GST BASIC KNOWLEDGE – PART 2

Standard

1)“output tax” in relation to a taxable person, means the tax chargeable under       this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis;

(2) “outward supply” in relation to a taxable person, means supply of goods or

services or both, whether by sale, transfer, barter, exchange, licence, rental, lease or
disposal or any other mode, made or agreed to be made by such person in the course

or furtherance of business;

3)“place of business” includes––
(a) a place from where the business is ordinarily carried on, and includes a
warehouse, a godown or any other place where a taxable person stores his
goods, supplies or receives goods or services or both; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an

agent, by whatever name called;

(4) “place of supply” means the place of supply as referred to in Chapter V of

the Integrated Goods and Services Tax Act.

5)“recipient” of supply of goods or services or both, means—
(a) where a consideration is payable for the supply of goods or services or
both, the person who is liable to pay that consideration;
(b) where no consideration is payable for the supply of goods, the person
to whom the goods are delivered or made available, or to whom possession or
use of the goods is given or made available; and
(c) where no consideration is payable for the supply of a service, the
person to whom the service is rendered,
and any reference to a person to whom a supply is made shall be construed as a
reference to the recipient of the supply and shall include an agent acting as such on

behalf of the recipient in relation to the goods or services or both supplied;

6)“reverse charge” means the liability to pay tax by the recipient of supply of

goods or services or both instead of the supplier of such goods or services or both
under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub-

section (4) of section 5 of the Integrated Goods and Services Tax Act;

7(“services” means anything other than goods, money and securities but
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;

(8) “State” includes a Union territory with Legislature;

(9) “State tax” means the tax levied under any State Goods and Services Tax

Act;

(10) “supplier” in relation to any goods or services or both, shall mean the

person supplying the said goods or services or both and shall include an agent
acting as such on behalf of such supplier in relation to the goods or services or both

supplied;

(11) “turnover in State” or “turnover in Union territory” means the aggregate

value of all taxable supplies (excluding the value of inward supplies on which tax is
payable by a person on reverse charge basis) and exempt supplies made within a State
or Union territory by a taxable person, exports of goods or services or both
and inter-State supplies of goods or services or both made from the State or Union

territory by the said taxable person but excludes central tax, State tax, Union territory

tax, integrated tax and cess;

12)“works contract” means a contract for building, construction, fabrication,
completion, erection, installation, fitting out, improvement, modification, repair,
maintenance, renovation, alteration or commissioning of any immovable property
wherein transfer of property in goods (whether as goods or in some other form) is

involved in the execution of such contract;

(13) For the purposes of this Act, the expression “supply” includes––
(a) 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;
(b) import of services for a consideration whether or not in the course or
furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without a
consideration; and
(d) the activities to be treated as supply of goods or supply of services as

referred to in Schedule II.

14)The central tax on the supply of petroleum crude, high speed diesel, motor spirit
(commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect
from such date as may be notified by the Government on the recommendations of the

Counci.

15)Notwithstanding anything to the contrary contained in this Act but subject to
the provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate
turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in
lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but
not exceeding,––
(a) one per cent. of the turnover in State or turnover in Union territory in case of
a manufacturer,
(b) two and a half per cent. of the turnover in State or turnover in Union territory
in case of persons engaged in making supplies referred to in clause (b) of paragraph 6
of Schedule II, and
(c) half per cent. of the turnover in State or turnover in Union territory in case of
other suppliers,
subject to such conditions and restrictions as may be prescribed:
Provided that the Government may, by notification, increase the said limit of fifty lakh
rupees to such higher amount, not exceeding one crore rupees, as may be recommended by

the Council.

16)The liability to pay tax on goods shall arise at the time of supply, as determined
in accordance with the provisions of this section.
(2) The time of supply of goods shall be the earlier of the following dates, namely:—
(a) the date of issue of invoice by the supplier or the last date on which he is
required, under sub-section (1) of section 31, to issue the invoice with respect to the
supply; or
(b) the date on which the supplier receives the payment with respect to the
supply:
Provided that where the supplier of taxable goods receives an amount up to one
thousand rupees in excess of the amount indicated in the tax invoice, the time of
supply to the extent of such excess amount shall, at the option of the said supplier, be

the date of issue of invoice in respect of such excess amount.

17)In case of supplies in respect of which tax is paid or liable to be paid on reverse
charge basis, the time of supply shall be the earliest of the following dates, namely:—
(a) the date of the receipt of goods; or
(b) the date of payment as entered in the books of account of the recipient or the
date on which the payment is debited in his bank account, whichever is earlier; or
(c) the date immediately following thirty days from the date of issue of invoice or
any other document, by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under
clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the

books of account of the recipient of supply.

18)Where it is not possible to determine the time of supply under the provisions of
sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such
return is to be filed; or

(b) in any other case, be the date on which the tax is paid.

19)Where the goods or services or both are used by the registered person partly for
effecting taxable supplies including zero-rated supplies under this Act or under the Integrated
Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the
amount of credit shall be restricted to so much of the input tax as is attributable to the said
taxable supplies including zero-rated supplies.
(3) The value of exempt supply under sub-section (2) shall be such as may be prescribed,
and shall include supplies on which the recipient is liable to pay tax on reverse charge basis,
transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule
II, sale of building.
(4) A banking company or a financial institution including a non-banking financial
company, engaged in supplying services by way of accepting deposits, extending loans or
advances shall have the option to either comply with the provisions of sub-section (2), or
avail of, every month, an amount equal to fifty per cent. of the eligible input tax credit on
inputs, capital goods and input services in that month and the rest shall lapse:
Provided that the option once exercised shall not be withdrawn during the remaining
part of the financial year:
Provided further that the restriction of fifty per cent. shall not apply to the tax paid on
supplies made by one registered person to another registered person having the same

Permanent Account Number.

20)food and beverages, outdoor catering, beauty treatment, health services,

cosmetic and plastic surgery except where an inward supply of goods or services
or both of a particular category is used by a registered person for making an
outward taxable supply of the same category of goods or services or both or as
an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre;
(iii) rent-a-cab, life insurance and health insurance except where––
(A) the Government notifies the services which are obligatory for an
employer to provide to its employees under any law for the time being in
force; or
(B) such inward supply of goods or services or both of a particular
category is used by a registered person for making an outward taxable
supply of the same category of goods or services or both or as part of a
taxable composite or mixed supply; and
(iv) travel benefits extended to employees on vacation such as leave or
home travel concession;
(c) works contract services when supplied for construction of an immovable
property (other than plant and machinery) except where it is an input service for further
supply of works contract service;
(d) goods or services or both received by a taxable person for construction of an
immovable property (other than plant or machinery) on his own account including
when such goods or services or both are used in the course or furtherance of business.
Explanation.––For the purposes of clauses (c) and (d), the expression
“construction” includes re-construction, renovation, additions or alterations or repairs,
to the extent of capitalisation, to the said immovable property;
(e) goods or services or both on which tax has been paid under section 10;
(f) goods or services or both received by a non-resident taxable person except
on goods imported by him;
(g) goods or services or both used for personal consumption;
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free

samples;

21)Where there is a change in the constitution of a registered person on account of
sale, merger, demerger, amalgamation, lease or transfer of the business with the specific
provisions for transfer of liabilities, the said registered person shall be allowed to transfer the
input tax credit which remains unutilised in his electronic credit ledger to such sold, merged,

demerged, amalgamated, leased or transferred business in such manner as may be prescribed.

22)In case of supply of capital goods or plant and machinery, on which input tax credit

has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may  be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher:

Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied

as scrap, the taxable person may pay tax on the transaction value of such goods determined

under section 15.

23)(1)Every supplier shall be liable to be registered under this Act in the State or

Union territory, other than special category States, from where he makes a taxable supply of
goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh
rupees:
Provided that where such person makes taxable supplies of goods or services or both
from any of the special category States, he shall be liable to be registered if his aggregate
turnover in a financial year exceeds ten lakh rupees.
(2) Every person who, on the day immediately preceding the appointed day, is registered
or holds a licence under an existing law, shall be liable to be registered under this Act with
effect from the appointed day.
(3) Where a business carried on by a taxable person registered under this Act is
transferred, whether on account of succession or otherwise, to another person as a going
concern, the transferee or the successor, as the case may be, shall be liable to be registered
with effect from the date of such transfer or succession.
(4) Notwithstanding anything contained in sub-sections (1) and (3), in a case of
transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case

may be, demerger of two or more companies pursuant to an order of a High Court, Tribunal otherwise, the transferee shall be liable to be registered, with effect from the date on which
the Registrar of Companies issues a certificate of incorporation giving effect to such order of
the High Court or Tribunal.
Explanation.––For the purposes of this section,––
(i) the expression “aggregate turnover” shall include all supplies made by the
taxable person, whether on his own account or made on behalf of all his principals;
(ii) the supply of goods, after completion of job work, by a registered job worker
shall be treated as the supply of goods by the principal referred to in section 143, and
the value of such goods shall not be included in the aggregate turnover of the registered
job worker;

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