Transfer of goods or right in goods without transfer of title thereof .
Eg. Transfer of computer to be used by a customer without transfer of ownership .
Any transfer of title where property in goods will pass at a future date. Eg.Transfer of Computer after paying all 10 installments in June 2018.
Lease, tenancy, easement, licence to occupy land .
Transfer or disposal of business assets whether or not for a consideration.
Lease or letting out of the building for business or commerce, either whole or partly

30. SCHEDULE-II Supply of Goods Supply of Services
Any supply of goods by any unincorporated association or Body of Person to member for consideration.
Ex. Sale of T. Shirt to member by any club
Treatment or process which is applied to another person’s goods .
Ex. Repair of Computer of customer
Where any person ceases to be a taxable person his business assets are deemed to be supply of goods unless business is transferred as a going concern or business is carried on by a personal representative who is deemed to be a taxable person
Goods of the business are put to any private use or made available other than business purpose , whether or not for a consideration .
Ex. Mobile given to employees who can use the same for personal calls .

31. DEEMED SUPPLY OF SERVICES
Renting of immovable property
Construction of complex except where entire consideration received after issuance of completion certificate or first occupation.
Temporary transfer or permitting the use of any IPR . Eg. Transfer of right to use of Know How .
Development, design, programming, upgradation of IT Software.
Agreeing to the obligation to refrain from an act , tolerate an act or to do an act .
Works contract.
Transfer of the right to use any goods for any purpose .
Supply of food or any other article for human consumption by way of or as a part of any service . Eg. Restaurant, Outdoor catering.

32. SCHEDULE -III ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES
Services by an employee to the employer in the course of or in relation to his employment.
Services by any Court or Tribunal established under any law for the time being in force.
(a) The functions performed by the MP, MLA etc.; (b) The duties performed by any person who holds any post in pursuance of the provisions of the Constitution; or (c) The duties performed by the C.G. or a S.G. or local authority.
Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
Actionable claims, other than lottery, betting and gambling.

33. ILLUSTRATIONS
1. An individual buys a car for personal use and after a year sells it to a car dealer. Will this transaction is supply under GST?
No.
Supply is not made in the course or furtherance of business.
2. Whether GST payable on disallowance of expenses for personal use.
Yes.
Deemed supply of service
3. Whether GST payable on tea/ snacks consumed by the employees in company/partner in firm during working? If yes, which supply

34. LEVY AND COLLECTION OF TAX
(SECTION 9 of CGST ACT)
CGST levied on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption at such rates, not exceeding 20%.
Specified categories of supply of goods or services or both would be under reverse charge.
Supply of taxable goods or services or both by an un-registered person to a registered person shall be under reverse charge basis on the recipient.
E-Commerce operator is liable to pay GST on specified categories of services, supplied through it.

35. LEVY AND COLLECTION OF TAX
(SECTION 9 of CGST ACT)
Where an E-commerce operator does not have a physical presence in the taxable territory, person representing such E-commerce operator for any purpose in the taxable territory shall be liable to pay tax.
Where an E-commerce operator does not have a physical presence in the taxable territory and also he does not have a representative, E-commerce operator to appoint a person in the taxable territory for the purpose of paying tax.

36. COMPOSITION LEVY (SECTION 10) Category of Registered Persons
A Registered person whose aggregate turnover in the preceding FY did not exceed Rs. 50 Lakhs.
All the registered taxable person under the same PAN should be under composition .
Cannot collect tax from the recipient on supplies made.
No credit of input tax .
Rates under Composition:
Category of Registered Persons
Rate of Tax
Manufacturers, other than as notified by Government. 1%
Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II, i.e. restaurant supplies.
2.5%
Any other supplier.
0.5%

37. COMPOSITION LEVY (SECTION 10)
CONDITIONS TO OPT FOR COMPOSITION LEVY
Not a supplier of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II (restaurant);
Not engaged in making supply of exempted goods under GST;
Not making any inter-State outward supplies of goods;
Not making any supply of goods through an electronic commerce operator;
Not a manufacturer of goods as may be notified.

38. Composition Rules Conditions and restrictions for Composition Levy:
Neither a casual taxable person nor a non-resident taxable person.
Goods held in stock on the appointed day, should not be purchased in the course of inter-state trade or imported.
Goods held in stock not purchased from un-registered supplier, and if purchased then tax paid under RCM.
Shall pay tax on RCM basis in case of inward supplies.
Not a manufacturer as notified by Government to be ineligible.
Mention “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply; and
Mention “composition taxable person” on every notice or signboard displayed at all places of business.

39. THANK YOU
CA VIRENDRA PARWAL