v 1.

vi vi

7. Procedure for registration [Sections 25, 26 & 27] ...................................................8.32

DETAILED CONTENTS : MODULE - 2 8. Amendment of registration [Section 28] ...................................................................8.64

9. Cancellation or suspension of registration

CHAPTER 7 – INPUT TAX CREDIT and revocation of cancellation [Sections 29 & 30]..................................................8.68

Learning Outcomes............................................................................................................................ 7.1 Let Us Recapitulate ..........................................................................................................................8.86

1. Introduction ................................................................................................................. 7.2 Test Your Knowledge......................................................................................................................8.95

2. Relevant definitions................................................................................................... 7.5 Answers..................................................................................................................................................8.99

3. Eligibility and conditions for taking input tax credit [Section16] ............... 7.10
CHAPTER 9- TAX INVOICE, CREDIT AND DEBIT NOTES
4. Apportionment of credit & blocked credits [Section 17]..............................7.32
Learning Outcomes............................................................................................................................ 9.1
5. Credit in special circumstances [Section 18] ....................................................7.86
1 Introduction.............................................................................................................................. 9.2
6. Distribution of credit by Input Service
2. Relevant definitions ............................................................................................................... 9.3
Distributor [Sections 20 & 21] ........................................................................... 7.104
3. Tax invoice [Section 31] ....................................................................................................... 9.4
7. How ITC is utilised ................................................................................................ 7.120
4. Credit and Debit notes [Section 34]..............................................................................9.52
Let Us Recapitulate ....................................................................................................................... 7.138
5. Prohibition of unauthorized collection of tax [Section 32] ..................................9.60
Test Your Knowledge................................................................................................................... 7.155
6. Amount of tax to be indicated in tax invoice and other
Answers ................................................................................................................................ 7.177
documents [Section 33].....................................................................................................9.61

CHAPTER 8 – REGISTRATION Let Us Recapitulate ..........................................................................................................................9.61

Learning Outcomes............................................................................................................................ 8.1 Test Your Knowledge......................................................................................................................9.72

1. Introduction............................................................................................................................. .8.2 Answers .................................................................................................................................................9.73

2. Relevant definitions............................................................................................................... 8.3

CHAPTER 10- ACCOUNTS AND RECORDS; E-WAY BILL
3. Concept of taxable person [Section 2(107)]................................................................. 8.6
Learning Outcomes..........................................................................................................................10.1
4. Persons liable for registration [Section 22] .................................................................. 8.7
1. Introduction............................................................................................................................10.2
5. Compulsory registration in certain cases [Section 24]...........................................8.20
2. Relevant definitions .............................................................................................................10.3
6. Persons not liable for registration [Section 23] ........................................................8.22
3. Accounts and other records [Section 35]....................................................................10.5

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 vii [Link] viii

4. Registration Requirements............................................................................................ 12.37

4. Period of retention of accounts [Section 36].......................................................... 10.15
Let Us Recapitulate ....................................................................................................................... 12.45
5. Electronic way bill [Section 68 read
with relevant rules] ........................................................................................................... 10.16 Test Your Knowledge................................................................................................................... 12.48

Let Us Recapitulate ....................................................................................................................... 10.40 Answers............................................................................................................................................... 12.50

Test Your Knowledge................................................................................................................... 10.52

CHAPTER 13: RETURNS
Answers .............................................................................................................................................. 10.53
Learning Outcomes..........................................................................................................................13.1

CHAPTER 11- PAYMENT OF TAX 1. Introduction............................................................................................................................13.2

Learning Outcomes..........................................................................................................................11.1 2. Relevant definitions .............................................................................................................13.5

1. Introduction............................................................................................................................11.2 3. Furnishing details of outward supplies [Section 37 read with Rule 59

of CGST Rules] ......................................................................................................................13.9
2. Relevant definitions.............................................................................................................11.4
4. Communication of Details of Inward Supplies and Input
3. Payment of tax, interest, penalty and other amounts [Section 49]...................11.8
Tax Credit [Section 38 Read with Rule 60................................................................ 13.26
4. Interest on delayed payment of tax [section 50] .................................................. 11.38
5. Furnishing of returns under Section 39 .................................................................... 13.33
5. Tax deduction at source [section 51 of CGST Act] ............................................... 11.45
6. Due Date for Payment of Tax [Section 39(7)]......................................................... 13.50
6. Transfer of Input Tax Credit [Section 53 of
7. Other Returns/ Statements............................................................................................ 13.56
CGST Act & Section 18 of IGST Act] .......................................................................... 11.53
8. Default/Delay in Furnishing Return [Sections 46 & 47]...................................... 13.62
Let Us Recapitulate ....................................................................................................................... 11.54
9. Goods And Services Tax Practitioners [Section 48].............................................. 13.67
Test Your Knowledge................................................................................................................... 11.65
10. Information Return [Sections 150 & 123]................................................................ 13.72
Answers............................................................................................................................................... 11.70
Let Us Recapitulate ....................................................................................................................... 13.75
CHAPTER 12- ELECTRONIC COMMERCE TRANSACTIONS
Test Your Knowledge................................................................................................................... 13.95
Learning Outcomes..........................................................................................................................12.1
Answers............................................................................................................................................... 13.96
1. Introduction............................................................................................................................12.2

2. Relevant definitions.............................................................................................................12.2

3. Taxability of Electronic Commerce Transactions Under GST...............................12.4

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 1.2 7.2 GOODS AND SERVICES TAX

1. INTRODUCTION
CHAPTER In earlier indirect tax regime, the
7 credit mechanism for indirect taxes
levied by the Union Government,
(central excise duty and service tax)
was governed by the CENVAT Credit
Rules, 2004; and the credit
mechanism for State-level VAT on
INPUT TAX CREDIT sale of goods was governed by the
States under their respective VAT
The section numbers referred to in the Chapter pertain to CGST Act and rule numbers
laws. The VAT legislations allowed
referred to in the Chapter pertain to CGST Rules, unless otherwise specified. For the
ITC of VAT on inputs and capital
sake of brevity, input tax credit has been referred to as ITC in this Chapter.
Examples/Illustrations/Questions and Answers given in the Chapter are based on the goods in transactions within the
position of GST law existing as on 30.04.2025. State, but not on inputs and capital
goods coming in the State from outside the State, on which central sales tax was
paid. CENVAT Credit Rules, 2004 allowed availing and utilizing credit of duty/tax
LEARNING OUTCOMES paid on both goods (capital goods and inputs) and services by the manufacturers
and the service providers across the country.

After studying this Chapter, you will be able to – The credit across goods and services was integrated vide the CENVAT Credit Rules,
2004 in the year 2004 to mitigate the cascading effects of central levies namely,
‰ describe what are inputs, input services, capital goods and other relevant terms
central excise duty and service tax. However, the credit chain remained fragmented
in relation to ITC
on account of State-Level VAT as the credit of central taxes could not be set off
‰ explain the various conditions, timelines and restrictions for taking ITC on goods
against a State levy and vice versa. The chain further got distorted as ITC was not
and services in general and in special circumstances
available on inter-State purchases. This resulted in cascading of taxes leading to
‰ identify the items on which ITC is available as also the blocked items on which
increase in costs of goods and services.
ITC is not available
‰ explain the concept relating to availing of proportionate ITC when common The GST regime promises seamless credit on goods and services across the entire
inputs or input service or capital goods are used or intended to be used for supply chain with some exceptions like supplies charged to tax under composition
exempted and taxable supplies or business and non-business activities scheme, blocked credits and supply of exempted goods and/or services. ITC is
‰ comprehend the concept of an input service distributor and the manner of considered to be the lifeline of the GST regime. In fact, it is the provisions of ITC
distribution of credit by him which essentially make GST - a value added tax i.e., collection of tax at all points of
‰ describe the manner of recovery of credit distributed in excess supply chain after allowing credit of tax paid at earlier points.
‰ comprehend, analyse and apply all the above provisions as also the provisions Chapter V of the CGST Act [Sections 16 to 21] & Chapter V: Input Tax Credit of the
relating to utilization of ITC in problem solving
CGST Rules [Rules 36-45] prescribes the provisions relating to ITC.
‰ compute the GST liability of a registered person.

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 INPUT TAX CREDIT 1.3 7.3 1.4 7.4 GOODS AND SERVICES TAX

Further, section 41 contains provisions for availment of ITC, sections 49(5), 49A, 49B ‰ Since ITC can be availed & utilized for payment of tax on taxable output
and rule 88A together prescribe the sequence of utilisation of ITC and rules 86A supply, as a natural corollary, ITC cannot be availed in respect of exempt
and 86B stipulate the conditions of use of amount available in electronic credit output supply on which tax is not payable.
ledger and restrictions on use of amount available in electronic credit ledger. State
‰ The exception to the above principle is ‘zero rated supply’, i.e. exports or
GST laws also prescribe identical provisions in relation to ITC. First the statutory
supplies to a special economic zone (SEZ) developer/unit for authorised
provisions of these sections together with the relevant rules have been extracted
operations, where ITC is available even if no tax is payable on output supply
followed by their analysis 1.
as zero-rated supplies are not exempt supplies. Such ITC can be utilized either
for making supplies by paying tax or refund of the unutilized ITC can be
Provisions of ITC under CGST Act have also been made applicable to IGST obtained. This simple mechanism is used to make exports and supplies to
Act vide section 20 of the IGST Act. SEZ completely tax free.
‰ If a taxable person is making both taxable and exempt supply, he is entitled
Scheme of ITC - At a Glance to avail full credit of ITC in respect of inputs, input services and capital goods
exclusively used for taxable supply and no credit at all can be availed for
Given below are the salient features of the scheme of ITC. The scheme has been
inputs, input services and capital goods exclusively used for exempt supply.
discussed in detail in the ensuing pages of this Chapter.
‰ If common inputs, input services and capital goods are used for taxable as
‰ The scheme is designed to avoid cascading effect of taxes and make GST a
well as exempt supply, only proportionate ITC attributable to the taxable
destination-based tax.
supply is available. The common ITC is apportioned in the ratio of value of
‰ Broadly, ITC is available on all inputs, input services and capital goods used taxable supply and exempt supply. Elaborate provisions have been made in
for purposes of business by a taxable person. The exception is ‘blocked the GST law to prescribe the manner of calculation of proportionate ITC.
credit’, where ITC is not available even when these goods or services are used
‰ ITC can be availed on inputs and capital goods sent for job work; ITC is
for the purposes of business.
available even if the inputs and capital goods are sent directly to the job
‰ ITC is used for payment of tax on taxable output supply to avoid cascading worker without being first brought to the place of business of the supplier. 2
effect of taxes.
‰ Input services received at head office or branch offices are ultimately
‰ GST law does not require ‘one to one’ co-relation between inputs/input indirectly used for supplies made from manufacturing or trading or business
services and final products/services. Any eligible ITC can be used for payment premises. ITC of such input services can be availed through mechanism of
of tax on any taxable output supply. ‘input service distributor’.
‰ IGST is another core aspect of GST. It is a transitory tax to enable transfer of Before proceeding to understand the statutory provisions relating to ITC, let us first
ITC when goods or services move from one State to another. This is a unique go through few relevant definitions.
feature of Indian GST.

1 2
The provisions of section 19 relating to taking ITC on inputs and capital goods sent for job The provisions relating to taking ITC on inputs and capital goods sent for job work have
work have been discussed in Chapter 16: Job Work in Module 3 of this Study Material. been discussed in Chapter 16: Job Work in Module 3 of this Study Material.

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 INPUT TAX CREDIT 1.5 7.5 1.6 7.6 GOODS AND SERVICES TAX

™ Conveyance includes a vessel, an aircraft and a vehicle [Section 2(34)].

2. RELEVANT DEFINITIONS
™ Exempt supply means supply of any goods or services or both which attracts
™ Agent means a person, including a factor, broker, commission agent, arhatia,
nil rate of tax or which may be wholly exempt from tax under section 11, or
del credere agent, an auctioneer or any other mercantile agent, by whatever
name called, who carries on the business of supply or receipt of goods or under section 6 of the IGST Act, and includes non-taxable supply [Section
services or both on behalf of another [Section 2(5)]. 2(47)].

™ Business includes ™ Input means any goods other than capital goods used or intended to be used
by a supplier in the course or furtherance of business [Section 2(59)].
(a) any trade, commerce, manufacture, profession, vocation, adventure,
wager or any other similar activity, whether or not it is for a pecuniary ™ Input service means any service used or intended to be used by a supplier
benefit; in the course or furtherance of business [Section 2(60)].
(b) any activity or transaction in connection with or incidental or ancillary ™ Input service distributor means an office of the supplier of goods or services
to sub-clause (a);
or both which receives tax invoices issued under section 31 towards the
(c) any activity or transaction in the nature of sub-clause (a), whether or receipt of input services and issues a prescribed document for the purposes
not there is volume, frequency, continuity or regularity of such of distributing the credit of central tax, State tax, integrated tax or Union
transaction;
territory tax paid on the said services to a supplier of taxable goods or services
(d) supply or acquisition of goods including capital goods and services in or both having the same Permanent Account Number as that of the said office
connection with commencement or closure of business; [Section 2(61)].
(e) provision by a club, association, society, or any such body (for a
™ Input tax in relation to a registered person, means the central tax, State tax,
subscription or any other consideration) of the facilities or benefits to
integrated tax or Union territory tax charged on any supply of goods or
its members;
services or both made to him and includes—
(f) admission, for a consideration, of persons to any premises;
(a) the integrated goods and services tax charged on import of goods;
(g) services supplied by a person as the holder of an office which has been
accepted by him in the course or furtherance of his trade, profession or (b) the tax payable under the provisions of sub-sections (3) and (4) of
vocation; section 9;
(h) activities of a race club including by way of totalisator or a licence to (c) the tax payable under the provisions of sub-section (3) and (4) of
book maker or activities of a licenced book maker in such club; and section 5 of the IGST Act;
(i) any activity or transaction undertaken by the Central Government, a
(d) the tax payable under the provisions of sub-section (3) and sub-section
State Government or any local authority in which they are engaged as
public authorities [Section 2(17)]. (4) of section 9 of the respective State Goods and Services Tax Act; or

™ Capital goods means goods, the value of which is capitalized in the books of (e) the tax payable under the provisions of sub-section (3) and sub-section
account of the person claiming the ITC and which are used or intended to be (4) of section 7 of the Union Territory Goods and Services Tax Act,
used in the course or furtherance of business [Section 2(19)]. but does not include the tax paid under the composition levy [Section 2(62)].

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 INPUT TAX CREDIT 1.7 7.7 1.8 7.8 GOODS AND SERVICES TAX

™ Input tax credit means the credit of input tax [Section 2(63)]. x a place where a taxable person maintains his books of account; or
™ Invoice or tax invoice means the tax invoice referred to in section 31 [Section x a place where a taxable person is engaged in business through an
2(66)]. agent, by whatever name called [Section 2(85)].
™ Inward supply in relation to a person, shall mean receipt of goods or services ™ Quarter shall mean a period comprising three consecutive calendar months,
or both whether by purchase, acquisition or any other means with or without ending on the last day of March, June, September and December of a
consideration [Section 2(67)].
calendar year [Section 2(92)].
™ Motor vehicle shall have the same meaning as assigned to it in clause (28)
™ Recipient of supply of goods or services or both, means—
of section 2 of the Motor Vehicles Act, 1988 [Section 2(76)].
(a) where a consideration is payable for the supply of goods or services or
Motor vehicle or vehicle under the Motor Vehicles Act, 1988 means any
both, the person who is liable to pay that consideration;
mechanically propelled vehicle adapted for use upon roads whether the
power of propulsion is transmitted thereto from an external or internal source (b) where no consideration is payable for the supply of goods, the person
and includes a chassis to which a body has not been attached and a trailer; to whom the goods are delivered or made available, or to whom
but does not include a vehicle running upon fixed rails or a vehicle of a special possession or use of the goods is given or made available; and
type adapted for use only in a factory or in any other enclosed premises or a
(c) where no consideration is payable for the supply of a service, the person
vehicle having less than four wheels fitted with engine capacity of not
to whom the service is rendered,
exceeding 25 cubic centimetres. [Section 2(28) of Motor Vehicles Act, 1988].
and any reference to a person to whom a supply is made shall be construed
™ Non-resident taxable person means any person who occasionally
as a reference to the recipient of the supply and shall include an agent acting
undertakes transactions involving supply of goods or services or both,
as such on behalf of the recipient in relation to the goods or services or both
whether as principal or agent or in any other capacity, but who has no fixed
supplied [Section 2(93)].`
place of business or residence in India [Section 2(77)].
™ Registered person means a person who is registered under section 25 of
™ Output tax in relation to a taxable person, means the tax chargeable under
CGST Act but does not include a person having a Unique Identity Number
this Act on taxable supply of goods or services or both made by him or by his
[Section 2(94)]
agent but excludes tax payable by him on reverse charge basis [Section 2(82)].
™ Supplier in relation to any goods or services or both, shall mean the person
™ Outward supply in relation to a taxable person, means supply of goods or
supplying the said goods or services or both and shall include an agent acting
services or both, whether by sale, transfer, barter, exchange, licence, rental,
as such on behalf of such supplier in relation to the goods or services or both
lease or disposal or any other mode, made or agreed to be made by such
supplied:
person in the course or furtherance of business [Section 2(83)].
Provided that a person who organises or arranges, directly or indirectly,
™ Place of business includes––
supply of specified actionable claims, including a person who owns, operates
x a place from where the business is ordinarily carried on, and includes a or manages digital or electronic platform for such supply, shall be deemed to
warehouse, a godown or any other place where a taxable person stores be a supplier of such actionable claims, whether such actionable claims are
his goods, supplies or receives goods or services or both; or supplied by him or through him and whether consideration in money or

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 INPUT TAX CREDIT 1.9 7.9 1.10 7.10 GOODS AND SERVICES TAX

money's worth, including virtual digital assets, for supply of such actionable
3. ELIGIBILITY AND CONDITIONS FOR TAKING
claims is paid or conveyed to him or through him or placed at his disposal in
any manner, and all the provisions of this Act shall apply to such supplier of INPUT TAX CREDIT [SECTION 16]
specified actionable claims, as if he is the supplier liable to pay the tax in
relation to the supply of such actionable claims [Section 2(105)].
STATUTORY PROVISIONS
™ Taxable person means a person who is registered or liable to be registered
under section 22 or section 24 [Section 2(107)].
Section 16 Eligibility and conditions for taking input tax credit
™ Taxable supply means a supply of goods or services or both which is leviable
Sub-section Clause Particulars
to tax under CGST Act [Section 2(108)].
(1) Every registered person shall, subject to such conditions and
™ Turnover in State or turnover in Union territory means the aggregate
restrictions as may be prescribed and in the manner specified in
value of all taxable supplies (excluding the value of inward supplies on which section 49, be entitled to take credit of input tax charged on any
tax is payable by a person on reverse charge basis) and exempt supplies made supply of goods or services or both to him which are used or
within a State or Union territory by a taxable person, exports of goods or intended to be used in the course or furtherance of his business and
services or both and inter-State supplies of goods or services or both made the said amount shall be credited to the electronic credit ledger of
such person.
from the State or Union territory by the said taxable person but excludes
central tax, State tax, Union territory tax, integrated tax and cess [Section (2) Notwithstanding anything contained in this section, no registered
2(112)]. person shall be entitled to the credit of any input tax in respect of
any supply of goods or services or both to him unless,–
™ Works contract means a contract for building, construction, fabrication,
completion, erection, installation, fitting out, improvement, modification, (a) he is in possession of a tax invoice or debit note issued
repair, maintenance, renovation, alteration or commissioning of any by a supplier registered under this Act, or such other tax
immovable property wherein transfer of property in goods (whether as goods paying documents as may be prescribed;

or in some other form) is involved in the execution of such contract [Section (aa) the details of the invoice or debit note referred to in
2(119)]. clause (a) has been furnished by the supplier in the
statement of outward supplies and such details have
™ Zero-rated supply means any of the following supplies of goods or services been communicated to the recipient of such invoice or
or both, namely:–– debit note in the manner specified under section 37;
(a) export of goods or services or both; or (b) he has received the goods or services or both.
(b) supply of goods or services or both for authorised operations to a Explanation.—For the purposes of this clause, it shall be
Special Economic Zone (SEZ) developer or a Special Economic Zone unit deemed that the registered person has received the
[Section 16(1) of the IGST Act]. goods or, as the case may be, services–

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 INPUT TAX CREDIT 1.11 7.11 1.12 7.12 GOODS AND SERVICES TAX

(i) where the goods are delivered by the supplier to (3) Where the registered person has claimed depreciation on the tax
a recipient or any other person on the direction of component of the cost of capital goods and plant and machinery
such registered person, whether acting as an under the provisions of the Income-tax Act, 1961, the input tax
agent or otherwise, before or during movement of credit on the said tax component shall not be allowed.
goods, either by way of transfer of documents of
title to goods or otherwise; (4) A registered person shall not be entitled to take input tax credit in
(ii) where the services are provided by the supplier to respect of any invoice or debit note for supply of goods or services
any person on the direction of and on account of or both after the thirtieth day of November following the end of
such registered person. financial year to which such invoice or debit note pertains or
furnishing of the relevant annual return, whichever is earlier.
(ba) the details of input tax credit in respect of the said supply
(6) Where registration of a registered person is cancelled under section 29
communicated to such registered person under section
and subsequently the cancellation of registration is revoked by any
38 has not been restricted;
order, either under section 30 or pursuant to any order made by the
(c) subject to the provisions of section 41, the tax charged in Appellate Authority or the Appellate Tribunal or court and where
respect of such supply has been actually paid to the availment of input tax credit in respect of an invoice or debit note was
Government, either in cash or through utilisation of input not restricted under sub-section (4) on the date of order of cancellation
tax credit admissible in respect of the said supply; and of registration, the said person shall be entitled to take the input tax
credit in respect of such invoice or debit note for supply of goods or
(d) he has furnished the return under section 39: services or both, in a return under section 39,–
Provided that where the goods against an invoice are received in
(i) filed upto thirtieth day of November following the financial
lots or instalments, the registered person shall be entitled to take
year to which such invoice or debit note pertains or furnishing
credit upon receipt of the last lot or instalment:
of the relevant annual return, whichever is earlier; or
Provided further that where a recipient fails to pay to the supplier (ii) for the period from the date of cancellation of registration or
of goods or services or both, other than the supplies on which tax is the effective date of cancellation of registration, as the case
payable on reverse charge basis, the amount towards the value of may be, till the date of order of revocation of cancellation of
supply along with tax payable thereon within a period of one registration, where such return is filed within thirty days from
hundred and eighty days from the date of issue of invoice by the the date of order of revocation of cancellation of registration,
supplier, an amount equal to the input tax credit availed by the
recipient shall be paid by him along with interest payable under whichever is later.
section 50, in such manner as may be prescribed:
Section 41 Availment of input tax credit
Provided also that the recipient shall be entitled to avail of the
(1) Every registered person shall, subject to such conditions and
credit of input tax on payment made by him to the supplier of the
restrictions as may be prescribed, be entitled to avail the credit of
amount towards the value of supply of goods or services or both
eligible input tax, as self-assessed, in his return and such amount
along with tax payable thereon.
shall be credited to his electronic credit ledger.

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 INPUT TAX CREDIT 1.13 7.13 1.14 7.14 GOODS AND SERVICES TAX

(2) The credit of input tax availed by a registered person under sub- (2) Input tax credit shall be availed by a registered person only if all
section (1) in respect of such supplies of goods or services or both, the applicable particulars as specified in the provisions of Chapter
the tax payable whereon has not been paid by the supplier, shall be VI are contained in the said document.
reversed along with applicable interest, by the said person in such
manner as may be prescribed. Provided that if the said document does not contain all the specified
particulars but contains the details of the amount of tax charged,
Provided that where the said supplier makes payment of the tax
description of goods or services, total value of supply of goods or
payable in respect of the aforesaid supplies, the said registered
services or both, GSTIN of the supplier and recipient and place of
person may re-avail the amount of credit reversed by him in such
supply in case of inter-State supply, input tax credit may be availed
manner as may be prescribed.
by such registered person.
Chapter V: Input Tax Credit of the CGST Rules
(3) No input tax credit shall be availed by a registered person in respect
Rule 36 Documentary requirements and conditions for claiming input of any tax that has been paid in pursuance of any order where any
tax credit demand has been confirmed on account of any fraud, willful
misstatement or suppression of facts under section 74 3.
Sub-rule Clause Particulars
(4) No input tax credit shall be availed by a registered person in respect
(1) The input tax credit shall be availed by a registered person, of invoices or debit notes the details of which are required to be
including the Input Service Distributor, on the basis of any of the furnished under subsection (1) of section 37 unless,-
following documents, namely:-
(a) the details of such invoices or debit notes have been furnished
(a) an invoice issued by the supplier of goods or services or by the supplier in the statement of outward supplies in FORM
both in accordance with the provisions of section 31; GSTR-1, as amended in FORM GSTR-1A if any, or using the
invoice furnishing facility; and
(b) an invoice issued in accordance with the provisions of
clause (f) of sub-section (3) of section 31, subject to the (b) the details of input tax credit in respect of such invoices or debit
payment of tax; notes have been communicated to the registered person in
FORM GSTR-2B under sub-rule (7) of rule 60.
(c) a debit note issued by a supplier in accordance with the
provisions of section 34; Rule 37 Reversal of input tax credit in the case of non-payment of
consideration
(d) a bill of entry or any similar document prescribed under
the Customs Act, 1962 or rules made thereunder for the Sub-rule Particulars
assessment of integrated tax on imports;
(1) A registered person, who has availed of input tax credit on any
(e) an input service distributor invoice or input service inward supply of goods or services or both, other than the supplies
distributor credit note or any document issued by an on which tax is payable on reverse charge basis, but fails to pay to
input service distributor in accordance with the
provisions of sub-rule (1) of rule 54.
3
Section 74 contains the provisions for determination of tax not paid or short paid or
erroneously refunded or ITC wrongly availed or utilized by reason of fraud or any wilful-
misstatement or suppression of facts, pertaining to the period upto financial year 2023-24.

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 INPUT TAX CREDIT 1.15 7.15 1.16 7.16 GOODS AND SERVICES TAX

the supplier thereof, the amount towards the value of such supply not been furnished by such supplier till the 30th day of September,
whether wholly or partly, along with the tax payable thereon, within following the end of the financial year in which the input tax credit
the time limit specified in the second proviso to sub-section (2) of in respect of such invoice or debit note has been availed, the said
section 16, shall pay or reverse an amount equal to the input tax amount of input tax credit shall be reversed by the said registered
credit availed in respect of such supply, proportionate to the person, while furnishing a return in FORM GSTR-3B on or before
amount not paid to the supplier, along with interest payable the 30th day of November following the end of the financial year.
thereon under section 50, while furnishing the return in FORM
GSTR-3B for the tax period immediately following the period of one Provided that where the said amount of input tax credit is not reversed
hundred and eighty days from the date of the issue of the invoice. by the registered person in a return in FORM GSTR-3B on or before the
30th day of November following the end of such financial year during
Provided that the value of supplies made without consideration as which such input tax credit has been availed, such amount shall be
specified in Schedule I of the said Act shall be deemed to have been payable by the said registered person along with interest thereon
paid for the purposes of the second proviso to sub-section (2) of under section 50.
section 16.
Provided further that where the said supplier subsequently
Provided further that the value of supplies on account of any amount furnishes the return in FORM GSTR-3B for the said tax period, the
added in accordance with the provisions of clause (b) of sub-section said registered person may re-avail the amount of such credit in the
(2) of section 15 shall be deemed to have been paid for the purposes return in FORM GSTR-3B for a tax period thereafter.
of the second proviso to sub-section (2) of section 16.

(2) Where the said registered person subsequently makes the payment ANALYSIS
of the amount towards the value of such supply along with tax
payable thereon to the supplier thereof, he shall be entitled to re-
(i) Eligibility for taking ITC [Section 16(1)]
avail the input tax credit referred to in sub-rule (1).
(a) Registration under GST
(4) The time limit specified in sub-section (4) of section 16 shall not
apply to a claim for re-availing of any credit, in accordance with Every registered person shall be entitled to ITC of GST charged on inward
the provisions of the Act or the provisions of this Chapter, that had supply [See definition of inward supply] of goods and / or services. This
been reversed earlier. is subject to the provisions relating to use of ITC under section 49 and
the conditions and restrictions in the rules. [Section 49 prescribes
Rule 37A Reversal of input tax credit in the case of non-payment of tax
by the supplier and re-availment thereof provisions relating to payment of tax, interest, penalty & other amounts.
The same has been discussed in detail in Chapter 11: Payment of Tax in
Where input tax credit has been availed by a registered person in this Module of the Study Material. Relevant portion is discussed in this
the return in FORM GSTR-3B for a tax period in respect of such Chapter subsequently.]
invoice or debit note, the details of which have been furnished by
the supplier in the statement of outward supplies in FORM GSTR-1, (b) Goods/services to be used for business purposes
as amended in FORM GSTR-1A if any, or using the invoice ITC of GST will be available on goods and/or services which are used or
furnishing facility, but the return in FORM GSTR-3B for the tax
intended to be used in the course or furtherance of the business [See
period corresponding to the said statement of outward supplies has
definition of business]. The scope of the definition of ‘business’ is very

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.17 7.17 1.18 7.18 GOODS AND SERVICES TAX

wide. It is also an inclusive definition. The relation of inputs and input of the former’s business [Circular No. 47/21/2018 GST dated
services with business can be direct or indirect. 08.06.2018 4].
The “intention to use” the goods and/or services in the course or (ii) Conditions for taking ITC [Section 16(2)]
furtherance of business would also suffice for availing ITC on such
This sub-section starts with a non-obstante clause and hence all the
goods and/or services. However, if finally, the input goods or services
conditions specified therein must be fulfilled irrespective of fulfillment of any
are not utilised for intended purpose, ITC is disallowed, as provided in
other conditions given under any other sub-section of section 16 for the
section 17(5) of CGST Act. [Section 17(5) specifies the inputs or input
purpose of taking of input tax credit. The registered person will be entitled to
services in respect of which ITC is not allowed. Provisions of section 17(5)
ITC on an inward supply only if ALL the following six conditions are fulfilled:
are discussed in the ensuing pages of this Chapter.]
(a) Possession of tax paying document [Section 16(2)(a) read with
Thus, tax paid on goods and or/services which are used or intended to rule 36]
be used for non-business purposes cannot be availed as credit. ITC will
ITC can be availed on the basis of any of the following documents:
be credited to electronic credit ledger. [Provisions relating to electronic
credit ledger have been discussed in detail in Chapter 11: Payment of Tax (i) Invoice or revised invoice 5 issued by the supplier of goods and/or
in this Module of the Study Material.] services
Moulds and dies provided by the original equipment manufacturer (ii) Invoice issued by the recipient receiving goods and/or services
(OEM) to component manufacturer on FOC basis – when not from unregistered supplier in case of reverse charge, subject to
considered as being in the course or furtherance of business? payment of tax
Moulds and dies owned by the original equipment manufacturer (OEM) (iii) Debit note issued by the supplier
which are provided to a component manufacturer (the two not being
(iv) Bill of entry or similar document prescribed under the Customs Act 6
related persons or distinct persons) on free on cost (FOC) basis does
not constitute a supply as there is no consideration involved. Further, (v) Document issued by input service distributor
since the moulds and dies are provided on FOC basis by the OEM to the The documents on the basis of which ITC is being taken should contain
component manufacturer in the course or furtherance of his business, at least the following details:
there is no requirement for reversal of ITC availed on such moulds and
¾ Amount of tax charged
dies by the OEM.
¾ Description of goods or services
However, where the contract between OEM and component
manufacturer is for supply of components made by using the
moulds/dies belonging to the component manufacturer, but the same
have been supplied by the OEM to the component manufacturer on 4
Circular No. 47/21/2018 GST dated 08.06.2018 also clarifies aspects relating to valuation
FOC basis, the OEM will be required to reverse the credit availed on of moulds and dies provided by the OEM to component manufacturer on FOC basis. The
such moulds/ dies, as the same will not be considered to be provided same are covered in Chapter 6: Value of Supply in Module 1 of this Study Material.
5
Provisions relating to invoice/revised invoice have been discussed in detailed in Chapter 9:
by OEM to the component manufacturer in the course or furtherance
Tax Invoice: Credit and Debit Notes in this Module of the Study Material.
6
Provisions relating to the Customs Act, 1962 have been discussed in Module 4 of this Study
Material.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.19 7.19 1.20 7.20 GOODS AND SERVICES TAX

¾ Total value of supply of goods and/or services GSTR-1A is a form wherein a registered person at his own option,
amend or furnish additional details of outward supplies of goods
¾ GSTIN of the supplier and recipient
and/or services after furnishing the details of outward supplies of goods
¾ Place of supply in case of inter-State supply and/or service in FORM GSTR-1 for a tax period but before filing of
return in FORM GSTR-3B for the said tax period.
(b) Details of invoices/debit notes uploaded by the supplier in his
GSTR-1 or using IFF and details communicated in Form GSTR-2B Thus, in respect of invoices/debit notes the details of which are not
[Section 16(2)(aa) read with rule 36(4)] furnished by the suppliers in their GSTR-1s, as amended in Form GSTR-
1A if any, or using IFF (and thus they are not visible in GSTR-2B of the
ITC in respect of any supply of goods or services or both can be taken
recipient), ITC cannot be availed by such recipient.
by a registered person only if the details of the invoice/debit note in
ITC on such invoices/debit notes, not reflected in GSTR-2B of the
respect of said supply have been furnished by the supplier in the
current month, may be claimed by the taxpayer in any of the succeeding
statement of outward supplies (Form GSTR-1, as amended in FORM
months when the details of said invoices/debit notes are furnished by
GSTR-1A if any, or using IFF) and such details have been the suppliers.
communicated to the recipient of such invoice/debit note in Form
The above concept has been illustrated as follows:
GSTR-2B.
ITC on invoices/debit FULL ITC can be claimed
GSTR-1 is a monthly/quarterly statement containing details of outward notes which have been on such invoices/debit
supplies made by a registered supplier. In case where GSTR-1 is furnished by the notes, if all other
furnished quarterly under QRMP (Quarterly Return Monthly Payment) suppliers in their conditions of availing ITC
GSTR-1s/using IFF and are fulfilled
scheme, supplier can furnish such details for 1st two months of the
reflected in GSTR-2B of
quarter using invoice furnishing facility (IFF). This facility is provided to recipient
the taxpayer, to pass on the credit to their recipients.

Such details of outward supplies furnished by the supplier are ITC on invoice/debit NO ITC can be claimed in
communicated and made available electronically (auto populated) to note which have not respect of such
the respective recipient(s) in GSTR- 2B. GSTR-2B is an auto-generated been furnished by invoices/debit notes.
suppliers in their
ITC statement for every registered person based on details furnished in
GSTR-1s/using IFF and
GSTR-1/using IFF by the supplier 7. thus, not reflected in
GSTR-2B of recipient.

7
The provisions relating to QRMP, filing of GSTR-1/IFF and GSTR-2B have been discussed in
detail in Chapter 13: Returns in this Module of the Study Material.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.21 7.21 1.22 7.22 GOODS AND SERVICES TAX

registered person, on whose order the goods are delivered to a third

ٌ Invoices on which ITC is not available under any of person.
the provisions e.g., under section 17(5), are not to be
Similarly, services may also be provided to a third party by the service
considered for claiming ITC even though furnished by
provider (supplier) on the direction of the service recipient (registered
the suppliers.
person). In this case also, though the service recipient (registered
ٌ On the other hand, full ITC can be availed in respect of IGST person) does not receive the service, by virtue of explanation to section
paid on imports, documents issued under reverse charge, credit 16(2)(b) it is deemed that the registered person (service recipient) has
received from ISD etc., which are outside the ambit of section received the service. In other words, service provided to any person on
37(1).
the direction of and on account of the registered person, is deemed to
have been received by such registered person. So, ITC will be available
(1) Atlas Pvt. Ltd. is a manufacturer of taxable goods. It has to the registered person, on whose direction the services are provided
received 50 invoices for inputs and input services from various to a third person.
suppliers during the month of September. Invoices involve
(2) A is a trader who places an order on B for a consignment
ITC of ` 5 lakh. Suppliers have furnished in their GSTR-1s 40 invoices
of soda ash. A receives a buying order from C for the same
involving ITC of ` 3 lakh as on the due date of furnishing of GSTR-1s
quantity of soda ash. A instructs B to deliver the goods
(which are not amended in GSTR-1A) and are reflected in GSTR-2B of
directly to C, and in turn A raises an invoice on C. Though the goods
Atlas Pvt. Ltd. ITC that can be claimed by Atlas Pvt. Ltd. in its GSTR-3B
are not physically received at the premises of A, section 16(2)(b) allows
for the month of September is ` 3 lakh.
ITC of such goods to A.
(c) Receipt of the goods and / or services [Section 16(2)(b)] (3) The registered head office (New Delhi) of ABC Pvt. Ltd. enters into
The registered person taking the ITC must have received the goods a contract with DEF Pvt. Ltd. of New Delhi for repair and maintenance
and / or services. of computers systems installed at its registered branch office in
Bengaluru, Karnataka. DEF Pvt. Ltd. issues an invoice on ABC Pvt. Ltd.,
“Bill to Ship to” Model: Under this model, the goods are delivered to
New Delhi for the services provided by it.
a third party - ‘C’ on the direction of the customer (registered person)
– ‘B’ who purchases the goods from the vendor (supplier) – ‘A’. In other Though the actual services are received by the branch office and not by
words, ‘A’ bills to ‘B’ but ships the goods to ‘C’ on direction of ‘B’. In the head office, section 16(2)(b) allows ITC of such repair and
effect, two supplies take place in this scenario viz., from ‘A’ to ‘B’ and maintenance services to head office.
from ‘B’ to ‘C’. Thus, under this model, the customer (registered person) Clarification on availability of ITC in respect of goods delivered
who receives such goods does not actually receive the said goods. under ex-works contract
For such cases, by virtue of explanation to section 16(2)(b), it is deemed In automobile sector, the contract between the automobile dealers
that the registered person (customer) has received the goods. In other and the Original Equipment Manufacturers (OEMs) is generally an
words, goods delivered to another person on the direction of the Ex-Works (EXW) contract, and as per the terms of the contract, the
registered person by way of transfer of documents of title or otherwise, property in goods (i.e. vehicles) passes to the dealer at the factory
either before or during the movement, are deemed to have been gate of the OEM, when the goods are handed over to the transporter
received by such registered person. So, ITC will be available to the

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.23 7.23 1.24 7.24 GOODS AND SERVICES TAX

at the instance of the dealer, and the delivery on the part of the
OEM is complete at his factory gate.

Delivery of
Goods under
Ex Works
Contract
Original Equipment Automobile
Manufacture r Dealer Accordingly, it is clarified that as per Explanation to section
[OEM]
16(2)(b), the registered person (the dealer) can be considered to
have “received” the said goods at the time of such handing over of
The transport may be arran
arranged by the OEM on behalf of the dealer the goods by the supplier to the transporter, at his factory gate, for
and where insurance is arranged, it may also be done on behalf of their onward transmission to the said registered person (the
the dealer. Any claim in case of loss has to be lodged by the dealer. dealer).

The issue which arose for consideration was whether ITC can be The same principle is applicable in respect of supply of other goods
availed by the dealer only after the vehicles are physically received also where the contract between the supplier and recipient is an
by automobile dealers at his business premises or ITC can be EXW (Ex Works) contract, and as per terms of the contract, the
availed on the date the vehicles are billed to him and handed over goods are to be delivered by the supplier to the recipient, or to any
to the transporter by the OEM at his factory gate. other person (including a transporter) on behalf of the recipient, at
his (supplier’s) place of business and the property in the goods
It has been clarified that in such a scenario, the property in the said stands transferred to the recipient at the time of such handing over.
goods can be considered to have been passed on to the dealer by
the OEM upon handing over of the said goods to the transporter at In such cases, the said goods can be construed to have been
his factory gate, meaning thereby that the goods can be considered “received” by the said recipient at the time of handing over the said
to have been delivered to the registered person (the dealer), goods to the recipient or to the transporter, as the case may be, as
through the transporter, by the supplier (the OEM) at his factory per provisions of section 16(2)(b).
gate and the supply of the said goods can be considered to have It is also mentioned that as per provisions of section 16(1)
fructified at the factory gate of the OEM, even though the goods (discussed earlier), a registered person is entitled to ITC only in
may be physically received by the registered person (the dealer) respect of supply of goods and/or services, which is used or
after the transit period. intended to be used in the course or furtherance of business.
Thus, if the goods are found to have been diverted for non-business
purposes at any stage, either before physically receiving the said
goods at his business premises or subsequently, the registered
person shall not be entitled to ITC on such goods in terms of section
16(1).

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.25 7.25 1.26 7.26 GOODS AND SERVICES TAX

Further, if at any time after “receiving” the goods, such goods are has discharged more tax liability from electronic credit ledger
lost, stolen, destroyed, written off or disposed of by way of gift or than prescribed under rule 86B 9.
free samples, the registered person would not be entitled to the ITC
in respect of such goods as per provisions of section 17(5)(h) ‰ other specified classes of persons.
[Section 17(5) contains the provisions relating to Blocked credit and (e) Tax leviable on supply actually paid to Government [Section
will be discussed subsequently in this chapter] 8. 16(2)(c)]
(d) Details of ITC in respect of the said supply communicated to the The supplier should have actually paid the tax charged on the goods
registered person under section 38 not restricted [Section and/or services, for which ITC is being taken, either in cash or by
16(2)(ba)] utilizing ITC, subject to the provisions of section 41.
Section 38 stipulates that the details of outward supplies furnished by Availment of self-assessed ITC [Section 41]
the registered suppliers in GSTR-1 (as amended in Form GSTR-1A if A registered person can avail the credit of eligible ITC as
any)/using IFF and an auto-generated statement - GSTR-2B - containing self-assessed in his return. Such amount shall be credited to his
the details of ITC is made available to the recipients of such supplies electronic credit ledger.
every month. Reversal of ITC in the case of non-payment of tax by the supplier
and re-availment thereof [Section 41 read with rule 37A]
GSTR-2B contains the details of inward supplies (i) on which ITC is
available to the recipient as well as (ii) on which ITC cannot be availed, (I) Reversal of ITC: If the tax payable corresponding to such ITC
availed is not paid by the supplier to the Government, ITC so
whether wholly or partly, by the recipient. Accordingly, ITC will not be
availed shall be reversed by the said person along with applicable
available in respect of inward supplies details of which have been
interest.
furnished by a registered supplier:
A registered person (recipient) can avail ITC in GSTR-3B for a tax
‰ who is a new registrant. (Specified period from taking registration
period in respect of such invoice/debit note, the details of which
will be prescribed for this purpose.)
have been furnished by its supplier in the statement of outward
‰ who has defaulted in payment of tax for a prescribed period. supplies (in GSTR-1, as amended in Form GSTR-1A if any/using IFF).
‰ whose output tax payable as per GSTR-1/IFF exceeds the output tax However, if supplier does not furnish return in Form GSTR-3B for
paid in GSTR-3B for a particular tax period by prescribed limit (Rule the tax period corresponding to the said statement of outward
88C). supplies till 30th September following the end of FY in which the
‰ who has availed ITC of an amount that exceeds the credit that can ITC in respect of such invoice/ debit note has been availed; the
be availed by him as per GSTR-2B during prescribed period and said amount of ITC shall be reversed by the said recipient, while
by prescribed limit.
9
‰ who has defaulted in discharging his tax liability in accordance Rule 86B provides that the registered person shall not utilise the amount available in
electronic credit ledger to discharge his liability towards output tax in excess of 99% of such
with the provisions of section 49(12) read with rule 86B, i.e. who
tax liability, in cases where the value of taxable supply other than exempt supply and zero-
rated supply, in a month exceeds ` 50 lakh subject to specified exceptions. It has been
8
Circular No. 241/35/2024 GST dated 31.12.2024 discussed subsequently in this chapter.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.27 7.27 1.28 7.28 GOODS AND SERVICES TAX

furnishing a return in GSTR-3B on or before 30th November (f) Filing of return [Section 16(2)(d)]
following the end of such FY during which such ITC has been The registered person taking the ITC must have filed his return in
availed. GSTR-3B under section 39. Thus, a taxpayer should file GSTR-3B to avail
However, where the said amount of ITC is not so reversed by ITC on eligible inward supplies.
recipient, such amount shall be payable by the said person along
(iii) Goods received in lots: ITC available only on receipt of last lot
with interest thereon under section 50.
[First proviso to section 16(2)]
(II) Re-availment of reversed ITC: Where the said supplier makes
payment of the tax payable in respect of the aforesaid supplies, In case the goods covered under an invoice are not received in a single
the said registered person may re-avail the amount of credit consignment but are received in lots / instalments, ITC can be taken only
reversed by him. upon receipt of the last lot / instalment.
Thus, where the said supplier subsequently furnishes the return in (5) XYZ enters into a contract with ABC for supply of 10 MT of a
GSTR-3B for the said tax period, the said registered person may
chemical for ` 1,18,000 (inclusive of GST of ` 18,000) in the month
re-avail the amount of such credit in the return in GSTR-3B for a
tax period thereafter. of August. The chemical is to be delivered in lots over a period of

(4) Jhamku, a registered supplier, supplies goods to three months. ABC raises the invoice for the entire amount in August and
Chamku valuing ` 10,000 on which he charged CGST XYZ also makes the payment in the same month but the supply is completed
and SGST of ` 900 each in the invoice raised in March, in November.
2025. Jhamku uploaded the details of the said invoice in his Though XYZ paid the full tax as early as August, it can take the ITC of the
GSTR-1 for the said month filed before the due date based on same only on receipt of the last lot of the chemical in the month of November.
which Chamku availed the said ITC of ` 900 each towards CGST
and SGST while filing his GSTR-3B for March, 2025 as the said ITC (iv) Payment for the invoice to be made within 180 days [Second
was also reflected in his GSTR-2B. However, Jhamku failed to proviso to section 16(2) read with rule 37]
furnish the corresponding GSTR-3B (for the month of March, The registered person must pay to the supplier, the value of the goods and/or
2025) upto 30th September, 2025. services along with the tax within 180 days from the date of issue of invoice
Accordingly, while filing GSTR-3B for the month of October, 2025 [Second proviso to section 16(2)].
on 20th November, 2025, Chamku reversed an amount of ITC However, where a registered person, who has availed of ITC on any inward
earlier availed by him. Subsequently, suppose if Jhamku files supply fails to pay to the supplier thereof, the amount towards the value of
GSTR-3B on 20th December, 2025 and pays the said amount of such supply, whether wholly or partly, along with the tax payable thereon,
` 900 each towards CGST and SGST alongwith interest, Jhamku within 180 days from the date of issue of invoice by supplier, shall pay or
can now re-avail the said input tax credit of ` 900 towards CGST reverse an amount equal to the ITC availed in respect of such supply,
and SGST which he has reversed earlier. proportionate to the amount not paid to the supplier, along with interest
payable thereon under section 50, while furnishing the return in Form
GSTR-3B for the tax period immediately following the period of 180 days
from the date of the issue of the invoice.

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 INPUT TAX CREDIT 1.29 7.29 1.30 7.30 GOODS AND SERVICES TAX

Exceptions (vi) Time limit for availing ITC: 30th November of succeeding
This condition of payment of value of supply plus tax within 180 days does financial year or date of filing of relevant annual return,
not apply in the following situations: whichever is earlier [Section 16(4)]

(a) Supplies on which tax is payable under reverse charge ITC on invoices pertaining to a financial year or debit notes issued in a
financial year can be availed any time till 30th November of the succeeding
(b) Deemed supplies without consideration – Schedule I
financial year or the date of filing of the relevant annual return, whichever is
(c) Additions made to the value of supplies on account of supplier’s earlier.
liability, in relation to such supplies, being incurred by the recipient of
Here, in case of debit notes, the date of
the supply as per section 15(2)(b).
issuance of debit note and not the date of
Under situations given in points (b) & (c), the value of supply is deemed to underlying invoice is relevant to determine
have been paid. the relevant financial year 10.
(6) Due to a quality dispute, PZP Ltd withheld payment on a Clarification on time limit under section 16(4)in
4)in respect of RCM
machine supplied by a vendor till it could be rectified. Over 180 supplies received from unregistered persons 11
days went by in this dispute. The credit taken by PZP on the invoice
It is clarified that in cases of supplies received from unregistered suppliers,
needs to be paid / reversed along with interest in GSTR-3B furnished for the
where tax has to be paid by the recipient under reverse charge mechanism
relevant month after completion of 180 days. Only after the vendor rectified
(RCM) and where invoice is to be issued by the recipient of the supplies in
the machine and PZP released the payment, could PZP take the credit again.
accordance with section 31(3)(f) the relevant financial year for calculation
(v) If depreciation claimed on tax component, ITC not allowed of time limit for availment of input tax credit under the provisions of
[Section 16(3)] section 16(4) will be the financial year in which the invoice has been
If the person taking the ITC on capital goods and plant and machinery has issued by the recipient under section 31(3)(f), subject to payment of tax
claimed depreciation on the tax component of the cost of the said items on the said supply by the recipient and fulfilment of other conditions and
under the Income-tax Act 1961, the ITC on the said tax component shall not restrictions of section 16 and 17. In case, the recipient issues the invoice after
be allowed. Thus, in respect of the tax paid on such items, dual benefit cannot the time of supply of the said supply and pays tax accordingly, he will be
be claimed under Income-tax Act, 1961 and GST law simultaneously. In other required to pay interest on such delayed payment of tax. Further, in cases of
words, either depreciation on the tax component can be claimed under such delayed issuance of invoice by the recipient, he may also be liable to
Income Tax Act or ITC of such tax paid can be availed under GST law. penal action under the provisions of Section 122 12.

(7) A registered supplier purchases machinery for business purpose. (8) A debit note dated 07.07.2024 is issued in respect of the original
The value of the machinery is ` 10 lakh and GST paid thereon is invoice dated 16.03.2024. As the invoice pertains to F.Y. 2023- 24, the
` 1.80 lakh. ITC of ` 1.80 lakh cannot be availed by the supplier if he relevant financial year for availment of ITC in respect of the said
has claimed depreciation on such amount under income-tax law. invoice in terms of section 16(4) shall be FY 2023-24. However, as the debit note

10
Circular No. 160/16/2021 GST dated 20.09.2021
11
Circular No. 211/5/2024 GST dated 26.06.2024
12
Section 122 has been discussed in detail in Chapter-21 of Module-3 of the Study material.

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 INPUT TAX CREDIT 1.31 7.31 1.32 7.32 GOODS AND SERVICES TAX

has been issued in FY 2024-25, the relevant financial year for availment of ITC in the date of revocation of cancellation of registration are filed within 30 days
respect of the said debit note shall be FY 2024-25 in terms of section 16(4). of revocation of cancellation of registration, subject to the condition that the
time limit to avail ITC in respect of the said invoice or the debit note under
(9) Hercules Machinery delivered a machine to XYZ, a monthly section 16(4) had not already expired on the date of cancellation of
return filer under GST, in the month of January under Invoice no. registration.
49 dated 28th January 2025 for ` 4,15,000 plus GST and undertook
(viii)Restriction of ITC in proportion of (i) taxable supplies (ii)
trial runs and calibration of the machine as per the requirements of XYZ. The
business purposes [Sub-sections (1) and (2) of section 17]
amount chargeable for the post-delivery activities was covered in a debit note
raised in the month of April 2025 for ` 50,000 plus GST. XYZ did not file its ITC is restricted in proportion of the use of the goods and/or services (i) in
annual return for FY 2024-25 till the end of November, 2025. the taxable and / or zero-rated supplies (ii) for business purposes. This is
elaborated in heading (4) below.
The time-limit to avail ITC in respect of tax paid on supply for Invoice No. 49
would be 30th November, 2025. (ix) ITC not allowed on certain supplies [Section 17(5)]

Since the debit note is received in the next financial year, the time limit for ITC has been blocked for specified goods and services. This is elaborated in
taking ITC available on ` 50,000 is 30th November 2026, [earlier of the date of heading (4) below.
filing the annual return for the preceding financial year or 30th of November
of the succeeding year.
4. APPORTIONMENT OF CREDIT & BLOCKED
Exception
CREDITS [SECTION 17]
The time limit u/s 16(4) does not apply to claim for re-availing of credit that
had been reversed earlier. STATUTORY PROVISIONS
(vii) Time limit for taking ITC in case of revoked registration
Section 17 Apportionment of credit and blocked credits
cancellation [Section 16(6)]
In case where registration of a taxpayer is cancelled and subsequently, it is Sub-section Clause Particulars
revoked, return for the period from date of cancellation/ effective date of (1) Where the goods or services or both are used by the registered
cancellation till the date of revocation of cancellation cannot be filed on the person partly for the purpose of any business and partly for other
portal by the taxpayers till their cancellation of registration is revoked. In purposes, the amount of credit shall be restricted to so much of the
such cases, where the recipient has not claimed the ITC in respect of any input tax as is attributable to the purposes of his business.
invoice/debit note pertaining to that financial year and in the meantime,
time-limit stipulated in section 16(4) lapses, he would not be able to claim (2) Where the goods or services or both are used by the registered
ITC on the said invoice/debit note. person partly for effecting taxable supplies including zero-rated
supplies under this Act or under the Integrated Goods and Services
Consequently, relaxation has been given and the time limit to avail ITC under
Tax Act and partly for effecting exempt supplies under the said
section 16(4) in respect of any invoice/debit note, is extended till the date of
Acts, the amount of credit shall be restricted to so much of the
filing return in cases where the returns for the period from date of
cancellation of registration/effective date of cancellation of registration till

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 INPUT TAX CREDIT 1.33 7.33 1.34 7.34 GOODS AND SERVICES TAX

input tax as is attributable to the said taxable supplies including (a) motor vehicles for transportation of persons having
zero-rated supplies. approved seating capacity of not more than thirteen
persons (including the driver), except when they are used
(3) The value of exempt supply under sub-section (2) shall be such as
for making the following taxable supplies, namely:—
may be prescribed, and shall include supplies on which the
recipient is liable to pay tax on reverse charge basis, transactions (A) further supply of such motor vehicles; or
in securities, sale of land and, subject to clause (b) of paragraph 5
of Schedule II, sale of building. (B) transportation of passengers; or

Explanation — For the purposes of this sub-section, the expression (C) imparting training on driving such motor
‘‘value of exempt supply’’ shall not include the value of activities vehicles;
or transactions specified in Schedule III, except: (aa) vessels and aircraft except when they are used––
(i) the value of activities or transactions specified in paragraph
5 of the said Schedule; and (i) for making the following taxable supplies,
namely:—
(ii) the value of such activities or transactions as may be
prescribed in respect of clause (a) of paragraph 8 of the said (A) further supply of such vessels or aircraft; or
Schedule.
(B) transportation of passengers; or
(4) A banking company or a financial institution including a non-
(C) imparting training on navigating such
banking financial company, engaged in supplying services by way
vessels; or
of accepting deposits, extending loans or advances shall have the
option to either comply with the provisions of sub-section (2), or (D) imparting training on flying such aircraft;
avail of, every month, an amount equal to fifty per cent. of the
eligible input tax credit on inputs, capital goods and input services (ii) for transportation of goods;
in that month and the rest shall lapse: (ab) the following supply of goods or services or both:—
Provided that the option once exercised shall not be withdrawn services of general insurance, servicing, repair and
during the remaining part of the financial year: maintenance in so far as they relate to motor vehicles,
Provided further that the restriction of fifty per cent. shall not apply vessels or aircraft referred to in clause (a) or clause (aa):
to the tax paid on supplies made by one registered person to Provided that the input tax credit in respect of such
another registered person having the same Permanent Account services shall be available—
Number.
(i) where the motor vehicles, vessels or aircraft
(5) Notwithstanding anything contained in sub-section (1) of section referred to in clause (a) or clause (aa) are used for
16 and sub- section (1) of section 18, input tax credit shall not be the purposes specified therein;
available in respect of the following, namely:—

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 INPUT TAX CREDIT 1.35 7.35 1.36 7.36 GOODS AND SERVICES TAX

(ii) where received by a taxable person engaged— the same to its employees under any law for the
time being in force 13.
(I) in the manufacture of such motor vehicles,
vessels or aircraft; or (c) works contract services when supplied for construction
of an immovable property (other than plant and
(II) in the supply of general insurance services machinery) except where it is an input service for further
in respect of such motor vehicles, vessels or supply of works contract service;
aircraft insured by him;
(d) goods or services or both received by a taxable person
(b) the following supply of goods or services or both— for construction of an immovable property (other than
(i) food and beverages, outdoor catering, beauty plant or machinery) on his own account including when
treatment, health services, cosmetic and plastic such goods or services or both are used in the course or
surgery, leasing, renting or hiring of motor furtherance of business
vehicles, vessels or aircraft referred to in clause Explanation.––For the purposes of clauses (c) and (d),
(a) or clause (aa) except when used for the the expression “construction” includes re-construction,
purposes specified therein, life insurance and renovation, additions or alterations or repairs, to the
health insurance: extent of capitalisation, to the said immovable property
Provided that the input tax credit in respect of (e) goods or services or both on which tax has been paid
such goods or services or both shall be available under section 10;
where an inward supply of such goods or services
or both is used by a registered person for making (f) goods or services or both received by a non-resident
an outward taxable supply of the same category taxable person except on goods imported by him;
of goods or services or both or as an element of a
(fa) goods or services or both received by a taxable person,
taxable composite or mixed supply;
which are used or intended to be used for activities
(ii) membership of a club, health and fitness centre; relating to his obligations under corporate social
and responsibility referred to in section 135 of the
Companies Act, 2013;
(iii) travel benefits extended to employees on vacation
such as leave or home travel concession: (g) goods or services or both used for personal consumption;

Provided that the input tax credit in respect of (h) goods lost, stolen, destroyed, written off or disposed of
such goods or services or both shall be available, by way of gift or free samples; and
where it is obligatory for an employer to provide

13
Circular No. 172/04/2022 GST dated 06.07.2022 clarifies that this proviso is applicable to
the whole of section 17(5)(b).

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 INPUT TAX CREDIT 1.37 7.37 1.38 7.38 GOODS AND SERVICES TAX

(i) any tax paid in accordance with the provisions of section (ii) the credit attributable to the supplies specified in
74, in respect of any period up to Financial Year sub-section (5) of section 17;
2023-24.
(b) the said company or institution shall avail the credit of
(6) The Government may prescribe the manner in which the credit tax paid on inputs and input services referred to in the
referred to in sub-sections (1) and (2) may be attributed. second proviso to sub-section (4) of section 17 and not
covered under clause (a);
Explanation.–– For the purposes of this Chapter and Chapter VI,
the expression “plant and machinery” means apparatus, (c) fifty per cent. of the remaining amount of input tax shall
equipment, and machinery fixed to earth by foundation or be the input tax credit admissible to the company or the
structural support that are used for making outward supply of institution and the balance amount of input tax credit shall
goods or services or both and includes such foundation and be reversed in Form GSTR-3B;
structural supports but excludes—
Rule 42 Manner of determination of input tax credit in respect of
(i) land, building or any other civil structures; inputs or input services and reversal thereof

(ii) telecommunication towers; and Sub-rule Clause Particulars

(iii) pipelines laid outside the factory premises. (1) The input tax credit in respect of inputs or input services, which
attract the provisions of sub-section (1) or sub-section (2) of
Chapter V: Input Tax Credit of the CGST Rules
section 17, being partly used for the purposes of business and
Rule 38 Claim of credit by a banking company or a financial institution partly for other purposes, or partly used for effecting taxable
supplies including zero rated supplies and partly for effecting
A banking company or a financial institution, including a non- exempt supplies, shall be attributed to the purposes of business or
banking financial company, engaged in the supply of services by for effecting taxable supplies in the following manner, namely,-
way of accepting deposits or extending loans or advances that
chooses not to comply with the provisions of sub-section (2) of (a) the total input tax involved on inputs and input services
section 17, in accordance with the option permitted under sub- in a tax period, be denoted as ‘T’;
section (4) of that section, shall follow the following procedure,
(b) the amount of input tax, out of ‘T’, attributable to inputs
namely,-
and input services intended to be used exclusively for the
(a) the said company or institution shall not avail the credit purposes other than business, be denoted as ‘T1’;
of,-
(c) the amount of input tax, out of ‘T’, attributable to inputs
(i) the tax paid on inputs and input services that are and input services intended to be used exclusively for
used for non-business purposes; and effecting exempt supplies, be denoted as ‘T2’;

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 INPUT TAX CREDIT 1.39 7.39 1.40 7.40 GOODS AND SERVICES TAX

(d) the amount of input tax, out of ‘T’, in respect of inputs available, previous to the month during which the said
and input services on which credit is not available under value of ‘E/F’ is to be calculated;
sub-section (5) of section 17, be denoted as ‘T3’;
Explanation: For the purposes of this clause, it is hereby
(e) the amount of input tax credit credited to the electronic clarified that the aggregate value of exempt supplies
credit ledger of registered person, be denoted as ‘C1’ and and the total turnover shall exclude the amount of any
calculated as- duty or tax levied under entry 84 and entry 92A of List I
C1 = T- (T1+T2+T3); of the Seventh Schedule to the Constitution and entry 51
and 54 of List II of the said Schedule;
(f) the amount of input tax credit attributable to inputs and
input services intended to be used exclusively for (j) the amount of credit attributable to non-business
effecting supplies other than exempted but including purposes if common inputs and input services are used
zero rated supplies, be denoted as ‘T4’; partly for business and partly for non-business purposes,
be denoted as ‘D2’, and shall be equal to five per cent. of
(g) ‘T1’, ‘T2’, ‘T3’ and ‘T4’ shall be determined and declared C2; and
by the registered person at summary level in FORM
GSTR-3B; (k) the remainder of the common credit shall be the eligible
input tax credit attributed to the purposes of business
(h) input tax credit left after attribution of input tax credit and for effecting supplies other than exempted supplies
under clause (f) shall be called common credit, be but including zero rated supplies and shall be denoted
denoted as ‘C2’ and calculated as- as ‘C3’, where,-
C2 = C1- T4; C3 = C2 - (D1+D2);

(i) the amount of input tax credit attributable towards (l) the amount ‘C3’, ‘D1’ and ‘D2’ shall be computed
exempt supplies, be denoted as ‘D1’ and calculated as- separately for input tax credit of central tax, State tax,
D1= (E ÷ F) × C2 Union territory tax and integrated tax and declared in
where, FORM GSTR-3B or through FORM GST DRC-03;
‘E’ is the aggregate value of exempt supplies during the
(m) the amount equal to aggregate of ‘D1’ and ‘D2’ shall be
tax period, and
reversed by the registered person in FORM GSTR-3B or
‘F’ is the total turnover in the State of the registered through FORM GST DRC-03:
person during the tax period:
Provided that where the amount of input tax relating to inputs or
Provided further that where the registered person does input services used partly for the purposes other than business and
not have any turnover during the said tax period or the partly for effecting exempt supplies has been identified and
aforesaid information is not available, the value of ‘E/F’ segregated at the invoice level by the registered person, the same
shall be calculated by taking values of ‘E’ and ‘F’ of the shall be included in ‘T1’ and ‘T2’ respectively, and the remaining
last tax period for which the details of such turnover are

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 INPUT TAX CREDIT 1.41 7.41 1.42 7.42 GOODS AND SERVICES TAX

amount of credit on such inputs or input services shall be included for effecting taxable supplies including zero rated supplies and
in ‘T4’. partly for effecting exempt supplies, shall be attributed to the
purposes of business or for effecting taxable supplies in the
(2) The input tax credit determined under sub-rule (1) shall be
following manner, namely,-
calculated finally for the financial year before the due date for
furnishing of the return for the month of September following the (a) the amount of input tax in respect of capital goods used
end of the financial year to which such credit relates, in the or intended to be used exclusively for non-business
manner specified in the said sub-rule and,- purposes or used or intended to be used exclusively for
effecting exempt supplies shall be indicated in FORM
(a) where the aggregate of the amounts calculated finally
GSTR-3B and shall not be credited to his electronic
in respect of ‘D1’ and ‘D2’ exceeds the aggregate of the
amounts determined under sub-rule (1) in respect of ‘D 1’ credit ledger;
and ‘D2’, such excess shall be reversed by the registered (b) the amount of input tax in respect of capital goods used
person in FORM GSTR-3B or through FORM GST DRC-
or intended to be used exclusively for effecting supplies
03 in the month not later than the month of September
other than exempted supplies but including zero-rated
following the end of the financial year to which such
credit relates and the said person shall be liable to pay supplies shall be indicated in FORM GSTR-3B and shall
interest on the said excess amount at the rate specified be credited to the electronic credit ledger;
in sub-section (1) of section 50 for the period starting
(c) the amount of input tax in respect of capital goods not
from the first day of April of the succeeding financial
covered under clauses (a) and (b), denoted as ‘A’, shall
year till the date of payment; or
be credited to the electronic credit ledger and the useful
(b) where the aggregate of the amounts determined under life of such goods shall be taken as five years from the
sub-rule (1) in respect of ‘D 1’ and ‘D2’ exceeds the date of the invoice for such goods:
aggregate of the amounts calculated finally in respect
of ‘D1’ and ‘D2’, such excess amount shall be claimed as Provided that where any capital goods earlier covered
credit by the registered person in his return for a month under clause (a) is subsequently covered under this clause,
not later than the month of September following the end input tax in respect of such capital goods denoted as ‘A’
of the financial year to which such credit relates. shall be credited to the electronic credit ledger subject to
the condition that the ineligible credit attributable to the
Rule 43 Manner of determination of input tax credit in respect of
period during which such capital goods were covered by
capital goods and reversal thereof in certain cases
clause (a), denoted as ‘Tie’, shall be calculated at the rate
Sub-rule Clause Particulars of five percentage points for every quarter or part thereof
and added to the output tax liability of the tax period in
(1) Subject to the provisions of sub-section (3) of section 16, the input
which such credit is claimed;
tax credit in respect of capital goods, which attract the provisions
of sub-sections (1) and (2) of section 17, being partly used for the
purposes of business and partly for other purposes, or partly used

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 INPUT TAX CREDIT 1.43 7.43 1.44 7.44 GOODS AND SERVICES TAX

Provided further that the amount ‘Tie’ shall be computed Te= (E÷ F) x Tr 14
separately for input tax credit of central tax, State tax, where,
Union territory tax and integrated tax and declared in ‘E’ is the aggregate value of exempt supplies, made,
FORM GSTR-3B. during the tax period, and ‘F’ is the total turnover in the
State of the registered person during the tax period:
(d) the aggregate of the amounts of ‘A’ credited to the
electronic credit ledger under clause (c) in respect of Provided further that where the registered person does
common capital goods whose useful life remains during not have any turnover during the said tax period or the
the tax period, to be denoted as ‘Tc’, shall be the common aforesaid information is not available, the value of ‘E/F’
credit in respect of such capital goods: shall be calculated by taking values of ‘E’ and ‘F’ of the
last tax period for which the details of such turnover are
Provided that where any capital goods earlier covered
available, previous to the month during which the said
under clause (b) are subsequently covered under clause
value of ‘E/F’ is to be calculated;
(c), the input tax credit claimed in respect of such capital
good(s) shall be added to arrive at the aggregate value Explanation: For the purposes of this clause, it is hereby
‘Tc’; clarified that the aggregate value of exempt supplies
and the total turnover shall exclude the amount of any
(e) the amount of input tax credit attributable to a tax duty or tax levied under entry 84 and entry 92A of List I
period on common capital goods during their useful life, of the Seventh Schedule to the Constitution and entry 51
be denoted as ‘Tm’ and calculated as:- and 54 of List II of the said Schedule;
Tm= Tc÷60
(h) the amount Te along with the applicable interest shall,
Explanation.- For the removal of doubt, it is clarified that during every tax period of the useful life of the
useful life of any capital goods shall be considered as concerned capital goods, be added to the output tax
five years from the date of invoice and the said formula liability of the person making such claim of credit.
shall be applicable during the useful life of the said
(i) The amount Te shall be computed separately for central
capital goods.
tax, State tax, Union territory tax and integrated tax and
(f) the amount of input tax credit, at the beginning of a tax declared in FORM GSTR-3B.
period, on all common capital goods whose useful life
Explanation (1):-For the purposes of rule 42 and this rule, it is hereby clarified that
remains during the tax period, be denoted as ‘Tr’ and shall
the aggregate value of exempt supplies shall exclude:-
be the aggregate of ‘Tm’ for all such capital goods.

(g) the amount of common credit attributable towards

exempted supplies, be denoted as ‘Te’, and calculated as: 14
Clause (f) of the rule which contained the provisions for computation of ‘Tr’ has been
omitted vide Notification No. 16/2020 CT dated 23.03.2020. This has rendered the formula
given in clause (g) otiose as the term ‘Tr’ is now nowhere defined in the amended rule.

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 INPUT TAX CREDIT 1.45 7.45 1.46 7.46 GOODS AND SERVICES TAX

A. Apportionment of ITC [Sub-sections (1) and (2) of section 17 read with

(b) the value of services by way of accepting deposits, extending loans
rule 42 and rule 43 of the CGST Rules]
or advances in so far as the consideration is represented by way of
interest or discount, except in case of a banking company or a The fundamental principle of credit scheme under value added tax is that tax
financial institution including a non-banking financial company, paid on inputs, input services and capital goods can be availed as credit only
engaged in supplying services by way of accepting deposits, when the output is taxable. Thus, when tax is not payable on output, credit
extending loans or advances; and cannot be availed.
Accordingly, ITC under GST can be availed and utilised for payment of tax on
(d) the value of supply of Duty Credit Scrips specified in Notification output supply. Consequently, ITC cannot be availed when tax is not payable
No. 35/2017CT (R) dated 13.10.2017 on output supply, i.e. on exempt supply. The only exception to the above
principle is ‘zero rated supply, where ITC is available even if no tax is payable
Explanation 3:- For the purpose of rule 42 and this rule, the value of activities or
on output supply as zero rated supply is not an exempted supply.
transactions mentioned in sub-paragraph (a) of paragraph 8 of Schedule III of the
Act which is required to be included in the value of exempt supplies under clause If a taxable person is making both taxable and exempt supply, he is entitled
(b) of the Explanation to sub-section (3) of section 17 of the Act shall be the value to full credit of ITC in respect of inputs, input services and capital goods
of supply of goods from Duty Free Shops at arrival terminal in international exclusively used for taxable supply and no credit at all for inputs, input
services and capital goods exclusively used for exempt supply.
airports to the incoming passengers.
If common inputs, input services and capital goods are used for taxable as
Explanation.- For the purposes of this Chapter,-
well as exempt supply, only proportionate ITC attributable to the taxable
(1) the expressions “capital goods” shall include “plant and supply is available. The common ITC is apportioned in the ratio of value of
machinery” as defined in the Explanation to section 17; taxable supply and exempt supply.
Also, in case goods and/or services are used by the taxable person partly for
(2) for determining the value of an exempt supply as referred to in
sub-section (3) of section 17- the business purposes and partly for non-business purposes, he is entitled to
full credit of ITC in respect of inputs, input services and capital goods
(a) the value of land and building shall be taken as the same exclusively used for business purposes and no credit at all can be availed for
as adopted for the purpose of paying stamp duty; and goods and/or services exclusively used for non-business purposes.

(b) the value of security shall be taken as one per cent. of the If common inputs, input services and capital goods are used partly for
sale value of such security. business and partly for non-business purposes, only proportionate ITC
attributable to the business purpose is available.
Elaborate provisions have been made in sub-sections (1) and (2) of section 17
ANALYSIS and rules 42 and 43 for calculation of such proportionate ITC. Such provisions
are discussed in detail in the ensuing pages.
Section 17 requires apportionment and concomitant restriction of ITC in two The situations requiring apportionment are as follows:
situations as also blocking of ITC on specified inward supplies.
(a) when the goods and / or services are used by the registered person
partly for the purpose of business [See the definition of business] and
partly for other purposes [Section 17(1)]; and

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 INPUT TAX CREDIT 1.47 7.47 1.48 7.48 GOODS AND SERVICES TAX

(b) when the goods and / or services are used by the registered person Clarification on availability of ITC in respect of warranty replacement
partly for making taxable supplies including zero-rated supplies and of goods or its parts and/ repair services during warranty period 15
partly for making exempt supplies [See the definition of exempt supplies]
[Section 17(2)]. As a commercial practice, the original equipment manufacturers/ suppliers
offer warranty for the goods / services supplied by them to the customers.
In both the above situations, full ITC on inward supplies cannot be taken; only
proportionate ITC is allowed in such scenarios. Where goods and/or services During the warranty period, goods /services are replaced to the customers
are used partly for non-business purposes and partly for business purposes, (either by manufacturer itself or by the distributor on behalf of the
ITC attributable only to business purposes can be taken by the registered manufacturer) and generally, no separate consideration is charged and
person. Similarly, where goods and/or services are partly used for making received at the time of replacement from the customer.
exempt supplies including zero rated supplies and partly for taxable supplies,
Following issues have been clarified in respect of warranty replacement of
ITC attributable to taxable supplies and zero rated supplies can be taken by
the registered person. goods or its parts and/ repair services provided during the warranty period:
SCENARIO 1
Section 16(2) of the IGST Act specifies that ITC may be
availed on inward supplies for making zero-rated supply, ORIGINAL EQUIPMENT MANUFACTURER OFFERING REPLACEMENT OF
GOODS OR ITS PARTS/ REPAIR SERVICES UNDER WARRANTY TO THE
notwithstanding the exempt nature of the zero-rated supply. Zero-
CUSTOMER
rated supply is an expression that covers two kinds of supplies: (i)
exports, and (ii) supplies for authorised operations to a SEZ unit or
SEZ developer. Therefore, ITC is available on goods and / or
services used for supplies made in the course of export or to an SEZ Replaces
unit or SEZ developer for authorised operations. goods or
provides
repair services
(10) A registered person is in the business of manufacturing Original Equipmentt Customer
shoes. He gave 50 pairs of shoes to his friends free of cost. ITC Manufacturer
on inputs and input services attributable to such 50 pair of shoes
being used for non-business purposes will not be available.
Issue: Where the original equipment manufacturer
(11) A registered person manufactures a product ‘X’ chargeable offers warranty for the goods supplied by him to the
to 18% GST, a product ‘Y’ chargeable to NIL rate of tax and a customer and provides rep lacement of goods or its
product ‘Z’ which is exported without payment of tax under bond. parts and/ or repair services to the customer during
All the three products are manufactured from common inputs and input the warranty period, without separately charging any
services. ITC on inputs and input services attributable to product ‘Y’ being an consideration at the time of such replacement/ repair
exempt supply, will not be available. services, whether in such cases, the manufacturer is required to reverse ITC

15
Circular No. 195/07/2023 GST dated 17.07.2023 read with Circular No. 216/10/2024 GST
dated 26.06.2024

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 INPUT TAX CREDIT 1.49 7.49 1.50 7.50 GOODS AND SERVICES TAX

in respect of such replacement of goods or its parts, as the case may be or

supply of repair services as part of warranty, in respect of which no additional
ITC admissibility in case of the transaction/activitiy undertaken
consideration is charged from the customer?
between Distributor and Manufacturer
Clarification: The value of original
• No separate charges Issue 1: Where the distributor provides
supply of goods (provided along with
for replacement/ replacement of GOODS OR ITS PARTS to the
warranty) by the manufacturer to the
repair services-NOT customer as part of warranty on behalf of the
customer includes the likely cost of
AN EXEMPT SUPPLY manufacturer, whether distributor is required to
replacement of goods or its parts and
• Thus, NO REVERSAL reverse the ITC in case of such replacement?
/ or repair services to be incurred
during the warranty period. Clarification: There can be 4 instances as
discussed below:-
Therefore, these supplies cannot be considered as exempt supply and
accordingly, the manufacturer, who provides replacement of goods or its
In case where In such a case
parts, as the case may be and/ or repair services to the customer during the
warranty period, is not required to reverse the ITC in respect of the said Distributor replaces the goods or its GST would be payable by the
replacement of goods or its parts, as the case may be or on the repair part(s) to the customer under warranty distributor on the said supply by
either by using his stock or by him to the manufacturer and the
services provided.
purchasing from a third party and manufacturer would be
SCENARIO 2 charges the consideration for the entitled to avail the ITC of the
goods or its part(s) so replaced from same, subject to other
DISTRIBUTOR PROVIDES WARRANTY REPLACEMENT AND/OR REPAIR
the manufacturer, by issuance of a conditions of the CGST Act,
SERVICES TO THE CUSTOMER ON BEHALF OF THE MANUFACTURER
tax invoice, for the said supply made 2017. In such case, no reversal
by him to the manufacturer. of ITC by the distributor is
required in respect of the same.

Distributor raises a requisition to the No GST is payable on such

Replaces
manufacturer for the goods or its replacement of goods or its
goods or
part(s) to be replaced by him under part(s) by the manufacturer.
provides
warranty and the manufacturer then Further, no reversal of ITC is
repair services
Distributor Customer provides the said goods or its part(s) required to be made by the
to the distributor for the purpose of manufacturer in respect of the
such replacement to the customer as goods or its parts so replaced by
part of warranty without separately the distributor under warranty.
charging any consideration at the
time of such replacement.

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 INPUT TAX CREDIT 1.51 7.51 1.52 7.52 GOODS AND SERVICES TAX

Clarification: In such scenario,

Distributor replaces the goods or its Accordingly, the tax liability Distributor provides repair
part(s) to the customer under warranty may be adjusted by the there is a supply of service by
service, in addition to
out of the supply already received by manufacturer subject to the the distributor and the
replacement of parts to
him from the manufacturer and the condition that such distributor manufacturer is the recipient customer without any
manufacturer issues a credit note in has reversed the ITC availed of such supply of repair services consideration, as part of
respect of the goods or its part(s) so against such goods/parts. in accordance with the warranty and charges the
replaced subject to provisions of provisions of section 2(93)(a) of manufacturer for such repair
section 34(2) 16. the CGST Act, 2017. services.
Distributor replaces the goods or its No GST is payable on such Hence, GST would be payable on
parts to the customer under warranty replenishment of goods or the such provision of service by the distributor to the manufacturer and the
by using his stock and then raises a parts. manufacturer would be entitled to avail the ITC of the same, subject to
requisition to the manufacturer for the Further, no reversal of ITC is other conditions of the CGST Act, 2017.
goods or the parts. The manufacturer required to be made by the
then provides the said goods or the manufacturer in respect of the (i) Methodology of apportionment of credit on inputs and input
parts to the distributor through a goods or its parts so replenished services and reversal thereof [Rule 42]
delivery challan, without separately to the distributor. In many situations, the amount of input tax involved in exempt /non-
charging any consideration at the
business use is not easily discernible, as common goods and/or services
time of such replenishment.
are used for (i) making taxable supplies including zero rated supplies
Issue 2: Where the distributor and exempt supplies and (ii) business and non-business purposes.
provides repair service, in
Rule 42 of the CGST Rules provides the methodology for apportionment
addition to replacement of parts
of ITC on inputs and input services and reversal of ineligible credit as
or otherwise, to the customer
follows:
without any consideration, as part
of warranty, on behalf of the Step 1 – Compute common credit
manufacturer but charges the
manufacturer for such REPAIR Total input tax involved on inputs & input services in a T
tax period
SERVICES either by way of issue of
tax invoice or a debit note, whether Less: Input tax on inputs & input services that are (T1)
ITC is available on such activity by intended to be used exclusively for non-business
the distributor? purposes

Less: Input tax on inputs & input services that are (T2)
intended to be used exclusively for exempt supplies

16
Provisions of section 34(2) have been discussed in detail in Chapter 10: Tax invoice;
Credit and Debit Notes in Module 2 of this Study Material.

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 INPUT TAX CREDIT 1.53 7.53 1.54 7.54 GOODS AND SERVICES TAX

Input tax on yellow dye: ` 15,000

Less: Input tax on inputs & input services which are (T3)
ineligible for credit [blocked credits- See discussion under Total input tax: ` 2,55,000 (This is T)
point (B)]
Total input tax reduced by (T1 + T2 + T4, i.e., by ` 1,40,000) is
ITC credited to Electronic Credit Ledger C1 ` 1,15,000.

Less: ITC on inputs & input services that are intended to (T4) Amount of common credit (C2) is ` 1,15,000. This has to be apportioned
be used exclusively for taxable supplies including zero as given below in Step 2.
rated supplies
Step 2 – Compute credit attributable to exempt supplies
Common ITC available for apportionment C2 (ineligible credit) by apportionment of common credit
9 Apportion C2 into credit attributable to exempt supplies D1 as
9 T1, T2, T3 and T4 will be determined and declared by the
under:
registered person at the summary level in GSTR-3B.
D1 = (E/F) x C2
9 Where ITC on inputs and input services used partly for non-
business purposes and exempt supplies can be segregated at Where
invoice level, the same will be added to T1 and T2 respectively and E = Aggregate value of exempt supplies during the tax period
the balance credit will be added in T4.
F = Total turnover in the State during the tax period
9 The portion identified as pertaining to taxable supplies in C2 will
be allowed as ITC. Notes:

Example on how to arrive at the amount of common credit C2 (i) If the registered person does not have any turnover during the
said tax period, or the above information is not available, the
Making an assumption that Hawai slippers are exempted, take a case of
values for the last tax period may be used.
Eezee Footwear, manufacturer of two varieties of Hawai slippers and
five varieties of other sandals and shoes. Dyes are used in the (ii) Here, exempt supplies include reverse charge supplies,
manufacture of all footwears. However, bright pink is used only for one transactions in securities, sale of land and sale of building
of the Hawai varieties, and black is used only for the sandals and shoes. when entire consideration is received either after issuance of
Blue and yellow are used for all the varieties. Brown is used for non- completion certificate by the competent authority or its first
business purposes. occupation, whichever is earlier and supply of warehoused
In inward supplies during the month - goods before clearance for home consumption*. Thus, ITC
attributable to such supplies will need to be reversed.
Input tax on brown dye: ` 10,000 (This is T1)
Input tax on bright pink dye: ` 90,000. (This is T2) *The value of supply of warehoused goods before clearance
for home consumption shall include the value of supply of
Input tax on black dye: ` 40,000. (This is T4)
goods from Duty Free Shops at arrival terminal in
Input tax on blue dye: ` 1,00,000 international airports to the incoming passengers.

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 INPUT TAX CREDIT 1.55 7.55 1.56 7.56 GOODS AND SERVICES TAX

(iii) Here, exempt supplies exclude- Example on how to apportion common credit into credit
attributable to exempt supplies
(b) supply of services by way of accepting deposits,
extending loans or advances where the consideration is Ezee Footwear, which manufactures two varieties of exempt Hawai
either interest or discount. However, value of such slippers and five varieties of taxable sandals and shoes, has the
services is included in the exempt supply when the same following turnover in October and has ` 1,15,000 common credit
are provided by a banking company or a financial that has to be apportioned:
institution including a NBFC.
Turnover of Hawai 1 plus Hawai 2: ` 3 crores (This is ‘E’)
(d) value of supply of Duty Credit Scrips specified in
Turnover of all varieties of taxable shoes and sandals: ` 2 crore
Notification No. 35/2017CT (R) dated 13.10.2017
Total turnover of all footwear during the month: ` 5 crores (This
Thus, ITC attributable to such supplies need not be reversed.
is ‘F’)
(iv) Aggregate value of exempt supplies and total turnover
No inputs/input services are used for non-business purposes.
excludes the central excise duty, State excise duty, central
sales tax and VAT. (3,00,00,000 /5,00,00,000) x 1,15,000= ` 69,000 is the input tax
that pertains to exempt supply (D1).
(v) The value of exempt supply in respect of land and building is
the value adopted for paying stamp duty and for security is 9 Compute credit attributable to non-business purposes D2 as

1% of the sale value of such security. under

D2 = 5% of C2 (common credit)
Presently, (i) central excise duty is leviable on
manufacture/production of tobacco, petroleum crude, diesel, Step 3 – Compute eligible credits
petrol, ATF and natural gas (ii) State excise duty is leviable on Compute C3 attributable to business purposes and taxable supplies
manufacture/production of alcoholic liquor, opium, Indian hemp including zero rated supplies as under:
and narcotics, and (iii) VAT/CST is leviable on intra-State/inter-
C3 = C2 - (D1 + D2)
State sale of petroleum crude, diesel, petrol, ATF, natural gas and
alcoholic liquor. Petroleum crude, diesel, petrol, ATF, natural gas Step 4 – Restrict ineligible credits
are presently not taxable under GST and alcoholic liquor is outside Reverse D1 + D2.
the ambit of GST. Thus, supply of both these products
(petrol/petroleum products and alcoholic liquor) being non- ™ Compute C3 separately for ITC of CGST, SGST/ UTGST and IGST.
taxable under GST, will be exempt supplies u/s 2(47) and ™ Compute š (D1 + D2) for the whole financial year, by taking
taxes/duties (as mentioned above) leviable thereon will be exempted turnover and aggregate turnover for the whole
excluded from the value thereof for the purpose of financial year, before the due date for filing the return for
apportionment of credit. September in the following financial year.

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 INPUT TAX CREDIT 1.57 7.57 1.58 7.58 GOODS AND SERVICES TAX

™ If š (D1 + D2) > the amount already reversed every month, the (iii), credit input tax in respect of the same, denoted as ‘A’, in the
differential amount has to be reversed in any month till ECrL.
September in the following financial year and interest rate @ 18%
Simultaneously, compute the ineligible credit attributable to the
should be paid on such differential amount from 1st April of
period during which such capital goods were used for non-
succeeding year till the date of payment.
business purpose/making exempt supplies @ 5% per quarter or
™ If the amount reversed every month !š D1 + D2), the additional part thereof and denote the same as ‘Tie’. Add such ‘Tie’ to the
amount paid has to be claimed back as credit in the return of the output tax liability of the tax period in which credit on such capital
month not later than September in the next financial year. goods is claimed.

(v) Add together the amounts of ‘A’ credited to ECrL in respect of

(ii) Methodology of apportionment of credit of capital goods and
common capital goods whose useful life remains during the tax
reversal thereof [Rule 43]
period to arrive at common credit ‘Tc’.
Rule 43 provides the methodology for apportionment of ITC on capital
(vi) Change from exclusive use for taxable including zero rated
goods and reversal of ineligible credit as follows:
supplies to common use: Where capital goods which were
Step 1 - Determine common credit ‘Tc’ on capital goods as initially covered under (ii) above get subsequently covered under
under: (iii), add input tax claimed in respect of the same to aggregate
(i) Identify input tax on capital goods used/ intended to be used value of ‘Tc’.
exclusively for non-business purposes or making exempt supplies. Step 2 - Determine common credit during the useful life of
Such amount will not be credited to electronic credit ledger [ECrL]. capital goods for a tax period as under and denote
(ii) Identify input tax on capital goods used/ intended to be used the same as ‘Tm’:
exclusively for making taxable supplies including zero rated Tm = Tc ÷ 60
supplies and declare the same in GSTR-3B. Such amount will be
Step 3 - Apportion common credit attributable to exempt
credited to ECrL.
supplies as under:
(iii) Identify input tax on capital goods not covered under (i) and (ii)
Te = (E ÷ F) x Tr
above [i.e. the capital goods which are used/intended to be used
commonly for making taxable and/or zero rated supplies as well Where
as exempt supplies and/or non-business purposes] and denote E = Aggregate value of exempt supplies made during the tax period
the same as ‘A’. Such amount (as reflected on the invoice) will be
credited to ECrL. The useful life of such capital goods will be taken F = Total turnover in the State during the tax period
as 5 years from the date of invoice. Notes:
(iv) Change from exclusive use for non-business purpose/exempt (i) Tm is to be computed during the useful life of capital goods which is
supplies to common use: Where capital goods which were five years from the date of invoice.
initially covered under (i) above get subsequently covered under

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 INPUT TAX CREDIT 1.59 7.59 1.60 7.60 GOODS AND SERVICES TAX

(ii) If the registered person does not have any turnover during the said Step 4: Restrict ineligible credit
tax period, or the above information is not available, the values for
Add Te to the output tax liability along with applicable interest during
the last tax period may be used.
every tax period of the useful life of the capital goods concerned.
(iii) Here, exempt supplies include reverse charge supplies, transactions
Clarification on the requirement of reversal of ITC in respect of the
in securities, sale of land and sale of building when entire
portion of the premium for life insurance policies which is not included
consideration is received either after issuance of completion
in taxable value 17
certificate by the competent authority or its first occupation,
whichever is earlier and supply of warehoused goods before ‘Life insurance business’ as per section 2(11) of the Insurance Act, 1938,
clearance for home consumption*. Thus, ITC attributable to such includes policies or instruments that combine investment and insurance
supplies will need to be reversed. components. This covers unit-linked insurance policies and similar products,
where both investment and life insurance risk coverage are provided by the
*The value of supply of warehoused goods before clearance for
insurer.
home consumption shall include the value of supply of goods from
Duty Free Shops at arrival terminal in international airports to the Further, exempt supply means nil-rated supplies, wholly exempt supplies
incoming passengers. under section 11, or under section 6 of the IGST Act, & includes non-taxable
supplies. Further, non-taxable supply means a supply not leviable to tax under
(iv) Here, exempt supplies exclude-
CGST Act/IGST Act.
(b) supply of services by way of accepting deposits, extending
The premium portion not includible in taxable value under Rule 32(4) is
loans or advances where the consideration is either interest
neither nil-rated nor wholly exempt from tax and also not a non-taxable
or discount. However, value of such services is included in the
supply; hence, same cannot be considered as pertaining to an exempt supply.
exempt supply when the same are provided by a banking
company or a financial institution including a NBFC. ITC reversal is required only for supplies used:-

(d) value of supply of Duty Credit Scrips specified in Notification (i) partly for business and partly for other purpose [Section 17(1)] or
No. 35/2017CT (R) dated 13.10.2017 (ii) partly for taxable supplies including zero rated supplies and partly for
Thus, ITC attributable to such supplies need not be reversed. exempt supplies. [Section 17(2)]

(v) Aggregate value of exempt supplies and total turnover excludes the It is clarified that the amount of the
Amount of life
central excise duty, State excise duty, central sales tax and 17VAT. premium for taxable life insurance policies, insurance premium not
not included in the taxable value under rule included in taxable
(vi) Amount of Tie and Te are to be computed separately for CGST,
32(4), cannot be considered as pertaining to value under rule 32(4)
SGST/UTGST and IGST and declared in GSTR 3B.
non-taxable/exempt supply & therefore, no No reversal of ITC
(vii) The value of exempt supply in respect of land and building is the reversal of ITC is required as per provisions required
value adopted for paying stamp duty and for security is 1% of the of Rule 42/43, read with section 17(1) &
sale value of such security. 17(2), in respect of the said amount.

17
Circular No.-214/8/2024-GST dated 26.06.2024

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 INPUT TAX CREDIT 1.61 7.61 1.62 7.62 GOODS AND SERVICES TAX

(iii) Optional method for banks etc. [Section 17(4) read with rule 38] (i) Motor vehicles and other conveyances and related services
(insurance, servicing and repair and maintenance)
‰ As an alternative to the above method, a banking company or a
financial institution including a NBFC, which accepts deposits, or Motor vehicles and conveyances have been defined in the CGST Act
extends loans or advances, has the option to limit its availment of [See definition under the heading Relevant Definitions]. Motor vehicles
ITC to 50% of the eligible ITC on inputs, capital goods and input exclude –
services each month and the balance amount of input tax credit
x vehicle running upon fixed rails
shall be reversed in Form GSTR-3B.
x special purpose vehicles for being used in a factory or any
‰ Credit of tax paid on inputs and input services that are used for
enclosed premises
non-business purposes and items mentioned u/s section 17(5)
[blocked credits] cannot be availed. x vehicle with less than 4 wheels fitted with engine capacity of upto
‰ The restriction of availing 50% ITC shall not apply to the tax paid 25cc – (Thus, railways, two/three wheelers with engine capacity of
on supplies procured from another registration within the same upto 25cc, bicycle etc. do not fall in the definition of motor
entity, i.e. 100% credit of such tax can be availed. vehicle.)

‰ The option once exercised cannot be changed during the Broadly, ITC is blocked on motor vehicles, vessels and aircrafts used for
remaining part of the financial year. passenger transportation with certain exceptions. Further, ITC is also
blocked on certain services relating to motor vehicles, vessels and
Interest is the main income of banks and NBFCs and the same is exempt aircrafts namely, general insurance, servicing and repair and
from GST. Thus, if rule 42 and 43 are applied strictly, significant portion maintenance. The basic principle here is that the motor vehicles,
of ITC of banks and NBFCs will have to be reversed/added to output tax aircrafts and vessels on which ITC is blocked, the ITC on services of
liability. Therefore, banks and NBFCs have been given the said option insurance, servicing and repair and maintenance pertaining to such
of availing 50% of eligible ITC to possibly encourage them as they are motor vehicles, vessels and aircrafts is also blocked.
required to finance priority sectors, MSME, agriculture etc.
The blocked credits relating to motor vehicles, vessels, aircrafts and
B. Blocked credits [Section 17(5)] related services are discussed hereunder:
ITC of tax paid on almost every inputs, input services or capital goods used
S. Goods and/or Exceptions to goods Remarks
for supply of taxable goods and/or services is allowed under GST except a
No. services on and/or services
small list of items provided u/s 17(5). Thus, ITC on such items is not allowed
which credit is mentioned in
even though the same may qualify as inputs, input services or capital goods blocked column (2) on which
and are used in the course or furtherance of business. credit is allowed
The blocked list of credit covers mainly items of personal consumption, inputs
(1) (2) (3) (4)
and input services use of which results into formation of an immovable
property (except plant and machinery), telecommunication towers, pipelines (i) Motor vehicles Ineligible motor ‰ ITC on
laid outside the factory premises, etc. and taxes paid as a result of detection for vehicles when used for ineligible
of evasion of taxes, etc. transportation of any of the following motor vehicles
persons with eligible purposes - used for any
The various goods and/or services on which credit is blocked are discussed
seating capacity purpose other
hereunder:

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 INPUT TAX CREDIT 1.63 7.63 1.64 7.64 GOODS AND SERVICES TAX

•  SHUVRQV x making further than the x making taxable

(including the taxable supply of eligible supply of
driver) – Referred such motor purposes is not transportation of
to as ineligible vehicles (e.g allowed. passengers;
motor vehicle in traders of motor ‰ ITC on motor x making taxable
this table vehicles); vehicles for supply of imparting
[Refer discussion transportation training on
on availability of of persons with navigating such
ITC on demo seating vessels;
vehicles given capacity > 13 x making taxable
below this table.] persons supply of imparting
x making taxable (including the training on flying
supply of driver) used for such aircrafts;
transportation of any purpose is x transportation of
passengers (e.g allowed. goods.
travel operator x ITC on motor
offering vehicles other (iii) General x Such services x ITC is not
transportation than ineligible insurance, relating to allowed on
services); motor vehicles servicing, repair ineligible motor services of
x Making taxable (e.g. motor and maintenance vehicles, vessels or general
supply of imparting vehicle used for relating to: aircraft when used insurance,
training on driving transportation x Ineligible for eligible servicing,
such motor of goods, motor vehicles purposes repair and
vehicles (e.g motor dumpers, x Vessels x Such services when maintenance
driving schools). tippers etc.) received by- relating to
x Aircraft
used for any o Manufacturer of motor vehicles,
purpose is ineligible vessels or
allowed. motor vehicles, aircraft, ITC on
vessels or which is not
(ii) Vessels and Vessels and aircraft ITC on vessels and allowed.
aircraft; or
aircrafts when used for any of aircrafts used for
o Supplier of x ITC is allowed
the following eligible any purpose other on services of
general
purposes- than the eligible general
insurance
x making further purposes is not insurance,
services in
taxable supply of allowed. servicing,
respect of
such vessels or repair and
ineligible motor
aircraft; maintenance
vehicles, vessels
relating to

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 INPUT TAX CREDIT 1.65 7.65 1.66 7.66 GOODS AND SERVICES TAX

or aircraft motor vehicles, Clarification on ITC availability in respect of demo vehicles which are
insured by him vessels or motor vehicles for transportation of passengers having approved
aircraft, ITC on seating capacity of not more than 13 persons (including the driver), in
which is terms of clause(a) of section 17(5) 19
allowed. The usage of the words “such motor vehicles” instead of “said motor
(iv) Leasing, renting x Such services when x ITC on leasing, vehicle”, in sub-clause (A) of section 17(5)(a) implies that the intention
or hiring of used for making an renting or of the lawmakers was not only to exclude from the blockage of ITC the
motor vehicles, outward taxable hiring of motor motor vehicle which is itself further supplied, but also to exclude from
vessels or aircraft supply of the same vehicles, the blockage of ITC the motor vehicle which is being used for the
on which ITC is category of vessels or purpose of further supply of similar type of motor vehicles.
not allowed services or as an aircraft on
As demo vehicles are used by authorized
element of a which ITC is
taxable composite allowed, is also dealers to provide trial run and to
demonstrate features of the vehicle to ITC availment on
or mixed supply allowed**.
demo vehicles – Not
x Such services when x ITC on such potential buyers, it helps the potential
BLOCKED
provided by an services is buyers to make a decision to purchase a
employer to its allowed in the particular kind of motor vehicle.
employees under a case of sub- Therefore, as demo vehicles promote sale of similar type of motor
statutory contracting, i.e. vehicles, they can be considered to be used by the dealer for making
obligation when such ‘further supply of such motor vehicles’.
services are
used by the Accordingly, ITC in respect of demo vehicles is not blocked under clause
taxpayer who is (a) of section 17(5) as it is excluded from such blockage in terms of sub-
in the same line clause (A) of the said clause.
of business.
Following issues have also been clarified in respect of ITC availment on
demo vehicles:-

**The term “leasing” referred in above table refers to Issue Clarification

leasing of motor vehicles, vessels and aircrafts only and
not to leasing of any other items. In such cases, the same cannot be
Where demo vehicles* are used
said to be used for making ‘further
Accordingly, availment of ITC is not barred in case of leasing, other by an authorized dealer for
supply of such motor vehicles’ and
than leasing of motor vehicles, vessels and aircrafts 18. purposes other than for making therefore, ITC in respect of such
further supply of such motor motor vehicles would not be
vehicles, say for transportation excluded from blockage in terms

18 19
Circular No. 172/04/2022 GST dated 06.07.2022 Circular No. 231/25/2024 GST dated 10.09.2024

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 INPUT TAX CREDIT 1.67 7.67 1.68 7.68 GOODS AND SERVICES TAX

of its staff employees/ of sub-clause (A) of section (12) ITC on cars purchased by a manufacturing company for
management etc. 17(5)(a). official use of its employees is blocked.
(13) ITC on cars purchased by a car dealer for sale to
In such a case, the authorized
Where the authorized dealer customers is allowed.
dealer is merely providing
merely acts as an agent or (14) ITC on cars purchased by a company engaged in renting out cars
marketing and/or facilitation
service provider to the vehicle services to the vehicle for transportation of passengers, is allowed.
manufacturer for providing manufacturer and is not making
marketing service, including (15) ITC on cars purchased by a car driving school for imparting
the supply of motor vehicles on
providing facility of vehicle test his own account. training on driving is allowed.
drive to the potential customers Therefore, the said demo vehicle (16) ITC on buses (seating capacity for 24 persons) purchased by a
of the vehicle on behalf of the cannot be said to be used by the company for transportation of its employees from their residence to
manufacturer and is not directly dealer for making further supply office and back, is allowed.
involved in purchase and sale of of such motor vehicles.
Accordingly, in such cases, ITC in (17) ITC on trucks purchased by a company for transportation of its
the vehicles.
respect of such demo vehicle finished goods is allowed.
In such cases, the sale invoice would not be excluded from
(18) ITC on aircraft purchased by a manufacturing company for official
for the vehicle is directly issued blockage in terms of sub-clause
use of its CEO is blocked.
by the vehicle manufacturer to (A) of section 17(5)(a) and
the customer. For providing therefore, ITC on the same would (19) ITC on aircraft purchased by an Aviation School providing training
facility of vehicle test drive to not be available to the said dealer. on flying aircrafts, is allowed.
the potential customers of the (20) ITC on general insurance taken on a car used by employees of a
vehicle, the dealer purchases manufacturing company for official purposes, is blocked.
demo vehicle from the vehicle
(21) A business jet purchased for the official travel of the company’s
manufacturer. The dealer may
directors is blocked.
sell the said demo vehicle to a
customer after a specified time (22) ITC on maintenance & repair services availed by a company for a
or kilometres as per agreement truck used for transporting its finished goods, is allowed.
with the vehicle manufacturer
(23) ITC on general insurance services taken on cars manufactured by
on payment of applicable GST.
a car manufacturing company is allowed.
*Demo vehicles are motor vehicles for transportation of persons having
approved seating capacity of not more than 13 persons (including the
driver).

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 INPUT TAX CREDIT 1.69 7.69 1.70 7.70 GOODS AND SERVICES TAX

(ii) Food & beverages, outdoor catering, health services and other obligation, ITC
services thereon is
blocked.
S. Goods and/or Exceptions to goods Remarks
No. services on and/or services (ii) Membership of Such services when When such goods
which credit is mentioned in a club, health provided by an and/or services
blocked column (2) on which and fitness employer to its are provided by
credit is allowed centre employees under a the employer to
statutory obligation its employees
(1) (2) (3) (4) without any
statutory
(i) x Food and x Such goods and/or x ITC on such
obligation, ITC
beverages services when used goods and/or
thereon is
x Outdoor by a registered services is
blocked.
catering person for making allowed in the
an outward taxable case of sub- (iii) Travel benefits Such services when When such goods
x Beauty
supply of the same contracting, i.e. extended to provided by an and/or services
treatment
category of goods when such employees on employer to its are provided by
x Health
and/or services or goods and/or vacation such as employees under a the employer to
services
as an element of a services are leave or home statutory obligation its employees
x Cosmetic and taxable composite used by the travel without any
plastic or mixed supply taxpayer who is concession statutory
surgery in the same line
x Such goods and/or obligation, ITC
x Life insurance services when of business, thereon is
and health provided by an e.g. outdoor blocked.
insurance employer to its catering service
employees under a availed by
another (24) A manufacturing company purchases food items for
statutory
outdoor being served to its customers, free of cost. ITC on such goods
obligation
caterer. is blocked.
x When such (25) AB & Co., a caterer of Amritsar, has been awarded a contract for
goods and/or catering in a marriage to be held at Ludhiana. The firm has given the
services are contract for supply of snacks, to be served in the marriage, to CD &
provided by
Sons, a local caterer of Ludhiana. ITC on such outdoor catering services
the employer
availed by AB & Co. from CD & Sons, is allowed.
to its
employees (26) ITC on outdoor catering services availed by a garment exporter
without any for a marketing event organised for its prospective customers, is
statutory blocked.

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 INPUT TAX CREDIT 1.71 7.71 1.72 7.72 GOODS AND SERVICES TAX

(27) Outdoor catering service is availed by a company to run a free things attached to the earth, or permanently fastened to anything
canteen in its factory for its employees. The Factories Act, 1948 requires attached to the earth.
the company to set up a canteen in its factory. ITC on such outdoor The term “attached to the earth” is defined in section 3 of the Transfer of
catering is allowed. Property Act, 1882 to mean:
(28) The Managing Director of a company has taken membership of a (a) rooted in the earth, as in the case of trees and shrubs; [However,
club, the fees for which is paid by the company. ITC on such service is the term "immovable property" under the Transfer of Property Act
blocked. does not cover standing timber, growing crops or grass.]

(29) A company avails services of a travel agency for organizing a free (b) embedded in the earth, as in the case of walls or buildings.
vacation for its top performing employees. ITC on such services is (c) attached to what is so embedded for the permanent beneficial
blocked. enjoyment of that to which it is attached.
(iii) Works contract services for construction of immovable property
[Clause (c) of section 17(5)] Under GST law, a composite supply of works contract is treated as
supply of services in terms of para 6(a) of Schedule II to the CGST Act.
One major input service, ITC on which is blocked is input service relating
to construction activity like construction of office building, factory ITC on works contract services for construction of an immovable
building etc. (except in case of persons like builders, developers and property is blocked EXCEPT WHEN
contractors who are undertaking construction for others). However, ITC
is available for routine construction related services like repairs, ¾ It is an input service for further supply of works contract service
maintenance, renovation etc. of office and factory building. Thus, (sub-contracting);
broadly, ITC of construction services is not available when the expenses [ITC on works contract services can be availed only by that taxpayer
are capitalised in the books of account. Here, it needs to be noted that who is in the same line of business, i.e. only a works contractor can
capitalisation of an expense does not depend on whether the taxpayer avail ITC on works contract services received by him.]
intends to avail ITC, but on the basis of Accounting Standards and GAAP.
¾ Immovable property is plant and machinery
Works contract has been defined in the CGST Act [See definition under
[Plant and machinery affixed permanently to the earth constitutes
the heading Relevant Definitions]. Essentially works contract is a
an immovable property. However, ITC on works contract services
composite supply involving both goods and services. Under the
used for construction of such plant and machinery is allowed as an
erstwhile laws, definition of works contract included work in relation to
exception.]
both movable and immovable properties. However, under GST law, the
ambit of works contract has been confined only to immovable Meaning of construction
property.
“Construction” includes re-construction, renovation, additions or
Meaning of immovable property alterations or repairs, to the extent of capitalization, to the said
immovable property.
Immovable property has not been defined under the GST law. Therefore,
we will have to look for the definition of immovable property in other Thus, if re-construction, renovation, additions or alterations or repairs
laws. Section 3(26) of the General Clauses Act, 1897, defines the term are not capitalized, it would not tantamount to construction under GST
immovable property to include land, benefits to arise out of land, and law. Consequently, ITC on works contract services availed for such

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 INPUT TAX CREDIT 1.73 7.73 1.74 7.74 GOODS AND SERVICES TAX

construction (which is not capitalized) whether for any immovable (30) ITC on works contracts services availed by a software
property or for any plant and machinery, would be allowed to all the company for construction of its office, is blocked.
recipients irrespective of their line of business.
(31) CD & Co., a works contractor of Noida, has been
Meaning of plant and machinery awarded a contract for construction of a commercial complex in
Lucknow. The firm avails services of EF & Co., a local works contractor
“Plant and machinery” means apparatus, equipment, and machinery
of Lucknow, for the construction of complex. ITC on such works
fixed to earth by foundation or structural supports that are used for
contract services availed by CD & Co., is allowed.
making outward supply of goods and/or services and includes such
foundation or structural support (32) ITC on works contract services availed by an automobile company
for construction of a foundation on which a machinery (to be used in
but excludes
the production process) is to be mounted permanently, is allowed.
land, building or other civil structures, telecommunication towers, and
pipelines laid outside the factory premises. (33) ITC on works contract services availed by a manufacturing
company for construction of pipelines to be laid outside its factory, is
Thus, ITC on works contract services availed for construction of eligible
blocked.
plant and machinery is allowed to the recipient irrespective of the line
of business of such recipient and irrespective of whether expense is (34) A consulting firm has availed services of a works contractor for
capitalized or not by the recipient. repair of its office building. The company has booked such expenditure
For instance, ITC on works contract services for construction of in its profit and loss account. ITC on such services is allowed.
machinery fixed to earth by a foundation, would be allowed. However, (35) A telecommunication company has availed services of a works
ITC on works contract services for construction of telecommunication contractor for repair of its office building. The company has capitalized
tower(s), would be blocked. such expenditure. ITC on such services is blocked.
(iv) Self-construction of immovable property [Clause (d) of section
ITC on works contract services for construction of 17(5)]
immovable property is available only in the following So now we know that ITC on works contract services availed by a
three situations: taxpayer, other than a works contractor, for construction of immovable
(i) When the works contract service is availed by a works property (other than plant and machinery) is not available. But what
contractor for being used in providing the works contract service. happens if a taxpayer procures goods and services and constructs an
(ii) For construction of eligible plant and machinery. In this immovable property, for being used in the course or furtherance of
case, ITC is allowed to all recipients irrespective of their line of business, without availing services of a works contractor? Will ITC be
business and whether expense capitalized or not. allowed in such a case?
(iii) When the value of works contract service is not capitalized. The answer is No. ITC is not allowed on goods and/or services received
In this case, ITC is allowed to all recipients irrespective of their by a taxable person for construction of an immovable property (other
line of business. than plant or machinery) on his own account even though such
goods and/or services are used in the course or furtherance of business.
Thus, ITC on goods and/or services used in the construction of an

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.75 7.75 1.76 7.76 GOODS AND SERVICES TAX

immovable property is blocked only in those cases where the taxable This distinction was addressed in Supreme Court in the case of Chief
person constructs the immovable property for his own use even if the Commissioner of CGST v. Safari Retreats Pvt. Limited (2024) 23 Centax 62 (SC)
20
immovable property being constructed is used in the course or . Further, in this case, the constitutional validity of clauses (c) and (d) of
furtherance of his business. section 17(5) and section 16(4) was also challenged.

The discussion on terms, ‘construction’ for works contract services The Apex Court observed that the explanation to section 17 which defines
[Elaborated in point (iii) above] applies to construction on own "plant and machinery” seeks to define said expression used in Chapter V and
account also. Chapter VI. In Chapter VI, the expression "plant and machinery" appears at
several places, but the expression "plant or machinery" is found only in
section 17(5)(d). This implies that legislature did not intend to give the
ITC on goods and/or services used in construction of
expression "plant or machinery" the same meaning as "plant and machinery”
immovable property is available only in the following
three situations: and thus, has made this distinction consciously. Therefore, the Court held
that the expression "plant and machinery" and "plant or machinery"
(i) For construction of eligible plant or machinery
cannot be given the same meaning.
(ii) When the value of goods and/or services is not capitalized
Consequently, in case of clause (c), if the construction is of "plant and
(iii) When the construction is not on own account machinery" as defined, the benefit of ITC will accrue. Similarly, under clause
(d), if the construction is of a "plant or machinery", ITC will be available.
(36) A company buys cement, tiles etc. and avails the Further, while trying to analyse the meaning of the expression "plant or
services of an architect for construction of its office building. machinery", the Court observed that the expression "plant or machinery" has
ITC on such goods and services is blocked. a different connotation. It can be either a plant or machinery. Section 17(5)(d)
deals with the construction of an immovable property. The very fact that the
(37) MN & Constructions procures cement, paint, iron rods and services
expression "immovable property other than "plant or machinery" is used
of architects and interior designers for construction of a commercial
shows that there could be a plant that is an immovable property. As the word
complex for one of its clients. ITC on such goods and services is allowed
'plant' has not been defined under the CGST Act or the rules framed
to MN & Co.
thereunder, its ordinary meaning in commercial terms will have to be
(38) A company buys cement, tiles etc. and avails the services of an attached to it.
architect for renovation of its office building. The company has booked Thus, the Supreme Court held that the question as to whether a mall,
such expenditure in its profit and loss account. ITC on such goods and warehouse or any building other than a hotel or a cinema theatre can be
services is allowed. classified as a plant within the meaning of the expression "plant or
Note: It is important to note here that the term used in clause (c) above is machinery" is a factual question which has to be determined keeping in
“plant AND machinery” whereas the term used in clause (d) above is “plant mind the business of the registered person and the role that building
plays in the said business. If the construction of a building was essential for
OR machinery”. The expression “plant AND machinery” used in clause (c)
has been defined in explanation to section 17 while expression “plant OR
20
machinery” used in clause (d) has not been defined under the CGST Act. The judgment of the Supreme Court in the case of Chief Commissioner of CGST v. Safari
Retreats Pvt. Limited (2024) 23 Centax 62 (SC) is effectively overridden by the proposed
amendment to section 17(5)(d) by the Finance Act, 2025. The same has not yet become
effective.

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 INPUT TAX CREDIT 1.77 7.77 1.78 7.78 GOODS AND SERVICES TAX

carrying out the activity of supplying services, such as renting or giving on Accordingly, it is clarified that availment of input tax credit is not restricted in
lease or other transactions in respect of the building or a part thereof, which respect of such ducts and manhole used in network of optical fiber cables (OFCs)
are covered by clauses (2) and (5) of Schedule II of the CGST Act, the building under clause (c)/(d) of section 17(5).
could be held to be a plant. Then, it is taken out of the exception carved out
by clause (d) of section 17(5) to sub-section (1) of section 16. (v) Inward supplies charged to tax under composition levy [Clause
(e) of section 17(5)]
Further, the Court upheld the constitutional validity of clauses (c) and (d)
of section 17(5) and section 16(4). A supplier registered under composition scheme cannot collect tax
from its customers. Thus, such supplier issues bill of supply and not a
Clarification on availability of ITC on ducts and manholes used in network of
tax invoice. A composition supplier pays a lumpsum tax at a specified
optical fiber cables (OFCs) in terms of section 17(5) 21
rate on its quarterly turnover.
Issue: Whether ITC on the ducts and manholes used in network of optical fiber
cables (OFCs) for providing telecommunication services is barred in terms of Tax paid on goods and/or services under composition scheme is not
clauses (c) and (d) of section 17(5) read with Explanation to section 17? available as ITC for the recipient.

Clarification: Ducts and manholes are basic components for the optical fiber Since a composition supplier cannot collect any tax on its supplies, from
cable (OFC) network used in providing telecommunication services. The OFC the recipient of its supplies, it is obvious that no ITC can be availed in
network is generally laid with the use of PVC ducts/sheaths in which OFCs are respect of such supplies by the recipients. Nevertheless, section
housed and service/connectivity manholes, which serve as nodes of the network, 17(5)(e) specifically blocks the ITC on inward supplies received by a
and are necessary for not only laying of optical fiber cable but also their upkeep taxable person from a composition supplier.
and maintenance. (vi) Inward supplies received by a non-resident taxable person
[Clause (f) of section 17(5)]
In view of the Explanation in section 17, it appears that ducts and manholes are
covered under the definition of “plant and machinery” as they are used as part Non-resident taxable person has been defined in the CGST Act [See the
of the OFC network for making outward supply of transmission of definition under the heading Relevant Definitions]. Essentially, a non-
telecommunication signals from one point to another. resident taxable person has no fixed place of business in India but he
sporadically supplies goods or services in India.
Moreover, ducts and manholes used in Ducts & manhole used
network of optical fiber cables (OFCs) in network of OFCs — Tax paid on goods and/or services received by such non-resident
have not been specifically excluded x Covered under the taxable person, is not available as ITC. However, tax paid by him on
from the definition of “plant and definition of “plant imported goods is allowed as ITC.
machinery” in the explanation to and machinery”
section as they are neither in nature of x ITC not restricted
land, building or civil structures nor are Whereas ITC on goods imported by a non-resident
in nature of telecommunication towers or pipelines laid outside the factory taxable person is allowed, ITC on services imported
premises. by him is blocked.

21
Circular No. 219/13/2024 GST dated 26.06.2024

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.79 7.79 1.80 7.80 GOODS AND SERVICES TAX

(vii) Inward supplies used/intended to be used for purpose of CSR partly for other purposes, section 17(1) restricts the credit to so much
[Clause (fa) of section 17(5)] of the ITC as is attributable to business purposes.
ITC shall not be available in respect of goods or services or both received Furthermore, section 17(5)(g) also specifically blocks the ITC on goods
by a taxable person, which are used or intended to be used for activities and/or service used for personal consumption.
relating to his obligations under corporate social responsibility (CSR)
The term ‘personal consumption’ has not been defined in the GST law.
referred to in section 135 of the Companies Act, 2013.
Thus, it may be understood in the general sense which would mean
CSR is a strategy undertaken by non-business use.
companies to not just grow
(40) Mr. X owns a retail showroom of tyres and tyre tubes. He
profits, but to take an active
takes 4 tyres from the showroom for his personal car. Being
and positive social role in the
used for personal consumption, ITC on such 4 tyres is blocked.
world around them. Corporate
social responsibility programs (ix) Free samples, gifts, goods lost/stolen etc. [Clause (h) of section
aim to give structure to a 17(5)]
company's efforts to give back ITC in respect of goods that are disposed of by way of gift or free
to the community, participate samples is not available. Also, ITC is blocked on lost goods, stolen
in philanthropic causes, and goods, destroyed goods and goods that are written off. This is because
provide positive social value. Businesses increasingly turn to CSR to principally, ITC is available only for payment of tax on output supply. If
make a difference and build a positive brand around their company. no tax is payable on output supply, ITC on inputs/input services/capital
(39) ABC Manufacturing Pvt. Ltd. purchased and distributed goods relating to such output supply is not eligible. Hence, ITC on gifts
1,000 educational kits (including school bags, notebooks, and and free samples is blocked as no tax is payable on its outward supply.
stationery) to a government school in a rural area as part of its CSR In case of lost/destroyed/stolen written off goods also, ITC is not
obligations under the Companies Act, 2013. It purchased school bags, available as these goods cannot be said to have been used for making
notebooks, and stationery from XYZ Stationery Suppliers (registered a taxable supply.
under GST) by making total payment of ಶ 5,50,000(inclusive of GST
Meaning of ‘gift’
amounting to ಶ 50,000). Since the ITC on goods/services used for
IXOILOOLQJ&65REOLJDWLRQVLVEORFNHG+HQFHಶ 50,000 GST paid on the The term gift has not been defined in the GST law. Therefore, we will
educational kits cannot be claimed as ITC by ABC Manufacturing Pvt. have to look for the definition of gift in other laws. Section 122 of the
Ltd. Transfer of Property Act, 1882, defines gift as transfer of certain existing
moveable or immoveable property made voluntarily and without
(viii) Inward supplies used for personal consumption [Clause (g) of
consideration, by one person, called the donor, to another, called the
section 17(5)]
donee, and accepted by or on behalf of the donee.
One of the foremost conditions laid down in section 16 for availing ITC
In common parlance, gift is made without consideration, is voluntary in
on goods and/or services is that such goods and/or services should be
nature and is made occasionally. It cannot be demanded as a matter of
used in the course or furtherance of business. Further, where goods
right.
and/or services are used partly for the purpose of any business and

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.81 7.81 1.82 7.82 GOODS AND SERVICES TAX

Meaning of ‘sample’ ITC shall not be available to the supplier on the inputs, input
services and capital goods to the extent they are used in relation
Sample is also not defined in the GST law. The dictionary meaning of
to the gifts or free samples distributed without any consideration.
sample is “a small part or quantity intended to show what the whole is
However, where the activity of distribution of gifts or free samples
like”. In commercial parlance, samples are given to prospective
falls within the scope of “supply” on account of the provisions
customers to enable them to test the quality of the item before making a
contained in Schedule I of the said Act, the supplier would be
decision to buy the same.
eligible to avail the ITC.
B. Buy one get one free offer
Goods that are disposed of by way of gift
This is not an individual supply of free goods, but a case of two or
Goods that are disposed of by way of free samples more individual supplies where a single price is being charged for
the entire supply. It can at best be treated as supplying two goods
for the price of one.
Lost goods
Taxability of such supply will be dependent upon as to whether

ITC on
Stolen goods the supply is a composite supply or a mixed supply and the rate
of tax shall be determined as per the provisions of section 8.
Destroyed goods ITC shall be available to the supplier for the inputs, input services
and capital goods used in relation to supply of goods or services

Clause (h) of section 17(5) blocks

Goods that are written off or both as part of such offers.

C. Discounts including ‘Buy more, save more’ offers

ITC is blocked in respect of the goods mentioned above.
Discounts offered by the suppliers to customers (including
ITC in the hands of the supplier in respect of sales promotional staggered discount under “Buy more, save more” scheme and
schemes post supply / volume discounts established before or at the time

Circular No. 92/11/2019 GST dated 07.03.2019 has clarified the of supply) shall be excluded to determine the value of supply
entitlement of ITC in the hands of supplier in respect of various sales provided they satisfy the parameters laid down in 15(3), including
promotional schemes as under [Taxability of such schemes has been the reversal of ITC by the recipient of the supply as is attributable
discussed at relevant places in Chapter 1: Supply Under GST and to the discount on the basis of document (s) issued by the
Chapter 6: Value of Supply in Module 1 of the Study Material.] supplier.

A. Samples and free gifts However, the supplier shall be entitled to avail the ITC for such

Samples which are supplied free of cost, without any inputs, input services and capital goods used in relation to the
consideration, do not qualify as “supply” under GST, except where supply of goods or services or both on such discounts.
the activity falls within the ambit of Schedule I of the CGST Act.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.83 7.83 1.84 7.84 GOODS AND SERVICES TAX

D. Secondary discounts In case the person returning the time expired goods is a composition
taxpayer, he may return the said goods by issuing a bill of supply and
These are the discounts which are not known at the time of supply pay tax at the rate applicable to a composition taxpayer. In this scenario
or are offered after the supply is already over. Such discounts there will not be any availability of ITC to the recipient of return supply.
shall not be excluded while determining the value of supply. In case the person returning the time-expired goods is an unregistered
There is no impact on availability or otherwise of ITC in the hands person, he may return the said goods by issuing any commercial
of supplier in this case. document without charging any tax on the same.
Where the goods returned by the retailer/wholesaler as a fresh supply,
ITC reversal when return of time expired medicines/drugs are
are destroyed by the manufacturer, he/she is required to reverse the
treated as fresh supply
ITC availed on the return supply in terms of section 17(5)(h). It is
The common trade practice in the pharmaceutical sector is that the pertinent to mention here that the ITC which is required to be reversed
drugs or medicines (hereinafter referred to as “goods”) are sold by the in such scenario is the ITC availed on the return supply and not the ITC
manufacturer to the wholesaler and by the wholesaler to the retailer on that is attributable to the manufacture of such time expired goods.
the basis of an invoice/bill of supply as case may be. Such goods have The clarification may also be applicable to return of goods for reasons
a defined life term which is normally referred to as the date of expiry. other than being time expired.
Such goods which have crossed their date of expiry are colloquially (41) If a manufacturer has availed ITC of ` 10 at the time of
referred to as time expired goods and are returned back to the manufacture of medicines valued at ` 100. At the time of return
manufacturer, on account of expiry, through the supply chain. of such medicine on the account of expiry, the ITC available to
Circular No. 72/46/2018 GST dated 26.10.2018 has clarified that the the manufacturer on the basis of fresh invoice issued by wholesaler is ` 15.
retailer/ wholesaler can return the time expired goods, either by So, when the time expired goods are destroyed by the manufacturer, he
treating the same as fresh supply or by issuing credit notes 22. would be required to reverse ITC of ` 15 and not of ` 10.
Return of time-expired goods by treating the same as fresh supply (x) Tax paid in fraud cases, detention, confiscation etc. [Clause (i)
In case the person returning the time expired goods is a registered of section 17(5)]
person (other than a composition taxpayer), he may, at his option, Tax paid under sections 74, 129 and 130 is not available as ITC. These
return the said goods by treating it is as a fresh supply and thereby sections prescribe the provisions relating to tax paid as a result of
issuing an invoice for the same (hereinafter referred to as the, “return evasion of taxes, or upon detention of goods or conveyances in transit,
supply”). The value of the said goods as shown in the invoice on the or towards redemption of confiscated goods/conveyances.
basis of which the goods were supplied earlier may be taken as the
value of such return supply. The wholesaler or manufacturer, as the Clarification in respect of entitlement of ITC by the insurance companies on the
case may be, who is the recipient of such return supply, shall be eligible expenses incurred for repair of motor vehicles in case of reimbursement mode of
to avail ITC of the tax levied on the said return supply subject to the insurance claim settlement23
fulfillment of the conditions specified in section 16. Insurance companies engaged in providing general insurance services in respect of
insurance of motor vehicles (MV) settle claims - either in cashless or reimbursement
mode. Under both modes, the insurance company accounts for repair liability and
22
The procedure for return of time expired drugs or medicines by issuing credit note is covered
23
in Chapter 9: Tax Invoice, Credit and Debit Note in this Module of the Study Material. Circular No. 217/11/2024 GST dated 26.06.2024

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.85 7.85 1.86 7.86 GOODS AND SERVICES TAX

is responsible for making payment of the approved repair charges to the garage. Following issues have been clarified in respect of ITC availment by insurance
Invoices are generally issued by the garages in the name of the insurance company. companies in case of reimbursement mode of claim settlement.
Under reimbursement mode of claim settlement, the insured avails repair services
Issue Clarification
from non-network garages with which the insurance companies do not have
routine business relationship. The said garages issue the invoice in the name of
What is the extent of ITC available to the ITC is available to insurance
the insurance company while not extending credit facility for the repair costs.
insurer in case of issue of two separate company only on the invoice issued
Accordingly, the policy holder/ insured makes payment of such repair services, and invoices by the garage for repair service to it subject to reimbursement of
subsequently, the insurance company reimburses the approved claim cost to the - one to the insurance company for the said amount by insurance company
approved claim cost & another to the to customer.
insured.
customer for any excess amount?
Further, irrespective of the fact that the payment of the repair services to the garage
is first made by the insured, which is then reimbursed by the insurance company to What is the extent of ITC available to the ITC is available to the insurance
the insured to the extent of the insurer in case of issue of single invoice company only to the extent of the
approved claim cost, the liability by the garage - covering the full reimbursement of the approved
to pay for the repair service for ITC is available to insurance amount for repair service & the claim cost to the insured, and not on
companies for MV repair expenses insurance company reimburses only the the full invoice value.
the approved claim cost lies with
incurred under the reimbursement approved claim cost.
the insurance company, and
mode
thus, the same is covered in the
Whether ITC is available to the insurer if ITC is not available to the insurance
definition of “recipient” under Conditions invoice for vehicle repair is not in company as it does not meet the
section 2(93), to the extent of insurance company’s name? requirements of section 16(2)(a) and
(i) Invoices are issued in the
approved repair liability. name of the insurance 16(2)(aa).
‘Consideration’ includes company and
payment related to supply by the (ii) ITC is claimed solely for the
recipient or by any other person amount reimbursed to the 5. CREDIT IN SPECIAL CIRCUMSTANCES
in terms of section 2(31). insured.
[SECTION 18]
Moreover, availment of ITC on
motor vehicle repair services received by the insurance company for outward
supply of insurance services for such MV is not barred under section 17(5). STATUTORY PROVISIONS
Section 17(5) provides that ITC in respect of services of repair of MVs is available
where received by a taxable person engaged in the supply of general insurance
services in respect of MVs insured by him. Section 18 Availability of credit in special circumstances

Accordingly, it is clarified that ITC is available to Insurance Companies in respect of Sub- Clause Particulars
MVs repair expenses incurred by them in case of reimbursement mode of claim section
settlement. (1) Subject to such conditions and restrictions as may be prescribed—

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.87 7.87 1.88 7.88 GOODS AND SERVICES TAX

(a) a person who has applied for registration under this Act or both to him after the expiry of one year from the date of issue of
within thirty days from the date on which he becomes tax invoice relating to such supply.
liable to registration and has been granted such
(3) Where there is a change in the constitution of a registered person
registration shall be entitled to take credit of input tax in
on account of sale, merger, demerger, amalgamation, lease or
respect of inputs held in stock and inputs contained in
transfer of the business with the specific provisions for transfer of
semi-finished or finished goods held in stock on the day
liabilities, the said registered person shall be allowed to transfer the
immediately preceding the date from which he becomes
input tax credit which remains unutilised in his electronic credit
liable to pay tax under the provisions of this Act;
ledger to such sold, merged, demerged, amalgamated, leased or
(b) a person who takes registration under sub-section (3) of transferred business in such manner as may be prescribed.
section 25 shall be entitled to take credit of input tax in
(4) Where any registered person who has availed of input tax credit
respect of inputs held in stock and inputs contained in
opts to pay tax under section 10 or, where the goods or services or
semi-finished or finished goods held in stock on the day
both supplied by him become wholly exempt, he shall pay an
immediately preceding the date of grant of registration;
amount, by way of debit in the electronic credit ledger or electronic
(c) where any registered person ceases to pay tax under cash ledger, equivalent to the credit of input tax in respect of inputs
section 10, he shall be entitled to take credit of input tax held in stock and inputs contained in semi-finished or finished
in respect of inputs held in stock, inputs contained in semi- goods held in stock and on capital goods, reduced by such
finished or finished goods held in stock and on capital percentage points as may be prescribed, on the day immediately
goods on the day immediately preceding the date from preceding the date of exercising of such option or, as the case may
which he becomes liable to pay tax under section 9: be, the date of such exemption:

Provided that the credit on capital goods shall be reduced Provided that after payment of such amount, the balance of input
by such percentage points as may be prescribed; tax credit, if any, lying in his electronic credit ledger shall lapse.

(d) where an exempt supply of goods or services or both by a (5) The amount of credit under sub-section (1) and the amount
registered person becomes a taxable supply, such person payable under sub-section (4) shall be calculated in such manner
shall be entitled to take credit of input tax in respect of as may be prescribed.
inputs held in stock and inputs contained in semi-finished
(6) In case of supply of capital goods or plant and machinery, on which
or finished goods held in stock relatable to such exempt
input tax credit has been taken, the registered person shall pay an
supply and on capital goods exclusively used for such
amount equal to the input tax credit taken on the said capital
exempt supply on the day immediately preceding the date
goods or plant and machinery reduced by such percentage points
from which such supply becomes taxable:
as may be prescribed or the tax on the transaction value of such
Provided that the credit on capital goods shall be reduced capital goods or plant and machinery determined under section 15,
by such percentage points as may be prescribed. whichever is higher:

(2) A registered person shall not be entitled to take input tax credit Provided that where refractory bricks, moulds and dies, jigs and
under sub-section (1) in respect of any supply of goods or services fixtures are supplied as scrap, the taxable person may pay tax on
the transaction value of such goods determined under section 15.

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 INPUT TAX CREDIT 1.89 7.89 1.90 7.90 GOODS AND SERVICES TAX

Chapter V: Input Tax Credit of CGST Rules (i) on the day immediately preceding the date from
which he becomes liable to pay tax under the
Rule 40 Manner of claiming credit in special circumstances provisions of the Act, in the case of a claim under
Sub-rule Clause Particulars clause (a) of sub- section (1) of section 18;

(1) The input tax credit claimed in accordance with the provisions of (ii) on the day immediately preceding the date of the
sub-section (1) of section 18 on the inputs held in stock or inputs grant of registration, in the case of a claim under
contained in semi-finished or finished goods held in stock, or the clause (b) of sub-section (1) of section 18;
credit claimed on capital goods in accordance with the provisions (iii) on the day immediately preceding the date from
of clauses (c) and (d) of the said sub-section, shall be subject to the which he becomes liable to pay tax under section
following conditions, namely - 9, in the case of a claim under clause (c) of sub-
(a) the input tax credit on capital goods, in terms of clauses section (1) of section 18;
(c) and (d) of sub-section (1) of section 18, shall be (iv) on the day immediately preceding the date from
claimed after reducing the tax paid on such capital goods which the supplies made by the registered person
by five percentage points per quarter of a year or part becomes taxable, in the case of a claim under
thereof from the date of the invoice or such other clause (d) of sub- section (1) of section 18;
documents on which the capital goods were received by
the taxable person. (d) the details furnished in the declaration under clause (b)
shall be duly certified by a practicing chartered
(b) the registered person shall within a period of thirty days accountant or a cost accountant if the aggregate value of
from the date of becoming eligible to avail the input tax the claim on account of central tax, State tax, Union
credit under sub-section (1) of section 18, or within such territory tax and integrated tax exceeds two lakh rupees;
further period as may be extended by the Commissioner
by a notification in this behalf, shall make a declaration, (e) the input tax credit claimed in accordance with the provisions
electronically, on the common portal in FORM GST ITC- of clauses (c) and (d) of sub-section (1) of section 18 shall be
01 to the effect that he is eligible to avail the input tax verified with the corresponding details furnished by the
credit as aforesaid: corresponding supplier in FORM GSTR-1 and in FORM
GSTR-1A, if any, or as the case may be, in FORM GSTR- 4,
Provided that any extension of the time limit notified by on the common portal.
the Commissioner of State tax or the Commissioner of
Union territory tax shall be deemed to be notified by the (2) The amount of credit in the case of supply of capital goods or plant
Commissioner. and machinery, for the purposes of sub-section (6) of section 18, shall
be calculated by reducing the input tax on the said goods at the rate
(c) the declaration under clause (b) shall clearly specify the of five percentage points for every quarter or part thereof from the
details relating to the inputs held in stock or inputs date of the issue of the invoice for such goods.
contained in semi-finished or finished goods held in
stock, or as the case may be, capital goods–

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.91 7.91 1.92 7.92 GOODS AND SERVICES TAX

Rule 41 Transfer of credit on sale, merger, amalgamation, lease or 11 and who intends to transfer, either wholly or partly, the
transfer of a business unutilised input tax credit lying in his electronic credit ledger to any
or all of the newly registered place of business, shall furnish within
Sub-rule Particulars a period of thirty days from obtaining such separate registrations,
the details in FORM GST ITC-02A electronically on the common
(1) A registered person shall, in the event of sale, merger, de-merger,
portal, either directly or through a Facilitation Centre notified in
amalgamation, lease or transfer or change in the ownership of
this behalf by the Commissioner:
business for any reason, furnish the details of sale, merger, de-
merger, amalgamation, lease or transfer of business, in FORM GST Provided that the input tax credit shall be transferred to the newly
ITC-02, electronically on the common portal along with a request registered entities in the ratio of the value of assets held by them
for transfer of unutilized input tax credit lying in his electronic at the time of registration.
credit ledger to the transferee:
Explanation.- For the purposes of this sub-rule, it is hereby clarified
Provided that in the case of demerger, the input tax credit shall be that the ‘value of assets’ means the value of the entire assets of the
apportioned in the ratio of the value of assets of the new units as business whether or not input tax credit has been availed thereon.
specified in the demerger scheme.
(2) The newly registered person (transferee) shall, on the common
Explanation: - For the purpose of this sub-rule, it is hereby clarified portal, accept the details so furnished by the registered person
that the “value of assets” means the value of the entire assets of (transferor) and, upon such acceptance, the unutilised input tax
the business, whether or not input tax credit has been availed credit specified in FORM GST ITC-02A shall be credited to his
thereon. electronic credit ledger.
(2) The transferor shall also submit a copy of a certificate issued by a Rule 44 Manner of reversal of credit under special circumstances
practicing chartered accountant or cost accountant certifying that the
sale, merger, de-merger, amalgamation, lease or transfer of business Sub-rule Clause Particulars
has been done with a specific provision for the transfer of liabilities.
(1) The amount of input tax credit relating to inputs held in stock,
(3) The transferee shall, on the common portal, accept the details so inputs contained in semi-finished and finished goods held in stock,
furnished by the transferor and, upon such acceptance, the un- and capital goods held in stock shall, for the purposes of sub-
utilized credit specified in FORM GST ITC-02 shall be credited to section (4) of section 18 or sub-section (5) of section 29, be
his electronic credit ledger. determined in the following manner, namely,-

(4) The inputs and capital goods so transferred shall be duly accounted (a) for inputs held in stock and inputs contained in semi-
for by the transferee in his books of account. finished and finished goods held in stock, the input tax
credit shall be calculated proportionately on the basis of
Rule 41A Transfer of credit on obtaining separate registration for the corresponding invoices on which credit had been
multiple places of business within a State or Union availed by the registered taxable person on such inputs;
territory
(b) for capital goods held in stock, the input tax credit involved
(1) A registered person who has obtained separate registration for in the remaining useful life in months shall be computed on
multiple places of business in accordance with the provisions of rule pro-rata basis, taking the useful life as five years.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.93 7.93 1.94 7.94 GOODS AND SERVICES TAX

status on account of exempt supply becoming taxable supply for a registered

(2) The amount, as specified in sub-rule (1) shall be determined
separately for input tax credit of central tax, State tax, Union person
territory tax and integrated tax. (2) reversal of ITC on inputs in stock and inputs contained in finished goods or
(3) Where the tax invoices related to the inputs held in stock are not work-in-progress and capital goods (i) at the time of exit from regular tax-
available, the registered person shall estimate the amount under paying status by opting for composition levy, (ii) at the time of exit from tax-
sub-rule (1) based on the prevailing market price of the goods on paying status on account of taxable supply becoming exempt supply for a
the effective date of the occurrence of any of the events specified registered person
in sub-section (4) of section 18 or, as the case may be, sub-section
(3) amount payable on supply of capital goods or plant and machinery on which
(5) of section 29.
ITC has been taken
(4) The amount determined under sub-rule (1) shall form part of the
(4) transfer of ITC on account of change in constitution of the registered person
output tax liability of the registered person and the details of the
amount shall be furnished in FORM GST ITC-03, where such (i) Entitlement of ITC at the time of registration/voluntary
amount relates to any event specified in sub-section (4) of section registration or switching to regular tax paying status or coming
18 and in FORM GSTR-10, where such amount relates to the into tax-paying status [Sub-sections (1) and (2) of section 18
cancellation of registration. read with rule 40]
(5) The details furnished in accordance with sub-rule (3) shall be duly The credit on inputs held in stock and contained in semi-finished goods or
certified by a practicing chartered accountant or cost accountant. finished goods held in stock and capital goods at the time of
(6) The amount of input tax credit for the purposes of sub-section (6) registration/voluntary registration or coming into regular tax/tax-paying
of section 18 relating to capital goods shall be determined in the status is available in the following manner:
same manner as specified in clause (b) of sub-rule (1) and the
S. Persons Goods entitled to ITC Restriction/conditio
amount shall be determined separately for input tax credit of
No. eligible to ns
central tax, State tax, Union territory tax and integrated tax: Inputs held in As on
take credit
stock/capital
Provided that where the amount so determined is more than the goods
tax determined on the transaction value of the capital goods, the
(1) (2) (3) (4) (5)
amount determined shall form part of the output tax liability and
the same shall be furnished in FORM GSTR-1. 1. Person who Inputs held in The day Î ITC to be availed
has applied stock and inputs immediately within 1 year from
for contained in preceding the the date of the issue
ANALYSIS registration semi-finished or date from of the tax invoice by
within 30 finished goods which he the supplier.
Section 18 provides for days from held in stock becomes
the date on liable to pay
(1) entitlement of ITC on inputs in stock and inputs contained in finished goods which he tax
or work-in-progress, and in last two cases in respect of capital goods as well becomes
(i) at the time of registration/voluntary registration, (ii) on coming into regular liable to
tax-paying status by exiting composition levy, (iii) on coming into tax-paying

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.95 7.95 1.96 7.96 GOODS AND SERVICES TAX

registration In all the above cases, the registered person has to make an electronic
and has declaration in the prescribed form 24 on the common portal, clearly specifying
been the details relating to the inputs held in stock, inputs contained in semi-
granted finished or finished goods held in stock and capital goods on the days
such mentioned in column (4) of table above. The declaration is to be filed within
registration
30 days (extendable by Commissioner/Commissioner of State
2. Person who Inputs held in The day GST/Commissioner of UTGST) from the date when the registered person
is not stock and inputs immediately
becomes eligible to avail ITC. If the claim of ITC pertaining to CGST,
required to contained in preceding the
SGST/UTGST, IGST put together exceeds ` 2,00,000, the declaration needs to
register, but semi-finished or date of
obtains finished goods registration be certified by a practicing Chartered Accountant/Cost Accountant.
voluntary held in stock (42) ‘Z’ becomes liable to pay tax on 1st August and has obtained
registration
registration on 15th August w.e.f. 1st August. ‘Z’ is eligible for ITC
3. Registered Inputs held in The day Î ITC on capital goods on inputs held in stock and as part of semi-finished goods or
person who stock and inputs immediately will be reduced by 5% finished goods held in stock as on 31st July. ‘Z’ cannot take ITC on capital
ceases to contained in preceding the per quarter of a year
goods.
pay semi-finished or date from or part of the year
composition finished goods which he from the date of (43) ‘A’ applies for voluntary registration on 5th June and obtains registration
tax and held in stock becomes invoice. w.e.f. 22nd June. ‘A’ is eligible for ITC on inputs held in stock and as part of
switches to and capital liable to pay Î ITC claimed shall be semi-finished goods or finished goods held in stock as on 21st June. ‘A’
regular goods tax under verified with the
cannot take ITC on capital goods.
scheme regular corresponding
scheme details furnished by (44) ‘B’, a registered taxable person, was paying tax under composition
4. Registered Inputs held in the corresponding scheme upto 30th July. However, w.e.f. 31st July, ‘B’ becomes liable to pay tax
The day
supplier. under regular scheme. ‘B’ will be eligible for ITC on inputs held in stock and
person stock and inputs immediately
Î ITC to be availed
whose contained in preceding the inputs contained in semi-finished or finished goods held in stock and on
within 1 year from
exempt semi-finished or date from capital goods as on 30th July. ITC on capital goods will be reduced by 5% per
supplies finished goods which such the date of the issue
of the tax invoice by quarter or part thereof from the date of the invoice.
become held in stock supply
the supplier.
taxable relatable to becomes (ii) Reversal of ITC on switching to composition levy or exit from
supplies such exempt taxable tax-paying status [Section 18(4) read with rule 44]
supply and
capital goods ‰ Section 18(4) requires reversal of ITC when a registered person who has
exclusively availed ITC switches to composition levy or when his supplies get wholly
used for such exempted from tax.
exempt supply

24
Declaration is to be filed in Form GST ITC-01 where a registered person ceases to pay
composition tax and switches to regular scheme or his exempt supplies become taxable
supplies.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.97 7.97 1.98 7.98 GOODS AND SERVICES TAX

‰ ITC on inputs should be reversed proportionately on the basis of then compared with the output tax payable on such goods, and the
corresponding invoices on which credit had been availed on such higher of the two amounts is finally paid by the registered person.
inputs. If invoices are not available, ITC can be reversed on the basis of
‰ ITC to be reversed on inputs and capital goods is calculated separately
the prevailing market price of such goods on the date of switch
for ITC of CGST, SGST/UTGST and IGST.
over/exemption. The details furnished on the basis of prevailing market
value need to be duly certified by a practicing Chartered Accountant/ ‰ The reversal amount is added to the output tax liability of the registered
Cost Accountant. person.
‰ ITC involved in the remaining useful life (in months) of the capital (iii) Amount payable on supply of capital goods or plant and
goods should be reversed on pro-rata basis, taking the useful life as 5 machinery on which ITC has been taken [Section 18(6) read with
years. rule 40(2) & rule 44(6)]
(45) Capital goods have been in use for 4 years, 6 month and ‰ If capital goods or plant and machinery on which ITC has been taken
15 days. are supplied outward by the registered person, he must pay an amount
The useful remaining life in months = 5 months ignoring a that is the higher of the following:
part of the month. 9 ITC taken on such goods reduced by 5% per quarter of a year or
ITC taken on such capital goods = C part thereof from the date of issue of invoice for such goods [i.e.,
ITC pertaining to remaining useful life of the capital goods (in
ITC attributable to remaining useful life that should be reversed
quarters)]*, or
= C x 5/60
9 tax on transaction value of such capital goods/plant & machinery
‰ The registered person has to debit the electronic credit or cash ledger
‰ ITC pertaining to remaining useful life of the capital goods should be
by the reversal amount in respect of inputs held in stock and inputs computed separately for ITC of CGST, SGST/UTGST and IGST.
contained in semi-finished or finished goods held in stock and capital
‰ Where the amount of ITC remaining so determined exceeds the tax
goods on the day immediately preceding the date of switch over/ date
payable on the transaction value of the capital goods, such amount
of exemption. [Provisions relating to electronic cash ledger have been
need to be paid and thus, should be added to the output tax liability.
discussed in detail in Chapter 11: Payment of Tax in this Module of the
Study Material.] ‰ If refractory bricks, moulds and dies, jigs and fixtures are supplied as
scrap, the taxable person may pay tax on the transaction value.
‰ Balance of ITC, if any, lying in the electronic credit ledger lapses.
*Note: Under rule 44(6), ITC involved in the remaining useful life (in months)
‰ Cancellation of registration also requires reversal of ITC on inputs held of the capital goods is reversed on pro rata basis, taking the useful life as 5 years.
in stock/ contained in semi-finished goods or finished goods held in
stock, capital goods or plant and machinery on the day immediately
preceding the cancellation date. The amount to be reversed on inputs
and capital goods is computed in the manner as applicable for sub-
sections (4) and (6) of section 18 (discussed above). Such amount is

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1.99 7.99 1.100 7.100 GOODS AND SERVICES TAX

Clarification on ITC availability on demo vehicles in cases where such vehicles are
capitalized in the books of account by the authorized dealers 25 In case demo vehicle, which is The authorized dealer shall have to
capitalized, is subsequently sold by the pay an amount or tax as per
As per provisions of section 16(1), every registered taxpayer is entitled to take ITC authorized dealer provisions of section 18(6) read with
charged on any supply of goods and services made to him, where such rule 44(6).
goods/services are used in the course or furtherance of business of such person.
Also, as per section 2(19), “capital goods” means goods, the value of which is (iv) Transfer of ITC on account of change in constitution of registered
capitalized in the books of account of the person claiming the ITC and which are person [Section 18(3) read with rule 41]
used or intended to be used in the course or
In case of sale, merger, demerger, amalgamation, lease, transfer or change in
furtherance of business.
ITC availment on ownership of business etc., the ITC that remains unutilized in the electronic
Since the demo vehicles are used by the authorized credit ledger of the registered person can be transferred to the new entity,
demo vehicles –
dealers to promote further sale of motor vehicles of the
Not affected by provided there is a specific provision for transfer of liabilities in such change
similar type and therefore, such vehicles appear to be
way of of constitution. Circular No. 96/15/2019 GST dated 28.03.2019 has clarified
used in the course or furtherance of business of the
capitalisation that transfer or change in the ownership of business includes transfer or
authorized dealers.
change in the ownership due to death of the sole proprietor.
Where such vehicles are capitalized in the books of
accounts by the authorized dealer, the said vehicle falls in the definition of “capital The above provisions have been explained with the help of the diagram given
goods”. As per provision of section 16(1), a recipient of goods is entitled to take below:
ITC in respect of tax charged on the inward supply of any goods, which as per
definition of “goods” under section 2(52) of CGST Act, includes even capital goods.
Accordingly, availability of ITC on demo vehicles is not affected by way of
capitalization of such vehicles in the books of account of the authorized dealers,
ITC remaining unutilized in the
subject to other provisions of the Act. 3 electronic credit ledger will be
Following issues have also been clarified in respect of ITC availment on capitalized transferred to the newly constituted
demo vehicles entity

Issue Clarification 2 Provision for

transfer of liabilities
Where the registered person has In case of capitalization of demo
claimed depreciation on the tax vehicles, availability of ITC would be
1 •Sale
component of the cost of capital goods subject to provisions of section Change in constitution
and plant and machinery under the 16(3), thus, ITC on the said tax of registered person •Merger
Income-tax Act, 1961 component shall not be allowed. •Demerger
•Amalgamtion
•Lease
•Transfer of business

25
Circular No. 231/25/2024 GST dated 10.09.2024

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1
1.101 7.101 1.102 7.102 GOODS AND SERVICES TAX

In the case of demerger, ITC will be apportioned in the ratio of the value of (2) The ratio of value of assets shall be applied to the total amount of
assets of the new units as specified in the demerger scheme. Circular No. unutilized ITC of the transferor, i.e. sum of CGST, SGST/ UTGST and IGST
133/3/2020 GST dated 23.03.2020 has clarified that the said formula for credit. The said formula need not be applied separately in respect of
apportionment of ITC shall be applicable for all forms of business re- each heads of ITC (CGST/ SGST/ IGST). Further, the said formula shall
organization that results in partial transfer of business assets along with also be applicable for apportionment of cess between the transferor
liabilities and not just demerger. Here, “value of assets” means the value of and transferee.
the entire assets of the business irrespective of whether ITC has been availed
(47) The ITC balances of transferor A in the State of
thereon or not.
Maharashtra under CGST, SGST and IGST heads are 5 lakh, 5
The registered person should furnish the details of change in constitution in lakh and 10 lakh respectively. Pursuant to a scheme of
the prescribed form (ITC - 02) on the common portal and submit a certificate demerger, A transfers 60% of its assets to transferee B.
from practicing Chartered Account/Cost Accountant certifying that the
Accordingly, the amount of ITC to be transferred from A to B shall be
change in constitution has been done with a specific provision for transfer of
60% of 20 lakh (total sum of CGST, SGST and IGST credit) i.e. 12 lakh.
liabilities. Upon acceptance of such details by the transferee on the common
portal, the unutilized ITC gets credited to his electronic credit ledger. The (3) The total amount of ITC to be transferred to the transferee (i.e. sum of
transferee should record the inputs and capital goods so transferred in his CGST, SGST/ UTGST and IGST credit) should not exceed the amount of
books of account. ITC to be transferred [Refer point (2) above]. However, the transferor
shall be at liberty to determine the amount to be transferred under each
Circular No. 133/3/2020 GST dated 23.03.2020 has clarified the following in
tax head (IGST, CGST, SGST/ UTGST) within this total amount, subject to
relation to apportionment of ITC in cases of business reorganization:
the ITC balance available with the transferor under the concerned tax
(1) For the purpose of apportionment of ITC pursuant to a demerger, the head.
value of assets of the new units is to be taken at the State level (at the
(47A)
level of distinct person) and not at the all-India level. The transferor
would be required to file Form GST ITC-02 only in those States where
both transferor and transferee are registered. (1) (2) (3) (4) (5) (6)
(46) Company XYZ, registered in both Madhya Pradesh (MP) State Asset Tax ITC balance Total amount ITC balance
DQG8WWDU3UDGHVK 83 KROGVDVVHWVYDOXHGDWಶFURUHಶ Ratio of Heads of of ITC of Transferor
FURUHLQ03DQGಶFURUHLQ83$SRUWLRQRI;<= VEXVLQHVV Transferee Transferor transferred to (post-
is being demerged into Company ABC. As part of this demerger, assets (pre- the Transferee apportion-
apportion- under GST ment) after
ZRUWK ಶ FURUH IURP 03 DQGಶFURUH IURP 83 WRWDOLQJ DW DOO-India
ment) as on ITC-02 filing of GST
OHYHO ಶFURUHDUHWUDQVIHUUHGIURP;<=WR$%& the date of ITC–02) [Col
filing GST (4) – Col (5)]
The unutilized ITC of XYZ in State of M.P. shall be transferred to ABC on
ITC–02)
the basis of ratio of value of assets in State of M.P., i.e. 30/60 = 0.5 and
not on the basis of all-India ratio of value of assets, i.e. 40/100=0.4. Delhi 70% CGST 10,00,000 10,00,000 0
Similarly, unutilized ITC of XYZ in State of U.P. will be transferred to ABC SGST 10,00,000 10,00,000 0
in ratio of value of assets in State of U.P, i.e. 10/40 = 0.25.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1
1.103 7.103 1.104 7.104 GOODS AND SERVICES TAX

IGST 30,00,000 15,00,000 15,00,000

6. DISTRIBUTION OF CREDIT BY INPUT
Total 50,00,000 35,00,000 15,00,000
SERVICE DISTRIBUTOR [SECTIONS 20 & 21]
M.P. 40% CGST 25,00,000 3,00,000 22,00,000
SGST 25,00,000 5,00,000 20,00,000
STATUTORY PROVISIONS
IGST 20,00,000 20,00,000 0
Total 70,00,000 28,00,000 42,00,000
Section 20 Manner of distribution of credit by input service distributor
(4) The apportionment formula shall be applied on the ITC balance of the
Sub-section Clause Particulars
transferor as available in electronic credit ledger on the date of filing of
Form GST ITC – 02 by the transferor. (1) Any office of the supplier of goods or services or both which
receives tax invoices towards the receipt of input services,
(5) For the purpose of apportionment of ITC, the ratio of the value of assets
including invoices in respect of services liable to tax under
should be taken as on the “appointed date of demerger” as specified in
sub-section (3) or sub-section (4) of section 9 of the CGST Act,
the respective scheme for demerger. Thus, for the purpose of
for or on behalf of distinct persons referred to in section 25,
apportionment of ITC, the ratio of the value of assets taken as on the shall be required to be registered as Input Service Distributor
“appointed date of demerger” should be applied on the ITC balance of under clause (viii) of section 24 and shall distribute the input
the transferor on the date of filing Form GST ITC – 02. tax credit in respect of such invoices.
(v) Transfer of ITC on obtaining separate registrations for multiple (2) The Input Service Distributor shall distribute the credit of
places of business within a State/ Union Territory [Rule 41A] central tax or integrated tax charged on invoices received by
Section 25 enables a taxpayer to obtain separate registrations for multiple him, including the credit of central or integrated tax in
places of business within a State/ Union territory [Provisions of section 25 are respect of services subject to levy of tax under sub-section (3)
or sub-section (4) of section 9 of CGST Act, paid by a distinct
discussed under Chapter 8: Registration in this Module of the Study Material].
person registered in the same State as the said Input Service
The registered person (transferor), having separate registrations for multiple
Distributor, in such manner, within such time and subject to
places of business within a State/Union Territory, can transfer the unutilised such restrictions and conditions as may be prescribed.
ITC (wholly or partly) lying in his electronic credit ledger to any or all of the
newly registered place(s) of business in the ratio of the value of assets held
by them at the time of registration. Here, the ‘value of assets’ means the (3) The credit of central tax shall be distributed as central tax or
value of the entire assets of the business irrespective of whether ITC has been integrated tax and integrated tax as integrated tax or central
availed thereon or not. tax, by way of issue of a document containing the amount of
input tax credit, in such manner as may be prescribed.
The registered person should furnish the prescribed details on the common
portal within a period of 30 days from obtaining such separate registrations.
Upon acceptance of such details by the newly registered person (transferee) Section 21 Manner of recovery of credit distributed in excess
on the common portal, the unutilised ITC gets credited to his electronic credit
ledger. Where the input service distributor distributes the credit in

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1
1.105 7.105 1.106 7.106 GOODS AND SERVICES TAX

contravention of the provisions contained in section 20 distributed amongst such recipients to whom the
resulting in excess distribution of credit to one or more input service is attributable and such distribution
recipients of credit, the excess credit so distributed shall be shall be pro rata on the basis of the turnover in a
recovered from such recipients along with interest, and the State or turnover in a Union territory of such
recipient, during the relevant period, to the
provisions of section 73 or section 74 or section 74A 26, as
aggregate of the turnover of all such recipients to
the case may be, shall, mutatis mutandis, apply for
whom such input service is attributable and which
determination of amount to be recovered. are operational in the current year, during the said
relevant period;
Chapter V: Input Tax Credit of CGST Rules
(e) the credit of tax paid on input services attributable
Rule 39 Procedure for distribution of input tax credit by Input
to all recipients of credit shall be distributed amongst
Service Distributor
such recipients and such distribution shall be pro rata
Sub-rule Clause Particulars on the basis of the turnover in a State or turnover in
a Union territory of such recipient, during the
(1) An Input Service Distributor shall distribute input tax credit in relevant period, to the aggregate of the turnover of
the manner and subject to the following conditions, namely: all recipients and which are operational in the
current year, during the said relevant period;
(a) the input tax credit available for distribution in a
month shall be distributed in the same month and the (f) the input tax credit that is required to be distributed
details thereof shall be furnished in FORM GSTR-6 in in accordance with the provisions of clauses (d) and
accordance with the provisions of Chapter VIII of (e) to one of the recipients "R1", whether registered
these rules or not, from amongst the total of all the recipients to
whom input tax credit is attributable, including the
(b) the amount of the credit distributed shall not exceed recipients who are engaged in making exempt
the amount of credit available for distribution; supply, or are otherwise not registered for any
reason, shall be the amount, "C1", to be calculated
(c) the credit of tax paid on input services attributable
by applying the following formula -
to a recipient of credit shall be distributed only to
that recipient; C1 = (t1/T) x C
where,
(d) the credit of tax paid on input services attributable "C" is the amount of credit to be distributed,
to more than one recipient of credit shall be
"t1 " is the turnover, as referred to in clauses (d) and
(e), of person R1 during the relevant period, and
26 "T" is the aggregate of the turnover, during the
Section 74A contains the provisions relating to determination of tax not paid/short
relevant period, of all recipients to whom the input
paid or erroneously refunded or ITC wrongly availed/utilized for any reason
service is attributable in accordance with the
pertaining to Financial Year 2024-25 onwards. Further, the provisions of sections 73
provisions of clauses (d) and (e);
and 74 are applicable for tax determination relating to the past period up to the
Financial Year 2023–24.

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 INPUT TAX CREDIT 1
1.107 7.107 1.108 7.108 GOODS AND SERVICES TAX

(g) the Input Service Distributor shall, in accordance (l) the Input Service Distributor shall issue an Input
with the provisions of clauses (d) and (e), separately Service Distributor credit note, as provided in sub-
distribute the amount of ineligible input tax credit rule (1) of rule 54, for reduction of credit in case the
(ineligible under the provisions of sub-section (5) of input tax credit already distributed gets reduced for
section 17 or otherwise) and the amount of eligible any reason;
input tax credit;
(m) any additional amount of input tax credit on account
(h) the input tax credit on account of central tax, State of issuance of a debit note to an Input Service
tax, Union territory tax and integrated tax shall be Distributor by the supplier shall be distributed in the
distributed separately in accordance with the manner and subject to the conditions specified in
provisions of clauses (d) and (e); clauses (a) to (j) and the amount attributable to any
recipient shall be calculated in the manner provided
(i) the input tax credit on account of integrated tax shall in clause (f) and such credit shall be distributed in the
be distributed as input tax credit of integrated tax to month in which the debit note is included in the
every recipient; return in FORM GSTR-6;

(j) the input tax credit on account of central tax and (n) any input tax credit required to be reduced on
State tax or Union territory tax shall- account of issuance of a credit note to the Input
Service Distributor by the supplier shall be
(i) in respect of a recipient located in the same
apportioned to each recipient in the same ratio in
State or Union territory in which the Input
which the input tax credit contained in the original
Service Distributor is located, be distributed
invoice was distributed in terms of clause (f), and the
as input tax credit of central tax and State tax
amount so apportioned shall be-
or Union territory tax respectively;
(i) reduced from the amount to be distributed in
(ii) in respect of a recipient located in a State or
the month in which the credit note is included
Union territory other than that of the Input
in the return in FORM GSTR-6; or
Service Distributor, be distributed as
integrated tax and the amount to be so (ii) added to the output tax liability of the
distributed shall be equal to the aggregate of recipient where the amount so apportioned is
the amount of input tax credit of central tax in the negative by virtue of the amount of
and State tax or Union territory tax that credit under distribution being less than the
qualifies for distribution to such recipient as amount to be adjusted.
referred to in clauses (d) and (e);
(1A) For the distribution of credit in respect of input services,
(k) the Input Service Distributor shall issue an Input attributable to one or more distinct persons, subject to levy of
Service Distributor invoice, as provided in sub-rule tax under sub-section (3) or (4) of section 9, a registered
(1) of rule 54, clearly indicating in such invoice that person, having the same PAN and State code as an Input
it is issued only for distribution of input tax credit; Service Distributor, may issue an invoice or, as the case may

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be, a credit or debit note as per the provisions of sub-rule (1A) (ii) the expression "recipient of credit" means the supplier of
of rule 54 to transfer the credit of such common input services goods or services or both having the same Permanent Account
to the Input Service Distributor, and such credit shall be Number as that of the Input Service Distributor;
distributed by the said Input Service Distributor in the manner
as provided in sub-rule (1). (iii) the term ''turnover'', in relation to any registered person
engaged in the supply of taxable goods as well as goods not
(2) If the amount of input tax credit distributed by an Input taxable under this Act, means the value of turnover, reduced
Service Distributor is reduced later on for any other reason for by the amount of any duty or tax levied under entries 84 and
any of the recipients, including that it was distributed to a 92A of List I of the Seventh Schedule to the Constitution and
wrong recipient by the Input Service Distributor, the process entries 51 and 54 of List II of the said Schedule.
specified in clause (n) of sub-rule (1) shall apply, mutatis
mutandis, for reduction of credit.
ANALYSIS
(3) Subject to sub-rule (2), the Input Service Distributor shall, on
the basis of the Input Service Distributor credit note specified (i) Role of an input service distributor (ISD)
in clause (l) of sub-rule (1), issue an Input Service Distributor
invoice to the recipient entitled to such credit and include the Companies may have their Head Office at one place and units at other places
Input Service Distributor credit note and the Input Service which may be registered separately. The Head Office would be procuring
Distributor invoice in the return in FORM GSTR-6 for the month certain services which would be for common utilization of one or more units
in which such credit note and invoice was issued. or all units across the country.

Explanation.––For the purposes of this rule,–– The bills for such expenses would be raised on the Head Office but the Head
Office itself would not be providing any output supply so as to utilize the
(i) the term "relevant period" shall be—
credit which gets accumulated on account of such input services.
(a) if the recipients of credit have turnover in their States Since the common expenditure is
or Union territories in the financial year preceding the
meant for the business of one or
year during which credit is to be distributed, the said
more units or all units, it is but
financial year; or ISD is an office of a
natural that the credit of input
business which receives
(b) if some or all recipients of the credit do not have any services in respect of such common
turnover in their States or Union territories in the tax invoices for input
invoices should be apportioned
financial year preceding the year during which the services and distributes
between the consuming units.
credit is to be distributed, the last quarter for which available ITC to other
details of such turnover of all the recipients are ISD mechanism enables branch offices of the
available, previous to the month during which credit is proportionate distribution of credit same business.
to be distributed; of input services amongst the
consuming units. The concept of
ISD under GST is a legacy carried over from the service tax regime.

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(ii) Separate registration for an ISD

An entity receiving common input services

Compulsory
(including services taxable under reverse separate
charge) is compulsorily required to obtain a registration for
separate registration as an ISD even though ISD
ISD
it may be separately registered. There is no
threshold limit for registration for an ISD. The

by ISD
invoice
other locations may be registered separately. Since the services relate to
other locations the corresponding credit should be transferred to such

SAME PAN
locations (having separate registrations) as the output services are being
provided there.

Distribution of credit of CGST,

SGST/UTGST and IGST by issuing ISD

Receipt of tax invoices for input services

Can a
company have Yes, different offices of a
SAME PAN multiple ISDs? company like marketing
Thus, the concept of ISD is a facility made available to business having a large division, security division
share of common expenditure and where billing/payment is done from a etc. may apply for
centralized location. The mechanism is meant to simplify the credit taking separate ISD registration.
process for entities and the facility is meant to strengthen the seamless flow
of credit under GST. (iii) Manner of distribution of credit by an ISD
It is important to note that ISD framework covers the services received The ISD is required to maintain
which are taxable under reverse charge mechanism, i.e. credit of the arithmetical accuracy and ensure ITC of input services is
services taxable under reverse charge received by ISD can also be that the credit distributed does not distributed ONLY amongst
distributed by the ISD. those registered persons who
exceed the credit available with it
for distribution. Further, in have used the input services in
It is important to note that the ISD mechanism is meant only
the course or furtherance of
for distributing the credit on common invoices pertaining to distributing the credit among
business.
INPUT SERVICES and not goods (inputs or capital goods). different locations of the entity -
which are supplying goods and/or
The credit pertaining to common input services received must be
services and have same PAN as that of the ISD (‘recipients’) - it must follow these
MANDATORILY DISTRIBUTED through ISD mechanism.
principles:
The credit on common invoices includes the credit on invoices of
(a) The credit connected to an input service must be distributed only to the
services liable to tax under reverse charge under section 9(3)/9(4) of the
particular recipient to whom that input service is attributable.
CGST Act, 2017.

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(b) If the input service is attributable to more than one recipient, the ‰ Where both taxable and non-taxable goods are supplied, the
relevant ITC is distributed to such recipients in the ratio of turnover of “turnover” excludes central excise duty, State excise duty, central sales
the recipient in a State / Union Territory [See definition of turnover in tax and VAT.
State or turnover in Union Territory] to the aggregate turnover [See
‰ Formula for distribution of credit
definition of aggregate turnover] of all the recipients to whom the input
service is attributable and which are operational during the current year. C1 = (t1÷T) × C

(c) ITC pertaining to input services which are common for all units, is where,
distributed to all the recipients in the ratio of turnover as described in “C” is the credit to be distributed,
(b) above.
“t1” is the turnover of the recipient during the relevant period, and
(d) Both ineligible and eligible ITC are distributed separately.
“T” is the aggregate of the turnover, during the relevant period, of all
(e) ITC of CGST, SGST/UTGST and IGST are distributed separately.
recipients to whom the input service is attributable
Proportionate distribution of credit to more than one recipient/all the
recipients DISTRIBUTION OF CREDIT
‰ For working out such pro rata distribution (as mentioned in (b) and (c)
above), the turnover during the relevant period is to be considered, ITC
both for turnover of the recipient in a State / Union Territory as well as attributable ITC attributable to more ITC attributable to all
for aggregate turnover of all recipients. to specific than one recipient recipients
recipient
‰ “Relevant period” for working out the above distribution is the
previous financial year, if all the recipients of credit had turnover in their
State / Union Territory during that year. Distributed
Pro rata distribution
to such
If some or all the recipients did not have turnover in their State / Union recipient only
territory during the previous financial year, then the last quarter for which ITC to be distributed =
details of turnover of all the recipients is available, prior to the month for ‫ ܐܜܑܟ ܛܝܠ܍ܖ ܏ܖܑܞ܉ܐ( ܜܖ܍ܑܘܑ܋܍ܚ ܎ܗ ܚ܍ܞܗܖܚܝ܂‬۷‫܂‬۱) ‫܌ܗܑܚ܍ܘ ܜܖ܉ܞ܍ܔ܍ܚ ܏ܖܑܚܝ܌‬
which credit is to be distributed, will be the “relevant period”. ‫ ܐܜܑܟ ܛܝܠ܍ܖ ܏ܖܑܞ܉ܐ( ܛܜܖ܍ܑܘܑ܋܍ܚ ܔܔ܉ ܎ܗ ܚ܍ܞܗܖܚܝ܂‬۷‫܂‬۱) ‫܌ܗܑܚ܍ܘ ܜܖ܉ܞ܍ܔ܍ܚ ܏ܖܑܚܝ܌‬
Turnover excludes central excise duty, State excise duty,
‰ If there are two or more locations of a recipient in a State / Union central sales tax and VAT
territory, the sum of their turnover is to be considered in working out the
proportion of the credit that will be distributed to that registration. (This Previous financial year
is because a PAN number will have a single registration for all its locations OR
within a business vertical in a State / Union territory – Refer Chapter 9: Relevant period = Last quarter prior to the month of
Registration in this Module of the Study Material for more details.) distribution for which turnover of all
recipients is available
‰ The credit attributable to a recipient is distributed even if such recipient
is unregistered or is making exempt supplies.
Ineligible credit also to be distributed in the above manner

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(48) ABC Ltd, a confectionary manufacturer, has paid bills of an (49) The Corporate office of ABC Ltd. is at Bangalore, with its
advertising company amounting to ` 24 lakh for advertising business locations of selling and servicing of goods at Bangalore,
campaigns for two varieties of cakes, which are manufactured at Chennai, Mumbai and Kolkata. Software license and maintenance
separate locations in Pune and Bangalore. The company had a total turnover of is used at all the locations, but invoice for these services (indicating CGST and
` 112 crores in the previous financial year. During relevant period, the turnover SGST) are received at Corporate Office. Since the software is used at all the
of the Pune unit was ` 5 crores, and the turnover of the Bangalore unit was ` 10
four locations, the ITC of entire services cannot be claimed at Bangalore. The
crores. The aggregate turnover here is taken as ` 15 crores, as advertising was
same has to be distributed to all the four locations. For that reason, the
for cakes, which are manufactured at these two units only.
Bangalore Corporate office has to act as ISD to distribute the credit.
The ITC is to be distributed between Pune and Bangalore units in the ratio
If the corporate office of ABC Ltd, an ISD situated in Bangalore, receives
1:2. Therefore, Pune unit will be given ITC of ` 8 lakhs, and Bangalore unit will
invoices indicating ` 4 lakh of CGST, `4 lakh of SGST and ` 7 lakh of IGST, it
be given ITC of ` 16 lakhs from the advertising bills. can distribute the ITC of CGST, SGST as well as IGST of ` 15 lakh amongst its
Distribution of taxes locations at Bangalore, Chennai, Mumbai and Kolkata through an ISD invoice
containing the amount of credit distributed.
‰ ITC of CGST, SGST/UTGST in respect of recipient located in the same
State/Union Territory is distributed as CGST and SGST/UTGST respectively. ILLUSTRATION 1

‰ ITC of CGST and SGST/UTGST, in respect of a recipient located in a XYZ Ltd, having its head Office at Mumbai, is registered as ISD. It has three
different State/Union territory, is distributed as IGST (total of ITC of units in different cities situated in different States namely ‘Mumbai’, ‘Jabalpur’
CGST and SGST/UTGST which were to be distributed to such recipient). and ‘Delhi’ which are operational in the current year.
M/s XYZ Ltd furnishes the following information for the month of July:
‰ ITC on account of IGST is distributed as IGST.
(i) CGST paid on services used only for Mumbai Unit: ` 3,00,000
Credit of IGST distributed as Credit of IGST
(ii) IGST, CGST & SGST paid on services used for all units: ` 12,00,000
Recipient and distributed Input tax credited Total turnover of the units for the previous financial year are as follows: -
ISD located in as under same
Credit of CGST
same State category of tax Unit Turnover (`)

distributed Total Turnover of three units ` 10,00,00,000

Recipient and
Credit of ISD located in as Input tax credited
SGST/UTGST different as IGST Turnover of Mumbai unit ` 5,00,00,000
States
Turnover of Jabalpur unit ` 3,00,00,000
Note: Section 20 provides that credit of integrated tax be distributed as “integrated
Determine the credit to be distributed by XYZ Ltd. to each of its three units.
tax or central tax”. However, rule 39 of CGST Rules provides that “input tax credit
on account of integrated tax shall be distributed as input tax credit of integrated tax
to every recipient.” The above diagram is based on the position as stated in rule 39.

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Answer ‰ The ISD needs to issue a ISD credit note, as prescribed in rule 54(1) of
the CGST Rules, for reduction in credit if the distributed credit gets
Particulars `)
Credit distributed to all units (`
reduced for any reason.
Total Mumbai Jabalpur Delhi
‰ The ISD invoice and ISD credit note must contain the following
credit
available information:

CGST paid on services 300000 300000 0 0 x Name, address and GSTIN of the ISD and recipient of credit;
used only for Mumbai Unit x A consecutive serial number up to 16 characters, containing
IGST, CGST & SGST paid on 12,00,000 6,00,000 3,60,000 2,40,000 alphabets or numerals or special characters or any combination
services used for all units thereof, for a financial year;
Distribution on pro rata basis
to all the units which are x Date of issue;
operational in the current x Amount of the credit distributed;
year
x Signature of the ISD or his authorized representative.
Total 15,00,000 9,00,000 3,60,000 2,40,000
Relaxation for banks & FIs: If the ISD is a banking company/ financial
Note 1: Credit distributed pro rata on the basis of the turnover of all the units institution including NBFC, the document for distributing credit need
is as under: - not be serially numbered.

(a) Unit Mumbai: (` 5,00,00,000/ ` 10,00,00,000) * ` 12,00,000 = ` 6,00,000 ‰ ITC available for distribution in a month is to be distributed in the same
month.
(b) Unit Jabalpur: (` 3,00,00,000/ ` 10,00,00,000) * ` 12,00,000 = ` 3,60,000

(c) Unit Delhi: (` 2,00,00,000/ `10,00,00,000) * ` 12,00,000 = ` 2,40,000

‰ Details of distribution of credit and all ISD invoices issued should be
furnished by ISD in monthly GSTR-6 within 13 days after the end of the
Note 2: Distribution of IGST, CGST & SGST paid on services for all units would month. The details in the returns are made available to the respective
be as follows: recipients in their GSTR 2A. An ISD is not required to file annual return.
(a) Unit Mumbai: Distribution of IGST, CGST & SGST as IGST, CGST & SGST, [Refer Chapter 13: Returns in this Module of the Study Material for
respectively. detailed discussion on GSTR-6].

(b) Unit Jabalpur: Distribution of IGST, CGST & SGST as IGST only (iv) Issue of debit note and credit note on ISD
(c) Unit Delhi: Distribution of IGST, CGST & SGST as IGST only Issue of a debit note

(iii) Procedural aspects of distribution of credit ‰ The additional ITC on account of issue of a debit note to the ISD is
distributed by the ISD, in accordance with the provisions discussed
‰ The ISD has to issue an ISD invoice, as prescribed in rule 54(1) of the
above, in the month in which such debit note is included in GSTR-6.
CGST Rules, for distributing ITC. It should be clearly indicated in such
invoice that it is issued only for distribution of ITC.

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Issue of a credit note If the ISD has distributed excess credit to any recipient, the excess will be
recovered from the recipient with interest as if it was tax not paid by
‰ If a credit note is issued to the ISD, the ITC to be reduced is apportioned initiating action under section 73 or 74 or section 74A 14 [Refer Chapter 19 :
amongst the relevant recipients in the same ratio in which the original Demands and Recovery in Module 3 of this Study Material for detailed
credit was distributed. discussion on section 74A]. Penalties may be applicable depending on the
circumstances. Circular No. 71/45/2018 GST dated 26.10.2018 has clarified
‰ Such apportioned credit is reduced from the credit to be distributed in
that the ISD would also be liable to a general penalty under section
the month in which the credit note is included in GSTR-6. If the
122(1)(ix).
apportioned credit exceeds the credit to be distributed, the same is
added to the output tax liability of the recipient.

‰ This process is also followed in case of reduction of credit already

7. HOW ITC IS UTILISED
distributed for any other reason e.g., when the credit is distributed to a
wrong recipient.
STATUTORY PROVISIONS
(v) Cross charge under GST
Section 49 Payment of tax, interest, penalty and other amounts
In case where one unit (generally the Head Office) provides internal services (Relevant extract)
or goods—such as HR, IT, admin, legal or accounting support—to another
unit (such as a branch) of the same legal entity registered in another State, Sub-section Clause Particulars
unit supplying said goods/services need to cross charge the receiving unit,
(5) The amount of input tax credit available in the electronic credit
even though they belong to same entity. No separate registration is required ledger of the registered person on account of––
for the same and supply of goods by HO to branches can also be cross-
charged. This is different from ISD mechanism where services for utilization (a) integrated tax shall first be utilised towards payment
of integrated tax and the amount remaining, if any,
the branches are commonly received by HO and ITC on the same is
may be utilised towards the payment of central tax
distributed to the branches to which said input service pertains. and State tax, or as the case may be, Union territory
(vi) Recovery of excess credit distributed to a recipient [Section 21] tax, in that order;

(b) the central tax shall first be utilised towards payment

of central tax and the amount remaining, if any, may
Excess credit distributed can be utilised towards the payment of integrated tax;
be recovered along with
interest only from the 14
recipient and not from ISD. Section 74A contains the provisions relating to determination of tax not
paid/short paid or erroneously refunded or ITC wrongly availed/utilized for any
reason pertaining to Financial Year 2024-25 onwards. Further, the provisions of
sections 73 and 74 are applicable for tax determination relating to the past period
up to the Financial Year 2023–24.

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(c) the State tax shall first be utilised towards payment of section 49, the Government may, on the recommendations of the
State tax and the amount remaining, if any, may be Council, prescribe the order and manner of utilisation of the input
utilised towards payment of integrated tax; tax credit on account of integrated tax, central tax, State tax or
Union territory tax, as the case may be, towards payment of any
Provided that the input tax credit on account of State such tax.
tax shall be utilised towards payment of integrated tax
only where the balance of the input tax credit on Chapter IX: Payment of Tax of the CGST Rules
account of central tax is not available for payment of
Rule 86A Conditions of use of amount available in electronic credit
integrated tax;
ledger
(d) the Union territory tax shall first be utilised towards
(1) (a) the credit of input tax has been availed on the strength of
payment of Union territory tax and the amount
tax invoices or debit notes or any other document
remaining, if any, may be utilised towards payment of
prescribed under rule 36-
integrated tax;
i. issued by a registered person who has been
Provided that the input tax credit on account of Union
found non-existent or not to be conducting any
territory tax shall be utilised towards payment of
business from any place for which registration
integrated tax only where the balance of the input tax
has been obtained; or
credit on account of central tax is not available for
payment of integrated tax; ii. without receipt of goods or services or both; or
(e) the central tax shall not be utilised towards payment (b) the credit of input tax has been availed on the strength of
of State tax or Union territory tax; and tax invoices or debit notes or any other document
prescribed under rule 36 in respect of any supply, the tax
(f) the State tax or Union territory tax shall not be utilised
charged in respect of which has not been paid to the
towards payment of central tax.
Government; or
Section 49A Utilisation of input tax credit subject to certain conditions
(c) the registered person availing the credit of input tax has
Notwithstanding anything contained in section 49, the input tax been found non-existent or not to be conducting any
credit on account of central tax, State tax or Union territory tax business from any place for which registration has been
shall be utilised towards payment of integrated tax, central tax, obtained; or
State tax or Union territory tax, as the case may be, only after the
(d) the registered person availing any credit of input tax is
input tax credit available on account of integrated tax has first
not in possession of a tax invoice or debit note or any
been utilised fully towards such payment.
other document prescribed under rule 36,
Section 49B Order of utilisation of input tax credit
may, for reasons to be recorded in writing, not allow debit of an
Notwithstanding anything contained in this Chapter and subject amount equivalent to such credit in electronic credit ledger for
to the provisions of clause (e) and clause (f) of sub-section (5) of discharge of any liability under section 49 or for claim of any

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refund of any unutilised amount. more than one lakh rupees in the preceding financial year
on account of unutilised input tax credit under clause (ii)
(2) The Commissioner, or the officer authorised by him under sub- of first proviso of sub-section (3) of section 54; or
rule (1) may, upon being satisfied that conditions for disallowing
debit of electronic credit ledger as above, no longer exist, allow (d) the registered person has discharged his liability towards
such debit. output tax through the electronic cash ledger for an
amount which is in excess of 1% of the total output tax
(3) Such restriction shall cease to have effect after the expiry of a
liability, applied cumulatively, upto the said month in the
period of one year from the date of imposing such restriction.
current financial year; or
Rule 86B Restrictions on use of amount available in electronic credit
ledger (e) the registered person is -

Notwithstanding anything contained in these rules, the registered (i) Government Department; or
person shall not use the amount available in electronic credit
ledger to discharge his liability towards output tax in excess of (ii) a Public Sector Undertaking; or
ninety-nine per cent. of such tax liability, in cases where the
value of taxable supply other than exempt supply and zero-rated
(iii) a local authority; or
supply, in a month exceeds fifty lakh rupees:

(iv) a statutory body:

Provided that the said restriction shall not apply where -

Provided further that the Commissioner or an officer authorised

(a) the said person or the proprietor or karta or the managing
by him in this behalf may remove the said restriction after such
director or any of its two partners, whole-time Directors,
verifications and such safeguards as he may deem fit
Members of Managing Committee of Associations or
Board of Trustees, as the case may be, have paid more
Rule 88A Order of utilization of input tax credit
than one lakh rupees as income tax under the Income-tax
Act, 1961(43 of 1961) in each of the last two financial
years for which the time limit to file return of income Input tax credit on account of integrated tax shall first be utilised
under subsection (1) of section 139 of the said Act has towards payment of integrated tax, and the amount remaining, if
expired; or any, may be utilised towards the payment of central tax and
State tax or Union territory tax, as the case may be, in any order.
(b) the registered person has received a refund amount of
more than one lakh rupees in the preceding financial year Provided that the input tax credit on account of central tax, State
on account of unutilised input tax credit under clause (i) tax or Union territory tax shall be utilised towards payment of
of first proviso of sub-section (3) of section 54; or integrated tax, central tax, State tax or Union territory tax, as the
case may be, only after the input tax credit available on account
(c) the registered person has received a refund amount of of integrated tax has first been utilised fully.

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entire input tax credit of Integrated tax is completely exhausted before the input
ANALYSIS tax credit of Central Tax or State/Union territory tax can be utilized. If ITC of IGST
is used for payment of SGST/UTGST (or vice versa), corresponding debit/credit is
made to respective State Government/Union Territory.
ITC is credited to a registered person’s electronic credit ledger. A taxable person
Sections 49(5), 49A, 49B, rule 88A and Circular No. 98/17/2019 GST dated
is entitled for ITC of CGST, SGST/UTGST and IGST depending upon the nature of
23.04.2019 together prescribe the sequence of utilisation of ITC. A combined
supplies received by him.
reading of such provisions shows that the order of utilization of ITC is as per the
To illustrate, a supplier making purchases intra-State, inter-State and via import order (of numerals) given below:
(of goods) is eligible for ITC as under:
ITC of Output IGST Output CGST Output SGST/ UTGST liability
liability liability
Intra-State purchases Inter-State purchases Import of goods
IGST (I) (II) – In any order and in any proportion
Taxes paid Taxes paid Taxes paid

(III) ITC of IGST to be completely exhausted mandatorily

CGST BCD
IGST
SGST IGST CGST (V) (IV) Not permitted

SGST/UTGST (VII) Not permitted (VI)

ITC ITC ITC
Only after ITC
CGST
IGST IGST of CGST has
SGST
been utilized
fully

The person may use the ITC to pay his output tax liability. As we know that Indian The numerals given above can be further explained in the following manner:
GST is a dual GST wherein two taxes viz, CGST and SGST/UTGST are levied
concurrently on a supply transaction. While the CGST revenue accrues to Central (I) IGST credit should be first utilized towards payment of IGST.
Government, SGST and UTGST revenue accrue to respective State Government (II) Remaining IGST credit, if any, can be utilized towards payment of
and Union Territory respectively. Hence, ITC of CGST and SGST/UTGST is not CGST and SGST/UTGST in any order and in any proportion, i.e.
inter-changeable and thus, cross utilisation of CGST and SGST/UTGST is not remaining ITC of IGST can be utilized –
permissible. x first towards payment of CGST and then towards payment of
IGST is a transitory tax. IGST paid by taxpayer initially goes to the Central SGST; or
Clearing Authority. ITC of IGST can be utilised for payment of CGST or x first towards payment of SGST and then towards payment of
SGST/UTGST (or vice versa). Thus, cross utilization of IGST and CGST, CGST; or
SGST/UTGST is permissible. Flexibility has been provided to the taxpayer to x towards payment of CGST and SGST simultaneously in any
utilise ITC of IGST (after payment of IGST first) for payment of CGST and/or proportion e.g. 50: 50, 30: 70, 40: 60 and so on.
SGST/UTGST in any proportion and in any order subject to the condition that the

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(III) Entire ITC of IGST should be fully utilized before utilizing the ITC of CGST 0 100 - 100
CGST or SGST/UTGST. SGST/UTGST 0 - 200 0

(IV) & (V) ITC of CGST should be utilized for payment of CGST and IGST in Total 1000 300 300 100
that order. ITC of CGST cannot be utilized for payment of Option 2
SGST/UTGST
ITC of Discharge of Discharge Discharge of Balance
(VI) & (VII) ITC of SGST /UTGST should be utilized for payment of SGST/UTGST output IGST of output output of
and IGST in that order. However, ITC of SGST/UTGST should be liability (``) CGST SGST/UTGST ITC (`)
utilized for payment of IGST, only after ITC of CGST has been liability (``) liability (`
`)
utilized fully. ITC of SGST/UTGST cannot be utilized for payment of
CGST. IGST 1000 100 200 0

ITC of IGST has been completely exhausted

x Cross-utilization of credit is available only between CGST - IGST and
SGST/UTGST - IGST. CGST 0 200 - 0
x CGST credit cannot be utilized for payment of SGST/UTGST and
SGST/UTGST 0 - 100 100
SGST/UTGST credit cannot be utilized for payment of CGST.
x ITC of IGST need to be exhausted fully before proceeding to utilize the ITC Total 1000 300 300 100
of CGST and SGST/UTGST in that order. Option 3
(50) Amount of ITC available and output tax liability under different ITC of Discharge of Discharge Discharge of Balance
tax heads output IGST of output output of
liability (`) CGST SGST/UTGST ITC (`)
Head Output tax liability (`
`) ITC (`
`)
liability (``) liability (``)
IGST 1000 1300
IGST 1000 150 150 0
CGST 300 200
ITC of IGST has been completely exhausted
SGST/UTGST 300 200
Total 1600 1700 CGST 0 150 - 50

Option 1 SGST/UTGST 0 - 150 50

Total 1000 300 300 100

ITC of Discharge Discharge Discharge of Balance
of output of output output of ITC (`
`) There can be other options also for utilization of ITC of IGST against CGST and
IGST CGST SGST/UTGST SGST liabilities. In this example, three options for utilizing ITC of IGST against
liability (``) liability (``) liability (``)
CGST and SGST liabilities are shown.
IGST 1000 200 100 0
ITC of IGST has been completely exhausted

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 INPUT TAX CREDIT 1
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Restrictions on utilisation of ITC [Rule 86A] Total amount of ineligible Officer to disallow debit of amount from
The Commissioner/ an officer (not below the rank of an Assistant Commissioner) or fraudulently availed ITC electronic credit ledger under rule 86A
authorised by him is empowered to impose restrictions on utilization of ITC Not exceeding ` 1 crore Deputy Commissioner/ Assistant
available in the electronic credit ledger if he has reasons to believe that such ITC Commissioner
has been fraudulently availed or is ineligible.
Above ` 1 crore but not Additional Commissioner/ Joint Commissioner
The restrictions can be imposed in the following circumstances: exceeding ` 5 crore

(i) ITC has been availed by the registered person on the basis of tax Above ` 5 crore Principal Commissioner/Commissioner
invoices/debit notes/prescribed documents -
The Additional Director General /Principal Additional Director General
Ń issued by a non-existent registered person (supplier) or by a supplier of DGGI can also exercise the powers assigned to the Commissioner under rule
not conducting any business from the place declared in registration; 86A. The monetary limits for authorization for exercise of powers under rule 86A
or to the officers of the rank of Assistant Director and above of DGGI by the
Additional Director General /Principal Additional Director General may be same as
Ń without actual receipt of goods or services or both; or mentioned for equivalent rank of officers in the table above 15.
Ń in respect of any supply the tax in respect of which has not been paid Restrictions on the use of amount available in electronic credit ledger [Rule
to the Government 86B]

(ii) the registered person availing ITC has been found non-existent or not to be Rule 86B restricts the use of ITC available in the electronic credit ledger for
conducting any business from the registered place of business; or discharging output tax liability. The aforesaid rule starts with a non-obstante
clause and thus, has an over-riding effect on any other provisions of the CGST
(iii) the registered person availing ITC is not in possession of tax invoice/ debit Rules.
note or any other prescribed valid document for it.
‰ Applicability of rule 86B
If the ITC is so availed, the restrictions can be imposed by not allowing such ITC
™ Rule 86B is applicable to the registered person having value of taxable
to be used for discharging any liability under section 49 or not allowing refund of
supply (other than exempt supply and zero-rated supply) in a month
any unutilised amount of such ITC. Such restrictions can be imposed for a period exceeding ` 50 lakh.
up to 1 year from the date of imposing such restrictions. However, the
™ Therefore, in cases wherein value of taxable supply in a month is upto
Commissioner/officer authorised by him, can withdraw such restriction if he is
` 50 lakh, then this restriction would not be applicable.
satisfied that conditions for imposing the restrictions no longer exist.
‰ Nature of restriction imposed
Proper authority for the purpose of rule 86A Minimum 1% of the
The registered person to whom the said rule is output tax liability be
The Commissioner/Principal Commissioner is the proper officer for the purpose of
applicable cannot use ITC to discharge the discharged using
exercising powers under rule 86A. The Commissioner/Principal Commissioner
output tax liability in excess of 99% of such tax electronic cash ledger
may authorize any officer subordinate to him, not below the rank of Assistant
Commissioner to be the proper officer for exercising powers under rule 86A
15
based on the following monetary limits as mentioned in the next page: CBIC - 20/16/05/2021 GST/1552 dated 02.11.2021

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 INPUT TAX CREDIT 1
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liability. In other words, amount available in electronic credit ledger shall be ¾ Receipt of refund of input tax credit of more than ` 1 lakh
utilized only to the extent of 99% of the output tax liability while Rule 86B is not applicable where the registered person has received a
discharging such tax liability. Balance 1% of the output tax liability needs to refund amount of more than ` 1 lakh on account of unutilized ITC under:
be discharged from electronic cash ledger.
™ zero-rated supplies made without payment of tax
The above restriction can be explained with the help of numerical example: ™ inverted duty structure
(51) The total value of inter-State supply of Raman & Sons for It is pertinent to note that refund should have been received in preceding
the month of February is of ` 100 lakh. Said supply is taxable @ FY.
18% IGST. Thus, total output tax liability of Raman & Sons is ` 18
lakh. Amount available in electronic credit ledger is ` 20 lakh (IGST). ¾ Payment of output tax liability through electronic cash ledger in
excess of 1% of total output tax liability in current FY
In terms of restriction imposed by rule 86B, Raman & Sons can discharge
99% of its output tax liability, i.e. ` 17,82,000 (99% of ` 18,00,000) from the If the registered person has discharged his output tax liability through
amount available in electronic credit ledger. However, it has to mandatorily the electronic cash ledger for an amount in excess of 1% of the total
discharge the balance 1% of the output tax liability i.e. ` 18,000 (1% of output tax liability, applied cumulatively, upto the said month in the
` 18,00,000) through electronic cash ledger only. current financial year, the restrictions under rule 86B shall not apply.

‰ Exceptions to rule 86B This exception provides relief to registered persons who have
consistently made substantial cash payments towards their GST liabilities.
In order to strike a balance between restricting potential misuse of ITC and The total cash payment of GST made by the registered person is
providing relief to compliant taxpayers, few exceptions to rule 86B have considered cumulatively for all preceding months of the current FY. The
been carved out. They take into account different circumstances and ensure cumulative approach ensures that the registered person is given credit
that taxpayers who have fulfilled certain criteria are not unduly burdened by for its consistent cash payments throughout the year, rather than
the restrictions imposed by rule 86B. assessing each month in isolation.
¾ Payment of income tax of more than ` 1 lakh (52) Assuming a scenario wherein in the current FY upto
Restriction under rule 86B is not applicable in cases where the below September month, the value of outward supply is ` 80 lakh.
mentioned person(s) have paid a sum of more than ` 1 lakh as income Output tax liability discharged through electronic cash ledger
tax (under the Income -tax Act, 1961) in each of the last 2 FYs for till August month is ` 1 lakh. Rule 86B would not be applicable in the
which the time limit to file return of income under section 139(1) of September month even though the value of supply during this month
the Income-tax Act has expired: exceeds ` 50 lakh, since cumulative payment of tax made in cash is more
than 1% of total output tax liability (1% of ` 80 lakh is ` 80,000).
™ Registered person/Karta/proprietor/managing director/ any of
its two partners It is pertinent to note that GST liability paid under reverse charge
mechanism should not be taken into account while calculating the total
™ Whole-time directors, output liability paid through electronic cash ledger.
™ Members of Managing Committee of Associations
¾ Specified registered persons
™ Board of Trustees
Rule 86B is not applicable in case of below-mentioned registered
person:
™ Government Department; or

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 INPUT TAX CREDIT 1
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™ a Public Sector Undertaking; or Notes:

™ a local authority; or (1) 100% ITC can be availed on invoices furnished by the suppliers in their GSTR-1s
and reflected in GSTR-2B of Vijay Sales.
™ a statutory body.
(2) As per rule 36(4), the ITC in respect of invoices not furnished by the suppliers in
However, Commissioner or an officer authorised by him in this behalf their GSTR-1s and thus, not being reflected in GSTR-2B of recipient, cannot be
may remove the said restriction after such verifications and such claimed. Thus, in respect of 20 invoices which are not furnished in GSTR-1s of
safeguards as he may deem fit suppliers and are not reflected in GSTR-2B of Vijay Sales, no ITC can be availed 16.

ILLUSTRATION 1 ILLUSTRATION 2

Vijay Sales, a registered supplier, receives 100 invoices (for inward supply of goods/ PQR Company Ltd., a registered supplier of Bengaluru (Karnataka), is a
services) involving GST of ` 10 lakh, from various suppliers during the month of manufacturer of goods. The company provides the following information
October. pertaining to GST paid on inward supplies during the month of April (current
financial year):
Out of 100 invoices, details of 80 invoices involving GST of ` 6 lakh have been
furnished by the suppliers in their respective GSTR-1s (which are not amended in S. No. Items GST paid in
(` )
GSTR-1A) filed on the prescribed due date therefor and are reflected in GSTR-2B of
Vijay Sales. (i) Life Insurance premium paid by the company for the 1,50,000
life insurance of factory employees as per the policy of
Compute the ITC that can be claimed by Vijay Sales in its GSTR-3B for the month of the company. There is no legal obligation for such
October to be filed by 20th November assuming that GST of ` 10 lakh is otherwise insurance for employees.
eligible for ITC.
(ii) Raw materials purchased for which invoice is missing 38,000
ANSWER but delivery challan is available
ITC to be claimed by Vijay Sales in its GSTR-3B for the month of October to be (iii) Raw materials purchased which are used for zero 50,000
filed by 20th November will be computed as under- rated supply
(iv) Works contractor's service used for repair of factory 30,000
Invoices Amount of ITC Amount of ITC building which is debited in the profit and loss
involved in the that can be account of company
`)
invoices (` availed (`
`)
(v) Company purchased the capital goods for ` 4,00,000 48,000
80 invoices furnished in GSTR-1 6 lakh 6 lakh and claimed depreciation of ` 44,800 (@ 10%) on the
[Refer Note 1] full amount of ` 4,48,000 under Income Tax Act, 1961

20 invoices not furnished in GSTR-1 4 lakh Nil

[Refer Note 2] 16
Let us suppose, subsequently, the suppliers of these 20 invoices furnish the details of said
Total 10 lakh 6 lakh invoices in their GSTR-1s for the month of November, the details shall be reflected in
GSTR-2B of Vijay Sales of November month and Vijay Sales can take credit of such invoices
in its GSTR-3B for the month of November.

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 INPUT TAX CREDIT 1
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Other information: case and thus, the ITC thereon is blocked [Second proviso to section
17(5)(b)].
(1) In the month of September of previous financial year, PQR Company Ltd.
availed ITC of ` 2,40,000 on purchase of raw material which was directly sent (2) ITC cannot be taken since invoice is missing and delivery challan is not a
to job worker's premises under a challan on 25th September (previous valid document to avail ITC [Section 16(2)(a)].
financial year). The said raw material has not been received back from the (3) ITC can be availed for making zero-rated supplies, notwithstanding that
job worker up to 30th April (current financial year). such supply may be an exempt supply [Section 16(2) of the IGST Act].
(2) All the above inward supplies except at S. No. (iii) above have been used in (4) ITC is blocked on works contract services when supplied for construction of
the manufacture of taxable goods. Inward supplies at S. No. (iii) above have an immovable property. However, “construction” includes only that repairs
been used in the manufacture of exempt goods. which are capitalized along with the said immovable property.
Compute the amount of net ITC that can be availed by PQR Company Ltd. for the In this case, since repairs of building is debited to P & L Account, the same
month of April with necessary explanations for the treatment of various items as does not amount to ‘construction’ and hence ITC thereon is available
per the provisions of the CGST Act. Subject to the information given above, assume [Section 17(5)(c)].
that all the other conditions necessary for availing ITC have been fulfilled.
(5) ITC is not available when depreciation has been claimed on the tax
component of the cost of capital goods under the Income-tax Act [Section
ANSWER
16(3)].
Computation of ITC available with PQR Company Ltd. for the month of April
(6) The principal is entitled to take ITC of inputs sent for job work even if the
Particulars `)
ITC (` said inputs are directly sent to job worker. However, where said inputs are
not received back by the principal within a period of 1 year of the date of
Life Insurance premium paid by the company on the life of Nil receipt of inputs by the job worker, it shall be deemed that such inputs had
factory employees [Note 1] been supplied by the principal to the job worker on the day when the said
Raw materials purchased [Note 2] Nil inputs were received by the job worker [Sub-sections (2) and (3) of section
19 17].
Raw materials used for zero rated supply [Note 3] 50,000
Hence, the ITC taken by PQR Company Ltd. in the month of September last
Work contractor’s service [Note 4] 30,000 year is valid and since one year period has yet not lapsed in April, there will
Capital goods purchased in respect of which depreciation is Nil be no tax liability on such inputs.
claimed on the tax component [Note 5]
ILLUSTRATION 3
Goods sent to job worker’s premises [Note 6] -
Siddhi Ltd. is a registered manufacturer engaged in taxable supply of goods. Siddhi
Total ITC available 80,000 Ltd. purchased the following goods during the month of January. The following
particulars are provided by the company:
Notes:
(1) ITC on life insurance service is available only when it is obligatory for an
employer to provide said services to its employees under any law for the
time being in force. Since it is not obligatory for the employer in the instant 17
Provisions of section 19 have been discussed in Chapter 16 – Job work in Module 3 of this
Study Material.

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 INPUT TAX CREDIT 1
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S. Particulars GST (`) Since the goods have been received in the month of March, ITC thereon can be
No. availed in the month of March and not in the month of January even though
the invoice for the same has been received in the month of January.
1. Capital goods purchased on which depreciation has been 15,000
taken on full value including GST paid thereon (3) Though ITC on motor vehicles used for further supply of such vehicles is not
blocked, ITC on goods destroyed for whatever reason is blocked [Clauses (a)
2. Goods purchased from Ravi Traders (Invoice of Ravi Traders 20,000 and (h) of section 17(5)].
is received in month of January but goods were received
(4) Section 17(5)(a) blocks ITC in respect of only those motor vehicles which are
after two months in the month of March)
used for transportation of persons albeit with certain exceptions. Thus, ITC on
3. Car purchased for making further supply of such car. Such 30,000 motor vehicles used for transportation of goods is allowed.
car is destroyed in accident while being used for test drive
by potential customers.
LET US RECAPITULATE
4. Truck purchased for delivery of finished products 80,000
Determine the amount of ITC that can be availed by Siddhi Ltd. for the month of
I. Definitions of certain key terms are summarized by
January by giving necessary explanations for treatment of various items as per the way of diagrams as under:
provisions of the CGST Act. Subject to the information given above, assume that all
BUSINESS
the other conditions necessary for availing ITC have been fulfilled.
ANSWER
includes Any activity incidental/ancillary to it
Computation of ITC available with Siddhi Ltd. for the month of January
Any trade/commerce, manufacture,
Any activity of same nature even if no
Particulars `)
GST (` profession, vocation etc. even if there
volume/continuity/frequency
is no monetary benefit
Capital goods [Note 1] Nil
Supply/acquisition of goods in connection with commencement/
Goods purchased from Ravi Traders [Note 2] Nil including capital goods & services closure of business

Cars purchased for making further supply [Note 3] Nil

Provision of facilities by to its members for consideration
Trucks purchased for delivery of output goods [Note 4] 80,000 club/association/society etc.

Total ITC available with Siddhi Ltd. 80,000 for a consideration

Admission to any premises

Notes: accepted in course/ furtherance of

Services as holder of an office trade, profession/vocation
(1) Since depreciation has been claimed on the tax component of the value of the
totalisator or a licence to book maker
capital goods, ITC of such tax cannot be availed in terms of section 16(3). Activities of a race club including by
or activities of a licensed book maker
way of
(2) ITC in respect of goods not received cannot be availed in terms of section in such club
16(2)(b). Any activity by Government /local
authority as public authorities Government includes both Central
and State Government

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 INPUT TAX CREDIT 1
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EXEMPT SUPPLY
INPUT TAX

means includes
Means Includes Excludes

Non-taxable
supply
Supply attracting NIL rate of Supply wholly exempt IGST
tax from Tax payable Tax payable
leviable
under forward under reverse
on import Composition
charge in respect charge
of goods tax
of supplies made
CGST IGST
to recipient

Goods Services
CGST SGST UTGST IGST

CAPITAL GOODS INPUTS INPUT SERVICES NON-RESIDENT TAXABLE PERSON

means means Principal

means means

goods value of which is capitalized Agent

goods other than services
in the books of account of person
capital goods any person supplying goods and/or as
claiming ITC
services occasionally
In any other
capacity
used/intended to be used
in the course/ furtherance
of business having NO fixed place of
business/residence in India

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 INPUT TAX CREDIT 1
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INWARD SUPPLY II. Provisions of section 16 relating to eligibility and

conditions for taking ITC read with relevant rules are
summarized below:
means

Registered He has valid tax

used/ if these
person to take invoice/debit
intended to SIX
receipt of goods and/or services by credit of tax note/prescribed tax
be used in conditions
paid on inward paying document.
the course are
supplies of or fulfilled:
goods and/or furtherance
services of business
purchase acquisition any other means

Details of He has Details of ITC in

with/without consideration Tax on
invoices/debit received respect of the said
such
notes uploaded by goods supply
supply
the supplier in his and/or communicated to
has
ZERO-RATED SUPPLY GSTR-1 (as services. the registered
been
amended in GSTR- paid person under
1A, if any) or using section 38 not
IFF and details restricted
communicated in
Form GSTR-2B

Goods delivered / services

provided to third person on the
Supply of goods and /or services for direction of the registered person
Export of goods and/or services authorised operations to SEZ deemed to be received by the
developer/ SEZ unit By registered person Ÿ ITC available
He has In OR to registered person [Bill to Ship
cash utilisation
furnished of ITC to Model]
return u/s 39

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 INPUT TAX CREDIT 1
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III. Provisions of section 17 relating to apportionment of

If depreciation credit and blocked credits read with relevant rules are
claimed on tax • ITC not allowed summarized as under:
component
A. Apportionment of credit

Attributable to
Used partly for business purposes
business and partly for
Goods received in lots • ITC allowed upon receipt of last non-business purposes
Goods and/or
lot services ITC available
only as
Used partly for making
taxable (including zero
rated supplies) supplies Attributable to taxable
• ITC pertaining to a particular FY supplies including zero
& partly for exempt
Time limit for availing can be availed by 30th November supplies rated supplies

ITC of next FY or filing of annual

lier.r
return, whichever is earlier. Exempt supplies include reverse charge supplies & transactions in securities and exclude activities
specified in Schedule III except sale of land and sale of building when entire consideration is
Exception received post completion certificate/first occupation, whichever is earlier and the value of such
activities/transactions as may be prescribed in respect of clause (a) of paragraph 8 of the said
Schedule.

Re-availment of ITC reversed

B. Special provisions for banking companies and NBFCs
earlier
x Balance will be
reversed in GSTR-3B.
x Restriction of 50%
shall not apply to
Option 1: Avail Option 2: Avail the tax paid on
x Reverse charge supplies received
™ Proportionate ITC to be proportionate 50% of eligible
supplies from another
reversed/paid with interest if ITC ITC
x Deemed supplies registration within
whole/part of value + tax of the same entity.
EXCEPTIONS without consideration
goods and /or services is not x Option once
x Additions made to
paid within 180 days of the exercised cannot be
value of supplies on withdrawn during
issuance of invoice.
account of supplier’s remaining part of
™ On payment, the ITC could be re- liability being incurred the year.
availed without any time limit. by the recipient of the
supply

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 INPUT TAX CREDIT 1
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C. Apportionment of common credit in case of inputs and input

services x C3 will be computed separately for ITC of CGST, SGST/ UTGST and IGST.
x š '1 + D2) will be computed for the whole financial year, by taking
T exempted turnover and aggregate turnover for the whole financial
year. If this amount is more than the amount already reversed every
Total IT on I + IS month, the differential amount will be reversed in any of the month till
September of succeeding year along with interest @ 18% from 1st April
of succeeding year till the date of payment.
x If this amount is less than the amount reversed every month, the
T1 T2 T3 C1
additional amount paid has to be claimed back as credit in the return
of any month till September of the succeeding year.
IT on I+IS used IT on I+IS used Remaining ITC
exclusively for Blocked credits u/s credited to ECrL
x Exempt supplies include reverse charge supplies & transactions in
exclusively for
non-business exempt supplies 17(5) = T- (T1 + T2 + T3) securities.
purposes x Exempt supplies exclude (i) activities specified in Schedule III except
sale of land and sale of building when entire consideration is received
post completion certificate/first occupation, whichever is earlier, and
C2 T4 supply of warehoused goods before clearance for home consumption*
(ii) services of accepting deposits, extending loans/advances where the
Common credit Credit attributable to I + IS consideration is interest/discount and the same are provided by
= C 1 – T4 used exclusively in taxable
supplies including ZRS
persons other than banking company/financial institution including
NBFC, and (iii) the value of supply of Duty Credit Scrips specified in
Notification No. 35/2017 CT (R) dated 13.10.2017
*Value of supply of warehoused goods before clearance for home
D1 D2 C3 consumption includes the value of supply of goods from Duty Free
Shops at arrival terminal in international airports to the incoming
passengers.
Credit attributable to exempt supplies- Remaining
common credit x Aggregate value of exempt supplies and total turnover exclude central
D1 = x C2 Credit attributable to non-
= C2 – (D1 + D2 ) excise duty, state excise duty, central sales tax and VAT.
business purpose if common I +
E = Value of ES during tax period IS used partly for business +
x Value of exempt supply in respect of land and building is the stamp
F = Total turnover in the State during tax non -business purposes
period D2 = 5% x C2 duty value and for security is 1% of the sale value of such security.
If no turnover during the tax period/values
not available, values for last period may be Eligible ITC
used. attributable to IT = Input tax
business & I = Inputs
taxable supplies
Ineligible ITC including ZRS IS = Input services
ECrl = Electronic Credit Ledger
ZRS = Zero rated supply
Total eligible ITC ES = Exempt supplies
To be reversed = T4 + C 3

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 INPUT TAX CREDIT 1
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D. Apportionment of common credit on capital goods

x Tm is to be computed during the useful life of capital goods which is

Total input tax (IT) on capital goods (CG)
five years from the date of invoice.
x Tie and Te are to be computed separately for ITC of CGST, SGST/
UTGST and IGST and declared in GSTR-3B

(a) (b) (c) x Exempt supplies include reverse charge supplies & transactions in
securities.

IT on CG used exclusively for IT on CG used IT on CG not covered under (a) & (b)
x Exempt supplies exclude:
non-business/exempt supplies exclusively for taxable denoted as ‘A’ and useful life of such
supplies including zero CG o 5 years from date of invoice
(i) activities specified in Schedule III except sale of land and sale of
rated supply (ZRS) building when entire consideration is received post completion
certificate/first occupation, whichever is earlier, and supply of
Not credited in Electronic warehoused goods before clearance for home consumption*
Credited to EcrL
Credit Ledger (ECrL) Credited to ECrL
(ii) services of accepting deposits, extending loans/advances where the
consideration is interest/discount and the same are provided by
Tc
persons other than banking company/financial institution including
NBFC, and
(iii) the value of supply of Duty Credit Scrips specified in Notification
Common credit on CG Ÿ Tc = ¦ (A of
common CG whose useful life remains No. 35/2017CT (R) dated 13.10.2017
Tm
during the tax period) *Value of supply of warehoused goods before clearance for home
Ÿ If CG under (a) subsequently gets covered
under (c), then ‘A’ = IT on CG under (a), and ‘A’ consumption includes the value of supply of goods from Duty Free
to be credited to ECrL. Tie = 5% of ‘A’ for every Shops at arrival terminal in international airports to the incoming
quarter or part thereof when CG was under (a)
and Tie to be added to output tax liability of the
passengers.
Common credit of CG for a tax
tax period when ‘A’ is claimed.
x Aggregate value of exempt supplies and total turnover exclude central
period during their useful life Ÿ If CG under (b) subsequently gets covered
under (c), then IT claimed on CG under (b) to be excise duty, state excise duty, central sales tax and VAT.
Tm = Tc/60
added to Tc
x Value of exempt supply in respect of land and building is the stamp
duty value and for security is 1% of the sale value of such security.
Te

Common credit towards exempted supplies

Te = x Tr

E o Aggregate value of exempt supplies during the

Added to output tax liability tax period; F o Total turnover in State during the
along with interest tax period. If no turnover during the tax
period/values not available, values for last tax
period may be used.

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 INPUT TAX CREDIT 1
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BLOCKED CREDITS PART-A

BLOCKED CREDITS PART-B

GI, Servicing, R&M Leasing/renting/hiring F&B, Outcat,

Ineligible Ves & AC relating to ineligible of MV, Ves or AC on BT, HS, C&PS,
MV
MV, Ves, AC which ITC is disallowed LI & HI Inward supplies received by taxable person for
WCS for construction of
immovable property construction of immovable property on his own
EXCEPTIONS EXCEPTIONS EXCEPTIONS EXCEPTIONS EXCEPTIONS account including when such supplies are used in the
course or furtherance of business
EXCEPTIONS
When used When used for- (i) When used (i) Where a
(i) When ineligible
for making (i) making for making an particular category EXCEPTIONS
MV, Ves or AC are
taxable further taxable outward taxable of such inward
used for eligible (A) WCS for P & M
supplies of- supply of such supply of the supplies is used
purposes (A) Construction of P or
(i) such MV Ves or AC same category for making an (B) WCS availed by a works
(ii) When received
(ii) trptn of (ii) passenger (sub- outward taxable contractor for further supply of M
by manufacturer of
passengers trptn service contracting) or supply of the same WCS [Sub-contracting] (B) Construction of
ineligible MV, Ves
(iii) imparting (iii) imparting as an element of category - [Sub- (C) Where value of WCS is not immovable property for
or AC
Credit available on
such exceptions

training on training on a taxable contracting] or as capitalized others

(iii) When received
driving such navigating/flying composite or an element of a
by a GI service (C) Value of construction
ineligible MV such Ves/AC mixed supply. taxable composite
provider in respect
(iv) trptn of (ii) When or mixed supply
of such ineligible
goods provided by an (ii) When provided
MV, Ves or AC
employer to its by an employer to
insured by it
employees its employees
under statutory under a statutory
obligation obligation Goods lost/ stolen/ Goods/ services Inward supplies
Inward supplies destroyed/ written off or used/ intended to used for
charged to disposed of by way of gift be used for CSR personal
composition levy or free samples related activities consumption

Credit available on the above exceptions

Ineligible MV-Motor vehicle for transportation
of persons with seating capacity of d 13 persons (A) Construction includes re-construction/
(including driver); Ves & AC-Vessel & Aircraft; renovation/ addition/ alterations/ repairs to
Membership of club & Travel benefits to Tax paid u/s 74 (Tax GI-General insurance; R&M-Repairs & the extent of capitalisation to said immovable
Inward supplies
health & fitness employees on short / not paid or maintenance; F&B-Food & beverages; Outcat- property.
received by NRTP
Centre vacation (LTC/HT) erroneously refunded Outdoor catering; BT-Beauty treatment; HS-
(B) P & M means apparatus, equipment, &
due to fraud etc.,) 129 Health services; C&PS-Cosmetic & plastic
EXCEPTION surgery; LI-Life insurance; HI-Health insurance; machinery fixed to earth by foundation or
(Amount paid for
EXCEPTION EXCEPTION NRTP-Non-resident taxable person; WCS- structural supports but excludes land,
release of goods and
conveyances in transit Works contract service; LTC-Leave Travel building/ other civil structures,
Goods which are detained) and Concession; HT-Home town; trptn- telecommunication towers, and pipelines laid
When provided by an When provided by an
imported 130 (Fine paid in lieu of transportation; P & M-Plant & machinery; ,P or outside the factory premises.
employer to its employer to its
by him confiscation) M-Plant or machinery
employees under a employees under a
statutory obligation statutory obligation

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IV. Provisions of section 18 read with relevant rules are Conditions for availing above credit:
(i) Filing of electronic declaration giving details of inputs held in stock/contained
summarized as under: in semi-finished goods and finished goods held in stock and capital goods on the
days immediately preceding the day on which credit becomes eligible.
A. Special circumstances enabling availing of credit
(ii) Declaration has to be filed within 30 days from becoming eligible to avail
credit.
Special circumstances enabling availing of credit (iii) Details in (i) above to be certified by a CA/ Cost Accountant if aggregate claim
of CGST, SGST/ IGST credit is more than ` 2,00,000.

B. Special circumstances leading to reversal of credit/payment of amount

Registered person
switching from Registered person's Person applying for Person obtaining
composition levy to exempt supplies registration within 30 voluntary Special circumstances leading to reversal
regular scheme of becoming taxable days of becoming liable registration of credit /payment of amount
payment of taxes for registration

Registered person (who has Supplies of registered Cancellation of Supply of capital goods
availed ITC) switching from person getting wholly registration (CG)/ plant and machinery
Credit entitled on Credit entitled on regular scheme of payment exempted from tax (P& M) on which ITC has
x Inputs as such held in stock x Inputs as such held in stock of tax to composition levy been taken
x Inputs contained in semi-finished goods held in x Inputs contained in semi-
stock finished goods held in
x Inputs contained in finished goods held in stock stock
x Capital goods [In case of exempt supply x Inputs contained in Amount to be paid is
Amount to be reversed is equivalent to ITC on : equivalent to higher of
becoming taxable Capital Goods used finished goods held in
x Inputs held in stock/ inputs contained in semi-finished or finished the following:
exclusively for such exempt supply] reduced
goods held in stock (i) ITC on CG or P&M
by 5% per quarter or part thereof from the less 5% per quarter or
x Capital goods
date of invoice part thereof from the
on the day immediately preceding the date of switch over/ date of
Note: ITC claimed shall be verified with the exemption/date of cancellation of registration date of invoice
corresponding details furnished by the (ii) Tax on transaction
corresponding supplier. value of such CG or P &
M
x If amount at (i)
Manner of reversal of credit on inputs and capital goods & other exceeds (ii), then
On the day On the day On the day
On the day conditions reversal amount will
immediately immediately immediately (i) Inputs Ÿ Proportionate reversal based on corresponding invoices. If such
immediately preceding be added to output
preceding the date preceding the preceding the invoices not available, prevailing market price on the effective date of switch
the date from which tax liability.
from which he date from which date of over/ exemption/cancellation of registration should be used with due
such supply becomes x Separate ITC reversal
becomes liable to pay he becomes registration certification by a practicing CA/ Cost Accountant is to be done for
taxable (ii) Capital goods Ÿ Reversal on pro rata basis pertaining to remaining
tax under regular liable to pay tax CGST, SGST/UTGST
useful life (in months), taking useful life as 5 years. and IGST
(iii) ITC to be reversed will be calculated separately for ITC of CGST, x Tax to be paid on
SGST/UTGST and IGST. transaction value
(iv) Reversal amount will be added to output tax liability of the registered when refractory
ITC, in all the above cases, is to be availed within 1 year from the date of issue of invoice
person. bricks, moulds, dies,
by the supplier. (v) Electronic credit/cash ledger will be debited with such amount. Balance jigs & fixtures are
ITC if any will lapse. supplied as scrap.

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 INPUT TAX CREDIT 1
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In case of sale, merger, amalgamation, lease or transfer of business, V. Provisions of section 20 and 21 read with relevant rules
unutilised ITC can be transferred to the new entity if there is a specific are summarized as under:
provision for transfer of liabilities to the new entity. The inputs and
capital goods so transferred should be duly accounted for by the
transferee in his books of accounts. ISD is basically an office meant to receive tax invoices towards receipt of
input services (including services taxable under reverse charge) and
In case of demerger, ITC is apportioned in the ratio of value of entire distribute the credit of taxes paid on such input services to supplier units
assets (including assets on which ITC has not been taken) of the new (having the same
ame PAN) proportionately
units as per the demerger scheme.

Details of change in constitution are to be furnished on common

portal along with request to transfer unutilised ITC. CA/Cost An ISD is required to
Accountant certificate is to be submitted certifying that change in obtain a separate x ITC of input services is
constitution has been done with specific provision for transfer of distributed only amongst those
registration even though
liabilities. recipients to whom the input
it may be separately
registered. The services are attributable.
Upon acceptance of such details by the transferee on the common x ITC is distributed amongst the
portal, the unutilized ITC is credited to his Electronic Credit Ledger. threshold limit of
registration is not operational units only and in the
applicable to ISD. ratio of turnover in a State/UT

Transfer of unutilised ITC on account of change in

constitution of registered person
of the recipient during the
relevant period to the
aggregate of turnover of all
Registered person having separate registrations for multiple places of
recipients during the relevant
business can transfer the unutilised ITC to any or all of the newly period to whom input service
registered place(s) of business in the ratio of the value of assets held x ISD should issue an ISD invoice being distributed is attributable.
by them at the time of registration. for distributing ITC. It should
x Relevant period is previous FY or
be clearly indicated in such
last quarter prior to the month of
invoice that it is issued only for
distribution of ITC. distribution for which turnover of
Value of assets means the value of the entire assets of the business x The ISD needs to issue a ISD all recipients is available.
irrespective of whether ITC has been availed thereon or not. credit note, for reduction in x Distributed ITC should not exceed
credit if the distributed credit the credit available for distribution.
The resgistered person should furnish the prescribed details on the gets reduced for any reason.
common portal within a period of 30 days from obtaining such x ITC available for distribution in
separate registrations. a month is to be distributed in
the same month.
x Details of distribution of credit If the ISD has distributed excess
Upon acceptance of such details by the newly registered person and all ISD invoices issued credit to any recipient, the excess
(transferee) on the common portal, the unutilised ITC is credited to should be furnished by ISD in will be recovered from the
his electronic credit ledger. monthly GSTR-6 within 13 days recipient with interest as if it was
after the end of the month.

Transfer of unutilised ITC on obtaining separate

registrations for multiple places of business
within a State/UT
tax not paid.

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VI. Provisions relating to utilization of ITC are 3. A garment factory receives a Government order for making uniforms for a
commando unit. This supply is exempt from tax under a notification issued
summarized as under: under section 11 of the CGST Act. The fabric is exclusively procured for such
supply, but thread and lining material for the collars are the ones which are
I. II.
used for other taxable products of the factory as well.
III.
ITC of ITC of The turnover (exclusive of taxes) of the other products of the factory and
IGST ITC of
CGST
IGST CGST SGST exempted uniforms in July is ` 4 crore and ` 1 crore respectively, the ITC on
SGST
thread and lining material procured in July is ` 5000 and ` 15000 respectively.
Calculate the amount of eligible ITC in respect of procurement of thread and
lining material.
CGST/SGST in 4. Ceramity Ltd. has following units:
any order & in IGST
IGST, only
any proportion when ITC of
CGST = NIL
A: Factory in Tumkur, Karnataka; turnover of ` 27 crores in preceding F.Y.;
B: Service centre in Hyderabad, Telangana; turnover of ` 1 crore in
preceding F.Y.;
ITC of IGST = C: Service centre in Chennai, Tamil Nadu; turnover of 2 crores in preceding
NIL
F.Y.;
Ceramity Ltd.’s corporate office functions as an ISD. It has to distribute ITC of
ITC of ITC of ` 9 lakh for May of current financial year. Of this, an invoice involving tax of
CGST SGST/
SGST/ UTGST
` 3 lakh pertains to technical consultancy for Tumkur unit.
CGST
UTGST
Explain in brief in what manner should the ITC be distributed?
5. A registered supplier of taxable goods supplied goods valued at
TEST YOUR KNOWLEDGE ` 2,24,000 (inclusive of CGST ` 12,000 and SGST ` 12,000) to Mohan Ltd. under
forward charge on 15th August for which tax invoice was also issued on the
1. Flamingo Ltd. is an airline providing passenger transportation services by air. same date. The inputs were received by Mohan Ltd. on 15th August. Mohan
The company offers meals of premium quality to passengers on board the Ltd. availed credit of ` 24,000 on 20th September by filing Form GSTR-3B for
aircraft. The value of such meals is compulsorily included in the price of the August month. However, Mohan Ltd. did not make any payment towards such
air ticket. The company avails outdoor catering services of Dhaniaram Pvt. supply along with tax thereon to the supplier. Is Mohan Ltd. eligible to avail
Ltd. for providing such meals to its customers. ITC on such supply?
Examine whether Flamingo Ltd. can avail ITC on such outdoor catering service Discuss ITC provisions if Mohan Ltd. makes the payment of
availed by it. ` 2,24,000 to the supplier on 18th March of next calendar year.
2. Jumbo Sales Pvt. Ltd., a supplier of readymade garments, announced ‘Buy 6. State the conditions that need to be followed by an input service distributor for
One get Two free’ offer on Men’s T-Shirts on Diwali to boost its sales. You are distribution of credit.
required to advise the company on the availability of ITC in respect of inward
supplies used in relation to such supply.

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7. With reference to the provisions of section 17, examine the availability of ITC
Particulars Amount
in the following independent cases: (`)
(i) MBF Ltd., an automobile company, has availed works contract service
Outward supply of taxable goods (exclusive of taxes) 70,000
for construction of a foundation on which a machinery (to be used in
the production process) is to be mounted permanently. Outward supply of exempt goods 40,000

(ii) Shah & Constructions procured cement, paint, iron rods and services of Total turnover 1,10,000
architects and interior designers for construction of a commercial
Inward supplies GST paid (`)
complex for one of its clients.
Capital goods used exclusively for taxable outward supply 2,000
(iii) ABC Ltd. availed maintenance & repair services from “Jaggi Motors” for
a truck used for transporting its finished goods. Capital goods used exclusively for exempt outward supply 1,800
8. On 25th August, M/s Agarwal & Agarwal, a registered supplier of taxable goods Capital goods used for both taxable and exempt outward 4,200
located in Bengaluru (Karnataka), purchased one machine for supply
` 12,39,000 (including IGST) from one supplier of Maharashtra who issued the
invoice on the same date. M/s Agarwal & Agarwal received the machinery on Subject to the information given above, assume that all the other conditions
the same day and availed ITC for the eligible amount. necessary for availing ITC have been fulfilled.
M/s Agarwal & Agarwal used the machine in the process of manufacture of 11. X, a manufacturer of roofing sheets, is having ` 1,60,000 as opening balance of
taxable goods. However, M/s Agarwal & Agarwal sold this machine to
ITC for June month. He provides the following information pertaining to the
Mr. Suresh Kumar of Andhra Pradesh on 20th August of next year for ` 7,50,000
goods and services procured during the month of June:
(excluding lGST).
(1) Input tax on raw materials is ` 40,000. The raw material is used for
With reference to section 18(6), determine the amount payable, if any, by
making both taxable and exempt supplies.
M/s Agarwal & Agarwal at the time of sale of the machine.
(2) Input tax on catering services procured from ‘Harvest Caterers’ in
Note: The applicable rate of IGST is 18%.
connection with his housewarming ceremony is ` 10,000.
9. Krishna Motors is a car dealer selling cars of an international car company. It
(3) Input tax on raw materials used exclusively in manufacture of exempt
also provides maintenance and repair services of the cars sold by it as also of
supplies of ` 2 lakh is ` 20,000.
other cars. It seeks your advice on the availability of ITC in respect of the cars
purchased from the manufacturer for making further supply of such cars. Two (4) Input tax on cosmetic and plastic surgery of manager of the factory is
of such cars are destroyed in accidents while being used for test drive by ` 30,000.
potential customers. Total taxable turnover for the month of June is ` 60 lakh exclusive of tax.
10. With the help of information given below in respect of a manufacturer for the Compute the ITC credited for the month of June to the Electronic Credit Ledger
month of September, compute the ITC credited to the Electronic Credit Ledger, and net GST payable from Electronic Cash Ledger by X for the month of June.
for the month. Also, compute the amount of ITC to be added to the output tax Rate of GST is 18% (Ignore CGST, SGST or IGST and provisions of rule 86B for
liability for the month of September. Ignore interest, if any. the sake of simplicity).

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Subject to the information given above, assume that all the other conditions 13. George Pvt. Ltd., a registered supplier of goods at Kerala who pays GST under
necessary for availing ITC have been fulfilled. All the purchases are made from regular scheme, has made the following transactions (exclusive of tax) during
registered suppliers. a tax period:

12. Sarani Weavers, at Pune, Maharashtra is a registered input service distributor Purchases (` ) Sales (` ) Tax Rate
and intends to distribute ITC for the month of March. The following are the
details available for such distribution: 5,00,000 10,00,000 IGST - 18%
[Purchases made from [Sale made to registered CGST – 9%
Branch Turnover of the last ITC specifically attributable registered person in New person in New Delhi] SGST- 9%
quarter (`) to the branch (`) Delhi]

Ganganagar Branch 10,00,000 IGST – ` 12,000 2,50,000 8,00,000

(Rajasthan) CGST – ` 3,000 [Purchases made from [Sales made to registered
SGST –` 3,000 registered person in person in Trivandrum,
Trivandrum, Kerala] Kerala]
Madhugiri Branch 5,00,000 Nil
(Karnataka) The company has complied with all the conditions for availing the ITC. The
following further information regarding various opening balances available
Kosala Branch (UP) 15,00,000 Nil
with it for the tax period, is provided by the company:
Mumbai Branch 20,00,000 IGST – ` 1,50,000
(Maharashtra) CGST– ` 15,000 CGST (` ) SGST (` ) IGST (`)
SGST– ` 15,000 50,000 30,000 1,00,000
lTC available on input services used commonly for all branches is as under:
Compute maximum net CGST, SGST and IGST payable from the Electronic Cash
CGST - ` 60,000
Ledger by George Pvt. Ltd. for the tax period as also ITC to be carried forward
SGST - ` 60,000 to next tax period, if any.
IGST - ` 1,20,000 14. Quanto Enterprises is not required to register under the CGST Act. However, it
lTC (IGST) of ` 10,000 pertaining to March (last year) was inadvertently not applied for voluntary registration on 17th September. Registration certificate
distributed. Whether the same can be considered for distribution in March this has been granted to the firm on 25th September. The CGST and SGST liability
year? of the firm for the month of September is ` 24,000 each. The firm is not
engaged in making inter-State outward taxable supplies.
Madhugiri, Karnataka branch uses input services to manufacture exempted
products. Turnover excludes duties & taxes payable to Central and State Quanto Enterprises provides the following information regarding capital goods
Government. and inputs held in stock by it as on 24th September:

Determine the manner of input tax distribution. Particulars Amount (`)

nd
Inputs procured on 2 September lying in stock

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 INPUT TAX CREDIT 1
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- CGST @ 6% 4,500 Particulars Turnover for the quarter Turnover for the quarter
ended 30th June (`) ended 30th September (`)
- SGST @ 6% 4,500
Input received on 21st July contained in semi-finished goods ‘P’ 60,00,000 50,00,000
held in stock: ‘Q’ 17,65,000 17,00,000
- CGST @ 6% 7,500
- SGST @ 6% 7,500 Particulars Stock as on 30th Stock as on 30th Stock as on 31st
Value of inputs contained in finished goods held in June (`) September (`) October (`)
stock- ` 2,00,000 [Such inputs were procured on 19th
‘P’ 25,00,000 10,00,000 3,60,000
September last year. Invoice for the goods was also issued
on the same day] ‘Q’ 10,00,000 2,00,000 1,20,000
- IGST @ 18% 36,000
The entire stock of the product’s ‘P’ and ‘Q’ available with the firm as on 30th
Inputs valued at ` 50,000 procured on 13th September lying September is purchased during the said half year except a consignment of
in stock: product ‘P’ valuing ` 3,00,000, which was purchased in the April month of the
- IGST @ 18% 9,000 preceding financial year. The said stock could not be sold during the month of
th October. In the current financial year, in the month of October, no purchases
Capital goods procured on 12 September
were made, and the products were sold with a profit margin of 20% on sales
-CGST @ 6% 12,000 value [exclusive of taxes].
-SGST @ 6% 12,000 The extract of the only bill book maintained by the firm showed the following
details-
You are required to compute the net GST payable from Electronic Cash Ledger
by Quanto Enterprises for the month of September assuming that conditions Bill Date Value of products (exclusive of taxes)
for availing ITC are fulfilled subject to the information given above. No.
‘P’ (`) ‘Q’ (` ) Total (`)
You are also required to mention reasons for treatment of all above items.
2306 1st October 2,00,000 3,000 2,03,000
15. B & D Company, a partnership firm, registered in Nagpur, Maharashtra is a
st
wholesaler of taxable product ‘P’ and product ‘Q’ exempted by way of a 2307 1 October 1,33,000 5,250 1,38,250
notification. The firm supplies these products only in the eastern part of nd
2308 2 October 67000 39,250 1,06,250
Maharashtra. All the procurements (both goods and services) of the firm are
from the suppliers registered under regular scheme in the State of Maharashtra. 2309 3rd October 58,750 33,750 92,500
The firm pays tax under composition scheme. th
2310 5 October 1,00,000 - 1,00,000
B & D Company has furnished the following details with respect to its turnover th
2311 6 October 94,000 6,000 1,00,000
(exclusive of taxes) and stock (exclusive of taxes):

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 INPUT TAX CREDIT 1
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2312 6th October - 17,000 17,000 (d) Machinery ‘Y’ purchased on 1st October four 4,00,000 72,000
th
years ago for being exclusively used in
2313 8 October 50,000 6,000 56,000 manufacturing product ‘Beta’. From 1st
th October, such machinery will also be used
2314 9 October 60,000 9,000 69,000
for manufacturing product ‘Gama’.
2315 …………….. …………….. …………….. ……………..
(e) Machinery ‘Z’ purchased on 1st October two 3,00,000 54,000
………. …………….. …………….. …………….. …………….. years ago for being used in manufacturing
all the three products
All the above amounts are exclusive of taxes, wherever applicable
(f) Raw Material used for manufacturing 1,50,000 27,000
Compute the ITC to be credited to the Electronic Credit Ledger of the B & D ‘Alpha’ purchased on 5th October
Company, when it exits composition scheme and becomes liable to pay tax
under regular scheme, in accordance with the provisions of section 18(1)(c). (g) Raw Material used for manufacturing ‘Beta’ 2,00,000 36,000
purchased on 10th October
Note: Make suitable assumptions wherever required. Stock is valued at cost
price. (h) Raw Material used for manufacturing 1,00,000 18,000
‘Gama’ purchased on 15th October
16. XYZ Pvt. Ltd. is a manufacturing company registered under GST in the State of
Uttar Pradesh. It manufactures two taxable products ‘Alpha’ and ‘Beta’ and Compute the following:
one exempt product ‘Gama’. On 1st October, while product ‘Beta’ got exempted
(i) Amount of ITC to be credited to Electronic Credit Ledger, for the month
through an exemption notification, exemption available on ‘Gama’ got
of October
withdrawn on the same date. The turnover (exclusive of taxes) of ‘Alpha’, ‘Beta’
and ‘Gama’ in the month of October was ` 9,00,000, ` 10,00,000 and (ii) Amount of aggregate value of common credit (Tc)
` 6,00,000 respectively. (iii) Common credit attributable to exempt supplies, for the month of
XYZ Pvt. Ltd. has furnished the following details: October
(iv) GST liability of the company payable through Electronic Cash Ledger,
S. No. Particulars Price (`) GST (`)
for the month of October if opening balance of ITC is nil.
(a) Machinery ‘U’ purchased on 1st October for 2,00,000 36,000
Note: Assume that all the procurements made by the company are from States
being used in manufacturing all the three
other than Uttar Pradesh. Similarly, the company sells all its products in States
products
other than Uttar Pradesh. Rate of IGST is 18%. Subject to the information
(b) Machinery ‘V’ purchased on 1st October for 1,00,000 18,000 given above, assume that all the other conditions necessary for availing ITC
being used in manufacturing product have been fulfilled. Ignore interest, if any and make suitable assumptions
‘Alpha’ and ‘Gama’ wherever required.
(c) Machinery ‘W’ purchased on 1st October for 3,00,000 54,000 17. ‘All-in-One Store’ is a retail chain of departmental store having presence in
being exclusively used in manufacturing almost all metro cities across India. Both exempted as well as taxable goods
product ‘Beta’

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 INPUT TAX CREDIT 1
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are sold in such Stores. The Stores operate in rented properties. All-in-One (x) GST paid on inputs used for personal purpose – ` 5,000
Stores pay GST under regular scheme.
(xi) GST paid on rent a cab services availed for transportation of employees,
In Mumbai, the Store operates in a rented complex, a part of which is used by which is not obligatory under any law – ` 4,000
the owner of the Store for personal residential purpose.
(xii) GST paid on items given as free samples – ` 4,000
All-in-One Store, Mumbai furnishes following details for a month:
Given the above available facts, you are required to compute the following:
(i) Aggregate value of various items sold in the Store:
A. Input tax credit (ITC) credited to the Electronic Credit Ledger
Taxable items – ` 42,00,000
B. Common Credit
Items exempted vide a notification – ` 12,00,000
C. ITC attributable towards exempt supplies out of common credit
Items not leviable to GST – ` 3,00,000
D. Eligible ITC out of common credit
(ii) Mumbai Store transfers to another All-in-One Store located in Goa
certain taxable items for the purpose of distributing the same as free E. Net GST payable from Electronic Cash Ledger for the month if opening
samples. The value declared in the invoice for such items is ` 5,00,000. balance of ITC is nil.
Such items are sold in the Mumbai Store at ` 8,00,000. Note:
(iii) Aggregate value of various items procured for being sold in the Store: (1) GTA has not exercised the option to pay tax itself. Tax is payable on such
Taxable items – ` 55,00,000 services @ 5%. Rate of GST in all other cases is 18% (Ignore CGST, SGST
or IGST for the sake of simplicity).
Items exempted vide a notification – ` 15,00,000
(2) All the inward supplies are procured from registered suppliers.
Items not leviable to GST – ` 5,00,000
(3) Wherever applicable, the amounts given are exclusive of taxes.
(iv) Freight paid to goods transport agency (GTA) for outward transportation
of taxable items – ` 1,00,000 (4) Subject to the information given above, assume that all the other
conditions necessary for availing ITC have been fulfilled.
(v) Freight paid to GTA for outward transportation of exempted items –
` 80,000 18. Vansh Shoppe is a retail supplier of both taxable and exempted goods,
registered under GST in the State of Rajasthan. Vansh Shoppe has furnished
(vi) Freight paid to GTA for outward transportation of non-taxable items -
the following details for a month:
` 20,000
(`)
(vii) Monthly rent payable for the complex – ` 5,50,000 (one third of total
space available is used for personal residential purpose). (1) Details of sales:
(viii) Activity of packing the items and putting the label of the Store along with Supply of taxable goods 50,00,000
the sale price has been outsourced. Amount paid for packing of all the Supply of goods not leviable to GST 10,00,000
items – ` 2,50,000
(2) Details of goods purchased for being sold in the
(ix) Salary paid to the regular staff at the Store – ` 2,00,000 shop:

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Taxable goods 45,00,000 There is no opening balance in the electronic cash ledger or electronic credit
ledger. Subject to the information given above, assume that all the other
Goods not leviable to GST 4,00,000
conditions necessary for availing ITC have been fulfilled.
(3) Details of expenses:
You are required to compute the following:
Monthly rent payable for the shop 3,50,000
(1) Input Tax Credit (ITC) credited to Electronic Credit Ledger
Telephone expenses paid 50,000
(2) Common credit available for apportionment
(` 30,000 for bills of land line phone installed at the
shop and ` 20,000 towards mobile phone bills of the (3) ITC attributable towards exempt supplies out of common credit
employees – Mobile phones are also given to (4) Net GST payable from Electronic Cash Ledger for the month
employees for official use)
19. Mr. Rajesh Surana has a proprietorship firm in the name of Surana & Sons in
Audit fees paid to a Chartered Accountant 60,000
Jaipur. The firm, registered under GST in the State of Rajasthan, manufactures
(` 35,000 for the statutory audit of preceding
three taxable products ‘M’, ‘N’ and ‘O’. Tax on ‘N’ is payable under reverse
financial year and ` 25,000 for certification work)
charge. The firm also provides taxable consultancy services.
Premium paid on health insurance policies taken for 10,000
The firm has provided the following details for a tax period:
specified employees of the shop as per company
policy.
Particulars (` )
Freight paid to goods transport agency (GTA) [service 50,000
taxable @ 5%] for outward transportation of goods Turnover of ‘M’ (excluding export sales) 14,00,000
not leviable to GST
Turnover of ‘N’ 6,00,000
Freight paid to goods transport agency (GTA) [service 1,50,000
taxable under reverse charge @ 5%] for outward Turnover of ‘O’ (excluding export sales) 10,00,000
transportation of taxable goods
Export of ‘M’ with payment of IGST (not eligible to avail 2,50,000
Goods given as free samples (Not included in taxable 5,000 benefit of merchant exports under Notification No. 41/2017)
goods value of 45,00,000)
Export of ‘O’ under letter of undertaking 10,00,000
All the above amounts are exclusive of all kinds of taxes, wherever applicable.
Consultancy services provided to unrelated clients located in 20,00,000
All the outward and outward supplies made by Vansh Shoppe are from/to foreign countries. In all cases, the consideration has been
registered suppliers within Rajasthan. received in convertible foreign exchange

Assume, wherever applicable, for purpose of reverse charge payable by Vansh Sale of building (excluding stamp duty of ` 2.50 lakh, being 1,20,00,000
Shoppe, the CGST, SGST and IGST rates as 2.5%, 2.5% and 5% respectively. 2% of value) [Entire consideration is received post issuance
CGST, SGST and IGST rates to be 6%, 6% and 12% respectively in all other of completion certificate; building was occupied thereafter]
cases.

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For a given month, the receipts (exclusive of GST) of M/s XYZ are as follows:
Interest received on investment in fixed deposits with a 4,00,000
bank - Hire charges for excavators - ` 18,00,000

Sale of shares (Purchase price ` 2,40,00,000/-) 2,50,00,000T - Service charges for supply of manpower for operation of the excavator -
` 20,000
Legal services received from an advocate in relation to 3,50,000
- Service charges for soil testing and seismic evaluation at three sites -
product ‘M’
` 2,50,000
Common inputs and input services used for supply of goods 50,00,000 The GST paid during the said month on services received by M/s XYZ is as
and services mentioned above [Inputs - ` 35,00,000; Input follows:
services - ` 15,00,000]
- Maintenance for excavators - ` 1,00,000
With the help of the above-mentioned information, compute the net GST - Health insurance for excavator operators - ` 11,000
liability of Surana & Sons, payable from Electronic Credit Ledger and/or
- Scientific and technical consultancy for soil testing and seismic
Electronic Cash Ledger, as the case may be, for the tax period.
evaluation - ` 1,00,000
Note: Assume that rate of GST on goods and services are 12% and 18% Compute the net GST payable by M/s XYZ from Electronic Cash Ledger for the
respectively (Ignore CGST, SGST or IGST for the sake of simplicity). Subject to given month.
the information given above, assume that all the other conditions necessary for
Assume the rates of GST to be as under:
availing ITC have been fulfilled. Turnover of Surana & Sons was ` 85,00,000 in
the preceding financial year. Hiring out of excavators – 12%

20. M/s XYZ, a registered supplier, supplies the following goods and services for Supply of manpower services and soil-testing and seismic evaluation
construction of buildings and complexes - services – 18%

- excavators for required period at a per hour rate (Ignore CGST, SGST or IGST for the sake of simplicity).
Note: - Opening balance of ITC of GST is nil.
- manpower for operation of the excavators at a per day rate
21. V-Supply Pvt. Ltd. is a registered manufacturer of auto parts in Kolkata, West
- soil-testing and seismic evaluation at a per sample rate.
Bengal. The company has a manufacturing facility registered under Factories
The excavators are invariably hired out along with operators. Similarly, Act, 1948 in Kolkata. It procures its inputs indigenously from both registered
excavator operators are supplied only when the excavator is hired out. and unregistered suppliers located within as well as outside West Bengal as
M/s XYZ receives the following services: also imports some raw material from China.
The company reports the following details for a tax period:
- Maintenance services for excavators;
- Health insurance for operators of the excavators; Payments (`) Receipts (`))
(in lakh) (in lakh)
- Scientific and technical consultancy for soil testing and seismic
evaluation. Raw material 3.5 Sales 15

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(iii) Transportation charges comprise of ` 0.60 lakh paid to Goods Transport

Consumables 1.25
Agency (GTA) in Kolkata and ` 0.10 lakh paid to horse pulled carts. GST
Transportation charges for 0.70 applicable on the services of GTA is 5% payable under reverse charge.
bringing the raw material to (iv) Life insurance policies for specified employees have been taken by the
factory company to fulfill a statutory obligation in this regard. The life insurance
service provider is registered in West Bengal.
Salary paid to employees on rolls 5.0
(v) Audit fee is paid to M/s Goyal & Co., a firm of Chartered Accountants
Premium paid on life insurance 1.60 registered in West Bengal, for the statutory audit of the preceding
policies taken for specified financial year.
employees
(vi) Telephone expenses pertain to bills for landline phone installed at the
Audit fee 0.50 factory and mobile phones given to employees for official use. The
telecom service provider is registered in West Bengal.
Telephone expenses 0.30
(vii) Bank charges are towards company’s current account maintained with a
Bank charges 0.10 Private Sector Bank registered in West Bengal.

All the above amounts are exclusive of all kinds of taxes, wherever applicable. (viii) The breakup of sales is as under:
However, the applicable taxes have also been paid by the company. Sales in West Bengal – ` 7 lakh
Further, following additional details are furnished by the company in respect of Sales in States other than West Bengal – ` 3 lakh
the payments and receipts reported by it:
Export under LUT – ` 5 lakh
(i) Raw material amounting to ` 0.80 lakh is procured from Bihar and
(ix) The opening balance of ITC with the company for the tax period is:
` 1.5 lakh is imported from China. Basic customs duty of ` 0.15 lakh,
social welfare surcharge of ` 0.015 lakh and integrated tax of ` 0.2997 CGST - ` 0.15 lakh
lakh are paid on the imported raw material. SGST - ` 0.08 lakh
Remaining raw material is procured from suppliers located in West IGST - ` 0.09 lakh
Bengal. Out of such raw material, raw material worth ` 0.30 lakh is
Compute (i) Total ITC available with V-Supply Pvt. Ltd. for the tax period; and
procured from unregistered suppliers; the remaining raw material is
(ii) Net GST payable [CGST, SGST or IGST, as the case may be] from Electronic
procured from registered suppliers.
Cash Ledger by V-Supply Pvt. Ltd. for the tax period.
Further, raw material worth ` 0.05 lakh purchased from registered supplier
located in West Bengal has been destroyed due to seepage problem in the Note-
factory and thus, could not be used in the manufacturing process. (i) CGST, SGST & IGST rates to be 9%, 9% and 18% respectively, wherever
(ii) Consumables are procured from registered suppliers located in Kolkata applicable.
and include diesel worth ` 0.25 lakh for running the generator in the (ii) The necessary conditions for availing ITC have been complied with by V-
factory. Supply Pvt. Ltd., wherever applicable.
You are required to make suitable assumptions, wherever necessary.

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22. ABC Company Ltd. of Bengaluru is a manufacturer and registered supplier of (ii) Supply of manpower operator service 18%
machineries. It has provided the following details for a tax period:
(Ignore CGST, SGST or IGST for the sake of simplicity)

Inward supplies GST paid Compute the amount of ITC available as also the net GST payable from the
(` ) Electronic Cash Ledger for the tax period by giving necessary explanations for
treatment of various items.
Health insurance of factory employees as required by the 20,000
Note: Opening balance of ITC is Nil.
Factories Act, 1948
23. Pari Ltd. of Jodhpur (Rajasthan) is a registered manufacturer of cosmetic
Raw materials for which invoice has been received and GST 18,000 products. Pari Ltd. has furnished following details for a tax period:
has also been paid for full amount but only 50% of material
has been received, remaining 50% will be received in next Particulars (`))
month
Details of Outward supplies
Work contractor’s service used for installation of plant and 12,000
machinery (i) Supplies in Rajasthan 8,75,000

Purchase of manufacturing machine sent directly to job 50,000 (ii) Supplies in States other than Rajasthan 3,75,000
worker’s premises under delivery challan
(iii) Export under LUT 6,25,000
Purchase of car used by director exclusively for the purpose of 25,000
business meetings Details of expenses

Outdoor catering service availed for business meetings 8,000 (i) Raw materials purchased from registered suppliers 1,06,250
located in Rajasthan
ABC Company Ltd. also provides service of hiring of machines along with
(ii) Raw materials purchased from unregistered suppliers 37,500
manpower for operation. As per trade practice, machines are always hired out
located in Rajasthan
along with operators and also operators are supplied only when machines are
hired out. (iii) Raw materials purchased from Punjab from registered 1,00,000
Outward supply (exclusive of GST) for the tax period are as follows: supplier

(iv) Integrated tax paid on raw materials imported from 22,732

Particulars Value (`)
USA
Hiring receipts for machine 5,25,000
(v) Consumables purchased from registered suppliers 1,56,250
Service charges for supply of manpower operators 2,35,000 located in Rajasthan including high speed diesel
(Excise and VAT paid) valuing ` 31,250 for running the
Assume the rates of GST to be as under: machinery in the factory

(i) Service of hiring of machine 12%

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(3) R Refinery requires a special packing for the valves. Cost of special
(vi) Monthly rent for the factory building to the owner in 1,00,000
Rajasthan packing is ` 10,000 (for 10 valves).

(4) Flowchem arranges for erection and testing of the valves supplied by it at
(vii) Salary paid to employees on rolls 6,25,000
R Refinery’s site. Cost of erection etc. is ` 15,000 (for 10 valves).
(viii) Premium paid on life insurance policies taken for 2,00,000
(5) Goods are dispatched with tax invoice on 20th July and they reach the
specified employees. Life insurance policies for
specified employees have been taken by Pari Ltd. to destination at Abu-Road on 21stJuly. Lorry freight of` 5,000 has been
fulfill a statutory obligation in this regard. The life paid by R Refinery directly to the lorry driver.
insurance service provider is registered in Rajasthan.
Assume CGST and SGST rates to be 9% each and IGST rate to be 18%. Opening
All the above amounts are exclusive of all kinds of taxes, wherever balance of ITC of IGST is Nil, CGST is ` 20,000 and SGST is ` 20,000. All the
applicable. However, the applicable taxes have also been paid by Pari Ltd. given amounts are exclusive of GST, wherever applicable.

The opening balance of ITC with Pari Ltd. for the given tax period is- Flowchem has also undertaken following local transactions during the month
CGST ` 20,000 of July on which it has paid CGST and SGST as under:
SGST ` 15,000
S. Particulars Amount Amount
IGST ` 15,000 No. paid CGST paid SGST
(` ) (` )
Assume CGST, SGST and lGST rates to be 9%, 9% and 18% respectively,
wherever applicable. 1. Availed services of works contractor to 5,000 5,000
Assume that all the other necessary conditions to avail the ITC have been erect foundation for fixing the
complied with by Pari Ltd., wherever applicable. machinery to earth, in the factory.

Compute (i) ITC available with Pari Ltd. for the tax period; and (ii) Net GST 2. It has entered into an agreement with a 2,500 2,500
payable [CGST, SGST or IGST, as the case may be] from Electronic Cash Ledger travel company to provide home travel
by Pari Ltd. for the tax period. facility to its employees when they are
on leave.
24. Flowchem Palanpur (Gujarat) has entered into a contract with R Refinery, Abu
Road (Rajasthan) on 1stJuly to supply 10 valves on FOR basis. The following 3. It has entered into an agreement with a 2,000 2,000
information is provided in this regard: fitness center to provide wellness
services to its employees after office
(1) List price per valve is ` 1,00,000, exclusive of taxes. hours
(2) One of the conditions of the contract is that Flowchem should ensure a
Work out the net GST [CGST, SGST or IGST, as the case may be] payable from
two stage third party inspection for the valves during the manufacturing
Electronic Cash Ledger of Flowchem, Palanpur (Gujarat) for the month of July
process. Cost of two stage inspection of ` 15,000 (for 10 valves) is directly
after making suitable assumptions, if any.
paid by R Refinery to testing agency.

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ITC shall be available to the supplier for the inputs, input services and capital
ANSWERS goods used in relation to supply of goods or services or both as part of such
offers.
Therefore, the given case is not the case of individual supplies of free goods,
1. As per section 17(5)(b)(i), ITC on supply of inter alia food and beverages and
but a case of three individual supplies where a single price is being charged
outdoor catering is blocked. However, ITC in respect of such goods or
for the entire supply. Thus, Jumbo Sales Pvt. Ltd. will be entitled to avail ITC
services or both shall be available where an inward supply of such goods or
on inputs, input services and capital goods used in relation to supply of T-
services or both is used by a registered person for making an outward taxable
Shirts as part of such offer.
supply of the same category of goods or services or both or as an element of
a taxable composite or mixed supply. 3. Thread and lining material are inputs which are used for making taxable as
well as exempt supplies. Therefore, credit on such items will be apportioned
In the given case, Flamingo Ltd. is availing outdoor catering service to provide
and credit attributable to exempt supplies will be reversed in terms of
outdoor catering (meals) to the passengers on board the aircraft. Since ITC
rule 42.
in respect of outdoor catering is available if the same is used for making an
outward taxable supply as an element of a taxable composite or mixed supply, Credit attributable to exempt supplies = Common credit x (Exempt turnover/
Flamingo Ltd. can avail ITC on outdoor catering service procured by it as it Total turnover)
will be considered as supply of an ancillary service to the passenger Common credit = ` 15,000 + ` 5,000 = ` 20,000
transportation services supplied by it (principal supply).
Exempt turnover = ` 1 crore
2. It may appear at first glance that in case of offers like “Buy One, Get One
Total turnover = ` 5 crore [` 1 crore + ` 4 crore]
Free”, one item is being “supplied free of cost” without any consideration.
Credit attributable to exempt supplies = (` 1 crore /` 5 crore) x ` 20,000 =
As per clause (a) of section 7(1) read with clause (c) thereof, goods or services
` 4,000.
which are supplied free of cost (without any consideration) shall not be
treated as supply except in case of activities mentioned in Schedule I. Ineligible credit of ` 4,000 will be reversed in Form GSTR-3B. Credit of
` 16,000 will be eligible credit for the month of July.
Circular No. 92/11/2019 GST dated 07.03.2019 has clarified the entitlement of
ITC in the hands of supplier in respect of sales promotional scheme like ‘buy 4. As per section 20 read with rule 39 relating to ITC, -
one get one free’. Such promotional offers are not individual supplies of free • ` 3 lakh is attributable to Tumkur unit, and will be transferred to Tumkur
goods, but a case of two or more individual supplies where a single price is unit only.
being charged for the entire supply. It can at best be treated as supplying
• ` 6 lakh have to be distributed among Tumkur unit and the service
two goods for the price of one.
centres in Hyderabad and Chennai in proportion of their turnover in the
Taxability of such supply will be dependent upon as to whether the supply is previous FY, that is, in 2023-24
a composite supply or a mixed supply and the rate of tax shall be determined o Tumkur unit will get (27 crore / 30 crore) x 6 lakh = ` 5.4 lakh;
as per the provisions of section 8.
o Hyderabad service centre will get (1 crore /30 crore) x 6 lakh =
` 20,000; and

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o Chennai service centre will get (2 crore /30 crore) x 6 Lakh = turnover of the recipient in a State/ Union Territory to the aggregate
` 40,000. turnover of all the recipients to whom the input service is attributable
Ceramity Ltd. should issue ISD invoices (from GSTN obtained separately for and which are operational during the current year.
ISD) for distributing ITC (as calculated above) to its units. It should be clearly (vi) ITC pertaining to input services which are common for all units, is
indicated in the invoices that the same are issued only for distribution of ITC.
distributed to all the recipients in the ratio of turnover in the prescribed
5. As per section 16, Mohan Ltd. is eligible to avail ITC of the tax paid on inputs manner.
received by it on the basis of the invoice issued by the supplier provided other
(vii) ITC available for distribution in a month shall be distributed in the same
conditions for availing ITC are fulfilled.
month and the details thereof shall be furnished in the prescribed form.
Payment of value of the goods along with the tax to the supplier is not a pre-
(viii) Both ineligible and eligible ITC are to be distributed separately.
requisite at the time of availing credit, but Mohan Ltd. has to pay the said
amount within 180 days from the date of issue of invoice. If Mohan Ltd, fails (ix) ITC of CGST, SGST/UTGST and IGST are to be distributed separately.
to do so, Mohan Ltd. shall pay an amount equal to the ITC availed in respect (x) ITC of CGST, SGST/UTGST in respect of recipient located in the same
of such supply (ITC of ` 24,000), proportionate to the amount not paid to the State/Union Territory is distributed as CGST and SGST/UTGST
supplier, along with interest payable thereon under section 50, while respectively.
furnishing the return in Form GSTR-3B for the tax period immediately
(xi) ITC of CGST and SGST/UTGST, in respect of a recipient located in a
following the period of 180 days from the date of the issue of the invoice.
different State/Union territory, is distributed as IGST (total of ITC of
If Mohan Ltd. makes the payment of ` 2,24,000 (Value + tax) to the supplier CGST and SGST/UTGST which were to be distributed to such recipient).
on 18th March of next calendar year, i.e. after the expiry of 180 days from date
(xii) ITC on account of IGST is distributed as IGST.
of issue of invoice, Mohan Ltd. can avail the credit of ` 24,000 while filing
Form GSTR-3B for the month of March. 7. (i) Section 17(5)(c) blocks input tax credit in respect of works contract
services when supplied for construction of an immovable property
6. The following conditions need to be followed by an input service distributor
(other than plant and machinery) except where it is an input service for
(ISD) for distribution of credit: further supply of works contract service.
(i) The ISD is required to obtain a separate registration for distribution of Further, the term “plant and machinery” means apparatus, equipment
credit. and machinery fixed to earth by foundation or structural support that
(ii) The credit can be distributed to the recipients of credit against an ISD are used for making outward supply of goods and/or services and
invoice containing prescribed details. includes such foundation or structural support but excludes land,
building or other civil structures, telecommunication towers, and
(iii) The amount of the credit distributed shall not exceed the amount of pipelines laid outside the factory premises.
credit available for distribution.
Thus, in view of the above-mentioned provisions, ITC is available in
(iv) The credit related to an input service must be distributed only to the respect of works contract service availed by MBF Ltd. as the same
particular recipient to whom that input service is attributable. is used for construction of plant and machinery which is not
blocked under section 17(5)(c). It is assumed that the expenditure
(v) If the input service is attributable to more than one recipient, the
incurred towards works contract service is capitalised in the books of
relevant ITC is distributed pro rata to such recipients in the ratio of
MBF Ltd. and no depreciation has been claimed on the tax component.

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(ii) Section 17(5)(d) blocks ITC on goods and/or services received by a

Less: Input tax credit to be reversed @ 5% per quarter for
taxable person for construction of an immovable property (other than
the period of use of machine
plant or machinery) on his own account including when such goods
(i) For the previous year = (` 1,89,000 × 5%) × 3 28,350
and/or services are used in the course or furtherance of business. Thus,
quarters
ITC on goods and/or services used in the construction of an immovable
(ii) For the current year = (` 1,89,000 × 5%) × 2 18,900
property is blocked only in those cases where the taxable person
quarters
constructs the immovable property for his own use notwithstanding the
fact that the immovable property being constructed will be used in the Amount required to be paid by adding the reversal 1,41,750
course or furtherance of his business. amount to the output tax liability) (A) **
In the given case, Shah & Constructions has used the goods and Duty leviable on transaction value (` 7,50,000 × 18%) (B) 1,35,000
services for construction of immovable property for some other
person and not on its own account. Hence, ITC in this case will be Amount payable towards disposal of machine is higher 1,41,750
allowed. of (A) and (B)

(iii) On a conjoint reading of section 17(5)(a) and 17(5)(ab), it can be Thus, M/s Agarwal & Agarwal is required to pay an amount of ` 1,41,750
concluded that ITC is allowed on repair and maintenance services at the time of sale of machinery by adding the same to the output tax
relating to motor vehicles, which are eligible for input tax credit. liability.
Further, as per section 17(5)(a) ITC is allowed on motor vehicles which
** In the above solution, amount payable towards disposal of machine has
are used for transportation of goods.
been computed on the basis of rule 40(2), i.e. ITC to be reversed for the period
Thus, ITC on maintenance & repair services availed from “Jaggi of use of capital goods/machine has been computed @ 5% for every quarter
Motors” for a truck used for transporting its finished goods is
or part thereof from the date of the issue of invoice.
allowed to ABC Ltd.
However, the said amount can also be computed in accordance with rule
8. As per section 18(6), if capital goods/ plant and machinery on which ITC has
44(6), i.e. ITC involved in the remaining useful life (in months) of the capital
been taken are supplied (outward) by a registered person, he must pay an
goods/ machine can be reversed on pro-rata basis, taking the useful life as 5
amount that is higher of the following:
years.
(a) ITC taken on such goods reduced by 5% per quarter or part thereof
from the date of issue of invoice for such goods or 9. As per section 16(1), every registered person can take credit of input tax
charged on any supply of goods or services or both to him which are used or
(b) tax on transaction value of such outward supply determined under
intended to be used in the course or furtherance of his business. However,
section 15.
section 17(5) specifies certain goods and services on which the input tax
Accordingly, the amount payable on supply of machinery by M/s Agarwal & credit is not available.
Agarwal shall be computed as follows:
Section 17(5)(a) specifically blocks ITC on motor vehicles for transportation
Particulars Amount (``) of passengers having approved seating capacity of not more than thirteen
persons. However, the same is allowed when the motor vehicles are used,
ITC taken on the machinery (` 12,39,000 × 18/118) 1,89,000
inter alia, for further supply of such vehicles. Thus, ITC on cars purchased from
the manufacturer for making further supply of such cars will be allowed.

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 INPUT TAX CREDIT 1
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However, ITC on the cars fully destroyed in accident will not be allowed as ‘E’ is the aggregate value of exempt supplies, made, during
the ITC on goods destroyed for whichever reason is specifically blocked under the tax period, and
section 17(5)(h). ‘F’ is the total turnover in the State of the registered
10. Computation of ITC credited to Electronic Credit Ledger and amount of person during the tax period [Rule 43(1)(g)]
ITC to be added to the output tax liability for the month of September = (40,000/1,10,000) × ` 70 (rounded off)

Amount to be added to the output tax liability for the 25.45

Particulars `)
ITC (`
month of September 15 [Rule 43(1)(h)]
Capital goods used exclusively for taxable supply 2,000
[Since used exclusively for taxable supply, full ITC is 11. Computation of ITC available and net GST payable from Electronic Cash
available under rule 43(1)(b)] Ledger for the month of June

Capital goods used exclusively for exempt supply Nil Particulars `)

Amount (`
[Since used exclusively for exempt supply, ITC is not
GST on taxable turnover for the month of June 10,80,000
available under rule 43(1)(a)]
[` 60,00,000 × 18%]
Capital goods used for both taxable and exempt supply - 4200
Common credit (Tc) Less: ITC available for June month in terms of rule 42
[Commonly used for taxable and exempt supplies – Rule Opening balance of ITC available in the ` 1,60,000
43(1)(c)] Electronic Credit Ledger
Total ITC credited to Electronic Credit Ledger for the 6,200 Add: ITC credited to the Electronic Credit ` 40,000
month of September Ledger for the month of June [Refer working
note below]

Common credit for the month of September (Tm) 70 Less: ITC out of common credit attributable (` 1,290) 1,98,710
= Tc ÷ 60 = 4,200 ÷ 60 [Rule 43(1)(e)] to exempt supply [Refer working note below]

Common credit attributable to exempt supplies in a month 25.45 Net GST payable from Electronic Cash Ledger 8,81,290
(Te)
= (E ÷ F) x Tr 14 where,

14
Prior to the amendment vide Notification No. 16/2020 CT dated 23.03.2020, clause (f) of
rule 43(1) provided that the amount of ITC, at the beginning of a tax period, on all common
capital goods whose useful life remains during the tax period, be denoted as ‘Tr‘ and shall be exempt supply, value of ‘Tm’ has been used here. It may be noted that as per the erstwhile
the aggregate of ‘T m‘ for all such capital goods. However, clause (f) has been omitted vide clause (f) of rule 43(1) value of ‘T r’ was the aggregate of ‘Tm.’.
the said notification. Consequently, the term “Tr” becomes redundant in the formula provided
15
Practically while filing GSTR-3B, ITC attributable to exempt supplies as per rule 42 and rule
in rule 43(1)(g). However, for the sake of computation of common credit attributable to
43 are reversed.

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 INPUT TAX CREDIT 1
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Working Note: supply or as an element of a taxable composite/ mixed supply. Hence,

the same is not credited to the Electronic Credit Ledger [Rule 42].
Computation of ITC (out of common credit) attributable to exempt
supplies (5) Since there are no inputs and input services which are used exclusively
for effecting taxable supplies, the entire ITC credited to Electronic Credit
Particulars Amount (`
`) Ledger, i.e. ` 40,000 will be the common credit [Rule 42].
(6) ITC attributable towards exempt supplies = Common credit x
Input tax on raw materials [Note1] 40,000
(Aggregate value of exempt supplies during the tax period / Total
turnover in the State during the tax period)
Input tax on catering for housewarming [Note 2] Nil
= ` 40,000 × ` 2,00,000/ ` 62,00,000 - (rounded off)
Input tax on inputs contained in exempt supplies [Note 3] Nil
= ` 1,290 (rounded off)
Input tax on cosmetic and plastic surgery of CEO of Nil
12. As per section 20 read with rule 39:
company [Note 4]
(i) Total GST credit (CGST+ SGST + IGST) of ` 18,000 specifically
ITC credited to the Electronic Credit Ledger in terms of 40,000 attributable to Ganganagar Branch, Rajasthan will be distributed as IGST
rule 42 in the month of June credit of ` 18,000 only to Ganganagar Branch, Rajasthan [Since recipient
and ISD are located in different states].

Common credit [Note 5] 40,000 (ii) IGST credit of ` 1,50,000, CGST credit of ` 15,000 and SGST credit of
` 15,000 specifically attributable to Mumbai Branch, Maharashtra will
ITC attributable towards exempt supplies to be 1,290 be distributed as IGST credit of ` 1,50,000, CGST credit of ` 15,000 and
reversed [Note 6]
SGST credit of ` 15,000 respectively, only to Mumbai Branch,
Maharashtra [Since recipient is located in the same State in which ISD
Notes:
is located].
(1) Being used in the course or furtherance of business, input tax on raw
materials is available as ITC and is credited to the Electronic Credit (iii) CGST credit of ` 60,000, SGST credit of ` 60,000 and IGST credit of
Ledger [Section 16(1)]. `1,20,000 have to be distributed among the three branches and
Mumbai Branch, Maharashtra in proportion of their turnover of the last
(2) ITC on outdoor catering is blocked in terms of section 17(5) if the same
is not used for making an outward supply of outdoor catering or as an quarter.
element of a taxable composite/mixed supply. Hence, the same is not - Ganganagar Branch, Rajasthan will get: ` 48,000 [` 2,40,000 x
credited to the Electronic Credit Ledger [Rule 42]. (` 10,00,000/ ` 50,00,000)] as IGST credit.
(3) Input tax on inputs used exclusively for making exempt supplies is not - Madhugiri Branch, Karnataka will get: ` 24,000 [` 2,40,000 x
available as ITC and thus, not credited to the Electronic Credit Ledger
(` 5,00,000/ ` 50,00,000)] as IGST credit.
in terms of rule 42.
- The credit attributable to a recipient is distributed even if such
(4) ITC on cosmetic and plastic surgery is blocked in terms of section 17(5)
recipient is making exempt supplies.
if the same are not used for making the same category of outward

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- Kosala Branch, UP will get: ` 72,000 [` 2,40,000 x (` 15,00,000/ Working Note:

` 50,00,000)] as IGST credit.
ITC available during the tax period is computed as under:
- Mumbai Branch, Maharashtra will get:
Opening balance of ITC 50,000 30,000 1,00,000
` 24,000 [` 60,000 x (` 20,00,000/ ` 50,00,000)] as CGST credit,
Purchases from New Delhi 5,00,000 90,000
`24,000 [` 60,000 x (` 20,00,000/ ` 50,00,000)] as SGST credit and [Being inter-State
` 48,000 [` 1,20,000 x (` 20,00,000/ ` 50,00,000)] as IGST credit. purchase, IGST would
have been paid on it.]
(iv) ITC of ` 10,000 of March (last year) cannot be distributed in March this
year as ITC available for distribution in a month is to be distributed in Purchases from 2,50,000 22,500 22,500
Trivandrum
the same month.
Total input tax credit 72,500 52,500 1,90,000
13. Computation of net CGST, SGST and IGST payable from the electronic
cash ledger by George Pvt. Ltd. for the tax period Note: Since sufficient balance of ITC of CGST is available for paying CGST
liability and cross-utilization of ITC of CGST and SGST is not allowed, ITC
Particulars Amount CGST @ SGST @ IGST @ of IGST has been used to pay SGST (after paying IGST liability) as credit of
(`
`) 9% (`
`) 9% (`
`) 18% (``) CGST and SGST can be utilized only after IGST credit has been fully utilized.
Sales made outside Kerala 10,00,000 1,80,000
14. Computation of net GST payable from Electronic Cash Ledger by Quanto
(New Delhi) –
Enterprises for the month of September
[Being inter-State sale, the
same is liable to IGST]
Particulars CGST (Rs) SGST
Sales made in Trivandrum 8,00,000 72,000 72,000 (Rs)
[Being intra-State sale, the
Output tax liability for the month 24,000 24,000
same is liable to CGST &
SGST] Less: ITC [Notes 1 & 2] 9,000 (IGST) 12,000
(SGST)
Less: ITC available during (72,000) (10,000) (1,80,000)
the tax period for set off CGST IGST 12,000 (CGST)
[Refer Working Note
(52,500) Net GST payable (from electronic cash 3,000 12,000
Below]
SGST ledger)
Net tax liability payable Nil 9,500 Nil
Notes:
in cash
1. Credit of IGST is first utilized towards payment of IGST and thereafter
ITC to be carried forward 500 Nil Nil for CGST and SGST in any order and in any proportion. Credit of CGST
to next tax period (72,500- (52,500- (1,90,000- and SGST can be utilized only after IGST credit has been fully utilized
72,000) 52,500) 1,90,000 [Rule 88A read with sections 49(5), 49A and 49B].

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Since Quanto Enterprises does not make any inter-State supply, in the
Capital goods procured on Nil Nil
above answer, entire credit of IGST has been utilized towards payment 12th September
of CGST. Credit of IGST can also be utilised against SGST liability or
against both CGST and SGST liabilities in any proportion and thus, the Total ITC 12,000 12,000 9,000
final answer will change accordingly.
15. As per section 10(3) read with Notification No.14/2019 CT dated 07.03.2019
2. As per section 18(1)(b) a person who takes voluntary registration is
as amended, the option availed of by a registered person to pay tax under
entitled to take credit of input tax in respect of inputs held in stock and
composition scheme shall lapse with effect from the day on which his
inputs contained in semi-finished/ finished goods held in stock on the
aggregate turnover during a financial year exceeds ` 1.5 crore [` 75 lakh in
day immediately preceding the date of grant of registration.
case of Special Category States except Assam, Himachal Pradesh and Jammu
However, he cannot take ITC in respect of capital goods held on the day and Kashmir].
immediately preceding the date of grant of registration.
As per section 2(6), aggregate turnover means the aggregate value of all
ITC on inputs needs to be availed within 1 year from the date of issue taxable supplies (excluding the value of inward supplies on which tax is
of the invoice by the supplier [Section 18(2)]. payable by a person on reverse charge basis), exempt supplies, exports of
In this case, since Quanto Enterprises has been granted voluntary goods or services or both and inter-State supplies of persons having the same
registration on 25th September, it will be entitled to ITC on inputs held in PAN, to be computed on all India basis but excludes CGST, SGST/UTGST, IGST
stock and inputs contained in semi-finished/ finished goods held in stock, and GST Compensation Cess.
on 24th September. In view of the said provisions, eligible ITC for Quanto In the given case, the firm is registered under the composition scheme in the
Enterprises is computed as follows: State of Maharashtra. The aggregate turnover of the firm exceeds
` 1.5 crore on 3rd October [aggregate of both taxable and exempt turnover
Particulars `)
CGST (` SGST (`
`) IGST
from 1st April to 3rd October, i.e. ` 1,50,05,000 (` 1,44,65,000 +
(`` )
` 2,03,000 + ` 1,38,250 + ` 1,06,250 + `92,500)].
Inputs held in stock since 2nd 4,500 4,500
Thus, the firm will pay tax under regular scheme (Section 9) from 3rd October.
September
As per section 18(1)(c) read with rule 40, where any registered person ceases
Inputs received on 21st July 7,500 7,500
to pay tax under section 10, he shall be entitled to take credit of input tax in
contained in semi-finished goods
respect of inputs held in stock, inputs contained in semi-finished or finished
held in stock
goods held in stock and on capital goods on the day immediately preceding
Inputs contained in finished goods Nil the date from which he becomes liable to pay tax under section 9.
held in stock which were procured
on 19th September last year [Invoice Further, ITC on supplies of inputs and capital goods shall not be available
issued prior to one year, hence ITC after the expiry of one year from the date of issue of tax invoice
cannot be availed] [Section 18(2)].

Inputs held in stock since 9,000

13th September

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In the light of the above-mentioned provisions, the ITC credited to the

Machinery ‘Z’ [Note 5] -
Electronic Credit Ledger of the B & D Company on inputs held in on
2nd October will be computed as under: Raw Material used for manufacturing ‘Alpha’ [Note 6] 27,000

Particulars Amount (`
`) Raw Material used for manufacturing ‘Beta’ [Note 6] -

Stock of taxable inputs as on 30th September 10,00,000 Raw Material used for manufacturing ‘Gama’ [Note 6] 18,000
[Since no tax is paid on exempt purchases, there does not Amount of ITC credited to Electronic Credit 99,000
arise any question of availing ITC on the same. Hence, Ledger, for the month of October
stock of only taxable inputs is considered]
(ii) Aggregate value of common credit (Tc) – Note 7
Add: Purchases Nil
[No purchases are made in October] Value of ‘A’ for Machinery ‘U’ purchased on 1st 36,000
st October
Less: Cost of taxable goods sold from 1 October to 3,20,000
2nd October Value of ‘A’ for Machinery ‘Z’ purchased on 1st October 54,000
[(2,00,000 + 1,33,000 + 67,000]) x 80%] 2 years ago for effecting both taxable and exempt
supplies
Stock of taxable inputs as on 2nd October 6,80,000
[Since the bill numbers are in continuation, it can be Input tax claimed on Machinery ‘Y’ purchased on 1st 72,000
concluded that no sales are missing from the extract] October 4 years ago for effecting taxable supplies but
Less: Stock with invoice issued prior to one year 3,00,000 used for effecting both taxable and exempt supplies
from 1st October in the current year [Note 8]
Stock of inputs on which ITC can be claimed 3,80,000
Aggregate value of common credit (Tc) 1,62,000
ITC of CGST @ 9% [Since all purchases are intra-State 34,200
and from the suppliers registered
ITC of SGST @ 9% 34,200
under regular scheme] (iii) Common credit attributable to exempt supplies,
for the month of October
16.
Common credit for the month of October (Tm) [Note 9] 2,700
S. No. Particulars `)
ITC (`

(i) Amount of ITC credited to Electronic Credit Common credit attributable to exempt supplies, 1,080
Ledger, for the month of October for the month of October (Te) – Note 10

Machinery ‘U’ - ‘A’ [Note 1] 36,000

(iv) Computation of GST liability of the company for
Machinery ‘V’ [Note 2] 18,000 October payable through Electronic Cash Ledger

Machinery ‘W’ [Note 3] -

IGST payable on ‘Alpha’ [` 9,00,000 x 18%] 1,62,000
Machinery ‘Y’ [Note 4] -

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exempt supplies will not be credited in the electronic credit ledger

IGST payable on ‘Beta’ [Exempt] Nil
[Rule 42].
IGST payable on ‘Gama’ [` 6,00,000 x 18%] 1,08,000
(7) The aggregate of the amounts of ‘A’ credited to the electronic credit
Total IGST payable on outward supply 2,70,000 ledger in respect of common capital goods whose useful life remains
during the tax period, to be denoted as ‘Tc’, shall be the common credit
Common credit attributable to exempt supplies for 1,080
in respect of such capital goods [Rule 43(1)(d)].
the month of October [Note 11]
(8) Where any capital goods which were used exclusively for effecting
Total output tax liability of October 2,71,080
taxable supplies are subsequently also used for effecting exempt
Less: ITC available in the Electronic Credit Ledger 99,000 supplies, the ITC claimed in respect of such capital goods shall be added
to arrive at the aggregate value of common credit ‘Tc’ [Proviso to rule
IGST payable from Electronic Cash Ledger 1,72,080
43(1)(d)].

Notes: (9) ITC attributable to a month on common capital goods during their
useful life (Tm) shall be computed in accordance with rule 43(1)(e) as
(1) ITC in respect of capital goods used commonly for effecting taxable under:
supplies and exempt supplies denoted as ‘A’ shall be credited to the
= Tc ÷ 60
electronic credit ledger [Rule 43(1)(c)].
= ` 1,62,000 ÷ 60
(2) ITC in respect of capital goods used or intended to be used exclusively
for effecting supplies other than exempted supplies but including zero = ` 2,700
rated supplies shall be credited to the electronic credit ledger [Rule
The useful life of any capital goods shall be considered as five years
43(1)(b)].
from the date of invoice and the said formula shall be applicable during
(3) ITC in respect of capital goods used or intended to be used exclusively the useful life of the said capital goods
for effecting exempt supplies shall not be credited to electronic credit
(10) The amount of common credit attributable towards exempted supplies,
ledger [Rule 43(1)(a)].
be denoted as ‘Te’, and shall be calculated as:
(4) Machinery ‘Y’ is being used for effecting both taxable and exempt
Te= (E÷ F) x Tr* where,
supplies from 1st October. Prior to that it was exclusively used for
effecting taxable supplies. Therefore, ITC in respect of such machinery ‘E’ is the aggregate value of exempt supplies, made, during the tax
would have already been credited to the electronic credit ledger. period, and

(5) Machinery ‘Z’ is being used for effecting both taxable and exempt ‘F’ is the total turnover in the State of the registered person during the
supplies from 1st October two years ago. Therefore, ITC in respect of tax period [Rule 43(1)(g)].
such machinery would have already been credited to the electronic Turnover of exempt supplies during the month of October
=Tr Ȝ
credit ledger. Total turnover of XYZ Pvt. Ltd. during the month of October
10,00,000
(6) ITC in respect of inputs used for effecting taxable supplies will be credited = ` Ȝ 25,00,000 = ` 1,080
in Electronic Credit Ledger. ITC in respect of inputs used for effecting

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(11) Common credit attributable to the exempt supplies (Te) along with the Computation of total input tax involved [T]
applicable interest (which is to be ignored in this case) shall, during
every tax period of the useful life of the concerned capital goods, be Particulars `)
(`
added to the output tax liability of the person making such claim of GST paid on taxable items [` 55,00,000 x 18%] 9,90,000
credit [Rule 43(1)(h)].
Items exempted vide a notification [Since exempted, Nil
*Prior to the amendment vide Notification No. 16/2020 CT dated 23.03.2020 no GST is paid]
clause (f) of rule 43(1) provided that the amount of ITC, at the beginning of a
tax period, on all common capital goods whose useful life remains during the Items not leviable to tax [Since non-taxable, no GST is Nil
paid]
tax period, be denoted as ‘Tr‘ and shall be the aggregate of ‘Tm‘ for all such
capital goods. However, clause (f) has been omitted vide the said notification. GST paid under reverse charge on freight paid to GTA 5,000
Consequently, the term “Tr” becomes redundant in the formula provided in rule for outward transportation of taxable items - [` 1,00,000
43(1)(g). However, for the sake of computation of common credit attributable x 5%]
to exempt supply, value of ‘Tm’ has been used here. It may be noted that as per
GST paid under reverse charge on freight paid to GTA 4,000
the erstwhile clause (f) of rule 43(1) value of ‘Tr’ was the aggregate of ‘Tm.’ for outward transportation of exempted items -
17. A. Computation of ITC credited to Electronic Credit Ledger [` 80,000 x 5%]

As per rule 42, the ITC in respect of inputs or input services being partly GST paid under reverse charge on freight paid to GTA 1,000
used for the purposes of business and partly for other purposes, or for outward transportation of non-taxable items -
partly used for effecting taxable supplies and partly for effecting [` 20,000 x 5%]
exempt supplies, shall be attributed to the purposes of business or for
GST paid on monthly rent - [` 5,50,000 x 18%] 99,000
effecting taxable supplies.
GST paid on packing charges [` 2,50,000 x 18%] 45,000
ITC credited to the electronic credit ledger of registered person [‘C1’] is
calculated as under- Salary paid to staff at the Store Nil
[Services by an employee to the employer in the course
C1 = T - (T1+T2+T3)
of or in relation to his employment is not a supply in
Where, terms of para 1 of the Schedule III and hence, no GST is
payable thereon].
T = Total input tax involved on inputs and input services in a tax
period. GST paid on inputs used for personal purpose 5,000
T1 = Input tax attributable to inputs and input services intended to
GST paid on rent a cab services availed for business 4,000
be used exclusively for non-business purposes
purpose
T2 = Input tax attributable to inputs and input services intended to
be used exclusively for effecting exempt supplies GST paid on items given as free samples 4,000
T3 = Input tax in respect of inputs and input services on which Total input tax involved during the month [T] 11,57,000
credit is blocked under section 17(5)

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Computation of T1, T2, T3 [ITC on goods inter alia, disposed of by way of free
samples is blocked under section 17(5)(h)].
Particulars (`)
Input tax for which credit is blocked under section 8,000
GST paid on monthly rent attributable to personal 33,000 17(5) [T3] **
purposes [1/3 of ` 99,000]
**Since GST paid on inputs used for personal purposes has been
GST paid on inputs used for personal purpose 5,000 considered while computing T1, the same has not been considered again
Input tax exclusively attributable to non-business 38,000 in computing T3.
purposes [T1] ITC credited to the electronic credit ledger

GST paid under reverse charge on freight paid to GTA 4,000 C1 = T - (T1+T2+T3)
for outward transportation of exempted items
= ` 11,57,000 – (` 38,000 + ` 5,000 + ` 8,000) = ` 11,06,000
[As per section 2(47), exempt supply means, inter alia,
supply which may be wholly exempt from tax by way of B. Computation of Common Credit
a notification issued under section 11. Hence, input C2 = C1 - T4
service of outward transportation of exempt items is
exclusively used for effecting exempt supplies.] where C2 = Common Credit
T4 = Input tax credit attributable to inputs and input services intended
GST paid under reverse charge on freight paid to GTA 1,000
to be used exclusively for effecting taxable supplies
for outward transportation of non-taxable items
[Exempt supply includes non-taxable supply in terms of Computation of T4,
section 2(47). Hence, input service of outward
transportation of non-taxable items is exclusively used Particulars (`
`)
for effecting exempt supplies.] GST paid on taxable items 9,90,000
Input tax exclusively attributable to exempt supplies 5,000 GST paid under reverse charge on freight paid to GTA 5,000
[T2] for outward transportation of taxable items

GST paid on rent a cab services availed for business 4,000 Input tax exclusively attributable to taxable 9,95,000
purpose supplies [T4]
[ITC on rent a cab service is blocked under section
17(5)(b)(i) as the same is not used by All-in-One Store Common Credit C2 = C1 - T4
for providing the rent a cab service or as part of a taxable =` 11,06,000 – ` 9,95,000 = ` 1,11,000
composite or mixed supply.

GST paid on items given as free samples 4,000

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C. Computation of ITC attributable towards exempt supplies out of E. Computation of Net GST liability for the month
common credit
Particulars `)
GST (`
ITC attributable towards exempt supplies is denoted as ‘D1’ and
calculated as- GST liability under forward charge

D1 = (E ÷ F) x C2 Taxable items sold in the store [` 42,00,000 x 18%] 7,56,000

where, Taxable items transferred to Goa Store [` 8,00,000 x 1,44,000

18%]
‘E’ is the aggregate value of exempt supplies during the tax period, and
‘F’ is the total turnover in the State of the registered person during the Total output tax liability under forward charge 9,00,000
tax period Less: ITC credited to the electronic ledger 10,80,385
Aggregate value of exempt supplies during the month
ITC carried forward to the next month 1,80,385
= ` 15,00,000 (` 12,00,000 + `3,00,000)
Net GST payable [A] Nil
Total turnover in the State during the tax period
GST liability under reverse charge
= ` 65,00,000 (` 42,00,000 + ` 12,00,000 + `3,00,000 + ` 8,00,000)
Freight paid to GTA for outward transportation of 5,000
Note: Transfer of items to Store located in Goa is inter-State supply in taxable items [` 1,00,000 x 5%]
terms of section 7 of the IGST Act, 2017 and hence includible in the total
turnover. Such supply is to be valued as per rule 28. However, the value Freight paid to GTA for outward transportation of 4,000
declared in the invoice cannot be adopted as the value since the exempted items [` 80,000 x 5%]
recipient Store at Goa is not entitled for full credit because the goods Freight paid to GTA for outward transportation of 1,000
are to be distributed as free samples, ITC on which is blocked. Therefore, non-taxable items [` 20,000 x 5%]
open market value of such goods, which is the value of such goods sold
Total tax liability under reverse charge [B] 10,000
in Mumbai Store, is taken as the value of items transferred to Goa Store.
D1 = (15,00,000 ÷ 65,00,000) x 1,11,000 Net GST liability to be paid in cash [A] + [B] 10,000
As per section 49(4), amount available in the
= ` 25,615 (rounded off) electronic credit ledger may be used for making
D. Computation of Eligible ITC out of common credit payment towards output tax. However, tax payable
under reverse charge is not an output tax in terms of
Eligible ITC attributed for effecting taxable supplies is denoted as ‘C3’, section 2(82). Therefore, tax payable under reverse
where- charge cannot be set off against the ITC and thus, will
C3 = C2 - D1 have to be paid in cash.

= ` 1,11,000 - ` 25,615 Note: While computing net GST liability, ITC credited to the electronic
= ` 85,385 ledger can alternatively be computed as follows:

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Particulars `)
(` Salary paid to staff at the Store Nil
[Services by an employee to the employer in the
GST paid on taxable items [` 55,00,000 x 18%] 9,90,000
course of or in relation to his employment is not a
Items exempted vide a notification [Since exempted, Nil supply in terms of para 1 of the Schedule III to CGST
no GST is paid] Act and hence, no GST is payable thereon]

Items not leviable to tax [Since non-taxable, no GST is Nil GST paid on inputs used for personal purpose Nil
paid] [ITC on goods or services or both used for personal
consumption is blocked under section 17(5)(g)]
GST paid under reverse charge on freight paid to GTA 5,000
for outward transportation of taxable items [` GST paid on rent a cab services availed for business Nil
1,00,000 x 5%] purpose
[ITC on rent a cab service is blocked under section
GST paid under reverse charge on freight paid to GTA Nil 17(5)(b)(i) as the same is not used by All-in-One Store
for outward transportation of exempted items [` for providing the rent a cab service or as part of a
80,000 x 5%] taxable composite or mixed supply.]
[As per section 2(47), exempt supply means, inter alia,
supply which may be wholly exempt from tax by way GST paid on items given as free samples Nil
of a notification issued under section 11. Hence, input [ITC on goods inter alia, disposed of by way of free
service of outward transportation of exempt items is samples is blocked under section 17(5)(h)]
exclusively used for effecting exempt supplies. Input
tax exclusively attributable to exempt supplies is to be Total ITC credited to the electronic ledger 11,06,000
excluded]
Less: ITC reversal [ITC of common credit, attributable (25,615)
GST paid under reverse charge on freight paid to GTA Nil to exempt supplies]
for outward transportation of non-taxable items
Net ITC available for credit 10,80,385
[` 20,000 x 5%]
[Exempt supply includes non-taxable supply in terms
18. (1) Computation of ITC credited to Electronic Credit Ledger
of section 2(47). Hence, input service of outward
transportation of non-taxable items is exclusively ITC of input tax attributable to inputs and input services intended to be
used for effecting exempt supplies. Input tax used for business purposes is credited to the electronic credit ledger.
exclusively attributable to exempt supplies is to be Input tax attributable to inputs and input services intended to be used
excluded] exclusively for non-business purposes, for effecting exclusively exempt
supplies and on which credit is blocked under section 17(5) is not
GST paid on monthly rent – for business purposes 66,000
credited to electronic credit ledger [Sections 16 and 17].
[(` 5,50,000 x 18%) – 1/3 of [(` 5,50,000 x 18%)]
In the light of the aforementioned provisions, the ITC credited to
GST paid on packing charges [` 2,50,000 x 18%] 45,000 electronic credit ledger of Vansh Shoppe is calculated as under:

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Particulars Amount CGST @ SGST @ Particulars Amount CGST @ SGST @

(`` ) 6% (`
`) 6% (``) (`
`) 2.5% (``) 2.5% (`
`)
GST paid on taxable goods 45,00,000 2,70,000 2,70,000 Freight paid to GTA for 50,000 Nil Nil
outward transportation of non-
Goods not leviable to GST 4,00,000 Nil Nil
taxable goods under reverse
[Since non-taxable, no GST is
charge
paid]
[Since definition of exempt
GST paid on monthly rent for 3,50,000 21,000 21,000 supply under section 2(47)
shop specifically includes non-
taxable supply, the input
GST paid on telephone 50,000 3,000 3,000
service of outward
expenses
transportation of non-taxable
GST paid on Chartered 60,000 3,600 3,600 goods is being exclusively used
Accountant Fee for effecting exempt supplies.]
GST paid on premium of 10,000 Nil Nil Freight paid to GTA for 1,50,000 3,750 3,750
health insurance policies as outward transportation of
per company policy taxable goods under reverse
[ITC on health insurance charge
service is allowed only if it is
ITC credited to the electronic 3,01,350 3,01,350
obligatory for employers to
ledger
provide such services to its
employees under any law for Less: ITC reversal [ITC out of (4,600) (4,600)
the time being in force-Proviso common credit, attributable to
to section 17(5)(b)]. exempt supplies] (Refer point
no. 2 & 3 below)
Taxable Goods given as free 5,000 Nil Nil
samples Net ITC available 2,96,750 2,96,750
[ITC on goods disposed of by
way of free samples is blocked (2) Computation of common credit available for apportionment
under section 17(5)(h)] Common Credit = ITC credited to Electronic Credit Ledger – ITC
attributable to inputs and input services intended to be used exclusively
for effecting taxable supplies [Section 17 read with rule 42].

Particulars CGST (`
`) SGST (`
`)

ITC credited to Electronic Credit Ledger 3,01,350 3,01,350

Less : ITC on taxable goods 2,70,000 2,70,000

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 INPUT TAX CREDIT 1
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Less: ITC on freight paid to GTA for outward 3,750 3,750 Total tax liability under reverse charge [B] 5,000 5,000
transportation of taxable goods
Net GST liability [A] + [B] 8,250 8,250
Common credit 27,600 27,600
Note: Amount available in the electronic credit ledger may be used
(3) Computation of ITC attributable towards exempt supplies out of for making payment towards output tax [Section 49]. However, tax
payable under reverse charge is not an output tax in terms of
common credit
definition of output tax provided under section 2(82). Therefore, tax
ITC attributable towards exempt supplies = Common credit x payable under reverse charge cannot be set off against the input tax
(Aggregate value of exempt supplies during the tax period/ Total credit and thus, will have to be paid in cash.
turnover during the tax period)[Section 17 read with rule 42].
19. Computation of net GST liability of Surana & Sons for the tax period
Particulars CGST (`
`) SGST (`
`)
Particulars `)
(`
ITC attributable towards exempt supplies 4,600 4,600
[` 27,600 x (` 10,00,000/` 60,00,000)] GST payable on outward supply [Refer Working Note 1] 3,18,000

Less: Input tax credit (ITC) [Refer Working Note 3] 2,78,180

(4) Computation of net GST liability for the month
GST payable from Electronic Cash Ledger [A] 39,820
Particulars `)
CGST (` SGST (`
`)
Add: GST payable on legal services under reverse charge 63,000
GST liability under forward charge [` 3,50,000 X 18%] [B]
[Tax on legal services provided by an advocate to a
Supply of taxable goods [` 50,00,000 x 3,00,000 3,00,000
business entity, is payable under reverse charge by the
6%]
business entity in terms of Notification No. 13/2017 CT
Total output tax liability under forward 3,00,000 3,00,000 (R) dated 28.06.2017. Further, such services are not
charge eligible for exemption provided under Notification No.
12/2017 CT (R) dated 28.06.2017 as the turnover of the
Less: ITC 2,96,750 2,96,750 business entity (Surana & Sons) in the preceding
Net GST payable [A] 3,250 3,250 financial year exceeds ` 20 lakh.]

GST liability under reverse charge Total GST paid from Electronic Cash Ledger [A] + [B] 1,02,820
[As per section 49(4) amount available in the electronic
Freight paid to GTA for outward 3,750 3,750 credit ledger may be used for making payment towards
transportation of taxable goods output tax. However, tax payable under reverse charge
[` 1,50,000 x 2.5%] is not an output tax in terms of section 2(82). Therefore,
input tax credit cannot be used to pay tax payable under
Freight paid to GTA for outward 1,250 1,250
reverse charge and thus, tax payable under reverse
transportation of non-taxable goods
charge will have to be paid in cash.]
[` 50,000 x 2.5%]

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 INPUT TAX CREDIT 1
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Working Note 1 payment of tax under a LUT in terms of section

Computation of GST payable on outward supply 16(3)(a) of that Act.]
It is assumed that export has been made under
Particulars `)
Value (` GST (``) LUT

Turnover of ‘M’ [liable to GST @ 12%] 14,00,000 1,68,000 Sale of building 1,20,00,000 Nil
[Sale of building is neither a supply of goods nor
Turnover of ‘N’ [Tax on ‘N’ is payable under 6,00,000 Nil
a supply of services in terms of para 5 of
reverse charge by the recipient of such goods]
Schedule III to the CGST Act, provided the entire
Turnover of ‘O’ [liable to GST @ 12%] 10,00,000 1,20,000 consideration has been received after issue of
completion certificate by the competent
Export of ‘M’ with payment of IGST @ 12% 2,50,000 30,000 authority or after its occupation, whichever is
earlier. Hence, the same is not liable to GST]
Export of ‘O’ under letter of undertaking (LUT) 10,00,000 Nil
[Export of goods is a zero rated supply in terms of Interest received on investment in fixed 4,00,000 Nil
section 16(1)(a) of the IGST Act, 2017. A zero deposits with a bank
rated supply can be supplied without payment of [Exempt vide Notification No. 12/2017 CT (R)
tax under a LUT in terms of section 16(3)(a) of that dated 28.06.2017]
Act.]
Sale of shares 2,50,00,000 Nil
Consultancy services provided to independent 20,00,000 Nil [Shares are neither goods nor services in terms
clients located in foreign countries. of section 2(52) and 2(102). Hence, sale of
[The activity is an export of service in terms of shares is neither a supply of goods nor a supply
section 2(6) of the IGST Act, 2017 as- of services and hence, is not liable to any tax.]
x the supplier of service is located in India;
x the recipient of service is located outside Total GST payable on outward supply 3,18,000
India;
x place of supply of service is outside India (in Working Note 2
terms of section 13(2) of the IGST Act, 2017); Computation of common credit attributable to exempt supplies during
x payment for the service has been received in the tax period
convertible foreign exchange or in Indian
rupees wherever permitted by the Reserve Particulars `)
(`
Bank of India; and
x supplier of service and recipient of service Common credit on inputs and input services [Tax on inputs - 6,90,000
are not merely establishments of distinct ` 4,20,000 (` 35,00,000 x 12%) + Tax on input services –
person. ` 2,70,000 (` 15,00,000 x 18%)]
[Export of services is a zero rated supply in
Common credit attributable to exempt supplies (rounded off) 4,74,820
terms of section 16(1)(a) of the IGST Act, 2017.
A zero rated supply can be supplied without

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= Common credit on inputs and input services x (Exempt Legal services used in the manufacture of taxable product ‘M’ 63,000
turnover during the period / Total turnover during the period)
= ` 6,90,000 x ` 1,33,50,000/ ` 1,94,00,000 ITC available in the Electronic Credit Ledger 7,53,000
Exempt turnover = ` 1,33,50,000 and total turnover = Less: Common credit attributable to exempt supplies during 4,74,820
`1,94,00,000 [Refer note below] the tax period [Refer Working Note 2]

Note: Net ITC available 2,78,180

As per section 17(3), value of exempt supply includes supplies on which the 20. Computation of net GST payable by M/s XYZ
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 Particulars GST payable
building. As per explanation to Chapter V of the CGST Rules, the value of (`
`)
exempt supply in respect of land and building is the value adopted for paying Gross GST liability [Refer Working Note 1 below] 2,63,400
stamp duty and for security is 1% of the sale value of such security.
Less: ITC [Refer Working Note 2 below] 2,00,000
Further, as per explanation to rule 42, the aggregate value of exempt supplies
Net GST payable from Electronic Cash Ledger 63,400
inter alia excludes the value of services by way of accepting deposits,
extending loans or advances in so far as the consideration is represented by Working Notes
way of interest or discount, except in case of a banking company or a financial
institution including a non-banking financial company, engaged in supplying (1) Computation of gross GST liability
services by way of accepting deposits, extending loans or advances.
Particulars Value Rate GST
Therefore, value of exempt supply in the given case will be the sum of value received of GST payable
of output supply on which tax is payable under reverse charge (` 6,00,000), `)
(` (`` )
value of sale of building (` 2,50,000 / 2 x 100 = ` 1,25,00,000) and value of
Hiring charges for excavators 18,00,000 12% 2,16,000
sale of shares (1% of ` 2,50,00,000 = ` 2,50,000), which comes out to be
` 1,33,50,000. Service charges for supply of 20,000 12% 2,400
manpower for operation of
Total turnover = ` 1,94,00,000 (` 14,00,000 + ` 6,00,000 + ` 10,00,000 + excavators [Refer Note 1]
` 2,50,000 + ` 10,00,000 + ` 20,00,000 + ` 1,25,00,000 + ` 4,00,000 +
` 2,50,000) Service charges for soil testing 2,50,000 18% 45,000
and seismic evaluation [Refer
Working Note 3 Note 2]
Computation of ITC available in the Electronic Credit Ledger of the
Gross GST liability 2,63,400
Surana & Sons for the tax period
Notes:
Particulars (`
`)
(i) Since the excavators are invariably hired out along with operators
Common credit on inputs and input services 6,90,000 and excavator operators are supplied only when the excavator is

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 INPUT TAX CREDIT 1
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hired out, it is a case of composite supply under section 2(30) Therefore, the maintenance service for the excavators does not
wherein the principal supply is the hiring out of the excavator. get covered by the bar under section 17 and the credit thereon
As per section 8(a), the composite supply is treated as the supply will be available. The same applies for scientific & technical
of the principal supply. Therefore, the supply of manpower for consultancy for construction projects because in this case also,
operation of the excavators (ancillary supply) will also be taxed at
the service is used for providing the outward taxable supply of
the rate applicable for hiring out of the excavator (principal
soil testing and seismic evaluation service and not for
supply), which is 12%.
construction of immovable property.
(ii) Soil testing and seismic evaluation services being independent of
the hiring out of excavator will be taxed at the rate applicable to (ii) Section 17(5)(b)(i) allows input tax credit on health insurance only
them, which is 18%. where an inward supply of such services is used by a registered
(2) Computation of ITC available for set off person for making an outward taxable supply of the same
category of goods or services or both or as an element of a
Particulars GST ITC taxable composite or mixed supply or where it is obligatory for an
paid available employer to provide the same to its employees under any law for
(`` ) (`` )
the time being in force.
Maintenance services for excavators 1,00,000 1,00,000
In the given case, it is assumed that it is not obligatory for
[Refer Note 1]
employer to provide health insurance to its employees under any
Health insurance for excavator 11,000 -
law for the time being in force, therefore the credit thereon will
operators [Refer Note 2]
not be allowed.
Scientific and technical consultancy 1,00,000 1,00,000
21. Computation of ITC available with V-Supply Pvt. Ltd. for the tax period
[Refer Note 1]
Total ITC available 2,00,000 S. Particulars ITC
No.
Notes: CGST* SGST* IGST* Total
` ` ` `
(i) Section 17(5)(d) blocks credit on goods/ or services received by a
1. Opening balance of 15,000 8,000 9,000 32,000
taxable person for construction of an immovable property on his
ITC
own account. Here, though the excavators are used for building
projects, the same are not used by M/s. XYZ on its own account 2. Raw Material
for construction of immovable property instead they are used for Raw material 14,400 14,400
outward taxable supply of hiring out of machinery. Further, purchased from Bihar
excavators are special purpose vehicles whose credit is not [Refer Note 1(i)]
restricted under section 17(5)(a), therefore, ITC on maintenance Raw material 29,970 29,970
service for excavators shall be allowed. imported from China
[Refer Note 1(ii)]

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 INPUT TAX CREDIT 1
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Raw material Nil Nil Nil 7. Audit fee [Refer Note 4,500 4,500 - 9,000
purchased from 6]
unregistered
8. Telephone expenses 2,700 2,700 5,400
suppliers within West
[Refer Note 6]
Bengal [Refer Note
1(iii)] 9. Bank charges [Refer 900 900 1,800
Note 6]
Raw material Nil Nil Nil
destroyed due to Total ITC available for the 55,650 48,650 53,370 1,57,670
seepage [Refer Note tax period
1(iv)]
Computation of net GST payable
Remaining raw 7,650 7,650 15,300
material purchased Particulars CGST* SGST* IGST* Total
from West Bengal ` ` ` `
[Refer Note 1(i)]
On Intra-state sales in West 63,000 63,000 1,26,000
[` 3.5 - ` 1.5 – ` 0.80
Bengal
– ` 0.30 – ` 0.05] =
` 0.85] On Inter-state sales other 54,000 54,000
than West Bengal
Total ITC for raw 7,650 7,650 44,370 59,670
material On exports under LUT Nil Nil Nil Nil
[Note 7]
3. Consumables 9,000 9,000 18,000
[Refer Note 2] Total output tax liability 63,000 63,000 54,000 1,80,000
4. Transportation 1,500 1,500 3,000 Less: ITC available for being (55,650) (48,650) (53,370) (1,57,670)
charges for bringing set off [Note 8 and Note 9]
the raw material to
Net GST payable from 7,350 14,350 630 22,330
factory [Refer Note 3]
Electronic Cash Ledger [A]
5. Salary paid to Nil Nil Nil Nil
GST payable on inward supply 1,500 1,500 3,000
employees on rolls
of GTA services under reverse
[Refer Note 4]
charge through Electronic
6. Premium paid on life 14,400 14,400 - 28,800 Cash Ledger [Note 3 and 10]
insurance policies [B]
taken for specified
Net GST payable through 8,850 15,850 630 25,330
employees [Refer
Electronic Cash Ledger [A] +
Note 5]
[B]

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Notes: Schedule III to the CGST Act. Therefore, since no GST is paid on such
(1) (i) Credit of input tax (CGST & SGST/ IGST) paid on raw materials services, there cannot be any ITC on such services
used in the course or furtherance of business is available in terms 5. ITC on supply of life insurance service is not blocked if it is obligatory
of section 16(1). for an employer to provide such service to its employees under any law
(ii) IGST paid on imported goods qualifies as input tax in terms of for the time being in force. [Proviso to section 17(5)(b)]. Therefore, GST
section 2(62)(a). Therefore, credit of IGST paid on imported raw paid on premium for life insurance policies will be available as ITC in
materials used in the course or furtherance of business is available terms of section 16(1) as the said service is used in the course or
in terms of section 16(1). furtherance of business.

(iii) Tax on intra-State procurements made by a registered person 6. Audit fee, telephone expenses and bank charges are all services used in
from an unregistered supplier is levied only on notified categories the course or furtherance of business and thus, credit of input tax paid
of goods and services. [Section 9(4)]. on such service will be available in terms of section 16(1).

(iv) ITC is not available on destroyed inputs in terms of section 7. Export of goods is a zero rated supply in terms of section 16(1)(a) of the
17(5)(h). IGST Act. A zero rated supply under LUT is made without payment of
integrated tax [Section 16(3)(a) of the IGST Act].
2. Consumables, being inputs used in the course or furtherance of
business, input tax credit is available on the same in terms of section 8. Since export of goods is a zero rated supply, there will be no
16(1). However, levy of CGST on diesel has been deferred till such date apportionment of ITC and full credit will be available [Section 16 of the
as may be notified by the Government on recommendations of the GST IGST Act read with section 17(2) of the CGST Act].
Council [Section 9(2)]. Hence, there being no levy of GST on diesel, 9. As per section 49(5) read with rule 88A, ITC of-
there cannot be any ITC.
(i) IGST is utilised towards payment of IGST first and then CGST and
3. GST is payable under reverse charge on transportation service received SGST in any proportion and in any order.
from GTA. Tax payable under section 9(3) of the CGST/SGST Act
(ii) CGST is utilised towards payment of CGST and IGST in that order.
qualifies as input tax in terms of clauses (b) and (d) of section 2(62).
ITC of CGST shall be utilized only after ITC of IGST has been
Thus, input tax paid under reverse charge on GTA service will be
utilised fully.
available as ITC in terms of section 16(1) as the said service is used in
course or furtherance of business. (iii) SGST is utilised towards payment of SGST and IGST in that order.
ITC of SGST shall be utilized only after ITC of IGST has been
Furthermore, intra-State services by way of transportation of goods by
utilised fully.
road except the services of a GTA and a courier agency are exempt from
CGST vide Notification No. 12/2017 CT (R) dated 28.06.2017. Therefore, 10. Section 49(4) lays down that the amount available in the electronic
since no GST is paid on such services, there cannot be any ITC on such credit ledger may be used for making payment towards output tax.
services. However, tax payable under reverse charge is not an output tax in terms
of section 2(82). Therefore, tax payable under reverse charge cannot
4. Services by employees to employer in the course of or in relation to his
be set off against the ITC and thus, will have to be paid in cash.
employment is not a supply in terms of section 7 read with para 1 of

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*11. CGST and SGST are chargeable on intra-State inward and outward 2. Where the goods against an invoice are received in lots/
supplies and IGST is chargeable on inter-State inward and outward installments, ITC is allowed upon receipt of the last lot/
supplies. installment vide first proviso to section 16(2). Therefore, ABC
Company Ltd. will be entitled to ITC of raw materials on receipt of
22. Computation of net GST payable by ABC Company Ltd.
second installment in next month.
Particulars GST payable 3. Section 17(5)(c) provides that ITC on works contract services is
`)
(` blocked when supplied for construction of immovable property
Gross GST liability [Refer working note (2) below] 91,200 (other than plant and machinery) except when the same is used
for further supply of works contract service.
Less: Input tax credit [Refer working note (1) below] 82,000
Though in this case, the works contract service is not used for
Net GST payable from Electronic Cash Ledger 9,200 supply of works contract service, ITC thereon will be allowed since
such services are being used for installation of plant and
Working Notes: machinery.
(1) Computation of ITC available with ABC Company Ltd. 4. ITC on capital goods directly sent to job worker’s premises under
challan is allowed in terms of section 19(5) read with rule 45(1).
Particulars `)
GST (`
5. Section 17(5)(a) provides that motor vehicle for transportation of
Health insurance of factory employees [Note – 1] 20,000
persons having approved seating capacity of not more than 13
Raw material received in factory [Note – 2] Nil persons (including the driver), except when they are used for
Work’s contractor’s service used for installation of plant 12,000 making taxable supply of-
and machinery [Note -3]
(i) further supply of such vehicles,
Manufacturing machinery directly sent to job worker’s 50,000
(ii) transportation of passengers,
premises under challan [Note -4]
Purchase of car used by director for business meetings Nil (iii) imparting training on driving, flying, navigating such
only [Note -5] vehicles and

Outdoor catering service availed for business meetings Nil Since ABC Company Ltd is a supplier of machine and it does not
[Note -6] use the car for transportation of passengers or any other use as
Total ITC available 82,000 specified, ITC thereon will not be available.

6. Section 17(5)(b)(i) provides that ITC on outdoor catering is

Notes:
blocked except where the same is used for making further supply
1. ITC of health insurance is available in the given case in terms of of outdoor catering or as an element of a taxable composite or
proviso to section 17(5)(b) since it is obligatory for employer to mixed supply.
provide health insurance to its employees under the Factories Act,
Since ABC Company Ltd is a supplier of machine, ITC thereon will
1948.
not be available.

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 INPUT TAX CREDIT 1
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(2) Computation of gross GST liability Raw material imported 22,732

from USA [Note 1(iii)]
Value Rate GST
received of GST payable 2. Consumables [Note 2] 11,250 11,250
`)
(` (`
`) (` 1,56,250- ` 31,250) x
9%]
Hiring receipts for machine 5,25,000 12% 63,000
3. Monthly rent for the 9,000 9,000
Service charges for supply of factory building to the
manpower operators 2,35,000 12% 28,200 owner in Rajasthan [Note
3]
Gross GST liability 91,200
4. Salary paid to employees Nil Nil Nil
on rolls [Note 4]
Note:
5. Premium paid on life 18,000 18,000 -
Since machine is always hired out along with operators and operators
insurance policies taken
are supplied only when the machines are hired out, it is a case of for specified employees
composite supply, wherein the principal supply is the hiring out of [Note 5] (` 2,00,000 x 9%)
machines [Section 2(30) read with section 2(90)]. Therefore, service of
Total 47,812.50 47,812.50 40,732
supply of manpower operators will also be taxed at the rate applicable
for hiring out of machines (principal supply), which is 12%, in terms of Add: Opening balance of ITC 20,000 15,000 15,000
section 8(a). Total ITC [Note 7] 67,812.50 62,812.50 55,732

23. Computation of ITC available with Pari Ltd. Computation of net GST payable

S. Particulars Eligible input tax credit Particulars CGST SGST IGST

No. CGST SGST IGST (`) (`) (`))
(`) (`) (`)
Intra-State supply 78,750 78,750
1. Raw Material
Inter-State supply 67,500
Purchased from local 9,562.50 9,562.50
registered suppliers [Note Exports under LUT [Note 6] Nil Nil Nil
1(i)] (` 1,06,250 x 9%) Total output tax liability 78,750 78,750 67,500
Purchased from local Nil Nil Less: ITC 67,812.50 62,812.50 55,732
unregistered suppliers
[Note 1(ii)] Net GST payable (rounded off) 10,938 15,938 11,768
Purchased from Punjab 18,000
from registered supplier
[Note 1(i)] (` 1,00,000 x
18%)

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Notes: 24. Computation of net GST payable by Flowchem for the month of July
1. (i) Credit of input tax (CGST & SGST/ IGST) paid on raw materials
Particulars CGST @ SGST @ IGST @
used in the course or furtherance of business is available in terms
9% (``) 9% (`
`) 18% (``)
of section 16.
(ii) Tax on procurements made by a registered person from an Output tax liability [Working Note 1] 1,88,100
unregistered supplier is levied only in case of notified goods and
Less: ITC of CGST [Working Note 2] (25,000)
services in terms of section 9(4). Therefore, since no GST is paid
on such raw material purchased, there does not arise any question Less: ITC of SGST has been utilized (25,000)
of ITC on such raw material. only after ITC of CGST has been
(iii) IGST paid on imported goods qualifies as input tax in terms of utilized fully in terms of proviso to
section 2(62). Therefore, credit of IGST paid on imported raw section 49(5)(c) [Working Note 2]
materials used in the course or furtherance of business is available Net GST payable from Electronic 1,38,100
in terms of section 16. Cash Ledger
2. ITC on consumables, being inputs used in the course or furtherance of
business, is available. However, since levy of GST on high speed diesel Working Note 1
has been deferred till a date to be notified by Government, there cannot
Computation of output tax liability of Flowchem for the month of July
be any ITC of the same.
3. ITC on monthly rent is available as the said service is used in the course Particulars Amount (`
`)
or furtherance of business.
List price of 10 valves (` 1,00,000 x 10) 10,00,000
4. Services by employees to employer in the course of or in relation to his
employment is not a supply in terms of section 7 read with Schedule III Add: Amount paid by R Refinery to testing agency [Note 1] 15,000
to the CGST Act. Therefore, since no GST is paid on such services, there Add: Special packing [Note 2] 10,000
cannot be any ITC on such services.
Add: Erection and testing at site [Note 2] 15,000
5. ITC on life insurance service is available if the same is obligatory for an
employer to provide to its employees under any law for the time being Add: Freight [Note 3] 5,000
in force as per proviso to section 17(5)(b). Value of taxable supply 10,45,000
6. Export of goods is a zero rated supply in terms of section 16(1)(a) of the
IGST @ 18% [Note 4] 1,88,100
IGST Act. A zero rated supply under LUT/bond is made without
payment of IGST in terms of section 16(3)(a).
Notes:
7. Since export of goods is a zero rated supply, there will be no
(1) As per section 15(2), any amount that the supplier is liable to pay in
apportionment of ITC and full credit will be available as per section 17(2).
relation to a supply but which has been incurred by the recipient of the
supply and not included in the price actually paid or payable for the
goods shall be included in the value of supply.
Since, in the given case, arranging inspection was the liability of the
supplier, the same should be included in the value of supply charges for

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 INPUT TAX CREDIT 1
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the same, however, have been paid directly to the third party service Notes:
provider by the recipient. Therefore, the value shall be included in
(1) As per section 17(5), ITC on works contract services when supplied for
taxable value.
construction of an immovable property (other than plant and
(2) As per section 15(2), any amount charged for anything done by the machinery) except where it is an input service for further supply of
supplier in respect of the supply of goods at the time of, or before works contract service, is blocked. Further, plant and machinery
delivery of goods shall be included in the value of supply. includes foundation and structural supports used to fix the machinery
to earth.
(3) As per section 15(2), any amount that the supplier is liable to pay in
relation to a supply but which has been incurred by the recipient of the (2) As per section 17(5), ITC on travel benefits extended to employees on
supply and not included in the price actually paid or payable for the home travel concession and membership of health and fitness center is
goods shall be included in the value of supply. blocked unless it is obligatory for an employer to provide the same to
its employees under any law for the time being in force.
Since, in the given case, the supply contract is on FOR basis, payment
of freight is the liability of supplier but the same has been paid by the
recipient and thus, should be included in the value of supply.
(4) As per section 10(1) of the IGST Act, 2017, where the supply involves
movement of goods, the place of supply is the location of the goods at
the time at which the movement of goods terminates for delivery to the
recipient, which in the given case is Abu Road (Rajasthan). Since the
location of the supplier (Gujarat) and the place of supply (Rajasthan) are
in two different States, the supply is an inter-State supply liable to IGST.
Working Note 2
Computation of ITC available with Flowchem for the month of July

Particulars CGST (`
`) SGST (``)
Opening ITC 20,000 20,000
Work contract services availed for erecting 5,000 5,000
foundation for fixing the machinery to the earth in
the factory [Note 1]
Services of travel company to provide home travel Nil Nil
facility to employees Note 2]
Services of fitness center to provide wellness
services to employees [Note 2] Nil Nil
Total ITC 25,000 25,000

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 INPUT TAX CREDIT 1
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AMENDMENTS MADE VIDE THE FINANCE ACT, 2025 Explanation — For re-construction,
The Finance Act, 2025 has come into force from 29.03.2025. However, most of the the purposes of renovation, additions
amendments made under the CGST Act and the IGST Act vide the Finance Act, 2025 clauses (c) and or alterations or
would become effective only from a date to be notified by the Central Government (d), the expression repairs, to the extent of
"construction" capitalisation, to the
in the Official Gazette. Such a notification has not been issued till 30.04.2025.
includes re- said immovable
Therefore, the applicability or otherwise of such amendment for May 2026,
construction, property.
September 2026 and/or January 2027 examinations shall be informed by the ICAI renovation,
Explanation 2- For the
by way of an announcement. additions or
purposes of clause (d),
In the table given below, the existing provisions of section 17(5)(d) and section 20 alterations or
it is hereby clarified
repairs, to the
are compared with the provisions as amended by the Finance Act, 2025. that notwithstanding
extent of
anything to the
Once the announcement for applicability of such amendments for examination(s) capitalisation, to the
contrary contained in
is made by the ICAI, students should read the amended provisions given hereunder said immovable
any judgment, decree
in place of the related provisions discussed in the chapter. property.
or order of any court,
tribunal, or other
Section Existing provisions Provisions as Remarks authority, any
No. amended by the reference to "plant or
Finance Act, 2025 machinery" shall be
construed and shall
17(5)(d) goods or services or goods or services or Clause (d) of sub- always be deemed to
both received by a both received by a section (5) of have been construed
taxable person for taxable person for section 17 is to be as a reference to
construction of an construction of an amended to "plant and
immovable immovable property substitute the machinery".
property (other (other than plant and words "plant or
than plant or machinery) on his own machinery" with 20(1) Any office of the Any office of the Section 20(1) and
machinery) on his account including when words "plant and supplier of goods or supplier of goods or Section 20(2) are to
own account such goods or services machinery". services or both services or both which be amended to
including when or both are used in the which receives tax receives tax invoices explicitly provide
such goods or course or furtherance invoices towards towards the receipt of for distribution of
services or both are of business. the receipt of input input services, input tax credit by
used in the course services, including including invoices in the Input Service
Explanation 1 — For the
or furtherance of invoices in respect respect of services Distributor in
purposes of clauses (c)
business. of services liable to liable to tax under sub- respect of inter-
and (d), the expression
tax under sub- section (3) or sub- state supplies, on
"construction" includes
section (3) or sub- section (4) of section 9 which tax has to be

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 INPUT TAX CREDIT 1
1.227 7.227 1.228 7.228 GOODS AND SERVICES TAX

section (4) of of this Act or under paid on reverse said Input Service 2017, paid by a distinct
section 9 for or on sub-section (3) or sub- charge basis, by Distributor, in such person registered in
behalf of distinct section (4) of section 5 inserting reference manner, within such the same State as the
persons referred to of the Integrated to sub-section (3) time and subject to said Input Service
in section 25, shall Goods and Services and sub-section (4) such restrictions Distributor, in such
be required to be Tax Act, 2017, for or of section 5 of IGST and conditions as manner, within such
registered as Input on behalf of distinct Act in said sub- may be prescribed. time and subject to
Service Distributor persons referred to in sections. The such restrictions and
under clause (viii) of section 25, shall be amendment will conditions as may be
section 24 and shall required to be be effective from prescribed.
distribute the input registered as Input 1st April, 2025.
tax credit in respect Service Distributor
of such invoices. under clause (viii) of
section 24 and shall
distribute the input tax
credit in respect of such
invoices.

20(2) The Input Service The Input Service

Distributor shall Distributor shall
distribute the credit distribute the credit of
of central tax or central tax or
integrated tax integrated tax charged
charged on invoices on invoices received by
received by him, him, including the
including the credit credit of central or
of central or integrated tax in
integrated tax in respect of services
respect of services subject to levy of tax
subject to levy of under sub-section (3)
tax under sub- or sub-section (4) of
section (3) or sub- section 9 of this Act or
section (4) of under sub-section (3)
section 9,paid by a or sub-section (4) of
distinct person section 5 of the
registered in the Integrated Goods and
same State as the Services Tax Act,

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 1.2 8.2 GOODS AND SERVICES TAX

CHAPTER 1. INTRODUCTION
8 Under any taxation law, registration is the most
fundamental requirement for the identification of
persons liable to pay tax thereby ensuring tax
compliance in the economy. Under the indirect tax
regime, without registration, a person can neither
REGISTRATION collect tax from his customers nor claim any credit
The section numbers referred to in the chapter pertain to the CGST Act, unless of tax paid by him. It is the first step towards
otherwise specified. Examples/Illustrations/Questions and Answers given in the becoming compliant under any tax law.
Chapter are based on the position of GST law existing as on 30.04.2025. Registration under GST legally recognizes a person as a supplier of goods or
services or both and legally authorizes him to collect taxes from his customers
and pass on the credit of the taxes paid on the goods or services supplied to the
LEARNING OUTCOMES purchasers/recipients. He can claim the input tax credit of taxes paid and can
utilize the same for payment of taxes due on the supply of goods or services.
After reading this chapter, you will be able to: Registration ensures the seamless flow of input tax credit from suppliers to
recipients at the national level.
‰ understand the concept of the taxable person
Under GST law, a supplier is required to obtain State-wise registration. There is
‰ explain when a person becomes liable to get registered no concept of a centralized registration under GST like the erstwhile service tax
under GST. regime. A supplier has to obtain registration in every State/UT from where he
makes a taxable supply provided his aggregate turnover exceeds a specified
‰ identify the scenarios where registration is compulsory. threshold limit. Such a supplier is not required to obtain registration in a
‰ identify the persons who are not liable for registration. State/UT from where he makes only a non-taxable supply.

‰ describe the procedure for obtaining registration under GST. Since registration in GST is PAN based, once a supplier is
liable to register in any one State, he has to obtain
‰ explain the procedure for amendment of registration. registration in each of the States/UTs in which he makes
taxable supply under the same PAN. Further, he is PAN based
‰ describe the cancellation of registration and revocation of
normally required to obtain single registration in a registration
cancellation of registration in specified circumstances.
State/UT. However, where he has multiple places of
business in a State/UT, he has an option either to get a
single registration for said State/UT [wherein he can declare one place as
principal place of business (PPoB) and the other places/branches as additional
place(s) of business (APoB)] or to get separate registrations for each place of
business in such State/UT.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.3 1.4 8.4 GOODS AND SERVICES TAX

Registration under GST is not tax specific, which means that there is single ™ Appellate Authority: means an authority appointed or authorised to
registration for all the taxes i.e. CGST, SGST/UTGST, IGST and GST compensation hear appeals as referred to in section 107 [Section 2(8)].
cess.
™ Exempt supply: means supply of any goods or services or both which
Chapter VI - Registration [Sections 22 to 30] of the CGST Act, 2017 and Chapter III attracts nil rate of tax or which may be wholly exempt from tax under
– Registration [Rules 8 to 26] of the CGST Rules, 2017 contain the provisions section 11 of the CGST Act, or under section 6 of the IGST Act, and
relating to registration. State GST laws also prescribe identical provisions in includes non-taxable supply [Section 2(47)].
relation to Registration.
™ Online gaming: means offering of a game on the internet or an electronic
Before proceeding to understand the registration provisions, let us first go network and includes online money gaming [Section 2(80A)].
through a few relevant definitions.
™ Online money gaming: means online gaming in which players pay or
deposit money or money's worth, including virtual digital assets, in the
2. RELEVANT DEFINITIONS expectation of winning money or money's worth, including virtual digital
assets, in any event including game, scheme, competition or any other
™ Agent: means a person, including a factor, broker, commission agent, activity or process, whether or not its outcome or performance is based on
arhatia, del credere agent, an auctioneer or any other mercantile agent, skill, chance or both and whether the same is permissible or otherwise
by whatever name called, who carries on the business of supply or under any other law for the time being in force [Section 2(80B)].
receipt of goods or services or both on behalf of another [Section 2(5)]. ™ Taxable supply: means a supply of goods or services or both which is
™ Common portal: means the common goods and services tax electronic leviable to tax under this Act [Section 2(108)].
portal referred to in section 146 [Section 2(26)]. ™ Taxable territory: means the territory to which the provisions of this Act
™ Council: means the Goods and Services Tax Council established under apply [Section 2(109)].
article 279A of the Constitution [Section 2(36)]. ™ Taxable person: means a person who is registered or liable to be
™ Place of business: includes [Section 2(85)]: registered under section 22 or section 24 [The concept of taxable person
has been discussed in detail in subsequent paras] [Section 2(107)].
a place from where the business is ordinarily carried on, and
™ Principal place of business: means the place of business specified as
includes a warehouse, a godown or any other place where a taxable
person stores his goods, supplies or receives goods or services or the principal place of business in the certificate of registration [Section
both; or 2(89)].
™ Proper officer: in relation to any function to be performed under this
a place where a taxable person maintains his books of account; or Act, means the Commissioner or the officer of the central tax who is
assigned that function by the Commissioner in the Board [Section 2(91)].
™ Registered person: means a person who is registered under section 25,
a place where a taxable person is engaged in business through an but does not include a person having a Unique Identity Number
agent, by whatever name called.
[Section 2(94)].

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.5 1.6 8.6 GOODS AND SERVICES TAX

™ Fixed establishment: means a place (other than the registered place of

3. CONCEPT OF TAXABLE PERSON [SECTION
business) which is characterised by a sufficient degree of permanence
and suitable structure in terms of human and technical resources to 2(107)]
supply services, or to receive and use services for its own needs [Section Under GST law, the concept of taxable
2(50)]. person is significant since tax on supplies of
goods and/or services, is to be paid by a
™ Tax period: means the period for which the return is required to be
taxable person. So, let us understand the
furnished [Section 2(106)].
concept of taxable person. As per section
™ Business: includes [Section 2(17)]– 2(107), taxable person means a person who
is registered or liable to be registered under
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any section 22 or section 24 [These sections have
other similar activity, whether or not it is for a pecuniary benefit;
been discussed in detail subsequently in this
Chapter].
(b) any activity or transaction in connection with or incidental or ancillary to (a) above;
Thus, even an unregistered person who is
liable to be registered is a taxable person.
(c) any activity or transaction in the nature of (a) above, whether or not there is Similarly, a person not liable to be registered, but has taken voluntary registration
volume, frequency, continuity or regularity of such transaction;
and got himself registered is also a taxable person.

(d) supply or acquisition of goods including capital assets and services in connection In the subsequent paras, we will see when a person becomes liable to get
with commencement or closure of business; registered, what is the procedure for getting registered under GST, how to get the
registration amended, when can the registration be cancelled and when the
(e) provision by a club, association, society, or any such body (for a subscription or any cancellation of the registration initiated by the Department or by the registered
other consideration) of the facilities or benefits to its members, as the case may be;
person be revoked.
Following sections of Chapter VI – Registration of the CGST Act shall be discussed
(f) admission, for a consideration, of persons to any premises; and
in this chapter to understand the registration provisions:

(g) services supplied by a person as the holder of an office which has been accepted
Section 22 Persons liable for registration
by him in the course or furtherance of his trade, profession or vocation;

(h) activities of a race club including by way of totalisator or a license to book maker or
Section 23 Persons not liable for registration
activities of a licensed book maker in such club
Section 24 Compulsory registration in certain cases
(i) any activity or transaction undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public authorities. Section 25 Procedure for registration.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.7 1.8 8.8 GOODS AND SERVICES TAX

Section 26 Deemed registration Provided also that the Government may, at the request of a State
and on the recommendations of the Council, enhance the
aggregate turnover from twenty lakh rupees to such amount not
Section 27 Special provisions relating to casual taxable person and
exceeding forty lakh rupees in case of supplier who is engaged
non-resident taxable person
exclusively in the supply of goods, subject to such conditions and
limitations, as may be notified.
Section 28 Amendment of registration
Explanation––For the purposes of this sub-section, a person shall
be considered to be engaged exclusively in the supply of goods
Section 29 Cancellation or suspension of registration even if he is engaged in exempt supply of services provided by way
of extending deposits, loans or advances in so far as the
Section 30 Revocation of cancellation of registration consideration is represented by way of interest or discount.

(2) Every person who, on the day immediately preceding the appointed day,
is registered or holds a license under an existing law, shall be liable to be
4. PERSONS LIABLE FOR REGISTRATION registered under this Act with effect from the appointed day.
[SECTION 22]
(3) Where a business carried on by a taxable person registered under
this Act is transferred, whether on account of succession or
STATUTORY PROVISIONS 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.
Section 22 Persons liable for registration
(4) Notwithstanding anything contained in sub-sections (1) and (3), in
Sub-section Particulars a case of transfer pursuant to sanction of a scheme or an
arrangement for amalgamation or, as the case may be, de-merger
(1) Every supplier shall be liable to be registered under this Act in the
of two or more companies pursuant to an order of a High Court,
State or Union territory, other than special category States, from
Tribunal or otherwise, the transferee shall be liable to be
where he makes a taxable supply of goods or services or both, if his
registered, with effect from the date on which the Registrar of
aggregate turnover in a financial year exceeds twenty lakh rupees.
Companies issues a certificate of incorporation giving effect to
Provided that where such person makes taxable supplies of goods such order of the High Court or Tribunal.
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 Explanation––For the purposes of this section, ––
year exceeds ten lakh rupees.
(i) the expression “aggregate turnover” shall include all supplies
Provided further that the Government may, at the request of a special
made by the taxable person, whether on his own account or
category State and on the recommendations of the Council, enhance
made on behalf of all his principals
the aggregate turnover referred to in the first proviso from ten lakh
rupees to such amount, not exceeding twenty lakh rupees and subject (ii) the supply of goods, after completion of job work, by a
to such conditions and limitations, as may be so notified. registered job worker shall be treated as the supply of goods

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.9 1.10 8.10 GOODS AND SERVICES TAX

by the principal referred to in section 143, and the value of Aggregate turnover
such goods shall not be included in the aggregate turnover
of the registered job worker

(iii) the expression “special category States” shall mean the

States as specified in sub-clause (g) of clause (4) of article
279A of the Constitution except the State of Jammu and --CGST
Kashmir and States of Arunachal Pradesh, Assam, Himachal Value of all outward supplies
--SGST
Pradesh, Meghalaya, Sikkim and Uttarakhand. --Taxable supplies
--UTGST
--Exempt supplies
--IGST
--Exports
ANALYSIS --Compensation cess
--Inter-State supplies
--Value of inward supplies on which tax
of persons having same PAN to be
(i) Threshold limit for registration is payable under reverse charge
computed on all India basis
‰ Every supplier of goods or services or both is required to obtain
registration The definition of ‘aggregate turnover’ Section 2(6) [as given above] read
with explanation (i) and (ii) to section 22 has been analysed as follows:
‰ in the State or the Union territory from where he makes the taxable
supply (A) Aggregate turnover to exclude inward supplies on which tax is
payable under reverse charge: It may be noted that the inward
‰ if his aggregate turnover exceeds specified threshold limit in a FY.
supplies on which recipient is required to pay tax under Reverse
Charge Mechanism (RCM) do not form part of the ‘aggregate
turnover’. The law stipulates certain supplies like, Goods Transport
Before, we study what is the applicable threshold Agency services, legal services, sponsorship services, to name a few,
limit for various States/ UTs, let us first where the recipient of service is required to pay the tax to the
understand the concept of aggregate turnover. Government – Discussed in detail in Chapter 2 – Charge of GST. The
value of such supplies would not form part of the ‘aggregate turnover’
Aggregate turnover is a crucial parameter for
of recipient of such supplies.
deciding the eligibility of a supplier to avail the
benefit of threshold exemption from registration
and eligibility for composition scheme [Discussed
Outward Supplies taxable
in Chapter 2 – Charge of GST in Module 1 of the
under reverse charge would
Study Material]. continue to be part of the
‘Turnover’ in common parlance is the total volume of business in monetary ‘aggregate turnover’ of the
terms. The term ‘aggregate turnover’ as defined under section 2(6) has supplier of such supplies
been presented in the diagrammatic form as follows:

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.11 1.12 8.12 GOODS AND SERVICES TAX

(1) Raghubir Private Ltd. pays GST on sitting fees paid to its agent of Mohini Enterprises as well as on its own account will be
directors for the services rendered by them, taxable under included in the aggregate turnover of M/s Bestfords & Associates.
reverse charge. The value of services provided by the
(F) ‘Aggregate turnover’ Vs. ‘Turnover in a State’: The definition of
independent directors to Raghubir Private Ltd. will form part of the
‘Turnover in a state’ is similar to the definition of ‘Aggregate turnover’
aggregate turnover of the directors and not of Raghubir Private Ltd
even though tax is to be paid by Raghubir Private Ltd. with a difference that the definition of ‘Turnover in a state’ considers
the taxable, exempt and export supplies made from the relevant State.
(B) Aggregate turnover excludes the elements of tax i.e. CGST, SGST, Aggregate turnover is used for determining the threshold limit for
UTGST, and IGST and compensation cess registration and the eligibility for the composition scheme [Discussed
(C) Aggregate turnover includes total turnover of all branches (i.e. all in Chapter 2 – Charge of GST]. However, once a person is eligible for
GST registrations) under same PAN composition levy, GST payable under composition levy would be
calculated as a specified % of ‘turnover in the State/UT’.
Aggregate turnover is calculated by taking together the value in
respect of the activities carried out on all-India basis. (G) Value of goods, after completion of job work, supplied directly from
the premises of the registered job worker not to be included in
(2) A dealer ‘X’ has two offices – one in Delhi and another in
aggregate turnover of the job worker [Explanation (ii) to Section 22]
Haryana. In order to determine the aggregate turnover of
‘X’, turnover of both the offices would be taken into account Job-work implies undertaking any treatment or process by a person
subject to provisions of section 24. on goods belonging to another registered taxable person.
(D) Value of exported goods/ services, exempted goods/services, The person who is treating or
inter-State supplies including inter-State supplies between processing the goods belonging
distinct persons having same PAN, to be included in aggregate to other person is called ‘job
turnover worker’ and the person to
(3) Madhur Oils, Punjab, is engaged in supplying machine whom the goods belong is called
oil as well as petrol. Supply of petrol is not leviable to GST, ‘principal’. Schedule II of the
but supply of machine oil is taxable. In order to determine CGST Act stipulates that job
the aggregate turnover of Madhur Oils, turnover of both non-taxable work is a service.
as well as taxable supplies would be taken into account.
The principal can supply the
(E) Aggregate turnover to include all supplies made by the taxable goods directly from the premises
person, whether on his own account or made on behalf of all his of the job worker without
principals. [Explanation (i) to Section 22] bringing it back to his own premises.
(4) Mohini Enterprises has appointed M/s Bestfords & In case the job worker is unregistered, principal should declare job
Associates as its agent. M/s Bestfords & Associates makes worker’s premises as his additional place of business and remove
supply of goods on its own account as well as on behalf of
goods from the same.
Mohini Enterprises where invoices are issued in name of M/s Bestfords
& Associates only.
All the supplies of goods made by M/s Bestfords & Associates as

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.13 1.14 8.14 GOODS AND SERVICES TAX

If the job worker is a registered person/ principal supplies of the Constitution, there are 11 Special Category States, namely, States of
notified goods, goods can be supplied directly from the premises of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya,
the job worker. Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
Supply of goods, after completion of job work, directly from a However, as per the explanation (iii) to section 22, for the purposes of
registered job worker’s premises is treated as supply of goods by registration, only Mizoram, Tripura, Manipur and Nagaland are Special
the principal. Category States. Therefore, the threshold limit ` 10 lakh is applicable for
Further, the value of such goods supplied will be included in the Mizoram, Tripura, Manipur and Nagaland.
aggregate turnover of the principal and not job worker.
If a person with places of business in
different States across India has one
supplies goods directly to buyer after
branch in a Special Category State, the
completion of job work on the same
threshold limit for GST registration will
be reduced to ` 10 lakh.
Registered Buyer
Job
worker
Government is empowered to enhance the threshold limit of ` 20 lakh upto
` 40 lakh for a supplier engaged exclusively in the supply of goods, at the
request of a State and on the recommendations of the Council. This shall
Supply of such goods shall be
be subject to such conditions and limitations, as may be notified.

the same
treated as the supply of goods by
the principal and the value of For the purposes of section 22(1), a person shall be considered to be

supplies goods to job

worker for processing
such goods shall be included in engaged exclusively in the supply of goods even if he is engaged in exempt
the aggregate turnover of the supply of services provided by way of extending deposits, loans or advances
principal.
in so far as the consideration is represented by way of interest or discount.
Further, Notification No. 10/2019 CT dated 07.03.2019 exempts any person
Principal who is engaged exclusively in supply of goods and whose aggregate
turnover in the financial year does not exceed ` 40 lakh, from the
Applicable threshold limit
requirement to obtain a registration.
The threshold limit prescribed under section 22(1) is ` 20 lakh in a FY, i.e.
Exceptions to this exemption are as follows:
every supplier, whose aggregate turnover in a financial year exceeds
` 20 lakh, is liable to be registered under GST in the State/ Union territory (a) Persons required to take compulsory registration under section 24.
from where he makes the taxable supply of goods and/or services. (b) Persons engaged in making supplies of
However, the limit of ` 20 lakh will be reduced to ` 10 lakh if the person is (i) ice cream and other edible ice, whether or not containing cocoa
carrying out business in Special Category States. As per Article 279A(4)(g) [2105 00 00],

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.15 1.16 8.16 GOODS AND SERVICES TAX

(ii) pan masala [2106 90 20], Special Special Manipur ` 10 lakh ` 10 Lakh
(iii) all goods of Chapter 24, i.e. Tobacco and manufactured tobacco Category Category
Mizoram ` 10 lakh ` 10 Lakh
substitutes, States/ UTs States as
as per per Nagaland ` 10 lakh ` 10 Lakh
(iv) fly ash bricks; fly ash aggregates; fly ash blocks [6815], Constitution section
Tripura ` 10 lakh ` 10 Lakh
(v) bricks of fossil meals or similar siliceous earths [6901 00 10], 22

(vi) building bricks [6904 10 00], Other Jammu and ` 40 lakh ` 20 Lakh
States/ Kashmir
(vii) earthen or roofing tiles [6905 10 00]. UTs
Assam ` 40 lakh ` 20 Lakh
(c) Persons engaged in making intra-State supplies in the States of
Himachal ` 40 lakh ` 20 Lakh
Arunachal Pradesh, Uttarakhand, Meghalaya, Sikkim, Telangana,
Pradesh
Puducherry and Special Category States as per section 22 [Nagaland,
Mizoram, Manipur, Tripura]. Inter-State supplies of goods are Arunachal ` 20 Lakh ` 20 Lakh
Pradesh
nevertheless liable to compulsory registration under section 24 and
are already covered in exception (a) above. Meghalaya ` 20 Lakh ` 20 Lakh

(d) Person who has opted for voluntary registration or such registered Sikkim ` 20 Lakh ` 20 Lakh
persons who intend to continue with their registration under the CGST Uttarakhand ` 20 Lakh ` 20 Lakh
Act.
The above information is presented in an alternate manner as follows:
In view of the above discussion, the registration requirements under GST
can be summarised as follows: States with States/UTs with States/UTs with threshold
threshold limit of threshold limit of limit of ` 20 lakh for supplier
The above information is presented in an alternate manner as follows:
` 10 lakh for ` 20 lakh for of services/ both goods and
Threshold limit for supplier of goods supplier of goods services and threshold limit
persons engaged and/or services and/or services of ` 40 lakh for supplier of
goods (Intra-State)
exclusively exclusively
in supply in supply of ‰ Manipur ‰ Arunachal ‰ Jammu and Kashmir
of goods services/ in ‰ Mizoram Pradesh ‰ Assam
supply of ‰ Nagaland ‰ Meghalaya ‰ Himachal Pradesh
both goods ‰ Sikkim
‰ Tripura ‰ All other States
& services
‰ Uttarakhand
States/UTs other than Puducherry ` 20 lakh ` 20 Lakh ‰ Puducherry
Special Category States ‰ Telangana
Telangana ` 20 lakh ` 20 Lakh
Others ` 40 lakh ` 20 Lakh

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.17 1.18 8.18 GOODS AND SERVICES TAX

(5) Prithiviraj of Assam is exclusively engaged in intra-State If in above example, all other things remaining the same, Ashoka is
supply of shoes. His aggregate turnover in the current financial exclusively engaged in supply of taxable services instead of paper, the
year is ` 22 lakh. In view of the discussion in the above paras, the applicable threshold limit for registration will still be ` 10 lakh. Thus,
applicable threshold limit for registration for Prithviraj in the given case is Ashoka will be liable to get registered under GST.
` 40 lakh. Thus, he is not liable to get registered under GST.
Further, if Ashoka is engaged in supply of both taxable goods and services,
If in the above example, all other things remaining the same, Prithiviraj is the applicable threshold limit for registration in that given case will be
exclusively engaged in the supply of pan masala instead of shoes, he will ` 10 lakh only. Thus, Ashoka will be liable to get registered under GST.
not be eligible for higher threshold limit of ` 40 lakh and the applicable
(8) Raghav of Assam is exclusively engaged in intra-State supply
threshold limit for registration in that given case will be ` 20 lakh. Thus,
of readymade garments. His turnover in the current FY from
Prithiviraj will be liable to get registered under GST.
Assam showroom is ` 28 lakh. He has another showroom in
If instead of pan masala, Prithiviraj is exclusively engaged in supply of Tripura with a turnover of ` 11 lakh in the current FY. Since Raghav is
taxable services, the applicable threshold limit for registration will still be engaged in supplying garments from a Special Category State as per section
` 20 lakh. Thus, Prithiviraj will be liable to get registered under GST. 22, the applicable threshold limit for him gets reduced to ` 10 lakh. Further,
Raghav is liable to get registered under GST in both Assam and Tripura on
Further, if Prithiviraj is engaged in supply of both taxable goods and
his aggregate turnover crossing the threshold limit of ` 10 lakh.
services, the applicable threshold limit for registration will still remain
` 20 lakh only. Thus, Prithiviraj will be liable to get registered under GST. (ii) Registration to be obtained only for a place of business from where
taxable supply takes place
(6) Shivaji of Telangana is exclusively engaged in intra-State supply
of toys. Its aggregate turnover in the current financial year is ` 22 A supplier is required to obtain registration with respect to his each place of
lakh. Since Shivaji is making taxable supplies from Telangana, he will business in India from where a taxable supply has been made. However, a
not be eligible for higher threshold limit available in case of exclusive supply of supplier is not liable to obtain registration in a State/UT from where he
goods. The applicable threshold limit for registration for Shivaji in the given makes an exempt/non-taxable supply.
case is ` 20 lakh. Thus, he is liable to get registered under GST.
It is pertinent to note here that a supplier is required to obtain registration
If in the above example, all other things remaining the same, if Shivaji is only in the State(s) “from where taxable supply is made” and not “where
exclusively engaged in supply of taxable services instead of toys or is taxable supply is made”. It may be noted that if goods and/or services are
engaged in the supply of both taxable goods and services, the applicable supplied in different States, GST registration is not required in each such
threshold limit for registration will still be ` 20 lakh. Thus, Shivaji will be State(s).
liable to get registered under GST in such cases.
Thus, if a person has only liaison office or marketing office in a State and if
(7) Ashoka of Manipur is exclusively engaged in intra-State there is no taxable supply from that State, he is not required to obtain
supply of paper. Its aggregate turnover in the current financial registration in that State, even if he is registered in other State/s. Thus, in
year is ` 12 lakh. Since Ashoka is making taxable supplies from that State where liaison office or marketing office is located, he will be
Manipur which is a Special Category State, the applicable threshold limit for treated as ‘unregistered’.
registration for Ashoka in the given case is ` 10 lakh. Thus, he is liable to
get registered under GST.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.19 1.20 8.20 GOODS AND SERVICES TAX

(9) Mr. X has a registered office in Delhi. He imports goods which (iii) Person liable for registration in case of transfer of business
are landed at Mumbai sea port. Mr. X enters into a sales
Where a business is transferred, whether on account
agreement with Mr. Y located in Mumbai to directly sell the goods
of succession or any other reason [including
from the Mumbai port. In this case, Mr. X is not required to obtain
transfer/change in the ownership of business due to
registration in Mumbai as he has no fixed establishment in Mumbai.
death of the sole proprietor 2], to another person as
Further, in a State from where taxable supply has been made, registration is a going concern, the transferee/ successor, is to be
required to be obtained only if the supplier has a “fixed establishment” in registered with effect from the date of such transfer/succession.
such State. This aspect is more relevant in respect of supply of services like
Where the business is transferred, pursuant to sanction of a scheme/
repair & maintenance, transportation, security, erection & commissioning
arrangement for amalgamation/ de-merger of two or more companies,
services and construction contracts etc.
pursuant to an order of a High Court/Tribunal, the transferee is to be
Further, the threshold limit of a person having places of business in more registered with effect from the date on which the Registrar of Companies
than one State/UT in India gets reduced to ` 10 lakh only when such person issues a certificate of incorporation giving effect to such order.
makes taxable supplies of goods or services or both from any of the
Special Category States as per section 22. However, in case he makes
exempt/non-taxable supply from a Special Category State and taxable
5. COMPULSORY REGISTRATION IN CERTAIN
supplies from a State other than Special Category State, the threshold limit CASES [SECTION 24]
shall not be so reduced.
As we have seen above that a supplier is liable to be registered under GST in the
(10) Uday Enterprises is engaged in supply of taxable goods and State/ Union territory from where he makes the taxable supply of goods and/or
services in Maharashtra. It also supplies alcoholic liquor for services only if his aggregate turnover in a financial year exceeds the applicable
human consumption from Nagaland. Its turnover in the current threshold limit. However, there are certain cases wherein a supplier is
financial year is ` 14 lakh in Maharashtra and ` 11 lakh in Nagaland. mandatorily required to obtain registration irrespective of the quantum of his
Since Uday Enterprises is engaged in making taxable supplies of goods and aggregate turnover. In other words, these are the cases wherein a supplier is
services from Maharashtra, the applicable threshold limit for obtaining compulsorily required to obtain registration even though his aggregate turnover
registration is ` 20 lakh. However, the threshold limit will not be reduced to does not exceed the applicable threshold limit.
` 10 lakh in this case, as supply of alcoholic liquor for human consumption However, certain exemptions from registration have also been provided under
from Nagaland (one of the Special Category States) is non-taxable supply 1. section 23. These exceptions have been incorporated briefly at the relevant
In the given case, since the aggregate turnover of Uday Enterprises exceeds places in the discussion under this heading in order to provide a holistic picture.
the applicable threshold limit of ` 20 lakh, it is liable to obtain registration. The exceptions have also been explained in detail in the next heading 6. Persons
It will obtain registration in Maharashtra but is not required to obtain not liable for registration.
registration in Nagaland as he is not making any taxable supplies from the The category of persons requiring compulsory registration under GST have been
said State. enlisted below with the relevant exceptions:

1 2
in terms of section 9(1) clarified vide Circular No. 96/15/2019 GST dated 28.03.2019

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.21 1.22 8.22 GOODS AND SERVICES TAX

(1) Persons making any inter-State taxable supply. However, threshold limit ‰ The threshold limit for registration is available to persons
of ` 20 lakh (` 10 lakh in case of Special Category States of Mizoram, making intra-State supplies of
Tripura, Manipur and Nagaland) is available in case of inter-State supply of goods through ECO.
taxable services and of notified handicraft goods and notified handmade In case a person already
(6) Persons who are required to deduct tax under
goods. registered under GST is
section 51, whether or not separately
required to deduct tax
(2) Casual taxable persons (CTP) making taxable supply. However, registered under this Act. under section 51, he is
threshold limit of ` 20 lakh (` 10 lakh in case of Special Category States of required to take separate
(7) Persons who make taxable supply of goods
Mizoram, Tripura, Manipur and Nagaland) is available in case of CTP who is registration for the
or services or both on behalf of other taxable purpose of deducting
making inter-State taxable supplies of notified handicraft goods and
persons whether as an agent or otherwise. tax under section 51.
notified hand-made goods and is availing the benefit of exemption from
registration as mentioned in point 1 above. (8) Every person supplying online information
and data base access or retrieval (OIDAR)
(3) Persons who are required to pay tax under reverse charge on inward
services from a place outside India to a
supplies received. However, persons engaged exclusively in making
person in India, other than a registered
outward supplies, tax on which is liable to be paid on reverse charge basis An ISD is required to
person.
under section 9(3) [except suppliers of metal scrap (Chapter 72 to 81)] are obtain a separate
exempt from registration. (9) Input Service Distributor, whether or not registration even
separately registered under CGST Act. though it may be
(4) Non-resident taxable persons (NRTP) making taxable supply. separately registered.
(10) Every person supplying online money gaming
(5) E-commerce:
from a place outside India to a person in
(i) Every ECO (Electronic Commerce Operator) who is required to collect India.
tax at source under section 52,
(11) Such other person or class of persons as may be notified by the
(ii) Persons who are required to pay tax under section 9(5) 3 i.e. e- Government on the recommendations of the Council.
commerce operator who is required to pay tax on specified services.
Note: Concept of CTP and NRTP is explained subsequently in this chapter.
(iii) Persons who supply goods and/or services, other than supplies
specified under section 9(5), through such ECO who is required to
collect TCS under section 52. Exceptions are as follows: 6. PERSONS NOT LIABLE FOR REGISTRATION
‰ The threshold limit of ` 20 lakh (` 10 lakh in case of Special [SECTION 23]
Category States of Mizoram, Tripura, Manipur and Nagaland) is
available in case of suppliers supplying services through ECO. Section 23 lists the persons who are not liable to obtain a registration. As
mentioned above, a person who is not registered under the GST but is liable
to be registered and a person who is registered (whether voluntarily or
otherwise) is considered to be a taxable person. Accordingly, it can be said
3 that persons listed as not liable to be registered under section 23 would not
The provisions of section 9(5) of the CGST Act, 2017 where the ECO is required to pay tax
are discussed in detail in Chapter 12 – Electronic Commerce Transactions of this Module of fall in the definition of the ‘taxable persons’.
the Study Material.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.23 1.24 8.24 GOODS AND SERVICES TAX

under personal supervision or the personal supervision of any

(i) Persons not liable to registration member of the family.

Section 23(1) lists the following persons as not liable to be registered. Thus, From the above definition, it is clear that the benefit of not being liable
the persons so listed will not be the ‘taxable persons’. to registration is only restricted to the agriculturists who are individuals
or HUFs. Further, if an agriculturist is also engaged in making any supply
(A) Person engaged exclusively in the business of supplying goods and
other than supply of produce out of cultivation of land, he shall be liable
/or services not liable to tax/wholly exempt from tax: Any person
to registration based on applicable threshold limit.
engaged exclusively in the business of supplying goods or services or
both that is not liable to tax or is wholly exempt from tax under CGST (13) Deshbandhu is an agriculturist engaged in cultivation of
Act/ IGST Act shall not be liable to registration. This provision can be wheat in his field in the State of Punjab. He was exclusively
understood with the help of following examples: engaged in intra-State supply of wheat cultivated in his field in
the previous year. Thus, he was not liable to registration as he was
(11) Madhur Oils, Punjab, is exclusively engaged in supplying
exclusively engaged in supply of produce out of cultivation of land.
petrol. Supply of petrol is not leviable to GST. Thus, Madhur Oils
is not liable for registration as it is engaged exclusively in In the current year, he decided to start trading in pre-packaged and labelled
supplying goods not leviable to tax. puffed rice apart from supplying his wheat produce. His turnover in the
(12) Bhavyajyoti Foundation, a charitable trust registered under current year is ` 32 lakh from supply of wheat produced and ` 9 lakh from
section 12AB of the Income-tax Act, 1961, is exclusively engaged trading of pre-packaged and labelled puffed rice.
in supply of services by way of charitable activities. Services by Since he is engaged in trading of pre-packaged and labelled puffed rice
an entity registered under section 12AB of the Income-tax Act, 1961 by way also, he is not covered under section 23 above. The threshold limit for
of charitable activities are exempt from GST. Bhavyajyoti Foundation is not registration applicable to a person exclusively engaged in supply of goods
liable for registration as it is exclusively engaged in supplying services in the State of Punjab is ` 40 lakh. The aggregate turnover of Deshbandhu
exempt from tax. in the current year is ` 41 lakh [` 32 lakh + ` 9 lakh] which exceeds the
(B) An agriculturist, to the extent of supply of produce out of threshold limit. Thus, he will be liable to registration.
cultivation of land: An agriculturist to the extent of supply of produce (ii) Specified category of persons notified by the Government exempted
out of cultivation of land is also not from obtaining registration
liable to registration. The term
agriculturist has been defined under Section 23(2) provides that notwithstanding anything to the contrary contained in
section 2(7) as an individual/Hindu section 22(1) or section 24, the Government may, on the recommendations of the
Undivided Family (HUF) who Council, by notification, subject to such conditions and restrictions as may be
undertakes cultivation of land— specified therein, specify the category of persons who may be exempted from
obtaining registration under this Act. Thus, section 23 (2) grants the Government,
(a) by own labour, or
a power to notify category of persons as being exempted from obtaining
(b) by the labour of family, or registration under GST law.

(c) by servants on wages payable in

cash or kind or by hired labour

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.25 1.26 8.26 GOODS AND SERVICES TAX

The following category of persons have been notified under the said section:- B. Persons making inter-State supplies of taxable services up to ` 20 lakh
A. Persons making only reverse charge supplies The persons making inter-State supplies of taxable services and having an
aggregate turnover, to be computed on all India basis, not exceeding an
Persons who are only engaged in making supplies of taxable goods or
amount of ` 20 lakh in a financial year have been exempted from obtaining
services or both, the total tax on which is liable to be paid on reverse charge
compulsory registration.
basis by the recipient of such goods or services or both under section 9(3)
have been exempted from obtaining registration However, the aggregate value of such supplies, computed on all India basis,
should not exceed an amount of ` 10 lakh in case of Special Category States
However, although the tax on the supply
of Mizoram, Tripura, Manipur and Nagaland [Notification No. 10/2017 IT
of metal scrap, falling under Chapters 72
dated 13.10.2017].
to 81 in the First Schedule to the
Customs Tariff Act, 1975 is payable by (15) Dhola & Co., located in Delhi, is engaged in supply of
the recipient under reverse charge taxable goods 4 in the neighbouring States of Punjab and
mechanism, above exemption from Haryana.
registration is not applicable in said case.
Its aggregate turnover in current FY is ` 10 lakh. Since it is engaged in
Thus, any person exclusively engaged in making inter-State taxable supply of goods, it is required to register
the supply of metal scrap will not be
mandatorily under GST irrespective of its aggregate turnover.
exempted from registration.
However, if in the above case, Dhola & Co. is engaged in inter- State
[Notification No. 5/2017 CT dated 19.06.2017]
supply of taxable services instead of goods, it will be eligible for
(14) Manikaran Transporters is a Goods Transport Agency (GTA) exemption from registration till its aggregate turnover does not exceed
engaged exclusively in supplying GTA services liable to tax under ` 20 lakh.
reverse charge [since tax is beng paid on GTA services @ 5% and
C. Persons making inter-State taxable supplies of notified handicraft
Manikaran has not exercised the option to pay GST itself]. Thus, it is exempt
goods and notified handmade goods up to ` 20 lakh
from registration as it is engaged exclusively in making supplies, tax on
which is liable to be paid on reverse charge basis. As we have seen earlier that as per section 24 read
with Notification No. 10/2017 IT, a person making
Further, Manikaran Transporters supplies the said service to Diwakar
inter-State supplies of goods is liable to be registered
Manufacturing Pvt. Ltd. whose aggregate turnover does not exceed the
compulsorily under GST irrespective of the threshold
applicable threshold limit.
limit.
However, since Diwakar Manufacturing Pvt. Ltd. has to pay tax on GTA
However, in the following cases, persons making inter-State supplies of
services [@ 5%] under reverse charge, it will be required to obtain goods have been exempted from obtaining registration:
registration mandatorily irrespective of the quantum of its aggregate
turnover.

4
other than notified handicraft goods and notified hand-made goods

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.27 1.28 8.28 GOODS AND SERVICES TAX

(a) Persons making inter-State taxable supplies of notified handicraft aggregate turnover does not exceed ` 20 lakh as it has availed the
goods 5 . exemption from registration under Notification No. 03/2018 IT8.

(b) Persons making inter-State taxable supplies of notified products 6 , D. Casual Taxable Persons making inter-State taxable supplies of notified
when made by craftsmen predominantly by hand even though some handicraft goods and notified handmade goods up to ` 20 lakh
machinery may also be used in the process. As we have seen earlier that as per section 24, a CTP is liable to be
registered compulsorily under GST irrespective of the threshold limit.
Conditions to be fulfilled:
However, following categories of CTPs have been exempted from obtaining
1. The aggregate value of such supplies, to be computed on all India
registration:
basis, does not exceed an amount of ` 20 lakh [` 10 lakh in case of
Special Category States of Mizoram, Tripura, Manipur and (a) CTPs making inter-State taxable supplies of notified handicraft
Nagaland] in a FY. goods, [as referred in Point C above] or

2. Such persons have obtained a PAN and have generated an (b) CTPs making inter-State taxable supplies of notified products [as
e-way bill 7 [Notification No. 3/2018 IT dated 22.10.2018]. referred in Point C above], when made by the craftsmen
predominantly by hand even though some machinery may also be
(16) Ariza Pvt. Ltd., located in Madhya Pradesh, is a supplier used in the process.
of taxable and notified handicraft goods. It supplies these
Conditions to be fulfilled:
goods in the neighbouring States of Uttar Pradesh and
Orissa. Its aggregate turnover till the month of October is 1. CTPs are availing benefit of Notification No. 03/2018 IT dated
22.10.2018 [discussed above].
` 15 lakh. Although, Ariza Pvt. Ltd. is engaged in making inter-State
supplies of taxable goods, it is not liable to obtain registration till its 2. The aggregate value of such supplies, to be computed on all India
basis, does not exceed an amount of ` 20 lakh [` 10 lakh in case of
5 Special Category States of Mizoram, Tripura, Manipur and
Handicraft goods referred herein are goods as defined and notified in Notification No. 21/2018
CT (R) dated 26.07.2018. This notification notifies the handicraft items which are eligible for Nagaland] in a FY.
concessional rate of tax, for instance, handcrafted candles, articles made of paper mache, coir
articles, handbags including pouches and purses; jewellery box, hand embroidered articles, art 3. Such persons have obtained a PAN and have generated an
ware of iron/aluminium, etc. These examples are only for the purpose of knowledge and are not e-way bill [Notification No. 56/2018 CT dated 23.10.2018].
relevant for examination purposes.
E. Persons making supplies of services through an ECO [other than
Handicraft goods are defined under said notification as goods predominantly made by hand even
supplies specified under section 9(5)] with aggregate turnover up to
though some tools or machinery may also have been used in the process; such goods are graced
with visual appeal in the nature of ornamentation or in-lay work or some similar work of a ` 20 lakh
substantial nature; possess distinctive features, which can be aesthetic, artistic, ethnic or culturally Persons making supplies of services, other than supplies
attached and are amply different from mechanically produced goods of similar utility.
6
specified under section 9(5), through an ECO who is
Some of the notified products are leather articles, carved wood products, wood turning and
required to collect tax at source under section 52, and
lacquer ware, bamboo products, textiles hand printing, theatre costumes, musical instruments,
dolls and toys, etc. These examples are only for the purpose of knowledge and are not relevant for having an aggregate turnover, to be computed on all
examination purpose. ` 10 lakh in case
India basis, not exceeding ` 20 lakh (`
7
The provisions relating to e-way bill have been discussed in detail in Chapter 10 in this
8
Module of the Study Material. subject to fulfilment of other conditions prescribed under said notification.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.29 1.30 8.30 GOODS AND SERVICES TAX

of Special Category States of Mizoram, Tripura, Manipur and Nagaland) in a (vi) such persons shall not be granted more than one enrolment number
FY, have been exempted from obtaining compulsory registration in a State/UT;
[Notification No. 65/2017 CT dated 15.11.2017]. (vii) no supply of goods shall be made by such persons through ECO
Therefore, all service providers, whether supplying intra-State, unless such persons have been granted an enrolment number on the
inter-State or through ECO, will be exempt from obtaining registration, common portal; and
provided their aggregate turnover does not exceed ` 20 lakh (` 10 lakh in (viii) where such persons are subsequently granted registration under
special category States of Mizoram, Tripura, Manipur and Nagaland). section 25, the enrolment number shall cease to be valid from the
(F) Persons making intra-State supplies of goods through an ECO with effective date of registration.
aggregate turnover up to the threshold limit [Notification No. 34/2023 CT dated 31.07.2023]
The persons making supplies of goods Liability to register in respect of services provided by the commission agent
through an ECO who is required to collect as per APMC Act for sale/ purchase of agricultural produce
TCS under section 52 and having an
CBIC has clarified 9 the issue as to whether the services provided by the
aggregate turnover in the preceding
commission agent as per Agricultural Produce Marketing Committee Act (APMC
financial year and in the current financial
Act) in connection to the sale/ purchase of agricultural produce qualify as supply
year not exceeding the threshold limit in
under GST with the help of the following example. It further examines and
accordance with the provisions of section
clarifies the registration requirements of such commission agents.
22(1), are exempted from obtaining
registration, subject to the following Mr. A sells agricultural produce by utilizing the services of Mr. B who is a
conditions, namely: commission agent as per the APMC Act of the State 10. Mr. B identifies the buyers
(i) such persons shall not make any and sells the agricultural produce on behalf of Mr. A for which he charges a
inter-State supply of goods; commission from Mr. A.
(ii) such persons shall not make supply of goods through ECO in more In case where the invoice is issued directly by Mr. A to the buyer, the commission
than one State/Union territory; agent (Mr. B) doesn’t fall under the category of agent covered under Schedule I.
(iii) such persons shall be required to have a PAN issued under the However, in case where the invoice is issued by Mr. B to the buyer, Mr. B is an
Income-tax Act, 1961; agent as covered under Para 3 of Schedule I to the CGST Act. Hence, in such
(iv) such persons shall, before making any supply of goods through ECO, cases, the services supplied by commission agent Mr. B on behalf of the principal
declare on the common portal: without consideration shall be deemed to be a supply – Concept of Deemed
a. their PAN Supply under Schedule-I has been discussed in detail in Chapter 1 – Supply under
GST in Module 1 of the Study Material.
b. address of their place of business and
c. State/UT in which such persons seek to make such supply,
which shall be subjected to validation on the common portal; 9
Circular No. 57/31/2018 GST dated 04.09.2018
(v) such persons have been granted an enrolment number on the 10
As per the APMC Act, the commission agent is a person who buys or sells the agricultural
common portal on successful validation of the PAN declared above; produce on behalf of his principal, or facilitates buying and selling of agricultural produce
on behalf of his principal and receives, by way of remuneration, a commission or
percentage upon the amount involved in such transaction.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.31 1.32 8.32 GOODS AND SERVICES TAX

The registration requirements of the commission agents in such cases have been The provisions of section 23 can be summarized in the following diagram:
examined and clarified as follows:
Person engaged exclusively in the Person engaged exclusively in the
(i) As we have already seen, as per section 24, a person is liable for mandatory business of supplying goods/ services/ business of supplying goods/ services/
both not liable to tax both wholly exempt from tax
registration if he makes taxable supply of goods or services or both on
Persons not liable for
behalf of other taxable persons.
registration
Accordingly, a commission agent will be liable Specified category of persons
Agriculturist to the extent of supply
to get mandatorily registered under this notified by the Government on GST
of produce out of cultivation of land
Council recommendation
provision only when both the following
conditions are satisfied:
(a) the principal should be a taxable person; 7. PROCEDURE FOR REGISTRATION [SECTIONS
and
25, 26 & 27]
(b) the supplies made by the commission
agent should be taxable.
STATUTORY PROVISIONS
However, generally, a commission agent under APMC Act makes supplies on
behalf of an agriculturist who is not a taxable person if he supplies produce
Section 25 Procedure for registration
out of cultivation of land 11 [as seen above].
Sub-section Particulars
Thus, a commission agent, who is making supplies on behalf of
non-taxable person [viz. agriculturist], is not liable for compulsory (1) Every person who is liable to be registered under section 22 or
registration under this provision. section 24 shall apply for registration in every such State or
Union territory in which he is so liable within thirty days from
(ii) Further, since the services provided by the commission agent for sale/
the date on which he becomes liable to registration, in such
purchase of agricultural produce are exempt from GST 12, such commission manner and subject to such conditions as may be prescribed.
agents are not liable to be registered in accordance with provisions of Provided that a casual taxable person or a non-resident taxable
section 23(1)(a) [as discussed above]. person shall apply for registration at least five days prior to the
(iii) However, where a commission agent is liable to pay tax under reverse commencement of business.
charge for any other services procured by him, such an agent will be Provided further that a person having a unit, as defined in the Special
required to get registered compulsorily (We have already seen under Economic Zones Act, 2005, in a Special Economic Zone or being a
previous heading that persons liable to pay tax under reverse charge are Special Economic Zone developer shall have to apply for a separate
registration, as distinct from his place of business located outside the
required to obtain registration mandatorily).
Special Economic Zone in the same State or Union territory.
Explanation—Every person who makes a supply from the
territorial waters of India shall obtain registration in the coastal
11
in terms of section 23(1)(a) State or Union territory where the nearest point of the
12
Notification No. 12/2017 CT (R) dated 28.06.2017 [Discussed in Chapter 3 – Exemptions appropriate baseline is located.
from GST in Module 1 in Module-1 of the Study material.]

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.33 1.34 8.34 GOODS AND SERVICES TAX

(2) A person seeking registration under this Act shall be granted a Provided further that in case of failure to undergo authentication
single registration in a State or Union territory. or furnish proof of possession of Aadhaar number or furnish
Provided that a person having multiple places of business in a alternate and viable means of identification, registration allotted
State or Union territory may be granted a separate registration to such person shall be deemed to be invalid and the other
for each such place of business, subject to such conditions as provisions of this Act shall apply as if such person does not have
may be prescribed. a registration.

(3) A person, though not liable to be registered under section 22 or (6B) On and from the date of notification, every individual shall, in
section 24 may get himself registered voluntarily, and all order to be eligible for grant of registration, undergo
provisions of this Act, as are applicable to a registered person, authentication, or furnish proof of possession of Aadhaar
shall apply to such person. number, in such manner as the Government may, on the
recommendations of the Council, specify in the said notification.
(4) A person who has obtained or is required to obtain more than one Provided that if an Aadhaar number is not assigned to an
registration, whether in one State or Union territory or more than individual, such individual shall be offered alternate and viable
one State or Union territory shall, in respect of each such registration, means of identification in such manner as the Government may,
be treated as distinct persons for the purposes of this Act on the recommendations of the Council, specify in the said
notification.
(5) Where a person who has obtained or is required to obtain
registration in a State or Union territory in respect of an (6C) On and from the date of notification, every person, other than an
establishment, has an establishment in another State or Union individual, shall, in order to be eligible for grant of registration,
territory, then such establishments shall be treated as undergo authentication, or furnish proof of possession of
establishments of distinct persons for the purposes of this Act. Aadhaar number of the Karta, Managing Director, whole time
Director, such number of partners, Members of Managing
(6) Every person shall have a Permanent Account Number issued
Committee of Association, Board of Trustees, authorised
under the Income- tax Act, 1961 in order to be eligible for grant
representative, authorised signatory and such other class of
of registration:
persons, in such manner, as the Government may, on the
Provided that a person required to deduct tax under section 51
recommendation of the Council, specify in the said notification
may have, in lieu of a Permanent Account Number, a Tax
Provided that where such person or class of persons have not
Deduction and Collection Account Number issued under the said
been assigned the Aadhaar Number, such person or class of
Act in order to be eligible for grant of registration.
persons shall be offered alternate and viable means of
(6A) Every registered person shall undergo authentication, or furnish identification in such manner as the Government may, on the
proof of possession of Aadhaar number, in such form and recommendations of the Council, specify in the said notification.
manner and within such time as may be prescribed.
(6D) The provisions of sub-section (6A) or sub-section (6B) or sub-
Provided that if an Aadhaar number is not assigned to the
section (6C) shall not apply to such person or class of persons or
registered person, such person shall be offered alternate and
any State or Union territory or part thereof, as the Government
viable means of identification in such manner as Government
may, on the recommendations of the Council, specify by
may, on the recommendations of the Council, prescribe.
notification.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.35 1.36 8.36 GOODS AND SERVICES TAX

Explanation—For the purposes of this section, the expression sub-section (10), if no deficiency has been communicated to the
“Aadhaar number” shall have the same meaning as assigned to applicant within that period
it in clause (a) of section 2 of the Aadhaar (Targeted Delivery of
Financial and Other Subsidies, Benefits and Services) Act, 2016 Section 26 Deemed registration

(7) Notwithstanding anything contained in sub-section (6), a non- (1) The grant of registration or the Unique Identity Number under
resident taxable person may be granted registration under sub- the State Goods and Services Tax Act or the Union Territory
section (1) on the basis of such other documents as may be Goods and Services Tax Act shall be deemed to be a grant of
prescribed registration or the Unique Identity Number under this Act subject
to the condition that the application for registration or the
(8) Where a person who is liable to be registered under this Act fails Unique Identity Number has not been rejected under this Act
to obtain registration, the proper officer may, without prejudice within the time specified in sub-section (10) of section 25.
to any action which may be taken under this Act or under any
other law for the time being in force, proceed to register such (2) Notwithstanding anything contained in sub-section (10) of
person in such manner as may be prescribed section 25, any rejection of application for registration or the
Unique Identity Number under the State Goods and Services Tax
(9) Notwithstanding anything contained in sub-section (1),–– Act or the Union Territory Goods and Services Tax Act shall be
deemed to be a rejection of application for registration under
(a) any specialised agency of the United Nations Organisation this Act.
or any Multilateral Financial Institution and Organisation
notified under the United Nations (Privileges and Section 27 Special provisions relating to casual taxable person and
Immunities) Act, 1947, Consulate or Embassy of foreign non-resident taxable person
countries ; and
(1) The certificate of registration issued to a casual taxable person or
(b) any other person or class of persons, as may be notified by a non- resident taxable person shall be valid for the period
the Commissioner, specified in the application for registration or ninety days from
the effective date of registration, whichever is earlier and such
shall be granted a Unique Identity Number in such manner and person shall make taxable supplies only after the issuance of the
for such purposes, including refund of taxes on the notified certificate of registration.
supplies of goods or services or both received by them, as may be
Provided that the proper officer may, on sufficient cause being
prescribed.
shown by the said taxable person, extend the said period of
(10) The registration or the Unique Identity Number shall be granted ninety days by a further period not exceeding ninety days.
or rejected after due verification in such manner and within such
(2) A casual taxable person or a non-resident taxable person shall,
period as may be prescribed.
at the time of submission of application for registration under
(11) A certificate of registration shall be issued in such form and with sub-section (1) of section 25, make an advance deposit of tax in
effect from such date as may be prescribed an amount equivalent to the estimated tax liability of such
person for the period for which the registration is sought.
(12) A registration or a Unique Identity Number shall be deemed to Provided that where any extension of time is sought under sub-
have been granted after the expiry of the period prescribed under section (1), such taxable person shall deposit an additional

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.37 1.38 8.38 GOODS AND SERVICES TAX

amount of tax equivalent to the estimated tax liability of such A casual taxable person or a at least 5 days
person for the period for which the extension is sought. non-resident taxable person prior to the
commencement
(3) The amount deposited under sub-section (2) shall be credited to of business
the electronic cash ledger of such person and shall be utilised in
the manner provided under section 49. Every person who makes a in the coastal State/UT within 30 days
supply from the territorial where the nearest point from the date on
waters of India of the appropriate base which he
ANALYSIS line is located. becomes liable to
registration
The procedure for registration is governed by section 25 read with the relevant
CGST Rules, 2017. Relevant provisions of CGST Rules, 2017 have been (17) Sugam Services Ltd. is engaged in taxable supply of services
incorporated at the relevant places. Further, special provisions have been provided in Delhi. The turnover of Sugam Services Ltd. exceeded ` 20 lakh
for registration of casual taxable person and non-resident taxable person under on 1st November. It is liable to get registered by 1st December in
section 27. Concept of deemed registration has been elaborated under section 26. Delhi.

Under GST, the application for registration has to be submitted electronically at the (ii) State-wise registration [Section 25(2) read with rule 11]
GST Common Portal – [Link], duly signed or verified.
(A) One registration per State
A large number of forms/formats relating to registration have been prescribed in
‰ Registration needs to be taken State-wise, i.e. there is no
the CGST Rules. For every process in the registration chain such as application for
centralized registration under GST. A business entity having its
registration, acknowledgment, query, rejection, registration certificate, show cause
notice for cancellation, reply, cancellation, amendment, field visit report etc., there branches in multiple States will have to take separate State-wise
are separate standard formats 13. This makes the process uniform all over the registration for its branches in different States.
country. The decision-making process has also been expedited. Strict time-lines ‰ Further, within a State, an entity with different branches shall
have been stipulated for completion of different stages of registration process. normally be granted a single registration wherein it can declare
(i) Where and by when to apply for registration? [Section 25(1)] one place as principal place of business (PPoB) and other
branches as additional places of business (APoB) The exception
Particulars Where When
to this is provided below:
Person who is liable to be in every such State/UT within 30 days
registered under section 22 in which he is so liable from the date on (B) Separate registration for different places of business within a
or section 24 which he State/UT may be granted
becomes liable to
‰ Although a taxpayer having multiple places of business in one
registration
State is not mandatorily required to obtain a separate
registration for each such place of business in the State, he has
13
For knowledge purposes students are advised to go through various forms/formats an option to obtain independent registrations with respect to
relating to registration which are a part of the CGST Rules. The online forms can also be
viewed at [Link]

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.39 1.40 8.40 GOODS AND SERVICES TAX

each such separate place of business based on business person would also become ineligible to pay tax under
requirements. composition levy.

‰ In case a separate registration for each place of business has ‰ The provisions of rules 9 and 10 [Discussed in subsequent paras]
been obtained, such separately registered places of business of relating to verification and grant of registration shall mutatis
such person shall have to pay tax on supply of goods/ services/ mutandis apply to an application submitted under this rule.
both made to another registered place of business, of such
(iii) Voluntary registration [Section 25(3)]
person and issue a tax invoice/bill of supply, for such supply.
A person who is not liable to be registered under
‰ A registered person opting to obtain separate registration for a
section 22 or section 24 may get himself registered
place of business shall submit a separate application in Voluntary
voluntarily. In case of voluntary registration, all
Form GST REG 01 in respect of such place of business. Registration
provisions of this Act, as are applicable to a
(18) Meethalal & Sons - a supplier in Maharshtra - has registered person, shall apply to such voluntarily
three branches in Mumbai, Pune and Mahabaleshwar. registered person.
Mumbai and Pune branches are engaged in supply of
However, once a person obtains voluntary registration, he has to pay tax
garments and Mahabaleshwar branch engaged in supply of shoes.
even though his aggregate turnover does not exceed the applicable
Either it can obtain single registration for Mahrashtra declaring one of
threshold limit for registration (` 40 lakh/ ` 20 lakh/ ` 10 lakh, as the case
the branches as PPoB and other two branches as APoB or it can obtain
may be). Voluntary registration is usually obtained by businesses for
separate GST registration for each of the three branches in Mumbai,
ensuring seamless flow of credit to their customers.
Pune and Mahabaleshwar as separate places of business.
(iv) Distinct Persons/ establishments of distinct persons [Section 25(4) &
In case Meethalal & Sons opts to have separate registrations for its all
(5)]
three branches and Mumbai branch sends some garments [liable to
GST] for sale to Pune branch, Mumbai branch must raise a tax invoice A person who has obtained/ is required to obtain more than one
and pay tax on such transfer of garments to Pune branch. registration, whether in one State/ Union territory or more than one
State/Union territory shall, in respect of each such registration, be treated as
(C) Composition levy in case of separate registration for multiple
distinct persons.
places of business within a State/UT

‰ If a person is paying tax for one of his places of business under Further, where a person who has obtained or is required to obtain registration in a
normal scheme, he cannot opt to pay tax under composition State or Union territory in respect of an establishment, has an establishment in
levy for any other place of business. another State or Union territory, then such establishments shall be treated as
establishments of distinct persons. These concepts have already been discussed
‰ If one of the places of business [separately registered] of a
in detail in Chapter 1– Supply under GST.
registered person becomes ineligible to pay tax under
composition levy, all other registered places of business of said

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.41 1.42 8.42 GOODS AND SERVICES TAX

(v) PAN must for obtaining registration [Section 25(6) & (7)] (vii) Suo-motu registration by the proper officer [Section 25(8) read with
rule 16]
A Permanent Account Number is mandatory to be eligible for grant of
registration. Where, pursuant to any survey, enquiry, inspection, Temporary
search or any other proceedings under the Act, the Registration
ೆ A Non-Resident Taxable Person (NRTP) may be granted registration on
proper officer finds that a person liable to
the basis of other prescribed documents [Elaborated in subsequent paras].
registration under the Act** has failed to apply for
ೆ A person required to deduct tax under section 51 may have, in lieu of a such registration, such officer may register the said person on a temporary
PAN, a Tax Deduction and Collection Account Number issued under the basis and issue an order in prescribed form.
Income Tax Act in order to be eligible for grant of registration.
**Such person shall either:
(vi) Unique Identity Number (UIN) [Section 25(9) & (10) read with rule 17]
(i) submit an application for registration in prescribed form within
Any specialized agency of the United Nations 90 days from the date of grant of temporary registration, or
Organization or any Multilateral Financial
(ii) file an appeal against such temporary registration.
institution and organization
as notified under the In case (ii), if the Appellate Authority upholds the liability to

United Nations (Privileges registration, application for registration shall be submitted within 30

and Immunities) Act, 1947, days from the date of issuance of such order of the Appellate

consulate or embassy of foreign countries and any Authority.

other person notified by the Commissioner, is Provisions relating to verification and issue of registration certificate [as
required to obtain a UIN from the GSTN portal. contained in rules 9 and 10] [discussed in subsequent paras] shall, mutatis

This UIN is needed for claiming refund of taxes paid on notified supplies of mutandis, apply to such application submitted by the person granted

goods and/or services received by them, and for such other purpose as may temporary registration.

be notified. The UIN granted would be a centralized UIN i.e. it shall be GSTIN thereafter granted shall be effective from the date of order of proper
applicable to the whole territory of India. A person having UIN is not officer granting temporary registration.
considered as a registered person and thus, is not a taxable person.
(viii) Procedure for registration [Section 25 read with rules 8, 9 & 10]
The proper officer may, upon submission of an application in prescribed
Provisions relating to procedure for
form or after filling up the said form or after receiving a recommendation
application for registration, verification of the
from the Ministry of External Affairs, Government of India, assign a UIN to
application and approval & issue of
the said person and issue a certificate in Form GST REG 06 within 3 working
registration certificate are contained in the
days from the date of submission of application.
rules 8, 9 and 10 respectively. The same have
to be read in conjunction with the provisions
of section 25.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.43 1.44 8.44 GOODS AND SERVICES TAX

The procedure for obtaining registration as prescribed under rules 8, 9 and Application for registration by Special Economic Zone (SEZ) [Second
10 is also applicable to a person paying tax under composition levy, every proviso to section 25(1)]: A person
person seeking voluntary registration as well as a casual taxable person. having unit in SEZ/an SEZ developer will SEZ is a geographically
have to make a separate application for bound zone where the
Such persons shall apply for registration in Form GST REG 01. The economic laws relating to
registration as distinct from his place of export and import are
application for registration in GST Form REG 01 is divided into two parts –
business located outside SEZ in the same more liberal as compared
Part A and Part B.
State/UT. to other parts of the
country. SEZ is considered
Above procedure will not apply to: Thus, there to be a place outside
may be a case India for all tax purposes.
‰ Non-resident taxable person (NRTP)
where two
‰ A person required to deduct tax at source under section 51
units of a tax
‰ A person required to collect tax at source under section 52 payer are located in same State/UT - one in SEZ
‰ A person supplying OIDAR services from a place outside India to a and another outside SEZ. In that case, separate
non-taxable online recipient referred to in section 14 of the IGST registrations have to be obtained for each of the two units as separate
Act. places of business.

‰ A person supplying online money gaming from a place outside (19) Suvarna Industries is engaged in manufacturing activities in
India to a person in India referred to in section 14A of the IGST Uttar Pradesh. It has two manufacturing units in UP - one in SEZ
Act. and another outside SEZ. Under GST, one registration per State
is required. However, since in this case, one of the two units of Suvarna
Industries is located in SEZ, SEZ unit will have to compulsorily make a
Facilitation centres
separate application for registration as a place of business distinct from unit
In order to cater to the needs of tax payers who are not IT savvy, Facilitation located outside SEZ in the same State
centres have been established which help
Application for registration by Input Service Distributor [Second
the taxpayer in submitting the
proviso to rule 8(1)]: Every person being an Input Service Distributor shall
application for registration, amending the
make a separate application for registration as such Input Service
registration certificate, submitting
Distributor. There is no threshold limit for registration for an ISD. A person
application for cancellation of
who follows ISD mechanism is required to obtain a separate registration
registration, revocation of cancellation of
even though it may be otherwise registered in the same State, though the
registration, etc. Facilitation Centre shall
application shall be made in Form GST REG 01 only. An office of a person
be responsible for the digitization and/or
like marketing division, security division etc. which receives common
uploading of the forms and documents.
services getting consumed by different GST registered locations may apply
for a separate ISD registration.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.45 1.46 8.46 GOODS AND SERVICES TAX

Procedure for registration has been depicted by way of a diagram

No
below:

No
Procedure for registration
writing.
recorded in

Part I
reasons to be

Proper officer
may reject the
application for

(C)
Every person liable to get registered and person seeking voluntary registration
shall, before applying for registration, declare his Permanent Account Number

Other cases
(PAN) and State/UT in Part A of FORM GST REG-01 on GST Common Portal.

out site verification

opt for Aadhaar authentication

where a person fails to undergo

where PO deems it fit to carry

Aadhaar authentication/does not

Yes

where a person, who has undergone

Aadhaar authentication, is identified
on common portal, based on data
analysis & risk parameters, to carry
out site verification
PAN is validated online by Common Portal from CBDT database and is
also be verified through separate OTPs sent to the PAN linked mobile
number and e-mail address.
Yes

Temporary Reference Number (TRN) is generated and communicated to

If proper officer is satisfied with it?

date

from
the applicant on the validated mobile number and e-mail address.
days’ time from receipt of notice?
clarification/ documents

within 7

application
submission
working days

within 30 days
date of receipt of information/

If applicant has furnished the clarification**,

submission date
from application
information or documents within 7 working
within 7 working days from the
Proper officer will grant registration

Using TRN, applicant shall electronically submit application in Part B of

is

application form, along with specified documents at the Common Portal.

risk

Part B of application contains the details, such as, constitution of business,

jurisdiction, option for composition, date of commencement of business,
&

thereby
seeking
from the
applicant

reason to obtain registration, address of PPoB and nature of activity carried

(B)

documents

issues notice
electronically

clarification**,

Proper Officer
information or

out therein, details of APoB, details of bank account(s), details of authorized

No. & E-mail address.

Part-II
signatory, aadhaar authentication, etc.
where a person, who
has undergone Aadhaar
authentication,
identified on common
portal, based on data
analysis
parameters, to carry out
site verification

On receipt of such application, an acknowledgement in the prescribed

Yes

form shall be issued to the applicant electronically. A Casual Taxable

tion/correction of particulars declared in the application

Person (CTP) applying for registration gets a TRN for making an advance
(B)

site

order?

deposit of tax in his electronic cash ledger and an acknowledgement is

found in
documents

If same are No
where PO
verification

deems it fit
to carry out

Registration is

issued only after said deposit.*

site & prescribed

granted within 30
after verification of
days of application

accompanying documents.

Application shall be forwarded to the Proper Officer.

(B)

where
fails to
Aadhaar
Aadhaar

undergo

Yes
applicant
authentication

tion/ does
authentica
not opt for

Proper Officer examines the application and

The procedure after receipt of application by the Proper Officer is

depicted in Part II.
(A)

date of

* Discussed in detail in subsequent paras.

aadhaar

7 working
application
verification
without site

Registration
if applicant
successfully

submission of
validates his

days from the

granted within
authentication,
**Clarification includes modification/correction
for registration other than PAN, State Mobile No

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.47 1.48 8.48 GOODS AND SERVICES TAX

AADHAAR AUTHENTICATION
ِ Deemed Approval of Application
If the proper officer fails to take any action in the following cases within the [Section 25(6A), (6B), (6C) & (6D) read with rules 8, 9, 10B and 25]
stipulated time, the application for grant of registration shall be deemed to As seen above, there’s a simplified registration procedure under GST.
have been approved- However, this easy registration procedure was unduly misused by fly-by-
night operators. Thus, in an endeavor to curb/check such operators and to
•within a period of 30 days from the date of
in cases where
he
e a person is submission of the application
increase compliance, aadhaar e-KYC based registration has been introduced
covered in (B) above under the GST law. Aadhaar authentication
is mandatory for the new applicants
(whether an individual applicant or
•within a period of 7 working days from the otherwise) in order to be eligible for grant
in case of a person covered date of submission of the application of registration. Aadhaar Authentication is
in (A) above
required to be complied with, by the
persons applying for GST registration as
normal taxpayer/ composition/ casual
•within 7 working days from the date
taxable person/ Input Service Distributor
of receipt of clarification, information
in cases covered in (C) above or documents furnished by the (ISD)/ SEZ Developer/ SEZ Unit etc. in Form
applicant GST REG 01.
Existing registrants (those who are already registered under GST) are also
required to undergo aadhaar authentication.
To summarise Deemed Approval: How is the aadhaar authentication done?
‰ In case of successful authentication of Aadhaar and no SCN being New registrants
issued, registration will be deemed to be approved within 7
While filing the application for registration, the applicant gets an option as
working days.
to whether he wants to opt for an Aadhaar authentication or not. If he opts
‰ Tax Officer can issue SCN within 7 working days, for grant of ‘Yes’ for Aadhaar authentication, GST system sends "authentication link" on
registration, in cases of successful Aadhar authentication. the mobile numbers and email ids (mentioned in the registration
‰ If Aadhar authentication is not opted for/ aadhaar authentication application) of promotor/partner, and primary authorized signatory which
fails in validation/ PO deems it fit to carry out site verification are selected by the applicant 14.
and no SCN is issued, registration will be deemed to be approved
On clicking the verification link, a window for Aadhaar authentication opens
within 30 days by tax officer. However, the PO can issue SCN
where they enter the Aadhaar Number and the OTP received by them on
upto 30 days.
the mobile number and email id linked with Aadhaar.
‰ In both the cases above where SCN is issued, applicants can
14
submit their reply within 7 working days from issue of SCN. While opting for Aadhaar authentication, the applicant needs to select atleast 1 Primary
Authorized Signatory and 1 Promoter/ Partner/Karta/Director/Member for authentication
purposes.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.49 1.50 8.50 GOODS AND SERVICES TAX

Once Aadhaar authentication has been successfully validated, his A. AADHAAR AUTHENTICATION PROCESS
application will be deemed to be approved within 7 working days and the
As per section 25(6A), (6B) and (6C), following persons are required to
registration application submitted by him will not be marked for mandatory
undergo aadhaar authentication:
site visit, unless the tax official raises a show cause notice within stipulated
time. (1) New applicant [Rule 8(4A), (4B) and (5)]

However, in case the applicant does not Every (i) individual applicant or (ii) an applicant, other than an
opt for Aadhaar authentication while individual, shall undergo authentication/furnish proof of possession of
applying for registration or where his Aadhaar number, in the manner prescribed in rule 8 16.
Aadhar authentication fails in validation,
the applicant who has undergone aadhaar (i) Where an applicant opts for authentication of Aadhaar number:
authentication is identified for site visit
Rule 8(4A) provides that where an applicant opts for authentication
based on data analysis and risk parameters
of Aadhaar number, he shall, while submitting an application for
or proper officer deems it fit to carry out
site visit, registration application will not be registration, undergo authentication of Aadhaar number. Said
deemed approved within 7 working days authentication is required to be eligible for grant of
and it will be marked for mandatory site registration.
visit and approval thereafter, by the tax
Date of submission of the application in such cases shall be earlier
official. Registration application will get deemed approved after 30 calendar
of:
days, if tax official doesn't take any action.
(a) the date of authentication of the Aadhaar number,
If tax official raises SCN within 30 calendar days, then applicant has 7
working days to reply to it. Tax official can take further action on that reply or
within 7 working days. If tax official doesn't take any action after receipt of (b) 15 days from the submission of the application in Part B of
applicant’s reply within next 7 working days, his application will get deemed Form GST REG-01.
approved.
Whose aadhaar numbers shall be verified?
Existing registrants
In case applicant is an individual, he shall undergo authentication
All the regular taxpayers and composition taxpayer are required to get of his own aadhaar number.
Aadhaar authenticated for existing GST registration. An existing taxpayer
can get himself Aadhaar authenticated on GST portal using either Aadhaar In case applicant is other than individual, the authentication will be
authentication link or uploading E-KYC documents 15. of aadhaar number of the Karta, Managing Director, whole time
Director, such number of partners, Members of Managing
Let us go through the aadhaar authentication process in detail:
Committee of Association, Board of Trustees, authorised
representative, authorised signatory and such other notified class
15
It is not mandatory for every authorized signatory, promoter or partner to get Aadhaar of persons [authorised signatory of all types, Managing and
authenticated for an existing GST registration. The Aadhaar authentication will be needed
only for 1 Primary Authorized Signatory and 1 Promoter/ Partner/ Karta/ Director/
16
Member. Notification No. 18/2020 CT dated 23.03.2020

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.51 1.52 8.52 GOODS AND SERVICES TAX

Authorised partners of a partnership firm and Karta of a Hindu along with the verification of the original copy of the documents
Undivided Family, have been so notified 17]. (E) uploaded with the application form at one of the notified
Facilitation Centers.
Risk-based biometric-based aadhaar authentication of registration
applicants 18 The application shall be deemed to be complete only after
completion of the process laid down hereunder.
An applicant who has opted for authentication of Aadhaar number
and is identified on the common portal, based on data analysis and (2) Persons already registered
risk parameters, shall be followed by biometric-based Aadhaar Every registered person shall undergo authentication/furnish proof of
authentication and taking photograph: possession of Aadhaar number, in prescribed form and manner and
(i) of the applicant where the applicant is an individual within the prescribed time.

or The manner in which aadhaar authentication needs to be done by a

registered person is prescribed as under:-
(ii) of notified individuals (mentioned as (E) above) in relation
to the applicant where the applicant is not an individual, A registered person, who has been issued a certificate of registration
under GST, shall undergo authentication of the Aadhaar number of:-
along with the verification of the original copy of the documents
uploaded with the application form at one of the notified ‰ Proprietor, in the case of proprietorship firm,
Facilitation Centres. ‰ Any partner, in the case of a partnership firm,
The application shall be deemed to be complete only after ‰ Karta, in the case of a Hindu undivided family,
completion of the process laid down hereunder. ‰ Managing director or any whole-time director, in the case of a
An acknowledgement shall be issued to the applicant only after company,
completion of biometric-based authentication. ‰ Any of the Members of the Managing Committee of an
(ii) Where an applicant does not opt for authentication of Aadhaar Association of persons or body of individuals or a Society, or
number 19: The application of a person who has not opted for
‰ Trustee in the Board of Trustees, in the case of a Trust;
and of the Authorized Signatory,
authentication of Aadhaar number, shall be followed by taking
photograph: in order to be eligible for the following purposes:
x of the applicant where the applicant is an individual or 9 for filing of application for revocation of cancellation of
registration [Rule 23]
x of notified individuals (mentioned as (E) above) in relation
to the applicant where the applicant is not an individual, 9 for filing of refund application in Form RFD-01 [Rule 89]
9 for refund of the IGST paid on goods exported out of India [Rule
96 20].

17
Notification No. 19/2020 CT dated 23.03.2020
18 20
First proviso to rule 8(4A) Provisions of rules 89 and 96 have been discussed in detail in Chapter 15 – Refunds in
19
Second proviso to rule 8(4A) Module 3 of this Study Material.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.53 1.54 8.54 GOODS AND SERVICES TAX

B. WHERE AADHAAR NUMBER IS NOT ASSIGNED Such manner has been prescribed as follows:

(1) In case of new applicant If Aadhaar number has not been assigned to the person required to
undergo authentication of the Aadhaar number, such person shall
If an aadhaar number is not assigned to a new applicant – either (i) an
furnish the following identification documents, namely: –
individual or (ii) person/class of persons (other than individual), such
individual/person/class of persons shall be offered alternate and (a) his/ her Aadhaar Enrolment ID slip; and
viable means of identification in the manner specified in rule 9 21. (b) (i) Bank passbook with photograph; or
Proviso to rule 9(1) provides that where (ii) Voter identity card issued by the Election Commission of
(i) a person fails to undergo authentication of aadhaar number or India; or
does not opt for authentication of Aadhaar number, or (iii) Passport; or
(ii) a person, who has undergone authentication of Aadhaar number, is (iv) Driving license issued by the Licensing Authority
identified on the common portal, based on data analysis and risk
However, once Aadhaar number is allotted to such person, he shall
parameters for carrying out physical verification of places of
undergo the authentication of Aadhaar number within a period of
business
30 days of the allotment of the Aadhaar number.
(iii) the proper officer (PO), with the approval of an officer authorised
In case of failure to undergo aadhaar authentication/furnish proof
by the Commissioner not below the rank of Assistant
of possession of Aadhaar number/furnish alternate and viable
Commissioner, deems it fit to carry out physical verification of
means of identification, registration allotted to such person shall be
places of business
deemed to be invalid and the other provisions of this Act shall
the registration shall be granted within 30 days of submission of apply as if such person does not have a registration 23.
application only after physical verification of the principal place of
C. Persons/class of persons exempt from aadhaar authentication
business, in the prescribed manner (specified in rule 25 discussed
subsequently) and verification of such documents as the proper officer Section 25(6D) stipulates that above provisions shall not apply to such
may deem fit. person or class of persons or any State or Union territory or part
thereof, as may be notified.
2. In case of already registered persons [Rule 10B]
Following persons have been notified in this regard 24:
If an Aadhaar number is not assigned to an existing registered
person, such person shall be offered alternate and viable means of ‰ A person who is not a citizen of India
identification in the prescribed manner 22. ‰ Department or establishment of State Government or Central
Government
‰ Local authority

21
Provisos to section 25(6B) and 25(6C) read with Notification No.s 18 and 19/2020 CT
23
both dated 23.03.2020 Second proviso to section 25(6A)
22 24
First proviso to section 25(6A) Notification No. 03/2021 CT dated 23.02.2021

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.55 1.56 8.56 GOODS AND SERVICES TAX

‰ Statutory body the notice (in prescribed form) seeking clarifications/ information/
documents from the applicant may be issued by the proper officer not later
‰ Public Sector Undertaking
than 30 days from the submission of the application for registration [Proviso
‰ A person applying for Unique Identity Number under to rule 9(2)].
section 25(9)
Where the proper officer is satisfied with the clarification, information or
Deficiency in registration application [Rule 9(2), (3) and (4)] documents furnished by the applicant, he may approve the grant of
(i) Where the application submitted under rule 8 is found to be deficient, registration to the applicant within a period of 7 working days from the
either in terms of any information or any document required to be date of the receipt of such clarification or information or documents.
furnished under the said rule, or Where no reply is furnished by the applicant in response to the notice
(ii) Where the proper officer requires any clarification with regard to any issued or where the proper officer is not satisfied with the clarification,
information provided in the application or documents furnished information or documents furnished, he may, for reasons to be recorded in
therewith, writing, reject such application and inform the applicant electronically in
prescribed form.
he may issue a notice to the applicant electronically in prescribed form
within a period of 7 working days from the date of submission of the Furnishing of bank account details [Rule 10A]
application. As seen in the diagram outlining the procedure for
registration, while filing the application for
SCN to be issued to applicant within 7 working days registration on GST portal, in Part B of the
application form, a person is required to furnish
The applicant shall furnish such clarification, information or documents the details of his bank account. Rule 10A relaxes
this requirement to a limited extent. In pursuance
electronically within a period of 7 working days from the date of the
to the same, the registered person is allowed to
receipt of such notice [Rule 9(2)].
furnish information within a period of 30 days
from the date of grant of registration, or before
Clarification, information or furnishing the details of outward supplies of goods or services or both
documents to be furnished by within 7 working days under section 37 in GSTR-1 or using IFF, whichever is earlier, furnish
applicant
information with respect to details of bank account on the common portal.
However, in such cases, i.e. where: In short, a taxpayer has an option to give his bank account details after
obtaining registration, within 30 days from the date of grant of
(i) a person fails to undergo Aadhaar authentication/does not opt for
registration or the due date of furnishing details of outward supplies,
Aadhaar authentication or whichever is earlier.
(ii) a person, who has undergone authentication of Aadhaar number, is However, this relaxation is not available for those who have been granted
identified on the common portal, based on data analysis and risk registration as TDS deductor/ TCS collector under rule 12 or suo-motu
parameters for carrying out physical verification of places of business registration under rule 16. They are mandatorily required to furnish the
bank account details at the time of filing the application for registration.
(iii) PO deems it fit to carry out site verification,

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.57 1.58 8.58 GOODS AND SERVICES TAX

Physical verification of business premises in certain cases [Rule 25] Display of registration certificate and GSTIN on the name board
[Rule 18]
(1) Where the proper officer is satisfied that
the physical verification of the place of Every registered person shall display his registration certificate in a
business of a person is required AFTER prominent location at his PPoB and at every APoB. Further, his GSTIN also
the grant of registration: he may get such has to be displayed on the name board exhibited at the entry of his PPoB
verification of the place of business done and at every APoB.
and the verification report along with the other documents, including
(ix) Effective date of registration [Rule 10]
photographs, shall be uploaded in prescribed form on the common
portal within a period of 15 working days following the date of such Where an applicant submits Effective date of registration
verification. application for registration is

(2) Where the physical verification of the place of business of a Within 30 days from the date the Date on which person becomes
person is required BEFORE the grant of registration in the person becomes liable to registration liable to registration
circumstances specified in the proviso to rule After 30 days from the date the Date of grant of registration
9(1) [as given in (B) earlier]: the proper officer person becomes liable to registration
shall get such verification of the place of business
(20) Sugam Services Ltd. is engaged in taxable supply of services
done and the verification report along with the
in Madhya Pradesh. The turnover of Sugam Services Ltd.
other documents, including photographs, shall be
exceeded ` 20 lakh on 1st November. It is required to submit the
uploaded in prescribed form on the common
application for registration upto 1st December [30 days] in the State of
portal at least 5 working days prior to the
Madhya Pradesh. It applies for registration on 28th November and is
completion of the time period specified in the said proviso.
granted registration certificate on 5th December. The effective date of
Issuance of registration certificate [Rule 10] registration of Sugam Services Ltd. is 1st November.
Where the application for grant of registration has been approved, a (21) In above example, if Sugam Services Ltd. applies for
certificate of registration [duly signed or verified through EVC by the proper registration on 3rd December and is granted registration certificate
officer] in Form GST REG-06 showing the PPoB and APoB is made available on 10th December. The effective date of registration of Sugam
to the applicant on the Common Portal and a Goods and Services Tax Services Ltd. is 10th December.
Identification Number (hereinafter referred to as “GSTIN”) i.e. the GST (x) Special provisions for grant of registration in case of Non-Resident
registration no. is communicated to applicant, within 3 days after the grant Taxable Person (NRTP) and Casual Taxable Person (CTP) [Sections 25 &
of registration. 27 read with rules 13 & 15]
GSTIN format (A) Meaning of casual taxable person and non-resident taxable
person
State PAN Entity Check sum
Code Code character Before going into nuances of the registration provisions of CTP and
NRTP, let us first understand the meaning of casual taxable person
and non-resident taxable person:

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 REGISTRATION 8.59 1.60 8.60 GOODS AND SERVICES TAX

or residence in India [Section 2(77)]. He cannot exercise the option to

pay tax under composition levy.
Based on the aforesaid definitions, following points merit
There may be case where a person has a registered
consideration:
business in some State in India, but wants to effect
supplies from some other State in which he does ‰ A CTP does not have a fixed place of business in the State/UT
not have any fixed place of business. Such person where he undertakes supply though he might be registered with
needs to register in the State from where he seeks regard to his fixed place of business in some other State/UT,
while a NRTP does not have fixed place of business/residence in
to supply as a ‘casual taxable person’.
India at all.
CGST Act defines a casual taxable person
‰ A CTP has to undertake transactions in the course or furtherance
as a person who occasionally undertakes
of business whereas the business test is absent in the definition
transactions involving supply of goods or
of NRTP.
services or both in the course or
furtherance of business, whether as (B) Special registration provisions of casual taxable person and
principal, agent or in any other capacity, in a State/UT where he has non-resident taxable person
no fixed place of business [Section 2(20)]. Further, he cannot exercise GST law prescribes special procedure for registration, as also for
the option to pay tax under composition levy. extension of the operation period of such casual or non-resident
(22) Krishnadev & Co., engaged in supplying taxable taxable persons. They have to apply for registration at least 5 days in
goods, is registered in Rajasthan. It wishes to participate in advance before making any supply. Also, registration is granted to
a 5 days’ business exhibition being held in Delhi. However, them or period of operation is extended, only after they make advance
it does not have a fixed place of business in Delhi. deposit of the estimated tax liability. The special registration
procedure pertaining to CTP and NRTP is as follows:
In this case, Krishnadev & Co. has to obtain registration as a casual
taxable person in Delhi. (A) Both CTP 25 and NRTP have to compulsorily get registered under
GST irrespective of the threshold limit, at least 5 days prior to
commencement of business.
(B) As per section 25(6), every person must have a PAN to be eligible
A person who is a foreigner and occasionally
for registration. Since NRTP will generally not have a PAN of India,
wants to effect taxable supplies from any State in
he may be granted registration on the basis of other prescribed
India needs GST registration for the same. Such
person needs to register in the State from where documents.
he seeks to supply as a non-resident taxable
person. CGST Act defines non-resident taxable
person as any person who occasionally undertakes transactions
involving supply of goods or services or both, whether as principal or
agent or in any other capacity, but who has no fixed place of business 25
Subject to exemption from registration under Notification No. 56/2018 CT dated
23.10.2018

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 REGISTRATION 8.61 1.62 8.62 GOODS AND SERVICES TAX

Thus, a NRTP being an Further, CTP/NRTP will get a Temporary Reference Number (TRN) for
individual has to submit a self- making an advance deposit of tax which shall be credited to his
attested copy of his valid CTP and NRTP will electronic cash ledger. An acknowledgement of receipt of application
passport along with the make taxable for registration is issued only after said deposit
application duly signed or Such advance tax deposit amount should be calculated after
supplies only after
verified through electronic considering the due eligible ITC which might be available to such
the issuance of the
verification code by his casual taxable person [Circular No. 71/45/2018 GST dated 26.10.2018].
certificate of
authorized signatory who is an
registration. **Where extension of time is sought, CTP/NRTP will deposit an
Indian Resident having valid
PAN. However, in case of a additional amount of tax equivalent to the estimated tax liability of
business entity incorporated or established outside India, the such person for the period for which the extension is sought.
application for registration shall be submitted along with its tax
Registration of participants of long running exhibitions
identification number or unique number on the basis of which the
entity is identified by the Government of that country or its PAN, if In case of long running exhibitions (for a period
available. more than 180 days), the taxable person cannot
be treated as a CTP and thus such person would
Application will be submitted by NRTP in a different prescribed
be required to obtain registration as a normal
form whereas CTP will submit the application for registration in the
taxable person.
normal form for application for registration i.e. Form GST REG 01
and his registration of CTP will be a PAN based registration. While applying for normal registration, the said
person should upload a copy of the allotment letter granting him
(C) Period of validity of registration certificate granted to CTP/NRTP
permission to use the premises for the exhibition and the allotment
Registration Certificate granted to CTP/NRTP will be valid for: letter/consent letter shall be treated as the proper document as a proof for
his place of business.
(i) Period specified in the registration application, or
In such cases, he would not be required to pay advance tax [Refer Point D]
(ii) 90 days from the effective date of registration [can be extended
for the purpose of registration. He can surrender such registration once the
further by a period not exceeding 90 days by making an application
exhibition is over [Circular No. 71/45/2018 GST dated 26.10.2018].
before the end of the validity of registration granted to him**]
(xi) Deemed registration [Section 26]
whichever is earlier.
Registration under GST is not tax specific, which means that there is single
Provisions relating to verification of application and grant of
registration for all the taxes i.e. CGST, SGST/UTGST, IGST and cess.
registration [under rules 9 and 10] will apply mutatis mutandis, to an
application for registration filed by NRTP. Grant of registration/UIN under any SGST Act/ UTGST Act is deemed to be
registration/UIN granted under CGST Act provided application for
(D) Advance deposit of tax
registration has not been rejected under CGST Act.
At the time of submitting the registration application, CTP/NRTP are
Further, rejection of application for registration/UIN under SGST Act/UTGST
required to make an advance deposit of tax of an amount equivalent
Act is deemed to be rejection of application for registration under CGST Act.
to the estimated tax liability of such person for the period for which
the registration is sought.

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 REGISTRATION 8.63 1.64 8.64 GOODS AND SERVICES TAX

(xii) Special provisions for grant of registration in case of persons required

to deduct tax at source under section 51 or to collect tax at source 8. AMENDMENT OF REGISTRATION [SECTION 28]
under section 52 [Rule 12]
An application for registration has to be submitted by such persons in a STATUTORY PROVISIONS
different prescribed form at GST Common Portal. They would be granted
registration within 3 working days from the date of submission of Section 28 Amendment of registration
application after due verification.
Sub-section Particulars
When a person is applying for registration to collect TCS or to deduct TDS in a
(1) Every registered person and a person to whom a Unique Identity
State/UT where he does not have a physical presence, he shall mention name
Number has been assigned shall inform the proper officer of any
of said State/UT in Part A of prescribed application form for registration.
changes in the information furnished at the time of registration or
Further, the name of the State/UT in which his principal place of business is
subsequent thereto, in such form and manner and within such
located is to be mentioned in Part B of the application form. Thus, States/UTs
period as may be prescribed.
mentioned in Part A and Part B of the application form may be different.
Where, on a request made in writing by a person to whom a registration has (2) The proper officer may, on the basis of information furnished
been granted under rule 12(2) or upon an enquiry or pursuant to any other under sub-section (1) or as ascertained by him, approve or reject
proceeding under the CGST Act, the proper officer is satisfied that a person amendments in the registration particulars in such manner and
to whom a certificate of registration has been issued is no longer liable to within such period as may be prescribed.
deduct tax at source under section 51 or collect tax at source under section Provided that approval of the proper officer shall not be required
52, the said officer may cancel the registration issued and such cancellation in respect of amendment of such particulars as may be prescribed.
shall be communicated to the said person electronically in prescribed form. Provided further that the proper officer shall not reject the
Proper Officer shall follow the procedure laid down for cancellation of application for amendment in the registration particulars without
registration prescribed under this Act and rules therein. giving the person an opportunity of being heard.

(xiii) Special provisions for grant of registration in case of (i) person (3) Any rejection or approval of amendments under the State Goods
supplying online information and data base access or retrieval services and Services Tax Act or the Union Territory Goods and Services
(OIDAR services) from a place outside India to a non-taxable online Tax Act, as the case may be, shall be deemed to be a rejection or
recipient (ii) person supplying online money gaming from a place approval under this Act.
outside India to a person in India [Rule 14]
Application for registration has to be submitted by such persons in a ANALYSIS
different prescribed form. They would be granted registration subject to
A registered person or UIN holder may need to make some
such conditions and restrictions and by such officer as may be notified by
changes/amendments in the registration application. There are two categories of
the Central Government on the recommendations of the Council.
details in registration application – core and non-core fields.
In this Chapter, while elaborating the registration
Core fields are name of the business, (legal name) if there is no change in PAN,
provisions contained in Chapter - III Registration of CGST
Rules, 2017, only Registration forms - Form GST REG-01 and addition / deletion of stakeholders 26, principal place of business (other than
Form GST REG-06 have been discussed. Students are advised to go change in State) or additional place of business (other than change in State). All
through various forms/formats relating to registration at
[Link] for knowledge purposes. 26
Refer diagram given on next page.

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 REGISTRATION 8.65 1.66 8.66 GOODS AND SERVICES TAX

other fields are non-core fields like name of day to day functionaries, e-mail ids, reasons to be recorded in writing and subject to conditions specified by
mobile numbers etc. Commissioner in the said order.
In case the change is in core information in the registration application, the ‰ Application for amendment of registration cannot be filed for change in
taxable person will apply for amendment within 15 days of the event PAN because GST registration is PAN-based. One needs to make fresh
necessitating the change. The proper officer, then, will approve the amendment application for registration in case there is change in PAN. Thus. where a
within next 15 days. For other changes – non-core information, no approval of change in the constitution of any business results in change of PAN of a
the proper officer is required, and the amendment can be affected by the taxable registered person, the said person shall apply for fresh registration.
person on his own on the common portal.
‰ Similarly, application for amendment of registration form cannot be filled if
The provisions relating to amendment of registration are contained in section 28 there is change in place of business from one State to the other because
read with rule 19. GST registrations are State-specific. If one wishes to relocate his business to
The significant aspects of the same are discussed hereunder: another State, he must voluntarily cancel his current registration and apply
for a fresh registration in the State he is relocating his business.
‰ Where there is any change in the particulars furnished in registration
application/UIN application, registered person shall submit an application in Core fields of information
prescribed manner, either at the time of obtaining registration or Unique
Identity Number or as amended from time to time, within 15 days of such Permission of proper officer required if change relates
change, along with documents relating to such change at the Common to core fields of information
Portal. And such change does not warrant cancellation of registration
under section 29
‰ In case of amendment of core fields of information, the proper officer
may, on the basis of information furnished or as ascertained by him,
Addition, deletion or retirement of
approve or reject amendments in the registration particulars in the
Legal name Address of stakeholders (partners or directors,
prescribed manner. Such amendment shall take effect from the date of Karta, Managing Committee, Board of
of business PPoB/APoB
occurrence of event warranting such amendment. Trustees, Chief Executive Officer or
equivalent, responsible for day to day
‰ However, where change relates to non-core fields of information, affairs of the business)
registration certificate shall stand amended upon submission of the
application for amendment on the Common Portal.
‰ The proper officer shall not reject the application for amendment in the Change of these two particulars shall be applicable for all
registration particulars without giving the person an opportunity of being registrations of a registered person obtained under provisions of
heard. this Chapter on same PAN.

‰ Any rejection or approval of amendments under the SGST/UTGST Act shall

be deemed to be a rejection or approval under this Act also.
Mobile no./e-mail address of authorised signatory can be amended only after
‰ Any particulars of the application for registration shall not stand amended online verification through GST Portal.
with effect from a date earlier than date of submission of application for
amendment on common portal except with order of Commissioner for

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 REGISTRATION 8.67 1.68 8.68 GOODS AND SERVICES TAX

Submission of If the proper officer fails to take any action,-

Core areas application within 15 (a) within a period of 15 working days from the date of submission of the
days of change application, or
Registered
Person/ UIN (b) within a period of 7 working days from the date of the receipt of the reply to
GST the show cause notice,
holder
Common Portal
the certificate of registration shall stand amended to the extent applied for and
Non-core areas the amended certificate shall be made available to the registered person on the
common portal.
Amendment carried out on GST
Common Portal (23) Varun Enterprises, a sole proprietorship firm, is engaged in supply
Proper Officer (PO) of electrical goods in Delhi. The firm is registered under GST. Varun is
the proprietor of the firm. He wishes to expand his business and his
friend – Arun - approaches him to provide additional capital for his business if he
Approval to be
is made a partner in Varun’s business.
granted within next
Registration certificate No
15 days
Is PO of the Varun agrees and changes the constitution of his business and forms a
amended
opinion that partnership firm – Varun Arun & Co. Since the change in constitution of business
amendment is from sole proprietorship firm to partnership firm results in change in PAN of the
Yes unwarranted/ registered person, the partnership firm has to apply for fresh registration. The
PO will serve a SCN why
application for amendment within 15 working days of documents reason for the same is that GSTIN is PAN based. Any change in PAN would
should not be rejected? receipt of application furnished are warrant a new registration.
incomplete/
incorrect?
If registered person replies
9. CANCELLATION OR SUSPENSION OF
No to the notice within 7 REGISTRATION AND REVOCATION OF
working days?
Yes
CANCELLATION [SECTIONS 29 & 30]
No
Yes STATUTORY PROVISIONS
If reply is
satisfactory? Application for
Section 29 Particulars
amendment shall be
rejected. Sub-section Cancellation or suspension of registration
Within 7 working days of receipt of
supply (1) The proper officer may, either on his own motion or on an
application filed by the registered person or by his legal

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.69 1.70 8.70 GOODS AND SERVICES TAX

heirs, in case of death of such person, cancel the (d) any person who has taken voluntary registration
registration, in such manner and within such period as under sub-section (3) of section 25 has not
may be prescribed, having regard to the circumstances commenced business within six months from the
where: date of registration
(a) the business has been discontinued, transferred (e) registration has been obtained by means of fraud,
fully for any reason including death of the wilful misstatement or suppression of facts
proprietor, amalgamated with other legal entity,
demerged or otherwise disposed of Provided that the proper officer shall not cancel the
registration without giving the person an opportunity of
(b) there is any change in the constitution of the being heard.
business
Provided further that during pendency of the proceedings
(c) the taxable person is no longer liable to be relating to cancellation of registration, the proper officer
registered under section 22 or section 24 or intends may suspend the registration for such period and in such
to optout of the registration voluntarily made manner as may be prescribed.
under sub-section (3) of section 25.
(3) The cancellation of registration under this section shall not
Provided that during pendency of the proceedings relating affect the liability of the person to pay tax and other dues
to cancellation of registration filed by the registered under this Act or to discharge any obligation under this
person, the registration may be suspended for such period Act or the rules made thereunder for any period prior to
and in such manner as may be prescribed. the date of cancellation whether or not such tax and other
dues are determined before or after the date of
(2) The proper officer may cancel the registration of a person
cancellation.
from such date, including any retrospective date, as he
may deem fit, where,– (4) The cancellation of registration under the State Goods and
Services Tax Act or the Union Territory Goods and Services
(a) a registered person has contravened such
Tax Act, as the case may be, shall be deemed to be a
provisions of the Act or the rules made thereunder
cancellation of registration under this Act.
as may be prescribed
(5) Every registered person whose registration is cancelled
(b) a person paying tax under section 10 has not
shall pay an amount, by way of debit in the electronic
furnished the return for a financial year beyond
credit ledger or electronic cash ledger, equivalent to the
three months from the due date of furnishing the
credit of input tax in respect of inputs held in stock and
said return
inputs contained in semi-finished or finished goods held in
(c) any registered person, other than a person stock or capital goods or plant and machinery on the day
specified in clause (b), has not furnished returns for immediately preceding the date of such cancellation or the
such continuous tax period as may be prescribed output tax payable on such goods, whichever is higher,
calculated in such manner as may be prescribed.

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 REGISTRATION 8.71 1.72 8.72 GOODS AND SERVICES TAX

Provided that in case of capital goods or plant and

machinery, the taxable person shall pay an amount equal ANALYSIS
to the input tax credit taken on the said capital goods or
plant and machinery, reduced by such percentage points The provisions relating to cancellation of registration and its revocation are
as may be prescribed or the tax on the transaction value of contained in sections 29 & 30 respectively read with rules 20 to 23. The
such capital goods or plant and machinery under section
registration granted under GST can be cancelled for specified reasons. The
15, whichever is higher.
cancellation can either be initiated by the Department on their own motion or
(6) The amount payable under sub-section (5) shall be the registered person can apply for cancellation of their registration.
calculated in such manner as may be prescribed.
Where the
Section 30 Revocation of cancellation of registration Voluntary For example, in case of
registered
cancellation by death of registered person,
person no more the legal heirs can apply
(1) Subject to such conditions as may be prescribed, any registered
requires the for cancellation.
registered person, whose registration is cancelled by the person
registration
proper officer on his own motion, may apply to such officer
for revocation of cancellation of the registration in such For example, when the
Where the Proper registrant is not doing

registration
manner, within such time and subject to such conditions Officer considers business from the

Cancellation of
and restrictions, as may be prescribed. Suo-motu
the registration of a registered place of
cancellation by business or if he issues tax
person liable for
the Department invoice without making the
(2) The proper officer may, in such manner and within such cancellation in view
of certain defaults supply of goods or
period as may be prescribed, by order, either revoke
services.
cancellation of the registration or reject the application.
Provided that the application for revocation of cancellation (i) Circumstances where registration is liable to be cancelled [Section
of registration shall not be rejected unless the applicant 29(1) & (2)]
has been given an opportunity of being heard.
A. Circumstances when the registration can be cancelled either suo
Provided further that such revocation of cancellation of motu by proper officer or on an application of the registered
registration shall be subject to such conditions and
person or his legal heirs (in case death of such person)
restrictions, as may be prescribed.
Cancellation by the registered person on its own or by the Department
(3) The revocation of cancellation of registration under the
--Business discontinued
State Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act, as the case may be, shall be --Transferred fully for any reason Taxable person who is
including death of the no longer liable to be
deemed to be a revocation of cancellation of registration proprietor Change in the registered under
under this Act. section 22 or section
--Amalgamated with other legal constitution of the
entity business 24 or who intends to
opt out of the
--Demerged or voluntary registration.
--Otherwise disposed of

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 REGISTRATION 8.73 1.74 8.74 GOODS AND SERVICES TAX

B. Circumstances when the proper officer can cancel registration on (e) avails input tax credit in violation of the provisions of
his own section 16 27 of the CGST Act or the rules made thereunder.
In the following cases, registration can be cancelled by the proper (f) furnishes the details of outward supplies in
officer from such date, including any retrospective date, as he may Form GSTR-1, as amended in FORM GSTR-1A if any, under
deem fit after giving an opportuniy of being heard: section 37 for one or more tax periods which is in excess of
the outward supplies declared by him in his valid return
A registered person
has contravened the under section 39 for the said tax periods.
prescribed provisions
(g) violates the provision of rule 86B 28.
(Refer I below)
(ga) violates the provisions of third or fourth proviso to rule
Registration was obtained A registered person has not
by means of fraud, wilful Proper filed returns for specified 23(1).
misstatement or officer can period [Refer clauses (h) &
suppression of facts cancel (h) required to file return under section 39(1) for each month
(i) below]
registration or part thereof (i.e. monthly return filer), has not
on his own furnished returns for a continuous period of 6 months.
if
Voluntarily registered person Composition tax payer has
has not commenced the not furnished return for a FY (i) required to file return under proviso to section 39(1) for
business within 6 months beyond 3 months from due each quarter or part thereof (Quarterly return under
from the date of registration date of furnishing return QRMP scheme), has not furnished returns for a
continuous period of 2 tax periods.
C. Suspension of registration [First proviso to section 29(1) and
second proviso to section 29(2) read with rule 21A]
(I) Prescribed contraventions which make a registered person liable to
Once a registered person has applied for cancellation of registration
cancellation of registration [Rule 21]: The registered person-
or the proper officer seeks to cancel his
(a) does not conduct any business from the declared place of registration, the proper officer may
business, or suspend his registration during pendency
of the proceedings relating to cancellation
(b) issues invoice/bill without supply of goods/services in
of registration. In this way, a taxpayer is
violation of the provisions of this Act, or the rules made
barred from the routine compliances, including filing returns, under
thereunder.
GST law during the pendency of the proceedings related to
(c) violates the provisions of section 171. Section 171 contains cancellation of registration.
provisions relating to anti-profiteering measure – discussed
in detail in Chapter 24 – Miscellaneous Provisions in
Module 3 of the Study Material. 27
Provisions of section 16 have been discussed in detail in Chapter 7 – Input tax credit in
this Module of the Study Material.
(d) violates the provision of rule 10A (discussed earlier in this 28
Provisions of rule 86B have been discussed in detail in Chapter 7 – Input tax credit of
chapter). Module 2 of this Study Material.

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 REGISTRATION 8.75 1.76 8.76 GOODS AND SERVICES TAX

The period and manner of suspension of registration is as follows: OR

1. Where registered person has applied for cancellation of (ii) such other analysis, as may be carried out on the
registration: Where a registered person has applied for recommendations of the Council,
cancellation of registration, the registration shall be deemed to be
show that there are significant differences or anomalies
suspended from:
indicating contravention of the provisions of the CGST Act or
(a) the date of submission of the application the rules made thereunder, leading to cancellation of
registration of the said person, or
or
(b) there is a contravention of the provisions of rule 10A by the
(b) the date from which the cancellation is sought,
registered person, the registration of such person shall be
whichever is later, suspended.
pending the completion of proceedings for cancellation of Said person shall be intimated in prescribed form by sending
registration. a communication to his e-mail address provided at the time
2. Where cancellation of the registration has been initiated by the of registration or as amended from time to time. In this
Department on its own motion: Where the proper officer has intimation for suspension and notice for cancellation of
reasons to believe that the registration, the said differences and anomalies are
registration of a person is liable to highlighted and said person is asked to explain, within a
be cancelled, he may suspend the period of 30 days, as to why his registration shall not be
registration of such person with cancelled.
effect from a date to be In cases where the cancellation is initiated by the Department on its
determined by him, pending the own and registration of a person has been suspended, such person
completion of the proceedings for shall not be granted any refund under section 54, during the period
cancellation of registration. of suspension of his registration.
Where,- 3. A registered person, whose registration has been suspended as
(a) (i) a comparison of the returns furnished by a registered above:
person under section 39 with: x shall not make any taxable supply** during the period of
suspension and
x the details of outward supplies furnished in Form
GSTR-1, as amended in GSTR-1A if any, or x shall not be required to furnish any return under section
39.
x the details of inward supplies derived based on the
details of outward supplies furnished by his **The expression “shall not make any taxable supply”
suppliers in their Form GSTR-1, as amended in shall mean that the registered person shall not issue a tax
GSTR-1A if any, of the previous tax period, if any, invoice and, accordingly, not charge tax on supplies made by
him during the period of suspension.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.77 1.78 8.78 GOODS AND SERVICES TAX

4. The suspension of registration shall be deemed to be revoked (ii) Procedure for cancellation of registration [Rules 20 and 22]
upon completion of the cancellation proceedings by the proper (a) Voluntary cancellation by registered person
officer. Such revocation shall be effective from the date on which
Application
the suspension had come into effect.
‰ A registered person seeking cancellation of registration 31 shall
The suspension of registration may be revoked by the proper
electronically submit the application for cancellation of registration in
officer, anytime during the pendency of the proceedings for
prescribed form within 30 days of occurrence of the event warranting
cancellation, if he deems fit.
cancellation.
5. Further, the suspension of registration shall be deemed to be
‰ He is required to furnish in the application the details of inputs held in
revoked upon furnishing of all the pending GST returns, where GST
stock or inputs contained in semi-finished/finished goods held in
registration was suspended due to non-filing of GST return for a
stock and of capital goods held in stock on the date from which
financial year beyond 3 months from the due date of furnishing the
cancellation of registration is sought, liability thereon, details of the
said return by a composition taxpayer or returns for such
payment, if any, made against such liability and may furnish relevant
continuous tax period as may be prescribed by registered persons
documents thereof.
(other than composition taxpayer) subject to the condition that
the registration has not been cancelled by the proper officer Order
under rule 22. ‰ Where a person who has submitted an application for cancellation of
6. Further also, where the registration has been suspended under his registration is no longer liable to be registered, proper officer shall
sub-rule (2A) for contravention of provisions of rule 10A [furnishing issue the order of cancellation of registration within 30 days from the
of bank account details] and the registration has not already been date of submission of application for cancellation.
cancelled by the proper officer under rule 22, the suspension of (b) Suo-motu cancellation by the Department
registration shall be deemed to be revoked upon compliance with
the provisions of rule 10A.
‰ Where the proper officer cancels the
registration suo-motu, he shall not
7. Where any order having the effect of revocation of suspension of cancel the same without giving a show
registration has been passed, the provisions of section 31(3)(a) cause notice and without giving a
[revised tax invoices 29] and section 40 [first return 30] in respect of reasonable opportunity of being heard,
the supplies made during the period of suspension and the to the registered person. The reply to
procedure specified therein shall apply. such show cause notice (SCN) has to be
submitted within 7 days of service of
notice.
‰ If reply to SCN is satisfactory, proper officer shall drop the
29 proceedings and pass an order in prescribed form. However, where
Provisions relating to revised tax invoice have been discussed in detail in Chapter 9 - Tax
Invoice; Credit and Debit Notes in this Module of the Study Material. the person instead of replying to the SCN served for failure to furnish
30
Provisions relating to first return have been discussed in detail in Chapter 13 - Returns in
31
this Module of the Study Material. under section 29(1)

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.79 1.80 8.80 GOODS AND SERVICES TAX

returns for a continuous period of 6 months or 2 tax periods, as the may be prescribed or the tax on the transaction value of such capital goods
case may be (return for a F.Y. beyond 3 months from due date of or plant and machinery under section 15, whichever is higher.
furnishing the said return in case of composition scheme supplier) 32
The manner of determination of amount of credit to be reversed is
furnishes all the pending returns and makes full payment of the tax
prescribed under rule 44. On conjoint reading of section 29(5) and rule 44,
dues along with applicable interest and late fee, the proper officer
it can be inferred as follows:
shall drop the proceedings and pass an order.
Amount of credit to be reversed in respect of INPUTS:
Where registration of a person is liable to be cancelled, proper officer
shall issue the order of cancellation of registration within 30 days from
the date of reply to SCN.
ITC in respect ITC on inputs computed
(c) Effective date of cancellation of inputs proportionately on the
calculated in basis of corresponding
‰ The cancellation of registration shall be effective from a date to be
accordance with invoices** on which
determined by the proper officer and mentioned in the cancellation whichever is
rule 44 of the ccredit had been availed
order. The taxable person will be directed in the said order to pay higher
CGST Rules on such inputs.
arrears of any tax, interest or penalty including the amount liable to be
paid under section 29(5).
(iii) Amount payable on cancellation of registration [Section 29(5) & (6)] Output tax payable on such goods

A registered person whose registration is cancelled will have to debit the * Discussed in detail in Chapter-7: Input Tax Credit
electronic credit or cash ledger by an amount equivalent to: **If tax invoices are not available, the ITC to be reversed will be based on the
prevailing market price (MP) of such goods on the date of cancellation.
(i) Input tax credit (ITC) in respect of:
Amount of credit to be reversed in respect of CAPITAL GOODS OR
¾ stock of inputs and inputs contained in semi-finished/finished
PLANT & MACHINERY:
goods’ stock or
¾ capital goods or plant and machinery
ITC in respect of ITC involved in the
on the day immediately preceding the date of cancellation, or capital goods or remaining useful life in
plant & machinery months of the capital
(ii) the output tax payable on such goods calculated in goods will be reversed
whichever is higher, calculated in such manner as may be prescribed. accordance with on pro-rata basis, taking whichever is
rule 44 the useful life as 5 years. higher
However, in case of capital goods or plant and machinery, the taxable
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 Tax on the transaction value of such capital goods or
plant and machinery under section 15
32
i.e., contravention of the provisions contained in section 29(2)(b)/(c) read with clauses (h)
& (i) of rule 21

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.81 1.82 8.82 GOODS AND SERVICES TAX

(24) Capital goods have been in use for 4 years, 6 month and 15 registration will be issued and intimated to the primary authorized
days. The useful remaining life in months = 5 months ignoring a signatory by email and SMS.
part of the month. ‰ Taxpayer would not be allowed by the Common portal to file return
for the period after date of cancellation mentioned in the cancellation
ITC taken on such capital goods = C
order. However, he can submit returns of the earlier period (i.e. for the
ITC attributable to remaining useful life = C x 5/60 period before date of cancellation mentioned in the cancellation order
for which registration was active).
It is important to note that this requirement to debit the electronic credit
and/or cash ledger by suitable amounts is not a prerequisite for applying (v) Revocation of cancellation of registration [Section 30 read with rule 23]
for cancellation of registration. This can also be done at the time of (A) Procedure for revocation of cancellation
submission of Final Return 33.
‰ Where the registration of a person is cancelled suo-motu by the
(iv) Other points about cancellation proper officer, such registered person, subject to the provisions
of rule 10B, may apply for revocation of the cancellation to such
‰ A person to whom a UIN has been granted under rule 17 cannot apply
proper officer, within a period of 90 days** from the date of the
for cancellation of registration [Rule 20].
service of the order of cancellation of registration.
‰ The cancellation of registration will not affect liability of registered
**Said period of 90 days may, on sufficient cause being shown
person to pay tax and other dues under the Act for any period prior to
and for reasons to be recorded in writing, be extended by the
the date of cancellation 34 [Section 29(3)]. Commissioner or an officer authorised by him in this behalf, not
(25) The proper officer cancelled the registration of Naman below the rank of Additional Commissioner/Joint Commissioner,
Associates on 11th October. The tax dues of Naman as the case may be, for a further period not exceeding 180 days.
Associates for July-September quarter (determined by the ‰ Thus, a registered person, whose registration is cancelled by the
proper officer on 16th December) are ` 50,000. The cancellation of proper officer on his own motion, may subject to provisions of
registration of Naman Associates shall have no effect on his liability of rule 10B submit an application for revocation of cancellation of
tax dues of ` 50,000 even though the tax dues are determined after registration, in prescribed form, to such proper officer, within a
the cancellation of registration. period of 90 days from the date of the service of the order of
cancellation of registration at the common portal, either directly
‰ The cancellation of registration under either SGST Act/UTGST Act shall
or through a Facilitation Centre notified by the Commissioner.
be deemed to be a cancellation of registration under CGST Act
[Section 29(4)]. ‰ If the proper officer is satisfied that there are sufficient grounds
‰ Once registration is cancelled by the tax authority, the taxpayer will be for revocation of cancellation, he may revoke the cancellation of
intimated about the same via sms and email. Order for cancellation of registration, by an order within 30 days of receipt of application
and communicate the same to applicant.
33
A taxable person whose GST registration is cancelled or surrendered has to file a return ‰ Otherwise, he may reject the revocation application. However,
known as Final Return. This is statement of stocks held by such taxpayer on day
before rejecting the application, he has to first issue SCN to the
immediately preceding the date from which cancellation is made effective. Detailed
provisions of Final Return are discussed in Chapter 13 -Returns. applicant who shall furnish the clarification within 7 working days
34
whether or not such tax and other dues are determined before or after the date of
cancellation.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.83 1.84 8.84 GOODS AND SERVICES TAX

of service of SCN. The proper officer shall dispose the application (26) The registration of Naman Associates was
(accept/reject the same) within 30 days of receipt of clarification. cancelled by the proper officer by an order dated
1st June for its failure to furnish returns. The
(B) Where registration was cancelled for failure of registered person registration was cancelled with effect from 1st June itself. It applied
to furnish returns for revocation of cancellation of registration and the order for
Where registration was cancelled for failure of registered person to revocation of cancellation of Naman Associates is passed on
31st July. In this case, Naman Associates shall be required to
furnish returns, before applying for revocation, the person has to
furnish all the returns for the period from 1st June to 31st July within
make good the defaults, i.e. the person needs to file such returns and
a period of 30 days from 31st July, i.e. by 30th August.
pay any amount due as tax along with any amount payable towards
interest, penalty and late fee in respect of the said returns. However, Returns for this period to Returns for this period to be
be filed before applying filed within 30 days of the
the registration may have been cancelled by the proper officer either
for revocation of order of revocation of
from the date of order of cancellation of registration or from a
retrospective date.
(1) Where the registration has been cancelled with effect from
the date of order of cancellation of registration

As we have already seen that the common portal does not allow
furnishing of returns for the period after the effective date of
furnished
returns not
Date of order
o registration
of
o cancellation
of
of revocation

cancellation, but returns for the earlier period (i.e. for the period
Date of order
of registration
of cancellation

Date from which

before date of cancellation mentioned in the cancellation order)
Effective date of
can be furnished after cancellation. cancellation of
Where the registration is cancelled with effect from the date of registration
order of cancellation of registration, person applying for
revocation of cancellation has to furnish all returns due till the (2) Where the i t ti
h registration h
has b l
been cancelled with retrospective
effect
date of such cancellation before the application for revocation
can be filed and has to pay any amount due as tax, in terms of Where the registration has been cancelled with retrospective
such returns along with any amount payable towards interest, effect, it is not possible to furnish the returns before filing the
penalties or late fee payable in respect of the said returns. application for revocation of cancellation of registration.
In that case, the application for revocation of cancellation of
However, since the portal does not allow to furnish returns for
registration is allowed to be filed, subject to the condition that
the period after the date of cancellation of registration, all all returns relating to the period from the effective date of
returns due for the period from the date of order of cancellation cancellation of registration till the date of order of revocation of
till the date of order of revocation of cancellation of registration cancellation of registration shall be filed within a period of 30
have to be furnished within a period of 30 days from the date of days from the date of order of such revocation of cancellation of
the order of revocation. registration.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.85 1.86 8.86 GOODS AND SERVICES TAX

(27) The registration of Naman Associates was

cancelled by the proper officer by an order dated LET US RECAPITULATE
1st June for its failure to furnish returns. The
registration was cancelled with effect from 1st January itself. It
Nature of registration
applied for revocation of cancellation of registration and the
order for revocation of cancellation of Naman Associates is
The registration in GST is PAN based and State specific.
passed on 31st July. In this case, Naman Associates shall be
required to furnish all the returns for the period from 1st January One registration per State/UT.
to 31st July within a period of 30 days from 31st July, i.e. by 30th
August. However, a business entity having separate places of business in a State may
obtain separate registration for each of its places of business .
Returns for this period to be filed within 30 days of the order
of revocation of cancellation GST identification number called “GSTIN” - a 15-digit number and a certificate of
registration incorporating therein this GSTIN is made available to the applicant
on the GSTN common portal.

Registration under GST is not tax specific, i.e. single registration for all the taxes
i.e. CGST, SGST/UTGST, IGST and cesses.

Persons liable to registration

furnished
returns not
registration
registration

revocation of

cancellation of
cancellation of

Date from which

D
Date of order of
Those who exceed threshold •Threshold limit elaborated separately in the

Date of order of
limit diagram below.
Effective date of
cancellation of
In case of transfer of
registration •Transferee liable to be registered from the date of
business on account of
succession of business
succession, etc.
Points to be noted
•Transferee liable to be registered from the date
In case of amalgamation/
UIN Holders (i.e. UN Bodies, Embassies and Other Notified on which Registrar of Companies issues
demerger by an order of
Persons), GST Practitioner cannot apply for revocation of cancelled incorporation certificate giving effect to order of
High Court etc.
High Court etc.
registration.

In case the registration is cancelled on the request of the

taxpayer or his legal heir, one cannot apply for revocation of Inter
Taxable Exempt Aggregate
cancelled registration. Exports State
Supplies supplies Turnover
supplies
The revocation of cancellation of registration under the SGST
Act/ UTGST Act, as the case may be, shall be deemed to be a
Aggregate Turnover will be computed on All-India basis for same PAN
revocation of cancellation of registration under CGST Act.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.87 1.88 8.88 GOODS AND SERVICES TAX

Applicable threshold limit Persons not liable for registration

States with threshold limit of ` 10 •Manipur, Mizoram, Nagaland and Tripura Person engaged exclusively in Agriculturist limited Persons making only
lakh for supplier of goods and/or supplying goods/ services/ both to supply of produce reverse charge supplies
services not liable to tax/ wholly exempt out of cultivation of except supplier of metal
from tax land scrap.

States/UTs with threshold limit of •Arunachal Pradesh, Meghalaya, Sikkim,

Casual Taxable Persons
` 20 lakh for supplier of goods Uttarakhand, Puducherry and Telangana Persons making inter-State
making inter-State taxable
and/or services Persons making inter-State taxable supplies of notified
supplies of notified
supplies of taxable services handicraft goods and
handicraft goods and
States/UTs with threshold limit of ` 20 up to ` 20 lakh** notified hand-made goods
notified hand-made goods
lakh for supplier of services/both •Jammu and Kashmir, Assam, Himachal up to ` 20 lakh**
up to ` 20 lakh**
goods and services and Pradesh, All other States
threshold limit of ` 40 lakh for supplier
of goods (Intra-State)
Persons making intra-State supplies of goods Persons making supplies of
Compulsory registration in certain cases through an ECO with aggregate turnover not services through an ECO [other
exceeding threshold limit and not making than supplies specified under
Casual taxable person who supply in more than one State/UT, with one section 9(5)] with aggregate
A person receiving supplies turnover up to ` 20 lakh**
does not have a fixed place of enrolment no.
Persons making any inter- on which tax is payable by
business in the State or Union
State taxable supply recipient on reverse charge
Territory from where he wants
basis
to make supply
**` 10 lakh in case of Special Category States of Mizoram, Tripura, Manipur
and Nagaland
Those ecommerce operators Non-resident taxable persons
who are notified as liable for tax who do not have a fixed place
payment under section 9(5) of business in India Where and by when to apply for registration?

A person who supplies on Suppliers other than notified Person who is liable A casual taxable A person who makes
Persons who are required
behalf of some other under section 9(5) who supply to be registered person or a non- a supply from the
to deduct tax under section
taxable person (i.e. an through an e-commerce under section 22 or resident taxable territorial waters of
51 (TDS)
Agent of some Principal) operator p
person India
section 24
•in every such State/UT
Every person supplying OIDAR •in every such State/UT •in the coastal State/UT
in which he is so liable
Every e-commerce operator services from a place outside India to
in which he is so liable where the nearest
who is required to collect a person in India other than a •at least 5 days prior to point of the
TCS registered person •within 30 days from the commencement of appropriate base line
the date on which he business is located.
becomes liable to
Input Service Distributor, Person supplying online Person/ class of persons registration •within 30 days from
whether or not separately money gaming from a notified by the Central/ the date on which he
registered place outside India to a
State Government becomes liable to
person in India
registration

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.89 1.90 8.90 GOODS AND SERVICES TAX

Voluntary Registration and UIN Procedure for registration

Part I
Voluntary Registration Unique Identification Number (UIN)
Every person liable to get registered and person seeking voluntary registration shall,
before applying for registration, declare his Permanent Account Number (PAN) and
In respect of supplies to some State/UT in Part A of FORM GST REG-01 on GST Common Portal.
Person not liable to be notified agencies of United
registered under sections Nations organisation,
22/24 may get himself multinational financial PAN is validated online by Common Portal from CBDT database and is also be
registered voluntarily. institutions and other verified through separate OTPs sent to the PAN linked mobile number and e-
organisations, a UIN is issued. mail address.

Temporary Reference Number (TRN) is generated and communicated to the

applicant on the validated mobile number and e-mail address.
Effective date of registration

Application submitted within 30 Application submitted after 30 Using TRN, applicant shall electronically submit application in Part B of
days of the applicant becoming days of the applicant becoming application form, along with specified documents at the Common Portal.
liable to registration liable to registration
Part B of application contains the details, such as, constitution of business,
Effective date is the date on jurisdiction, option for composition, date of commencement of business,
Effective date is date of reason to obtain registration, address of PPoB and nature of activity carried
which he becomes liable to
grant of registration out therein, details of APoB, details of bank account(s), details of authorized
registration
signatory, aadhaar authentication, etc.

Deemed registration On receipt of such application, an acknowledgement in the prescribed form shall
be issued to the applicant electronically. A Casual Taxable Person (CTP)
applying for registration gets a TRN for making an advance deposit of tax in his
electronic cash ledger and an acknowledgement is issued only after said
Deemed registration
deposit.*

Application shall be forwarded to the Proper Officer.

Grant of registration/UIN under any Rejection of application for
SGST Act/ UTGST Act is deemed to be registration/UIN under SGST Act/UTGST
registration/UIN granted under CGST Act is deemed to be rejection of
The procedure after receipt of application by the Proper Officer is depicted
Act provided application for registration application for registration under CGST
in Part II.
has not been rejected under CGST Act. Act.
* Discussed in detail in subsequent paras.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 Part-II
Proper Officer examines the application and where a person fails to undergo
accompanying documents. Aadhaar authentication/does not
opt for Aadhaar authentication
within 30 days
Proper Officer from where PO deems it fit to carry
If same are No issues notice application out site verification
found in thereby submission
Yes where a person, who has undergone
order? seeking date
Aadhaar authentication, is identified
Yes clarification**, on common portal, based on data
Registration information or within 7 analysis & risk parameters, to carry
granted within Registration is documents working days out site verification
7 working granted within 30 from application
from the
© The Institute of Chartered Accountants of India

days from the days of application submission date

applicant Other cases
date of after verification of
site & prescribed electronically
submission of No
documents If applicant has furnished the clarification**,
application
information or documents within 7 working
without site where
verification
days’ time from receipt of notice?
applicant where PO where a person, who
REGISTRATION

fails to deems it fit (C)

has undergone Aadhaar Yes
if applicant undergo to carry out No
authentication,is If proper officer is satisfied with it?
Aadhaar site
successfully identified on common
authentica
validates his verification portal, based on data
tion/ does Yes
aadhaar analysis & risk Proper officer
not opt for Proper officer will grant registration
authentication, parameters, to carry out may reject the
Aadhaar within 7 working days from the
authentication site verification application for
date of receipt of information/
(A) clarification/ documents
reasons to be
8.91

(B) (B) recorded in

(B)
writing.
**Clarification includes modification/correction of particulars declared in the application
for registration other than PAN, State Mobile No. & E-mail address.
1.92
8.92

fixed place of business.

Casual Taxable Person

Casual Taxable Person

© The Institute of Chartered Accountants of India

supply as a Casual taxable person.
Such person needs to register in
the State from where he seeks to
effect supplies from some other
who has a registered business in

State in which he is not having any

some State in India, but wants to
A Casual taxable person is one

any supply.
GOODS AND SERVICES TAX

GST registration.

they make advance deposit of the estimated tax liability.

Special procedure for registration of CTP and NRTP

application or 90 days from the effective date of registration.

Non-resident taxable person
person is one who is a
foreigner and occasionally
wants to effect taxable
A Non-Resident taxable

India, and for that he needs

supplies from any State in
Non-resident Taxable Person

the operation period of such Casual or Non-Resident taxable persons.

Registration is granted to them for the period specified in the registration

They have to apply for registration at least 5 days in advance before making
GST law prescribes special procedure for registration, as also for extension of

Registration is granted to them or period of operation is extended only after

 REGISTRATION 8.93 1.94 8.94 GOODS AND SERVICES TAX

Amendment of Registration Procedure for cancellation

Except for the changes in some core information in the registration application, Where the registered person Where the proper officer
a taxable person shall be able to make amendments without requiring any cancels the registration
applies for cancellation
specific approval from the tax authority.
In case the change is core feilds of information, the taxable person will apply PO shall issue a SCN to the registered
Registered person seeking
for amendment within 15 days of the event necessitating the change. The person who has to reply to said notice
cancellation shall apply for the same
Proper Officer, then, will approve the amendment within the next 15 days. h d
within 30 days of occurrence of the
For changes in non-core fields, no approval of the Proper Officer is required, event warranting cancellation, in Proceedings shall be Cancellation
and the amendment can be affected by the taxable person on his own on the prescribed form, furnishing the details dropped order shall
common portal. of inputs held in stock or inputs be issued
contained in semi-finished/finished within 30
Cancellation or suspension of registration and revocation of cancellation of If reply to Where instead days of
goods held in stock and of capital
registration SCN is of replying to reply to
goods held in stock on the date from satisfactory SCN, person SCN where
which cancellation of registration is furnishes all registration
sought, liability thereon, payment, if pending is liable to
A registered person has any made & relevant documents. returns & be cancelled
Registration --Business Registration contravened the prescribed makes full
can be discontinued/ can be provisions payment of tax
cancelled Transferred/ cancelled Proper officer (PO) shall issue the order along with
either by Amalgamated by the A registered person has not filed of cancellation within 30 days of interest & late
proper with other legal proper returns for continuous 6 months
submission of application for the same. fee.
officer or on entity/ officer on or 2 tax periods (return for a F.Y.
an Demerged or his own beyond 3 months from due date
application Otherwise of furnishing the said return for
of the disposed of composition supplier) Revocation of cancellation
registered
Voluntarily registered person has In case where registration is cancelled suo-motu by the proper officer, the taxable person can apply
person
not commenced the business within 90 days (extendible by 180 days by Commissioner or officer authorised not below the rank of
Change in the
within 6 months from the date of Additional/Joint Commissioner) of service of cancellation order, requesting the officer for revoking the
constitution of cancellation ordered by him.
the business registration
However, before so applying, the person has to make good the defaults (by filing all pending returns,
Taxable person Registration was obtained by making payment of all dues and so) for which the registration was cancelled by the officer.
no longer liable means of fraud, wilful
to be registered misstatement or suppression of If satisfied, the proper officer will revoke the cancellation earlier ordered by him.
or intends to facts
However, if the officer concludes to reject the request for revocation of cancellation, he will first
opt out of observe the principle of natural justice by way of issuing notice to the person and hearing him on the
voluntary issue.
registration However, there shall be deemed revocation of cancellation upon furnishing of pending GST returns
subject to the condition that the registration has not been cancelled by the proper officer under rule
22
Once a registered person has applied for cancellation of registration or the proper officer seeks to cancel Revocation of cancellation of registration shall be subject to such conditions and restrictions, as may
his registration, proper officer may suspend his registration during pendency of proceedings relating to be prescribed.
cancellation of registration filed by such registered person.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.95 1.96 8.96 GOODS AND SERVICES TAX

(c) If Mahadev Enterprises is dealing in taxable supply of goods only

TEST YOUR KNOWLEDGE from Himachal Pradesh and has also effected inter-State supplies
of taxable goods (other than notified handicraft goods and notified
1. Mahadev Enterprises, a sole proprietorship firm, opened a shopping complex hand-made goods) amounting to ` 4,00,000.
dealing in supply of ready-made garments at multiple locations, i.e. in 2. LMN Pvt. Ltd., Coimbatore, Tamil Nadu, exclusively manufactures and sells
Himachal Pradesh, Uttarakhand and Tripura in the month of June. product ‘X’ which is exempt from GST vide a notification issued under relevant
It has furnished the following details relating to the supply made at such GST legislations. The company sells product ‘X’ only within Tamil Nadu and
multiple locations for the month of June:- is not registered under GST. Further, all the inward supply of the company
are taxable under forward charge. The turnover of the company in the
Particulars Himachal Uttarakhand Tripura previous year was ` 45 lakh. The company expects the sales to grow by 30%
Pradesh in the current year. The company purchased additional machinery for
(`)* (`)* (`)* manufacturing ‘X’ on 1st July. The purchase price of the capital goods was
` 30 lakh exclusive of GST @ 18%.
Intra-State supply of taxable 22,50,000 - 7,00,000
goods However, effective from 1st November, exemption available to ‘X’ was
withdrawn by the Central Government and GST @ 12% was imposed thereon.
Intra-State supply of exempted - - 6,00,000
goods The turnover of the company for the half year ended on 30th September was
` 45 lakh.
Intra-State supply of non- - 21,00,000 40,000
taxable goods (a) Examine the above scenario and advise LMN Pvt Ltd. whether it needs
to get registered under GST.
* excluding GST
(b) If the answer to the above question is in affirmative, advise LMN Pvt.
With the help of the above mentioned information, answer the following
Ltd. whether it can avail input tax credit on the additional machinery
questions giving reasons:-
purchased exclusively for manufacturing “X”?
(1) Determine whether Mahadev Enterprises is liable to be registered under
3. SNP Pvt. Ltd., Coimbatore, Tamil Nadu, exclusively manufactures and sells
GST law and what is the threshold limit of taking registration in this
product ‘Z’ which is exempt from GST vide notifications issued under relevant
case assuming that it is not required to pay any tax on inward supplies
GST legislations. The company sells product ‘Z’ only within Tamil Nadu and it
under reverse charge.
not registered under GST. Further, all the inward supplies of the company are
(2) Explain with reasons whether your answer in (1) will change in the taxable under forward charge. The turnover of the company in the previous
following independent cases: year was ` 55 lakh. The company expects the sales to grow by 20% in the
(a) If Mahadev Enterprises is dealing exclusively in taxable supply of current year. Owing to the growing demand for the product, the company
goods only from Himachal Pradesh; decided to increase its production capacity and purchased additional
machinery for manufacturing ‘Z’ on 1st July. The purchase price of such
(b) If Mahadev Enterprises is dealing in taxable supply of goods and
capital goods was ` 20 lakh exclusive of GST @ 18%.
services only from Himachal Pradesh;

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.97 1.98 8.98 GOODS AND SERVICES TAX

However, effective from 1st November, exemption available on ‘Z’ was You are required to provide reasons for treatment of various items given
withdrawn by the Central Government and GST @ 12% was imposed thereon. above.
The turnover of the company for the half year ended on 30th September was 5. With the help of the following information in the case of M/s Jayant
` 50 lakh. Enterprises, Jaipur (Rajasthan) for the financial year, determine the aggregate
(a) The Board of Directors of SNP Pvt. Ltd. wants to know whether they turnover for the purpose of registration under the CGST Act.
have to register under GST.
Sl. Particulars Amoun
(b) In case in the above question, SNP Pvt. Ltd. is already registered with No. t (` )
respect to certain taxable supplies being made by it along with
(i) Sale of diesel on which VAT is levied by Rajasthan 1,00,000
manufacture of exempt product ‘Z’, other facts remaining the same, can Government.
it take input tax credit on additional machinery purchased exclusively
for manufacturing ‘Z’? If yes, then how much credit can be availed? (ii) Supply of goods, after completion of job work, from 3,00,000
the place of Jayant Enterprises directly by principal by
Advice SNP Pvt. Ltd. on the above issues with reference to the provisions of declaring the place of M/s Jayant Enterprises as its
GST law. additional place of business.
4. Rishabh Enterprises – a sole proprietorship firm – started an air-conditioned (iii) Export of goods to England (U.K.) 5,00,000
restaurant in Virar, Maharashtra in the month of February wherein the
(iv) Supply to its own additional place of business in 5,00,000
customers are served cooked food as well as cold drinks/non-alcoholic Rajasthan.
beverages. In March, the firm opened a liquor shop in Raipur, Uttarakhand
for trading of alcoholic liquor for human consumption. (v) Outward supply of services on which GST is to be paid 1,00,000
by recipient under reverse charge.
Determine whether Rishabh Enterprises is liable to be registered under GST
law with the help of the following information: All the above amounts are excluding GST.
You are required to provide reasons for treatment of various items given
Particulars February March
above.
(`)* (`)*
6. Rajesh Dynamics, having its head office in Chennai, Tamil Nadu carries on
Serving of cooked food and cold drinks/non- 5,50,000 6,50,000
the following activities with respective turnovers in a financial year:
alcoholic beverages in restaurant in
Maharashtra `
Sale of alcoholic liquor for human consumption 5,00,000
Supply of petrol at Chennai, Tamil Nadu 18,00,000
in Uttarakhand
Value of inward supplies on which tax is payable on reverse 9,00,000
Supply of packed food items from restaurant in 1,50,000 2,00,000
charge basis
Maharashtra
Supply of transformer oil at Chennai, Tamil Nadu 2,00,000
* excluding GST
Value of branch transfer from Chennai, Tamil Nadu to 1,50,000

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.99 1.100 8.100 GOODS AND SERVICES TAX

Bengaluru, Karnataka without payment of consideration (iv) all inter-State supplies of persons having the same PAN.
The above is to be computed on all India basis.
Value of taxable supplies at Manipur branch 11,50,000
In the light of the afore-mentioned provisions, the aggregate turnover of
It argues that it does not have taxable turnover crossing threshold limit of Mahadev Enterprises is computed as under:
` 40,00,000 either at Chennai, Tamil Nadu, Bengaluru, Karnataka or Manipur
Computation of State-wise aggregate turnover of Mahadev Enterprises
branch. Further, it believes that the determination of aggregate turnover is
not required for the purpose of obtaining registration but is required for Particulars Himachal Pradesh Uttarakhand Tripura
determining the eligibility for composition levy.
(`` )* (`` )* (`` )*
Determine the aggregate turnover of Rajesh Dynamics. You are also required
to review the technical veracity of the arguments of Rajesh Dynamics. Intra-State supply of 22,50,000 - 7,00,000
taxable goods

Intra-State supply of - - 6,00,000

ANSWERS
exempted goods

Intra-State supply of non-

1. As per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a
taxable goods (Refer Note
supplier is liable to be registered in the State/ Union territory from where he below) - 21,00,000 40,000
makes a taxable supply of goods and/or services, if his aggregate turnover
in a financial year exceeds the threshold limit. The threshold limit for a Aggregate Turnover 22,50,000 21,00,000 13,40,000
person making exclusive intra-State taxable supplies of goods is as under:-
Note: As per section 2(47), exempt supply includes non-taxable supply.
(i) ` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland. Thus, intra-State supply of non-taxable goods in Uttarakhand, being a non-
(ii) ` 20 lakh for the States of Arunachal Pradesh, Meghalaya, Puducherry, taxable supply, is an exempt supply and is, therefore, included in the
Sikkim, Telangana and Uttarakhand. aggregate turnover.

(iii) ` 40 lakh for rest of India. In the given case, Mahadev Enterprises is engaged in exclusive intra-State
supply of goods from Himachal Pradesh, Tripura and Uttarakhand.
The threshold limit for a person exclusively making taxable supply of
However, since Mahadev Enterprises makes taxable supply of goods from
services or supply of both goods and services is as under:-
one of the specified Special Category States (i.e. Tripura), it will not be
(i) ` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland. eligible for the higher threshold limit of ` 40 lakh; instead, the threshold
(ii) ` 20 lakh for the rest of India. limit for registration will be reduced to ` 10 lakh.

As per section 2(6), aggregate turnover includes the aggregate value of: (1) In view of the above-mentioned provisions, Mahadev Enterprises is
liable to be registered under GST law with the aggregate turnover
(i) all taxable supplies,
amounting to ` 56,90,000 (computed on all India basis) of the States
(ii) all exempt supplies, of Himachal Pradesh, Uttarakhand and Tripura since the applicable
(iii) exports of goods and/or services and threshold limit of registration in this case is ` 10 lakh. Further, he is

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.101 1.102 8.102 GOODS AND SERVICES TAX

not liable to be registered in Uttarakhand since he is not making any not required to be registered till that day; though voluntary
taxable supply from Uttarakhand. registration was allowed under section 25(3).
(2) (a) If Mahadev Enterprises is dealing in supply of goods only from However, the position will change from 1st November as the supply of
Himachal Pradesh, the applicable threshold limit of registration goods become taxable from that day and the turnover of company is
would be ` 40 lakh. Thus, Mahadev Enterprises will not be liable above ` 40 lakh. It is important to note here that in terms of section
for registration as its aggregate turnover would be ` 22,50,000. 2(6), the aggregate turnover limit of ` 40 lakh includes exempt
turnover also.
(b) If Mahadev Enterprises is dealing in taxable supply of goods and
services only from Himachal Pradesh then higher threshold limit of Therefore, turnover of ‘X’ prior to 1st November will also be considered
` 40 lakh will not be applicable as the same applies only in case of for determining the limit of ` 40 lakh even though the same was
exclusive supply of goods. Therefore, in this case, the applicable exempt from GST. Therefore, the company needs to register within
threshold limit will be ` 20 lakh and hence, Mahadev Enterprises 30 days from 1st November (the date on which it becomes liable to
will be liable to registration. registration) in terms of section 25(1).
(c) In case of inter-State supplies of taxable goods other than notified (b) Section 18(1)(a) provides that a person who has applied for
handicraft goods or notified hand-made products, section 24 registration within 30 days from the date on which he becomes liable
requires compulsory registration irrespective of the quantum of to registration and has been granted such registration shall be entitled
aggregate turnover. Thus, Mahadev Enterprises will be liable to to take credit of input tax in respect of inputs held in stock and inputs
registration. contained in semi-finished or finished goods held in stock on the day
2. (a) Section 22(1) read with Notification No. 10/2019 CT dated 07.03.2019 immediately preceding the date from which he becomes liable to pay
inter alia provides that every supplier who is exclusively engaged in tax under the provisions of this Act.
intra-State supply of goods is liable to be registered under GST in Thus, LMN Pvt. Ltd. cannot avail credit for additional machinery
the State/ Union territory from where he makes the taxable supply of purchased exclusively for manufacturing X as input tax credit of only
goods only when aggregate turnover in a financial year exceeds
inputs is allowed when a person gets registered for the first time.
` 40,00,000.
3. (a) Section 22(1) read with Notification No. 10/2019 CT dated 07.03.2019
However, the above provisions are not applicable to few specified
inter alia provides that every supplier who is exclusively engaged in
States, i.e. States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram,
intra-State supply of goods is liable to be registered under GST in
Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand.
the State/ Union territory from where he makes the taxable supply of
Further, a person exclusively engaged in the business of supplying goods only when aggregate turnover in a financial year exceeds
goods and/or services that are not liable to tax or are wholly exempt ` 40,00,000.
from tax is not liable to registration in terms of section 23(1)(a).
However, the above provisions are not applicable to few specified
In the given case, the turnover of the company for the half year ended
States, i.e. States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram,
on 30th September is ` 45 lakh which is more than the applicable
Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand.
threshold limit of ` 40 lakh. Therefore, as per above mentioned
provisions, the company should be liable to registration. However,
since LMN Pvt. Ltd. supplied exempted goods till 31st October, it was

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.103 1.104 8.104 GOODS AND SERVICES TAX

However, a person exclusively engaged in the business of supplying Rule 40(1)(a) lays down that the credit on capital goods can be
goods and/or services that are not liable to tax or are wholly exempt claimed after reducing the tax paid on such capital goods by 5% per
from tax is not liable to registration in terms of section 23(1)(a). quarter of a year or part thereof from the date of the invoice.
In the given case, the turnover of the company for the half year ended Therefore, in the given case, SNP Pvt. Ltd. could not claim credit on
on 30th September is ` 50 lakh which is more than the applicable machinery till the time the supply of product ‘Z’ for which said
threshold limit of ` 40 lakh. Therefore, as per section 22, the company machinery was being used was exempt. However, it can claim credit of
will be liable to registration. However, since SNP Pvt. Ltd. supplied in respect of said machinery once the supply of product ‘Z’ became
exempted goods till 31st October, it was not required to be registered taxable.
till that day; though voluntary registration was allowed under section
Further, SNP Pvt. Ltd. can take following amount of ITC on said
25(3).
machinery for its remaining useful life by making an electronic
However, the position will change from 1st November as the supply of declaration in prescribed form specifying the details of said
goods become taxable from that day and the turnover of company is machinery:
above ` 40 lakh. It is important to note here that in terms of section
2(6), the aggregate turnover limit of ` 40 lakh includes exempt Date of purchase of machinery 1st July
turnover also. Date on which credit becomes eligible 31st
Therefore, turnover of ‘Z’ will be considered for determining the October
threshold limit even though the same was exempt from GST. Number of quarters for which credit is to be 2 (including
Therefore, the company needs to register within 30 days from reduced part of
1st November (the date on which it becomes liable to registration) in quarter)
terms of section 25(1).
GST paid on machinery [` 20,00,000 x 18%] ` 3,60,000
Further, the company cannot avail exemption of ` 40 lakh from
1st November as the GST law does not provide any threshold Credit to be reduced [` 3,60,000 x 5% x 2] ` 36,000
exemption from payment of tax but threshold exemption from Amount of credit that can be taken ` 3,24,000
obtaining registration (which in this case had been crossed). [`` 3,60,000 – ` 36,000]
(b) Rule 43(1)(a) disallows input tax credit on capital goods used or
4. As per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a
intended to be used exclusively for effecting exempt supplies.
supplier is liable to be registered in the State/ Union territory from where he
However, as per section 18(1)(d), where an exempt supply of goods makes a taxable supply of goods and/or services, if his aggregate turnover
and/or services by a registered person becomes a taxable supply, such in a financial year exceeds the threshold limit. The threshold limit for a
person gets entitled to take credit of input tax in respect of inputs person making exclusive intra-State taxable supplies of goods is as under:-
held in stock and inputs contained in semi-finished or finished goods
(i) ` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
held in stock relatable to such exempt supply and on capital goods
exclusively used for such exempt supply on the day immediately (ii) ` 20 lakh for the States of Arunachal Pradesh, Meghalaya, Puducherry,
preceding the date from which such supply becomes taxable. Sikkim, Telangana and Uttarakhand.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.105 1.106 8.106 GOODS AND SERVICES TAX

(iii) ` 40 lakh for rest of India.

Add: Sale of alcoholic liquor for human 5,00,000
The threshold limit for a person making exclusive taxable supply of services consumption in Uttarakhand [As per
or supply of both goods and services is as under:- section 2(47), exempt supply includes
non-taxable supply. Thus, supply of
(i) ` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland. alcoholic liquor for human consumption
(ii) ` 20 lakh for the rest of India. in Uttarakhand, being a non-taxable
supply, is an exempt supply and is,
As per section 2(6), aggregate turnover includes the aggregate value of: therefore, includible while computing
(i) all taxable supplies, the aggregate turnover.]

(ii) all exempt supplies, Add: Supply of packed food items from 1,50,000 3,50,000
restaurant in Maharashtra [` 1,50,000 +
(iii) exports of goods and/or services and
` 2,00,000]
(iv) all inter-State supplies of persons having the same PAN.
Aggregate Turnover 7,00,000 20,50,000
The above is computed on all India basis. Further, the aggregate turnover
excludes central tax, State tax, Union territory tax, integrated tax and cess. Rishabh Enterprises was not liable to be registered in the month of February
Moreover, the value of inward supplies on which tax is payable under since its aggregate turnover did not exceed ` 20 lakh in that month.
reverse charge is not taken into account for calculation of ‘aggregate However, since its aggregate turnover exceeds ` 20 lakh in the month of
turnover’. March, it should apply for registration within 30 days from the date on
In the given question, since Rishabh Enterprises is engaged in making which it becomes liable to registration. Further, he is not liable to be
taxable supplies of goods and services from Maharashtra and non-taxable registered in Uttarakhand since he is not making any taxable supply from
supplies from Uttarakhand, the threshold limit for obtaining registration is Uttarakhand. It should obtain registration in Maharashtra.
` 20 lakh. 5. Computation of aggregate turnover of M/s Jayant Enterprises for the FY
In the light of the afore-mentioned provisions, the aggregate turnover of
Particulars `
Rishabh Enterprises is computed as under:
Supply of diesel on which Sales Tax (VAT) is levied by 1,00,000
Computation of aggregate turnover of Rishabh Enterprises
Rajasthan Government [Note-1]
Particulars Turnover Cumulative Supply of goods, after the completion of job work, from the Nil
of February turnover of place of Jayant Enterprises, directly by the principal [Note-2]
(`` ) February &
March (`
`) Export supply to England [Note-3] 5,00,000

Serving of cooked food and cold 5,50,000 12,00,000

drinks/non-alcoholic beverages in [` 5,50,000 +
restaurant in Maharashtra ` 6,50,000]

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.107 1.108 8.108 GOODS AND SERVICES TAX

(ii) ` 20 lakh for the States of Arunachal Pradesh, Meghalaya,

Supply to its own additional place of business in Rajasthan 35 Nil
[Note-4] Puducherry, Sikkim, Telangana and Uttarakhand.

(iii) ` 40 lakh for rest of India.

Outward supply of services on which GST is to be paid by 1,00,000
recipient under reverse charge [Note-5] The threshold limit for a person making exclusive taxable supply of
services or supply of both goods and services is as under:-
Aggregate turnover 7,00,000
(i) ` 10 lakh for the States of Mizoram, Tripura, Manipur and
Notes:- Nagaland.
1. As per section 2(47), exempt supply includes non-taxable supply. Thus, (ii) ` 20 lakh for the rest of India.
supply of diesel, being a non-taxable supply, is an exempt supply and
exempt supply is specifically includible in aggregate turnover in terms The applicable turnover limit for registration, in the given case, will be
of section 2(6). ` 20 lakh as Rajasthan is not a Special Category State and M/s. Jayant
Enterprises is engaged in supply of goods and services. Although, the
2. Supply of goods after completion of job work by a principal by
aggregate turnover of M/s Jayant Enterprises does not exceed
declaring the place of business of job worker its additional place of
` 20 lakh, it is compulsorily required to register in terms of
business shall be treated as the supply of goods by the principal in
section 24(i) irrespective of the turnover limit as it is engaged in
terms of explanation (ii) to section 22.
making inter-State supply of goods in the form of exports to England.
3. Export supplies are specifically includible in the aggregate turnover in
terms of section 2(6). 6. Computation of aggregate turnover of Rajesh Dynamics:

4. Supply made without consideration to units within the same State is a Particulars `
not a supply and hence not includible in aggregate turnover.
Supply of petrol at Chennai, Tamil Nadu [Being a non- 18,00,000
5. Outward supplies taxable under reverse charge would be part of the taxable supply, it is an exempt supply and thus, includible
“aggregate turnover” of the supplier of such supplies. Such turnover in aggregate turnover vide section 2(6)]
is not included as turnover in the hands of recipient.
Value of inward supplies on which tax is payable on Nil
As per section 22 read with Notification No. 10/2019 CT dated
reverse charge basis
07.03.2019, a supplier is liable to be registered in the State/ Union
territory from where he makes a taxable supply of goods and/or Supply of transformer oil at Chennai, Tamil Nadu 2,00,000
services, if his aggregate turnover in a financial year exceeds the
threshold limit. The threshold limit for a person making exclusive Value of branch transfer from Chennai, Tamil Nadu to 1,50,000
intra-State taxable supplies of goods is as under:- Bengaluru, Karnataka without payment of consideration
[Being a taxable supply, it is includible in aggregate
(i) ` 10 lakh for the States of Mizoram, Tripura, Manipur and turnover]
Nagaland.
Value of taxable supplies of Manipur Branch 11,50,000

Aggregate turnover 33,00,000

35
The above solution has been worked out on the assumption that supply to another place
of business is without consideration (as per general business practices).

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 REGISTRATION 8.109

Rajesh Dynamics is not liable to be registered in Chennai, Tamil Nadu, if his

aggregate turnover in a financial year does not exceed ` 40 lakh. However,
since Rajesh Dynamics also makes taxable supplies from Manipur, a
specified Special Category State, the threshold exemption gets reduced to
` 10 lakh in terms of section 22(1) [Notification No.10/2019-CT dated.
07.03.2019].
Rajesh Dynamics’ argument that it is not liable to registration since the
threshold exemption of ` 40 lakh is not being crossed either at Chennai,
Tamil Nadu, Bengaluru, Karnataka or Manipur is not correct as firstly, the
aggregate turnover to be considered in its case is ` 10 lakh and not ` 40
lakh and secondly, the same is computed on all India basis and not
State-wise.
Apart from this, Rajesh Dynamics is also wrong in believing that aggregate
turnover is computed only for the purpose of determining the eligibility
limit for composition levy since the aggregate turnover is required for
determining the eligibility for both registration and composition levy.
Last but not the least, Rajesh Dynamics is compulsorily required to register
under section 24 irrespective of the turnover limit as it is liable to pay tax
on inward supplies under reverse charge and it also makes inter-State
taxable supply.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 1.2 9.2 GOODS AND SERVICES TAX

CHAPTER 1. INTRODUCTION
9 An invoice is a commercial instrument
issued by a supplier of
goods/services to a recipient. It
identifies both the parties involved,
and lists, describes the items
TAX INVOICE, CREDIT sold/services supplied, quantifies the items sold, shows the date of shipment and
mode of transport, prices and discounts, if any, and the delivery and payment terms
(in case of supply of goods).
AND DEBIT NOTES Invoicing is very crucial aspect for ensuring tax
compliance under any indirect taxation system. In order
The section numbers referred to in the Chapter pertain to the CGST Act, unless
to ensure transparency, issuance of invoice for every
otherwise specified. Examples/Illustrations/Questions and Answers given in the
taxable transaction is a pre-requisite. In case of supply
Chapter are based on the position of GST law existing as on 30.04.2025.
of goods or provision of services, an invoice is raised by
the supplier of such goods or services to the recipient of
the same. Tax invoice acts as a document evidencing
LEARNING OUTCOMES the payment of the value of the goods or services or
both as also the tax portion in the same. In certain cases,
After studying this chapter, you will be able to- – an invoice serves as a demand for payment and
‰ describe and analyze the provisions relating to tax invoice in case of taxable becomes a document of title when paid in full.
supply of goods and in case of taxable supply of services – time limit and Under the GST regime, an “invoice” or “tax invoice” means the tax invoice referred
manner of issuing the same. to in section 31 of the CGST Act, 2017. This section mandates the issuance of an
‰ enumerate the particulars of a tax invoice. invoice or a bill of supply for every supply of goods or services. Under GST law, a
tax invoice is an important document. It not only evidences supply of goods or
‰ understand the provisions relating to e-invoicing. services, but is also an essential document for the recipient to avail Input Tax Credit
‰ explain the provisions relating to revised tax invoice, bill of supply, receipt (ITC). A registered person cannot avail input tax credit unless he is in possession of
voucher, refund voucher, payment voucher, etc. a tax invoice or a debit note.
The provisions relating to tax invoices, credit and debit notes are contained in
‰ explain the provisions relating to transportation of goods without issuance of
Chapter VII - Tax Invoice, Credit and Debit Notes [Sections 31 to 34] of the CGST
invoice.
Act and Chapter-VI: Tax Invoice, Credit and Debit Notes [Rules 46 to 55A] of Central
‰ describe the provisions relating to issuance of credit and debit notes. Goods and Services (CGST) Rules, 2017. State GST laws also prescribe identical
provisions in relation to Tax Invoice, Credit and Debit Notes.
‰ explain the provisions relating to prohibition of unauthorised collection of tax.
‰ describe the provisions relating to amount of tax to be indicated in tax invoice
and other documents. Provisions of Tax invoice, Credit and Debit Notes under CGST Act have also
been made applicable to IGST Act vide section 20 of the IGST Act.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 TAX INVOICE, CREDIT AND DEBIT NOTES 9.3 1.4 9.4 GOODS AND SERVICES TAX

Before proceeding to understand the provisions of Tax Invoice, Credit and Debit ™ Exempt supply: means supply of any goods or services or both which
Notes, let us first go through few relevant definitions. attracts nil rate of tax or which may be wholly exempt from tax under
section 11, or under section 6 of the Integrated Goods and Services Tax
Act, and includes non-taxable supply [Section 2(47)].
2. RELEVANT DEFINITIONS
™ Invoice or tax invoice: means the tax invoice referred to in section 31
™ Credit note: means a document issued by a registered person under sub- (discussed subsequently) [Section 2(66)].
section (1) of section 34 [Section 2(37)].
™ Quarter: shall mean a period comprising three consecutive calendar
™ Debit note: means a document issued by a registered person under sub- months, ending on the last day of March, June, September and December
section (3) of section 34 [Section 2(38)]. of a calendar year [Section 2(92)].
™ Continuous supply of goods: means [Section 2(32)]: ™ Return: means any return prescribed or otherwise required to be furnished
a supply of goods which is provided, or agreed to be provided, by or under this Act or the rules made thereunder [Section 2(97)].
continuously or on recurrent basis
under a contract
3. TAX INVOICE [SECTION 31]
whether or not by means of a wire, cable, pipeline or other conduit, and
STATUTORY PROVISIONS
for which the supplier invoices the recipient on a regular or periodic basis
and
includes supply of such goods as the Government may, subject to such Section 31 Tax invoice
conditions, as it may, by notification, specify
Sub-section Particulars
™ Continuous supply of services: means [Section 2(33)]:
(1) A registered person supplying taxable goods shall, before or at the
supply of services which is provided, or agreed to be provided, time of,—
continuouslyy or on recurrent basis (a) removal of goods for supply to the recipient, where the supply
under a contract involves movement of goods; or
for a period exceeding 3 months with periodic payment obligations and (b) delivery of goods or making available thereof to the recipient,
includes supply of such services as the Government may, subject to such in any other case, issue a tax invoice showing the description,
conditions, as it may, by notification, specify quantity and value of goods, the tax charged thereon and
such other particulars as may be prescribed:
™ Document: includes written or printed record of any sort and electronic Provided that the Government may, on the recommendations of
record as defined in clause (t) of section 2 of the Information Technology the Council, by notification, specify the categories of goods or
Act, 2000 [Section 2(41)]. Information Technology Act defines electronic supplies in respect of which a tax invoice shall be issued, within
record as data, record or data generated, image or sound stored, received such time and in such manner as may be prescribed.
or sent in an electronic form or micro film or computer-generated micro
fiche.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 TAX INVOICE, CREDIT AND DEBIT NOTES 9.5 1.6 9.6 GOODS AND SERVICES TAX

(2) A registered person supplying taxable services shall, before or a receipt voucher or any other document, containing such
after the provision of service but within a prescribed period, issue particulars as may be prescribed, evidencing receipt of such
a tax invoice, showing the description, value, tax charged thereon payment;
and such other particulars as may be prescribed. (e) where, on receipt of advance payment with respect to any
Provided that the Government may, on the recommendations of supply of goods or services or both the registered person
the Council, by notification— issues a receipt voucher, but subsequently no supply is made
and no tax invoice is issued in pursuance thereof, the said
(a) specify the categories of services or supplies in respect of
registered person may issue to the person who had made
which a tax invoice shall be issued, within such time and in
the payment, a refund voucher against such payment;
such manner as may be prescribed;
(f) a registered person who is liable to pay tax under sub-
(b) subject to the condition mentioned therein, specify the
section (3) or sub-section (4) of section 9 shall within the
categories of services in respect of which—
period as may be prescribed issue an invoice in respect of
(i) any other document issued in relation to the supply
goods or services or both received by him from the supplier
shall be deemed to be a tax invoice; or
who is not registered on the date of receipt of goods or
(ii) tax invoice may not be issued. services or both;

(3) Notwithstanding anything contained in sub-sections (1) and (2)– (g) a registered person who is liable to pay tax under sub-section
(3) or sub-section (4) of section 9 shall issue a payment
(a) a registered person may, within one month from the date of
voucher at the time of making payment to the supplier.
issuance of certificate of registration and in such manner as
Explanation—For the purposes of clause (f), the expression
may be prescribed, issue a revised invoice against the
"supplier who is not registered" shall include the supplier
invoice already issued during the period beginning with the
who is registered solely for the purpose of deduction of tax
effective date of registration till the date of issuance of
under section 51.
certificate of registration to him;
(b) a registered person may not issue a tax invoice if the value (4) In case of continuous supply of goods, where successive
of the goods or services or both supplied is less than two statements of accounts or successive payments are involved, the
hundred rupees subject to such conditions and in such invoice shall be issued before or at the time each such statement
manner as may be prescribed; is issued or, as the case may be, each such payment is received.
(c) a registered person supplying exempted goods or services or
both or paying tax under the provisions of section 10 shall (5) Subject to the provisions of clause (d) of sub-section (3), in case of
issue, instead of a tax invoice, a bill of supply containing continuous supply of services,––
such particulars and in such manner as may be prescribed: (a) where the due date of payment is ascertainable from the
Provided that the registered person may not issue a bill of contract, the invoice shall be issued on or before the due
supply if the value of the goods or services or both supplied date of payment;
is less than two hundred rupees subject to such conditions (b) where the due date of payment is not ascertainable from
and in such manner as may be prescribed; the contract, the invoice shall be issued before or at the time
(d) a registered person shall, on receipt of advance payment when the supplier of service receives the payment;
with respect to any supply of goods or services or both, issue

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.7 1.8 9.8 GOODS AND SERVICES TAX

(c) where the payment is linked to the completion of an event, There is no format prescribed for the Tax Invoice. Only certain fields have been
the invoice shall be issued on or before the date of prescribed as mandatory fields.
completion of that event. A. TAX INVOICE ISSUED BY A SUPPLIER OF TAXABLE GOODS/ TAXABLE
(6) In a case where the supply of services ceases under a contract SERVICES
before the completion of the supply, the invoice shall be issued at A tax invoice shall be issued by a registered person
the time when the supply ceases and such invoice shall be issued supplying taxable goods or taxable services or both.
to the extent of the supply made before such cessation. Such tax invoice shall show the prescribed particulars.
(7) Notwithstanding anything contained in sub-section (1), where the (i) Time limit for issuance of invoice [Sections 31(1), (2), (4) & (5) read with
goods being sent or taken on approval for sale or return are rule 47]
removed before the supply takes place, the invoice shall be issued
before or at the time of supply or six months from the date of The time for issuing an invoice would depend on the nature of supply viz.
removal, whichever is earlier. whether it is a supply of goods or supply of services.

A registered person supplying taxable goods shall issue a tax invoice, before
Explanation.––For the purposes of this section, the expression “tax invoice” shall
or at the time of removal of goods (where supply involves movement of
include any revised invoice issued by the supplier in respect of a supply made
earlier. goods) or in any other case, before or at the time of delivery or making
available the said goods to the recipient.
Section 31A Facility of digital payment to recipient
In case of supply of taxable services, tax invoice may be issued before or after
The Government may, on the recommendations of the Council, the provision of services, but within the specified period.
prescribe a class of registered persons who shall provide Government may notify the categories of services in respect of which any
prescribed modes of electronic payment to the recipient of supply
other document issued in relation to supply shall be deemed to be a tax
of goods or services or both made by him and give option to such
invoice or tax invoice may not be issued subject to specified conditions.
recipient to make payment accordingly, in such manner and
subject to such conditions and restrictions, as may be prescribed. The Government may, on the recommendations of the Council, by
notification, specify the categories of goods or services supplies in respect of
which a tax invoice shall be issued, within such time and in such manner as
may be prescribed.
ANALYSIS
In case of taxable In case of taxable supply of services
The provisions relating to Tax Invoice are provided under Section supply of goods
31 of the CGST Act as well as Chapter-
Invoice shall be Invoice shall be issued before or after the
VI: Tax Invoice, Credit and Debit Notes
issued before or at provision of service, but within a period of 30
of Central Goods and Services (CGST) days* from the date of supply of service.
the time of,—
Rules, 2017. The provisions contained in
Ru
these rules have been incorporated at the relevant (a) removal of *45 days in case of an insurer or banking company
places. goods for or financial institution, including a non- banking

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.9 1.10 9.10 GOODS AND SERVICES TAX

supply to the financial company (NBFC) (1) Ritu Manufacturers, Delhi supplies goods to Prakhar Electronics,
recipient, where Haryana. The goods were removed from its factory in Delhi on 23rd
the supply September. Ritu Manufacturers needs to issue a tax invoice on or
involves An insurer or a banking company or a before 23rd September.
movement of financial institution, including NBFC, or a
goods; or telecom operator, or any other class of (2) Katyani Security Services Ltd. provides security services to
Royal Jewellers for their Jewellery Exhibition to be organized on 5th
(b) delivery of supplier of services as may be notified by the
October. Katyani Security Services Ltd. needs to issue a tax invoice
goods or Government, making taxable supplies of
services between distinct persons as specified within 30 days of supply of security services, i.e. on or before 4th November.
making
available in section 25
(ii) Where supply of services ceases before its completion [Section 31(6)]
thereof to the
In a case where the supply of services ceases under a
recipient, in any
other case. contract before the completion of the supply, the
invoice shall be issued at the time when the supply
ceases and such invoice shall be issued to the extent of
the supply made before such cessation.
(iii) Goods sent on sale or return basis [Section 31(7)]
Where the goods being sent or taken on approval for sale or return are
removed before the supply takes place, the invoice shall be issued:
In case of In case of continuous supply of services
continuous supply (i) before/at the time of supply
of goods
or
Where successive Where the invoice shall be
(ii) 6 months from the date of removal
statements of issued
accounts/ successive whichever is earlier.
(a) due date of on or before the due date
payments are
payment is of payment The goods which are taken for supply on approval basis can be moved from
involved, the invoice
ascertainable from the place of business of the registered supplier to another place within the
shall be issued
the contract same State or to a place outside the State on a delivery challan [discussed
before/at the time
each such statement (b) due date of before or at the time when subsequently in this Chapter in detail] along with the e-way bill 1 wherever
is issued or each payment is not the supplier of service applicable. The invoice may be issued at the time of delivery of goods. For
such payment is ascertainable from receives the payment this purpose, the person carrying the goods for such supply can carry the
received. the contract
(c) payment is linked on or before the date of 1
E-way bill is a document which is required to be carried by the person-in charge of the
to the completion of completion of that event. conveyance for the movement of goods from the supplier’s premises to the recipient’s premises.
an event Detailed provisions have been discussed in Chapter 10 – Accounts and Records; E-way Bill in this
Module of the Study Material.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.11 1.12 9.12 GOODS AND SERVICES TAX

invoice book with him so that he can issue the invoice in accordance within tax invoice on the date of expiry of 6 months from the date of removal, in
the time stipulated above, once the supply is fructified. respect of such quantity of specified goods which have neither been sold nor
brought back, in accordance with the provisions contained in section 12 and
Goods sent/ taken out of India for exhibition or on consignment basis
section 31 read with rule 46 [Circular No. 108/27/2019 GST dated 18.07.2019].
for export promotion
The above position is explained by way of example below:
Sometimes the goods
are sent or taken out of (3) M/s. ABC sends 100 units of specified goods out of India. The
India for exhibition or activity of merely sending/ taking such specified goods out of
on consignment basis India is not a supply. No tax invoice is required to be issued in this
for export promotion. case, but the specified goods shall be accompanied with a delivery challan
The activity of sending/ issued in accordance with the provisions contained in rule 55.
taking the goods out of
In case the entire quantity of specified goods is brought back within the
India for exhibition or
stipulated period of 6 months from the date of removal, no tax invoice is
on consignment basis
required to be issued as no supply has taken place in such a case.
for export promotion,
except when such activity satisfies the tests laid down in Schedule I In case, however, the entire quantity of specified goods is neither sold nor
(hereinafter referred to as specified goods), do not constitute supply as the brought back within 6 months from the date of removal, a tax invoice would
said activity does not fall within the scope of section 7 as there is no be required to be issued for entire 100 units of specified goods in accordance
consideration at that point in time. with the provisions contained in section 12 and section 31 with rule 46 within
the time period stipulated under section 31(7).
The specified goods sent/taken out of India are required to be either sold or
brought back within the stipulated period of 6 months from the date of (iv) Particulars of a tax invoice [Sections 31(1) & (2) read with rule 46]
removal as per the provisions contained in section 31(7). As discussed earlier, there is no format prescribed for an invoice, but rules
The supply would be deemed to have taken place, on the expiry of 6 months make it mandatory for an invoice to have the following fields (only applicable
from the date of removal, if the specified goods are neither sold abroad nor fields are to be filled):
brought back within the said period.
Name, address and GSTIN of the supplier;
If the specified goods are sold abroad, fully or partially, within the
A consecutive serial number not exceeding 16 characters, in one or
specified period of 6 months, the supply is effected, in respect of quantity
multiple series, containing alphabets/numerals/special characters hyphen
so sold, on the date of such sale. In that case, the sender shall issue a tax
or dash and slash, and any combination thereof, unique for a FY;
invoice in respect of such quantity of specified goods which has been sold
abroad, in accordance with the provisions contained in section 12 and section Date of its issue;
31 read with rule 46.
If recipient is registered - Name, address and GSTIN or UIN of recipient
When the specified goods sent / taken out of India have neither been
If recipient is unregistered Particulars of invoice
sold nor brought back, either fully or partially, within the stipulated
and value of supply is
period of 6 months, as laid down in section 31(7), the sender shall issue a

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.13 1.14 9.14 GOODS AND SERVICES TAX

` 50,000 or more Name and address of the recipient and Quick Response code, having embedded Invoice Reference Number (IRN)
the address of delivery, along with the in it, in case e-invoice has been issued 2
name of State and its code
Note: The taxpayers exempted from the mandatory requirement of
less than ` 50,000 unregistered recipient may still request e-invoicing (discussed subsequently) are required to provide a declaration on
the aforesaid details to be recorded in the the tax invoice stating that though their aggregate turnover exceeds the
tax invoice
notified aggregate turnover for e-invoicing, they are not required to prepare
In cases involving supply of online money gaming or in cases where any an e-invoice.
taxable service is supplied by or through an ECO or by a supplier of OIDAR (v) Number of HSN digits required on tax invoice and class of registered
services to a recipient who is unregistered, irrespective of the value of such person not required to mention HSN [Rule 46]
supply, a tax invoice issued by the registered person shall contain the name
of the State of the recipient and the same shall be deemed to be the address Board may, on the recommendations of the
on record of the recipient. Council, by notification, specify:

HSN code for goods or services; (i) the number of digits of Harmonised System
of Nomenclature (HSN) code for goods or
Description of goods or services; services that a class of registered persons
shall be required to mention; or
Quantity in case of goods and unit or Unique Quantity Code thereof;
(ii) a class of supply of goods or services for which specified number of
Total value of supply of goods or services or both; digits of HSN code shall be required to be mentioned by all registered
Taxable value of supply of goods or services or both taking into account taxpayers; and
discount or abatement, if any; (iii) the class of registered persons that would not be required to mention
the HSN code for goods or services.
Rate of tax (central tax, State tax, integrated tax, Union territory tax or
cess); This provision is also applicable to Bill of Supply [The concept of Bill of Supply
is discussed in subsequent paras].
Amount of tax charged in respect of taxable goods or services (central
tax, State tax, integrated tax, Union territory tax or cess); In view of the above powers, following has been notified vide Notification No.
12/2017 CT dated 28.06.2017 as amended.
Place of supply along with the name of State, in case of a supply in the
course of inter-State trade or commerce; [Link]. Aggregate Turnover (AT) Number of Digits of
in the preceding FY HSN Code
Address of delivery where the same is different from the place of supply;
1. $7•` 5 crores For B2B supply - 4
Whether the tax is payable on reverse charge basis; and
For B2C supply – 4
Signature or digital signature of the supplier or his authorized (optional)*
representative
(not required in case of issuance of an electronic invoice in accordance
with the provisions of the Information Technology (IT) Act, 2000). 2
in the manner prescribed under rule 48(4)

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.15 1.16 9.16 GOODS AND SERVICES TAX

INTEGRATED TAX” or “SUPPLY MEANT FOR EXPORT / SUPPLY TO SEZ

2. AT >` 5 crores For B2B supply and B2C
supply – 6 UNIT/SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR
LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX”,
*As mentioned above, a registered person having aggregate turnover up to as the case may be.
` 5 crores in the previous financial year have been exempted from the
requirement of mentioning the HSN Code in the manner specified in above
table in a tax invoice issued by him under the said rules in respect of supplies
made to unregistered persons.
(vi) Manner of issuing the invoice [Sections 31(1) & (2) read with rule 48]

In case of taxable supply of In case of taxable supply of

goods services

Invoice shall be prepared in Invoice shall be prepared in

TRIPLICATE DUPLICATE

It is important to note that particulars of an Export Invoice are same as a Tax

Triplicate Duplicate Invoice. However, where recipient is unregistered and value of supply is
` 50,000 or more, instead of name of State and its code, in case of an
export invoice, name of the country of destination is to be mentioned.
Original copy Original
copy
Key points from aforesaid discussion have been summarized as
Duplicate copy follows:
Duplicate
copy 1. All GST taxpayers are free to design their own Tax Invoice Format.
Triplicate copy
2. The law requires that only certain fields as mandatory fields in the Tax
Invoice. The same have been listed under heading (iv) above. The
The serial number of invoices issued during a tax period shall be furnished mandatory fields have also been circled in the Sample Tax Invoice given
electronically [through the Common Portal – [Link]], in FORM
subsequently.
GSTR-1 [Details of outward supplies of goods or services] or GSTR-1A.
3. The time period for issuance of invoice is different for goods and
(vii) Invoice in case of export of goods or services [Third proviso to rule 46] services. For goods, it is any time before or at its delivery and for
In the case of the export of goods or services, the invoice shall carry an services, it is within 30 days from the date of supply of services.
endorsement “SUPPLY MEANT FOR EXPORT/ SUPPLY TO SEZ UNIT/SEZ
DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.17 1.18 9.18 GOODS AND SERVICES TAX

Sample Tax Invoice

E-invoicing' has been introduced for reporting of business to business

(B2B) invoices to GST System for certain notified category of taxpayers.
All registered businesses with
an aggregate turnover (based
on PAN) in any preceding
financial year from 2017-18
onwards greater than ` 5 crores
(hereinafter referred to as
‘notified persons’) will be
required to issue e-invoices. E-
invoicing is not voluntary; only
notified persons are enabled to report invoices on Invoice Registration Portal
(IRP).
Before we proceed
further, let us first
understand what is
‘e-invoicing’? E-invoicing
is not generation of
invoice by a Government
portal. Taxpayers will
continue to create their
GST invoices on their own
Accounting/Billing/ERP
Systems as per e-invoice
scheme. These invoices
will then be reported to
‘IRP’. On such reporting,
IRP will generate a unique
‘Invoice Reference
Number (IRN)’, digitally sign it and return the e-invoice to the supplier. A GST
e-invoice will be valid only with a valid IRN.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.19 1.20 9.20 GOODS AND SERVICES TAX

Presently, invoices, credit notes and debit notes, when issued by notified will help to curb the actions of unscrupulous taxpayers and reduce the
persons (to registered persons (B2B) or for the purpose of exports) are number of fraud cases as the tax authorities will have access to data in real-
covered under e-invoice. Though different documents are covered, for ease time.
of reference and understanding, the system is referred as ‘e-invoicing’.
E-invoicing statutory provisions
Advantages of e-invoicing
Rule 48(4) stipulates that the e-invoice shall be prepared by notified class of
E-invoice has many advantages for registered persons, by uploading such particulars as contained in
businesses. One such advantage is Form GST INV-01 on the Common GST Electronic Portal 3 and obtain an IRN
auto-reporting of invoices into GST (Invoice Reference Number), in prescribed manner and subject to prescribed
return and auto-generation of
conditions and restrictions.
e-way bill (wherever required).
Under e-invoicing, business has to However, the Commissioner may, on the recommendations of the Council, by
report the B2B invoice data only notification, exempt a person or a class of registered persons from issuance
once in the e-invoice form and the of e-invoice under rule
same is reported in multiple forms 48(4) for a specified period,
(GSTR-1, e-way bill etc.). E-way bill subject to such conditions
can be auto-generated using e- and restrictions as may be
invoice data. GSTR-1 can also be specified in the said
auto-populated with the e-invoice data. It will become part of the business notification.
process of the taxpayer.
Every invoice, issued by
Consequently, there will be a substantial reduction in transcription errors as
above persons, in any
same data will get reported to tax department as well as to the buyer to
manner other than the
prepare his inward supplies (purchase) register. On receipt of information
manner specified in rule 48(4) shall not be treated as an invoice. Where e-
through GST System, buyer can reconcile the same with his Purchase Order.
invoicing is applicable, there is no need of issuing invoice copies in
Thus, it will facilitate standardisation and inter-operability leading to triplicate/duplicate.
reduction of disputes among transacting parties, improve payment cycles,
reduction of processing costs and thereby greatly improving overall business Class of persons notified to mandatorily issue e-invoice
efficiency. In view of said powers, a registered person (except specified class of
Further, since a complete trail of B2B invoices is available with the persons 4), whose aggregate turnover in any preceding financial year from
Department, it will enable the system-level matching of input tax credit and
3
output tax thereby reducing the tax evasion. Ten dedicated Invoice Reference Portals have been notified as Common Goods and Service
Tax (GST) Electronic Portal for the purpose of preparing e-invoice. These portals are enlisted
Last but not the least, e-invoicing will eliminate the fake invoices. Claiming in subsequent paras.
4
fictitious input tax credit (ITC) by raising fake invoices is also one of the Special Economic Zones and insurer or banking company or financial institution including
biggest challenges currently faced by tax-authorities. The e-invoice system NBFC, GTA, supplier of passenger transportation service, person supplying services by way of
admission to exhibition of cinematograph films in multiplex screens, a Government

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.21 1.22 9.22 GOODS AND SERVICES TAX

2017-18 onwards exceeds ` 5 crore, has been notified as class of persons who ‰ Supplier of passenger transportation service
shall prepare e-invoice in respect of B2B supplies (supply of goods or services
‰ Person supplying services by way of admission to exhibition of
or both to a registered person) and for exports 5. Thus, presently, such
cinematograph films in multiplex screens
notified persons are not required to report B2C invoices on IRP. However,
reporting of B2C invoices will be brought under e-invoice in the next phase. ‰ a Government Department and a local authority
However, they will be brought under e-invoice in the next phase. Further, e- Thus, above mentioned entities are not required to issue e-invoices even if
invoicing is also not applicable to invoices issued by Input Service Distributor their turnover exceeds ` 5 crore in any preceding financial year from
(ISD). 2017-18 onwards.
If the invoice issued by a notified person is in respect of supplies made by Further, the above taxpayers exempted from the mandatory requirement of
him, tax on which is payable under reverse charge under section 9(3), e-invoicing are required to provide a declaration as below:-
e-invoicing is applicable.
that invoice is not required to be issued in the manner specified under rule
(4) A taxpayer (say a firm of advocates) having aggregate turnover 48(4), in all cases where an invoice is issued, other than in the manner so
in a FY of more than ` 5 crore is supplying services to a company specified under the said rule 48(4), by the taxpayer having aggregate turnover
(who will be discharging tax liability as recipient under reverse in any preceding financial year from 2017-18 onwards more than the
charge mechanism), such invoices have to be reported by said tax payer (since aggregate turnover as notified under rule 48(4) [presently its ` 5 crore]-
it is a notified person) on IRP.
“I/We hereby declare that though our aggregate turnover in any preceding
On the other hand, where specified category of supplies are received by financial year from 2017-18 onwards is more than the aggregate turnover
notified person from unregistered persons [attracting reverse charge under notified under sub-rule (4) of rule 48, we are not required to prepare an
section 9(4)] or through import of services, e-invoicing doesn’t arise/ not invoice in terms of the provisions of the said sub-rule.”
applicable. E-invoicing is also not applicable for import of goods (Bills of Entry).
**It is important to note here that only SEZ units and not SEZ developers are
Exemption from e-invoicing exempt from issuing e-invoices. Thus, SEZ developers whose turnover

Following entities are exempt from the mandatory requirement of exceeds ` 5 crore in any preceding financial year from 2017-18 onwards are

e-invoicing: mandatorily required to issue e-invoices. Further, in case of supplies made by

notified persons to SEZ units, e-invoices need to be issued.
‰ Special Economic Zone units**
(5) Maharaja Private Limited has an SEZ unit and a regular DTA
‰ Insurer or banking company or financial institution including NBFC
unit (both having same PAN). The aggregate total turnover of
‰ GTA supplying services in relation to transportation of goods by road Maharaja Private Limited is more than ` 5 crore (considering both
in a goods carriage the GSTINs). However, the turnover of DTA unit is ` 2.5 crore for preceding
financial year.

In this scenario, SEZ unit is exempt from e -invoicing. However, e-invoicing

Department and a local authority. will be applicable to DTA Unit because the aggregate turnover of Maharaja
5
Notification No. 13/2020 CT dated 21.03.2020 as amended

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.23 1.24 9.24 GOODS AND SERVICES TAX

Private Limited in this case is > ` 5 crore. The applicability is based on annual
aggregate turnover on the common PAN.

It has been clarified 6 that the said exemption from generation of e-invoices
is for the entity as a whole and is not restricted by the nature of supply
being made by the said entity.

(6) A banking company providing banking services, may also be

involved in making supply of some goods, including bullion.

The said banking company is exempted from mandatory issuance

of e-invoice in terms of Notification No. 13/2020 CT dated 21.03.2020, for
all supplies of goods and services and thus, will not be required to issue e-
invoice with respect to any supply made by it.

How e-invoice is generated?

The taxpayer first prepares and generates his invoice using his own ERP/
accounting/ billing system or manual system 7. The invoice must conform to
the e-invoice schema (It is a standard notified format which is discussed in
detail subsequent paras) and must have the mandatory parameters.

The details of this invoice are uploaded/reported by the taxpayer to the

Invoice Registration Portal (IRP).

This way taxpayer registers his supply transaction on IRP. On uploading, IRP
returns the e-invoice with a unique ‘Invoice Reference Number (IRN)’
(explained in detail subsequent paras) after digitally signing the e-invoice
and adding a QR Code (Quick Response Code).

Then, the supplier shares the e-invoice with the receiver (along with QR
Code).

6
Circular No. 186/18/2022 GST dated 27.12.2022
7
For entities not having their own ERP/Software solutions, they can use the free offline utility
(‘bulk generation tool’) downloadable from the e-invoice portal. Through this, invoice data
can be easily reported to IRP and obtain IRN/signed e-invoice

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.25 1.26 9.26 GOODS AND SERVICES TAX

How e-invoice data is consumed by GST System for generation of Important terms
e-way bill or populating relevant parts of GST Returns? E-invoice Schema
On successful reporting of invoice details to IRP, the invoice data (payload)
Businesses use various accounting/billing software, each generating and
including IRN, will be saved in GST System.
storing invoices in their own electronic formats. These different formats are
The GST system will auto-populate them into GSTR-1 of the supplier and neither understood by GST System nor by the systems of suppliers and
GSTR-2A of respective receivers. IRN and IRN date will also be shown along receivers.
with source marked as ‘e-invoice’ (except where such details were
(7) An invoice generated by SAP system cannot be read by a
modified/re-uploaded by taxpayer).
machine which is using ‘Tally’ system, unless a connector is used.
The e-invoice schema (discussed subsequently) includes parameters e.g. With more than 300 accounting/billing software products, there
‘Transporter ID’ and ‘Vehicle Number’, etc. that are required for creating and was no way to have connectors for all.
generating e-way bills. These can be entered if available with seller, at the time
of generation of e-invoice so that e-way bill can be created using this data In this scenario, ‘e-invoicing’ was introduced aiming at machine-readability
without any further requirement of data entry by the user. The e-invoice and uniform interpretation. To ensure this complete ‘inter-operability’ of e-
reporting software already allows reporting of e-invoice and generation of invoices across the entire GST eco-system, an invoice standard is a must. By
e-way bill with same data. this, e-invoices generated by one software can be read by any other software,
Cancellation/amendment of reported invoice thereby eliminating the need of fresh/manual data entry. Since there was no
such standard for e-invoice available earlier, as a first step, a standard/format
Where needed, the seller can cancel IRN for an e-invoice already reported by
for e-invoice has been finalized.
reporting it on IRP within specified time 8.
This uniform standard format (containing specified fields) applicable for all
Amendment of e-invoice already uploaded on IRP will be done only on GST
the businesses across the country is known as ‘e-invoice schema’. It is notified
portal (while filing GSTR-1). Amendment of invoices is not possible through
as Form GST INV-1. E-invoice schema mandates what particulars shall be
the IRP.
reported in electronic format to IRP. Invoice details in prescribed schema to
Implications for businesses be reported to IRP in JSON format (JavaScript Object Notation). ‘JSON’ can
As apparent from the above discussion, e-invoicing does not mean that the be understood as a common language for systems/machines to communicate
invoice needs to be prepared/generated on the Government portal. It is only between each other and exchange data.
intimating the Government portal that invoice has been issued to the buyer,
Invoice Registration Portal (IRP)
by registering that particular invoice on the Government portal.
Consequently, businesses will continue to issue invoices as they were doing IRP is the website for uploading/reporting of invoices by the notified persons.
earlier. Necessary changes on account of e-invoicing requirement (i.e. to Following IRPs have been notified for the purpose of preparation of the
enable reporting of invoices to IRP and obtain IRN), be made by e-invoice:
ERP/Accounting and Billing Software providers in their respective software.
[Link]
They need to get the updated version having this facility.
[Link]
[Link]
8
However, if the connected e-way bill is active or verified by officer during transit, cancellation of
[Link]
IRN will not be permitted.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.27 1.28 9.28 GOODS AND SERVICES TAX

[Link] Quick Response (QR) code

[Link] Upon successful registration of invoice on IRP, it will return a
signed e-invoice to the supplier with IRN and QR Code. IRN
[Link]
is embedded in the QR Code which shall be extracted and
[Link] printed on the invoice. The QR code enables quick view,
[Link] validation and access of the invoices from the GST system
from hand-held devices. The digitally signed QR code will have a unique IRN
[Link]
which can be verified on the central portal as well as by an offline app by the
Invoice Reference Number officer. This will be helpful for tax officers checking the invoice offline on the
As seen earlier, GST invoice will be valid only with a valid IRN. IRN is different roadside where internet may not be available all the time.
from invoice number. Invoice no. (e.g. ABC/1/2019-20) is assigned by The QR code consists of the following e-invoice parameters:
supplier and is internal to business. Its format can differ from business to
‰ GSTIN of supplier
business and also governed by relevant GST rules. IRN, on other hand, is a
unique reference number (hash) generated and returned by IRP, on successful ‰ GSTIN of recipient
registration of e-invoice, for instance, IRN is a unique 64-character hash, e.g. ‰ Invoice number as given by supplier
35054cc24d97033afc24f49ec4444dbab81f542c555f9d30359dc75794e06bbe
‰ Date of generation of invoice
Other points:
‰ Invoice value (taxable value and gross tax)
‰ The e-invoicing system is also available for the E-Commerce Operators
‰ Number of line items
(ECO) to report the invoices to the Invoice Registration portal,
generated by them on behalf of the suppliers. ‰ HSN code of main item (the line item having highest taxable value)

‰ Bulk uploading of invoices to IRP is also possible 9. ‰ Unique Invoice Reference Number (hash)

‰ CBIC has clarified 10 that there is no requirement to carry the physical ‰ Date of generation of IRN
copy of tax invoice in cases where e-invoice has been generated by the E-invoicing applicable to Government Departments/PSUs etc. registered
supplier. Whenever e-invoice has been generated, production of the solely for the purpose of deduction of tax at source as per provisions of
Quick Reference (QR) code having an embedded Invoice Reference
section 51
Number (IRN) electronically, for verification by the proper officer, would
suffice. ‰ The issue which arose for consideration was whether e-invoicing is applicable for
supplies made by a registered person, whose turnover exceeds the prescribed
threshold for generation of e-invoicing, to Government Departments or
establishments/ Government agencies/ local authorities/ PSUs which are
registered solely for the purpose of deduction of TDS as per provisions of section
9
Discussion on e-invoicing is primarily based on the relevant rules, notifications and FAQS on e- 51.
invoicing hosted on GSTN website.
10
Circular No. 160/16/2021 GST dated 20.09.2021

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.29 1.30 9.30 GOODS AND SERVICES TAX

‰ It is clarified that Government Departments or establishments/ Government Today, many shops have static QR code at the payment counter which is
agencies/ local authorities/ PSUs, which are required to deduct TDS under scanned by the buyer, but the buyer has to enter the amount to be paid to
section 51, are liable for compulsory registration in accordance with section the shop in the mobile payment App. The dynamic QR code, on the other
24(vi). hand, will have the payment details and thus ‘scan and pay’ in one go is
possible.
‰ Therefore, Government Departments or establishments/ Government agencies/
This has no relevance or applicability to the e-invoicing in respect to B2B
local authorities/ PSUs, registered solely for the purpose of deduction of TDS as
supplies by notified class of taxpayers. Dynamic QR Code will be
per provisions of section 51, are to be treated as registered persons under the
generated by the seller himself either on the Point of Sale (PoS) machine or
GST law as per provisions of section 2(94).
the invoice issued.
‰ Accordingly, the registered person, whose turnover exceeds the prescribed Dynamic QR Code in case of an invoice, issued to person having a UIN
threshold for generation of e-invoicing, is required to issue e-invoices for the
Any person, who has obtained a Unique Identity Number (UIN), is not a
supplies made to such Government Departments or establishments/
11 “registered person” as per the definition of registered person provided in section
Government agencies/ local authorities/ PSUs, etc. under rule 48(4) .
2(94). Therefore, any invoice, issued to such person having a UIN, shall be
considered as invoice issued for a B2C supply and shall be required to comply
with the requirement of Dynamic QR Code.
All B2C invoices issued by a registered person whose aggregate turnover Non-applicability of requirement of Dynamic QR code
in any preceding financial year from 2017-18 onwards exceeds ` 500
Dynamic QR code is not applicable to an invoice issued to an unregistered
crores will have a QR code.
person by following suppliers:
Sixth proviso to rule 46 has empowered the Government to specify that the
(i) Insurer or banking company or financial institution including NBFC
tax invoice shall have Quick Response (QR) code. Resultantly, it has been
notified 12 that invoice issued by a registered person [except specified class of (ii) Goods transport agency supplying services in relation to transportation
persons (discussed subsequently)], whose aggregate turnover in a financial of goods by road in a goods carriage
year exceeds ` 500 crores, in respect of B2C supplies (supply of goods or (iii) Supplier of passenger transportation service
services or both to an unregistered person) shall have Dynamic QR code.
(iv) Person supplying services by way of admission to exhibition of
A Dynamic Quick Response (QR) code made available to buyer by such cinematograph films in multiplex screens
registered person through digital display (with payment cross-reference) shall
(v) Supplier of online information and database access or retrieval (OIDAR)
be deemed to be having QR code. The purpose of this provision is to
services.
enable and encourage digital payments where buyer can scan the
dynamic QR code and make payment from mobile wallet directly. No Dynamic QR code in case of exports: As regards the supplies made for
exports, though such supplies are made by a registered person to an
unregistered person, however, since e-invoices are required to be issued in
respect of supplies for exports treating them as B2B supplies, Dynamic QR
11
Circular No. 198/10/2023 GST dated 17.07.2023
12
Notification No. 14/2020 CT dated 21.03.2020

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.31 1.32 9.32 GOODS AND SERVICES TAX

code requirement will not be applicable to [Link]/ details to be ii. in cash, without using Dynamic QR Code and the supplier provides a
captured in the Dynamic QR Code cross reference of the amount paid in cash, along with date of such
payment on the invoice;
Dynamic QR Code, inter-alia, shall contain the following information: -
The said invoice shall be deemed to have complied with the requirement of
‰ Supplier GSTIN number
having Dynamic QR Code.
‰ Supplier UPI ID
Case-II: If a supplier makes available to customers an electronic mode
‰ Payee’s Bank A/c number and IFSC of payment like UPI Collect, UPI Intent or similar other modes of
‰ Invoice number & invoice date, payment, through mobile applications or computer-based applications,
where though Dynamic QR Code is not displayed, but the details of
‰ Total invoice value and
merchant as well as transaction are displayed/ captured otherwise
‰ GST amount along with breakup i.e. CGST, SGST, IGST, Cess, etc.
In such cases, if the cross reference of the payment made using such
Further, Dynamic QR Code should be such that it can be scanned to make a electronic modes of payment is made on the invoice, the invoice shall be
digital payment. deemed to comply with the requirement of Dynamic QR Code.
Compliance with the Dynamic QR Code requirements in certain cases However, if payment is made after generation/ issuance of invoice, the
The purpose of dynamic QR Code is to enable the recipient/ customer to scan supplier shall provide Dynamic QR Code on the invoice.
and pay the amount to be paid to the merchant/ supplier in respect of the Case-III: In case of pre-paid invoices i.e. where payment has been made
said supply. If the supplier has issued invoice having Dynamic QR Code for before issuance of the invoice
payment, the said invoice shall be deemed to have complied with Dynamic
If cross reference of the payment received either through electronic mode
QR Code requirements. Compliance with the Dynamic QR Code requirements
or through cash or combination thereof is made on the invoice, then the
has been examined in the following cases:
invoice would be deemed to have complied with the requirement of
Case-I: If a supplier provides/ displays Dynamic QR Code, but the Dynamic QR Code.
customer opts to make payment without using Dynamic QR Code and
In cases other than pre-paid supply i.e. where payment is made after
supplier provides the cross reference of such payment made without use
generation / issuance of invoice, the supplier shall provide Dynamic QR
of Dynamic QR Code, on the invoice
Code on the invoice.
In cases where the supplier, has digitally displayed the Dynamic QR Code and
Case-IV: In case where the e-commerce operator (ECO)/online
the customer pays for the invoice: - application has complied with the Dynamic QR Code requirements,
i. using any mode like UPI, credit/ debit card or online banking or cash whether the suppliers using such e-commerce portal or application will
or combination of various modes of payment, with or without using still be required to comply with the requirement of Dynamic QR Code?
Dynamic QR Code, and the supplier provides a cross reference of Dynamic QR code requirements apply to each supplier/registered person
the payment (transaction id along with date, time and amount of separately, if such person is liable to issue invoices with Dynamic QR Code for
payment, mode of payment like UPI, Credit card, Debit card, online B2C supplies.
banking etc.) on the invoice; or

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.33 1.34 9.34 GOODS AND SERVICES TAX

In case, the supplier is making supply through the e- commerce portal or payment along with unique order ID/ sales reference number are also provided
application, and the said supplier gives cross references of the payment received on the invoice.
in respect of the said supply on the invoice, then such invoices would be deemed
Case - VII: In case part-payment is received before dynamic QR code is
to have complied with the requirements of Dynamic QR Code.
generated.
In cases other than pre-paid supply i.e. where payment is made after generation
When the part-payment for any supply has already been received from the
/ issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
customer/ recipient, either in advance or by adjustment (e.g. using a voucher,
Case-V: No Dynamic QR code required on an invoice issued to a recipient discount coupon etc), before the dynamic QR Code is generated, then the
located outside India for supply of services whose POS is in India and dynamic QR code may provide only the remaining amount payable by the
payment received in FOREX customer/ recipient against “invoice value”.
In cases, where an invoice is issued to a recipient located outside India, for The details of total invoice value, along with details/ cross reference of the
supply of services, for which the place of supply is in India, as per the part payment/ advance/ adjustment done, and the remaining amount to be
provisions of the IGST Act, and the payment is received by the supplier, in paid, should be provided on the invoice 13.
convertible FOREX or in Indian Rupees wherever permitted by the RBI (such The detailed process of uploading of e-invoices on invoice registration portal (IRP)
supply of services is not considered as export of services as per the IGST Act), has been given for the information of the students in the Annexure to this chapter.
such invoice may be issued without having a Dynamic QR Code, as such The same is not relevant for examination purposes.
dynamic QR code cannot be used by the recipient located outside India for
Key Points
making payment to the supplier.
¾ E-invoices will not be generated at the IRP Portal.
Case-VI: In case of retail sales over the counter, the payment from the
customer is received on the payment counter by displaying dynamic QR ¾ E-Invoice schema issued by GST System will be used by the all kind of
code on digital display, whereas the invoice, along with invoice number, businesses. The Schema has mandatory and non-mandatory fields,
is generated on the processing system being used by supplier/ merchant mandatory fields has to be filled by all the taxpayers. Non-mandatory field
after receiving the payment. is for the business to choose.

In such cases, it may not be possible for the merchant/ supplier to provide ¾ E-Invoice will be authenticated with the digital signature of the IRP.
details of invoice number in the dynamic QR code displayed to the customer ¾ Each E-Invoice will be uploaded for registration on IRP within time line.
on payment counter. However, each transaction i.e. receipt of payment from
¾ E-Invoice mechanism has an option to cancel the invoice within 24 hours
a customer is having a unique Order ID/ sales reference number, which is
of registration of IRP.
linked with the invoice for the said transaction.
In such cases, the unique order ID/ unique sales reference number, which is
uniquely linked to the invoice issued for the said transaction, may be provided
in the Dynamic QR Code for digital display, as long as the details of such unique
order ID/ sales reference number linkage with the invoice are available on the 13
The discussion on Dynamic QR code is based primarily on sixth proviso to rule 46 alongwith
processing system of the merchant/ supplier and the cross reference of such Notification No. 14/2020 CT dated 21.03.2020 and Circular no. 146/02/2021 GST dated
23.02.2021, Circular no. 156/12/2021 GST dated 21.06.2021 and Circular No. 165/21/2021 GST
dated 17.11.2021.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.35 1.36 9.36 GOODS AND SERVICES TAX

C. SPECIAL CASES (8) Sarabhai Private Ltd. commenced business of supply of goods
(i) Revised Tax Invoice [Section 31(3)(a) read with rule 53] on 1st April in Delhi. Its turnover exceeded the applicable
threshold limit on 3rd September. Thus, it became liable to
When issued?
registration on 3rd September. It applied for registration on 29th September
Every registered person who has been granted and was granted registration certificate on 5th October. Since it applied for
registration with effect from a date earlier For the purposes of this
registration within 1 month of becoming liable to registration, registration
than the date of issuance of certificate of section, the expression
granted is effective from 3rd September.
registration to him, may issue Revised Tax “tax invoice” shall
Invoices in respect of taxable supplies effected include any revised Sarabhai Private Ltd. may issue Revised Tax Invoices on or before
invoice issued by the 5th November in respect of taxable supplies effected between 3rd September
during the period starting from the effective
supplier in respect of a and 5th October.
date of registration till the date of the issuance
supply made earlier
of the registration certificate. Consolidated Revised Tax Invoices in certain cases
[Explanation to section
Revised Tax Invoices shall be issued within 1 32]. A registered person may issue a Consolidated Revised Tax Invoice in respect
month from the date of issuance of certificate of all taxable supplies made to an unregistered recipient during such period.
of registration. The words “Revised Invoice” shall be indicated prominently However, in case of inter-State supplies where the value of supply does not
on such invoices. exceed ` 2.5 Lakh, a consolidated revised invoice may be issued separately in
This provision is necessary, as a person who becomes liable for registration respect of all unregistered recipients located in a State.
has to apply for registration within 30 days of becoming liable for registration. Thus, a revised/ consolidated revised invoice may be issued within one month
When such an application is made within the stipulated time period and from the date of registration as follows:
registration is granted, the effective date of registration is the date on which
x For each inter-State B2C taxable supply up to ` 2,50,000: State-wise
the person became liable for registration.
consolidated revised invoice
Thus, there would be a time lag between the date of grant of certificate of
x For each inter-State B2C taxable supply more than ` 2,50,000:
registration and the effective date of registration. For supplies made by such
Recipient wise revised invoice
person during this intervening period, the law enables the issuance of a
revised invoice, so that ITC can be availed by the recipient on such supplies. x For all intra-State B2C taxable supplies irrespective of the amount:
Recipient wise Consolidated revised invoice
Revised Tax Invoices to be issued in respect of taxable
supplies effected during this period Particulars of Revised Tax Invoice

Name, address and GSTIN of the supplier;

Effective date of Date of issuance of A consecutive serial number not exceeding 16 characters, in one or
registration certificate of registration multiple series, containing alphabets or numerals or special characters -
hyphen or dash and slash and any combination thereof, unique for a FY;

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.37 1.38 9.38 GOODS AND SERVICES TAX

Instead, such registered person shall issue a Consolidated Tax Invoice for
Date of issue of the document;
such supplies at the close of each day in respect of all such supplies.

Name, address and GSTIN or UIN, if registered, of the recipient; Thus, small taxpayers, like small retailers, doing a large number of small
transactions for upto a value of ` 200 per transaction to unregistered
Name and address of the recipient and the address of delivery, along with customers need not issue invoice for every such transaction. They can issue
the name of State and its code, if such recipient is un-registered; one consolidated invoice at the end of each day for all transactions done
during the day. However, they need to issue an invoice when the customer
Serial number and date of the corresponding tax invoice or, as the case demands.
may be, bill of supply; However, this option is not available to a supplier engaged in making supply
of services by way of admission to exhibition of cinematograph films in
Signature/digital signature of the supplier/his authorized representative. multiplex screens.
Above provision is also applicable to Bill of Supply.
Note: Any invoice or debit note issued in pursuance of any tax payable in
accordance with the provisions of section 74 or section 129 or section 130 shall (iii) Bill of Supply [Section 31(3)(c) read with rule 49]
prominently contain the words “INPUT TAX CREDIT NOT ADMISSIBLE”
Section 31(3)(c) stipulates that a registered person supplying exempted
Section 74 - Determination of tax not paid or short paid or erroneously goods or services or both or a registered person paying tax under
refunded or input tax credit wrongly availed or utilised by reason of fraud or any composition levy, shall issue a bill of supply instead of a tax invoice. Person
wilful misstatement or suppression of facts 14 opting for composition levy shall mention the words “composition taxable
person, not eligible to collect tax on supplies” at the top of the bill of supply
Section 129 - Detention, seizure and release of goods and conveyances in transit
issued by him 16.
Section 130 - Confiscation of goods or conveyances and levy of penalty 15
Supplying exempted
(ii) No Tax Invoice required to be issued if value < ` 200 – A consolidated Tax goods or services or both
Invoice can be issued [Section 31(3)(b) read with fourth proviso to rule 46]
A registered person may not issue a Tax Invoice if:
(i) Value of the goods/services/both supplied < ` 200, Registered
Person
(ii) the recipient is unregistered; and
Paying tax under
(iii) the recipient does not require such invoice. composition levy

14
It may be noted that the provisions of section 74 are applicable for tax determination
relating to the past period up to the Financial Year 2023–24. 16
Fourth proviso to rule 49 stipulates that the Bill of supply shall have a Quick Response
15
Provisions of sections 129 and 130 have been discussed in detail in Chapter 21- Offences and
Code. However, the same is not yet made effective.
Penalties and Ethical aspects under GST in Module 3 of the Study Material.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 TAX INVOICE, CREDIT AND DEBIT NOTES 9.39 1.40 9.40 GOODS AND SERVICES TAX

Particulars of Bill of Supply (9) Patel & Sons is a manufacturer of goods who has opted for
composition levy under section 10(1) and (2). It will issue a Bill of
A registered person opting for the composition levy does not collect tax from
Supply to the buyers of goods and not the tax invoice.
the recipient on outward supplies made by him. Similarly,
in case of a registered person supplying exempted goods Invoice-cum-bill of supply [Rule 46A]
and/or services, no tax implications are there. Recipients Where a registered person is supplying taxable as well as exempted goods or
should not expect Tax Invoice from such suppliers as they services or both to an unregistered person, a single “invoice-cum-bill of
cannot issue tax invoice. supply” may be issued for all such supplies. Rule 46A is notwithstanding
Since no tax is collected from the recipient by a registered person opting for anything contained in rule 46 or rule 49 or rule 54 of CGST Rules. The said
the composition levy and a registered person supplying exempted goods single "invoice-cum-bill of supply" shall contain the particulars as specified
and/or services, Bill of Supply issued by such persons does not contain the under rule 46 or rule 54, as the case may be, and rule 49.
details pertaining to rate of tax and amount of tax. Further, value to be (iv) Receipt Voucher [Section 31(3)(d) read with rule 50]
mentioned in the Bill of Supply is not a taxable value. A Bill of Supply shall be
A registered person shall, on receipt of advance payment with respect to any
issued containing the following details, namely:
supply of goods or services or both, issue a Receipt Voucher evidencing
Name, address and GSTIN of the supplier; receipt of such payment.

A consecutive serial number not exceeding 16 characters, in one or more Particulars of Receipt Voucher
multiple series, containing alphabets or numerals or special characters -
Name, address and GSTIN of the supplier;
hyphen or dash and slash and any combination thereof, unique for a FY;
Date of its issue; A consecutive serial number not exceeding 16 characters, in one or
multiple series, containing alphabets or numerals or special characters
Name, address and GSTIN or UIN, if registered, of the recipient;
-hyphen or dash and slash and any combination thereof, unique for a
HSN Code for goods or services; FY

Description of goods or services or both; Date of its issue;

Value of supply of goods or services or both taking into account discount/
Name, address and GSTIN or UIN, if registered, of the recipient;
abatement, if any; and
Signature or digital signature of the supplier or his authorized Description of goods or services;
representative
Amount of advance taken;
(not required in case of issuance of an electronic bill of supply in
accordance with the provisions of the Information Technology (IT) Act, Rate of tax (central tax, State tax, integrated tax, Union territory tax
2000). or cess);
Note: Any tax invoice or any other similar document issued under any other
Amount of tax charged in respect of taxable goods or services
Act for the time being in force in respect of any non-taxable supply shall be (central tax, State tax, integrated tax, Union territory tax or cess);
treated as bill of supply for the purposes of the Act.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.41 1.42 9.42 GOODS AND SERVICES TAX

Particulars of Refund Voucher

Place of supply along with the name of State and its code, in case of
a supply in the course of inter-State trade or commerce; Name, address and GSTIN of the supplier;
Whether the tax is payable on reverse charge basis; and A consecutive serial number not exceeding sixteen characters, in one
or multiple series, containing alphabets or numerals or special
Signature/digital signature of supplier/his authorized representative characters -hyphen or dash and slash and any combination thereof,
unique for a FY;
Where at the time of receipt of advance, rate of tax and/or nature of
supply is not determinable Date of its issue;

Where at the time of receipt of advance Name, address and GSTIN or UIN, if registered, of the recipient;

Number and date of Receipt Voucher issued

(i) rate of tax is not determinable tax shall be paid at the
rate of 18% Description of goods/services in respect of which refund is made

(ii) nature of supply is not determinable same shall be treated as Amount of refund made
inter-State supply
Rate of tax (central tax, State tax, integrated tax, Union territory tax
or cess)
(v) Refund Voucher [Section 31(3)(e) read with rule 51]
Amount of tax paid in respect of such goods or services (central tax,
Where, on receipt of advance payment with respect to any supply of goods
State tax, integrated tax, Union territory tax or cess)
or services or both the registered person issues a Receipt Voucher, but
subsequently no supply is made and no tax invoice is issued in pursuance Whether the tax is payable on reverse charge basis; and

thereof, the said registered person may issue to the person who had made Signature/digital signature of supplier/his authorized representative
the payment, a Refund Voucher against such payment.
(vi) Invoice and Payment Voucher [Section 31(3)(f) & (g) read with rule 46, rule
Advance payment 47A and rule 52]

Receipt Voucher The recipient is liable to pay tax on reverse charge basis where he receives
supply of such goods/services/both which are notified for reverse charge
Supply
purposes under section 9(3). Such supplies can be received from a registered
Supplier Tax Invoice or an unregistered supplier.
Recipient
Refund Voucher
Further, a builder/promoter is required to pay GST on reverse charge basis
under section 9(4) in one or more of the following cases:
(i) A builder/promoter must purchase 80% of inputs and input services
used in supplying the service from registered persons. In case of
shortfall, he’s required to pay tax under reverse charge on all such

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.43 1.44 9.44 GOODS AND SERVICES TAX

inward supplies (to the extent short of 80% of the inward supplies from Rule 47A provides that
registered supplier). where an invoice referred to
in rule 46 is required to be
(ii) Where cement is received from an unregistered person, issued under clause (f) of
promoter/builder has to pay tax on supply of such cement on reverse section 31(3) by a registered
charge basis and person, who is liable to pay
tax under section 9(3)/9(4),
(iii) GST on capital goods purchased from unregistered person is payable
he shall issue the said
by the promoter on reverse charge basis.
invoice within a period of 30
Invoice to be issued by recipient if he is liable to pay tax under days from the date of
section 9(3)/(4) and receives supplies from an unregistered person receipt of the said supply of
goods and/or services, as
A registered person who is liable to pay tax under reverse charge [under
the case may be.
section 9(3)/9(4) of the CGST Act] shall within the prescribed period issue
an invoice in respect of goods or services or both received by him from the Thus, invoice to be issued within a period of 30 days from the date of
receipt of the said supply of goods and/or services, as the case may be.
supplier who is not registered on the date of receipt of goods or services
or both. Payment voucher to be issued by recipient at the time
of making payment if he is liable to pay tax under
Further, the expression "supplier who is not registered" shall include the
section 9(3)/(4)
supplier who is registered solely for the purpose of deduction of tax under
section 51. In other words, a supplier registered solely for the purposes Besides, a registered person who is liable to pay tax under
of tax deduction at source under section 51 17 of the CGST Act, 2017 shall reverse charge [under section 9(3)/9(4) of the CGST Act] shall issue a
not be considered as a registered person for the purposes of section Payment Voucher at the time of making payment to the supplier.
31(3)(f). Particulars of Payment Voucher
Thus, invoice to be issued by recipient within the prescribed time if he is
liable to pay tax under section 9(3)/(4) and receives supplies from an Name, address and GSTIN of the supplier if registered;
unregistered person A consecutive serial number not exceeding 16 characters, in one or
Further, the time limit for issuing tax invoice in case of reverse charge multiple series, containing alphabets or numerals or special characters
mechanism supplies has been prescribed in rule 47A. -hyphen or dash and any combination thereof, unique for a FY

Date of its issue;

Name, address and GSTIN of the recipient;

Description of goods or services;

Amount paid;

17
Rate of tax (central tax, State tax, integrated tax, Union territory tax
The provisions of section 51 of the CGST Act, 2017 are discussed in detail in Chapter-
or cess);
11 of this Module of the Study Material.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.45 1.46 9.46 GOODS AND SERVICES TAX

Amount of tax payable in respect of taxable goods or services (central Taxable value
tax, State tax, integrated tax, Union territory tax or cess);
Tax rate and tax
Place of supply along with the name of State and its code, in case of
amount – central tax,
a supply in the course of inter-State trade or commerce; and
state tax, integrated
Signature/digital signature of supplier/his authorized representative tax, union territory tax
or cess, where the
(vii) Delivery challan [Rule 55] transportation is for
supply to the
Rule 55 specifies the cases where for the purpose of transportation of goods
consignee
without issue of Invoice, Delivery Challan be issued:
These are provided in the following table: Place of supply, in case
of inter-state
Nature of supply Deliver challan to Particulars of Delivery movement
be issued Challan
Signature
(1) Supply of liquid x serially Date and number of
gas where the numbered not the delivery challan A. Delivery challan in Triplicate
quantity at the exceeding 16 The delivery challan shall be prepared in TRIPLICATE, in case of supply of
time of removal characters Name, address and
goods, in the following manner:
from the place of x GSTIN of the consigner,
in one or
business of the if registered
multiple series Original copy
supplier is not
x at the time of Name, address and
known,
removal of GSTIN or UIN of the Duplicate copy
(2) Transportation of goods for consignee, if
goods for job transportation registered Triplicate copy
work,
(3) Transportation of HSN code and B. Declaration in E-way Bill
goods for reasons description of goods,
Where goods are being transported on a delivery challan in lieu of invoice,
other than by
the same shall be declared in E-Way Bill 18.
way of supply, or Quantity (provisional,
(4) Such other where the exact C. Tax invoice to be issued after delivery of goods
supplies as may quantity being supplied
Where the goods being transported are for the purpose of supply to the
be notified by the is not known)
recipient but the tax invoice could not be issued at the time of removal of
Board
18
The provisions of E-way Bill have been discussed in Chapter-10: Accounts and Records; E-way
Bill in this Module of the Study Material.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.47 1.48 9.48 GOODS AND SERVICES TAX

goods for the purpose of supply, the supplier shall issue a tax invoice after supply can carry the invoice book with him so that he can issue the invoice
delivery of goods. once the supply is fructified [Circular No. 10/10/2017 GST dated 18.10.2017].
D. Goods transported in SKD/CKD condition or in batches or lots
Likewise, in case where artists supply art works in different States - other
Where the goods are being transported in a semi knocked down or than the State in which they are registered as a taxable person and if the art
completely knocked down condition or in batches or lots, work is selected by the buyer, then the supplier issues a tax invoice only at
(a) the supplier shall issue the complete invoice before dispatch of the the time of supply, it is clarified that the art work for supply on approval
first consignment; basis can be moved from the place of business of the registered person
(b) the supplier shall issue a delivery challan for each of the subsequent (artist) to another place within the same State or to a place outside the State
consignments, giving reference of the invoice; on a delivery challan along with the e-way bill wherever applicable and the
(c) Copies of the corresponding delivery challan shall accompany each invoice may be issued at the time of actual supply of art work [Circular No.
consignment along with a duly certified copy of the invoice; and 22/22/2017 GST dated 21.12.2017].

(d) the original copy of the invoice shall be sent along with the last (viii) Supplier permitted to issue any document other than tax invoice
consignment. [Proviso to section 31(2) read with rules 54]
E. Goods may be moved within the State/from the State of Government may, on the recommendations of
registration to another State for supply on approval basis and art the Council, by notification and subject to such
works may be sent by artists to galleries for exhibition on delivery conditions as may be mentioned therein,
challan along with e-way bill wherever applicable specify the categories of services in respect of
Suppliers of jewellery etc. who are registered in one State may have to visit which––
other States (other than their State of registration) and need to carry the (a) any other document issued in relation to the supply shall be deemed
goods (such as jewellery) along for approval. In such cases if jewellery etc. is to be a tax invoice; or
approved by the buyer, then the supplier issues a tax invoice only at the time
(b) tax invoice may not be issued.
of supply. Since the suppliers are not able to ascertain their actual supplies
Following suppliers may issue a tax invoice, but they are also permitted to
beforehand and while ascertainment of tax liability in advance is a mandatory
issue any other document in lieu of tax invoice, by whatever name called:
requirement for registration as a casual taxable person, the supplier is not
able to register as a casual taxable person. Such goods are also carried within Supplier of Document in lieu of the tax invoice
the same State for the purposes of supply. taxable service
Optional Mandatory information
In view of relevant provisions of rule 55, it is clarified that the goods which
information
are taken for supply on approval basis can be moved from the place of
business of the registered supplier to another place within the same State Insurer/ x Serial number (It Other information (other
or to a place outside the State on a delivery challan along with the e-way Banking is not than serial no. and address of
bill wherever applicable and the invoice may be issued at the time of company/ mandatory for a recipient) as prescribed for a
Financial bank/ insurance Tax Invoice, under rule 46.
delivery of goods. For this purpose, the person carrying the goods for such

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.49 1.50 9.50 GOODS AND SERVICES TAX

institution, company to A customer may avail Details of place of origin and

including NBFC serially number numerous services from the destination
the invoices/ bank / insurer in a given tax
document). period. Such entities may GSTIN of the person liable
x Address of the issue a consolidated tax for paying tax whether as
recipient of invoice/ statement/ advice, consignor, consignee or GTA
taxable service. any other document in lieu
thereof, by whatever name Other information as
called may be issued/ made prescribed for a tax invoice,
available, physically/ under rule 46
electronically, for supply of
services made during a Supplier of x Serial number Tax invoice shall include
month at the end of the passenger x Address of the ticket in any form, by
month. transportation recipient of whatever name called.
service taxable service
However, the signature or Other information (other than
digital signature of the serial no. and address of
supplier or his authorised recipient) as prescribed for a
representative shall not be tax invoice, under rule 46.
required in the case of
issuance of a consolidated However, signature or digital
tax invoice or any other signature of the supplier or his
document in lieu thereof in authorized representative shall
accordance with the not be required in the case of
issuance of ticket in
provisions of the
accordance with the provisions
Information Technology
of the Information Technology
Act, 2000.
Act, 2000.
Goods Transport Gross weight of the
Registered person Details of recipient Supplier is required to issue an
Agency (GTA) consignment
supplying supplying of service electronic ticket and the said
services in Name of the consignor and services by way electronic ticket shall be
the consignee of admission to deemed to be a tax invoice.
relation to
exhibition of
transportation of
Registration number of cinematograph Other information (other than
goods by road in
goods carriage in which the films in details of recipient of
a goods carriage
goods are transported multiplex service) as prescribed for a tax
screens invoice, under rule 46.
Details of goods transported

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.51 1.52 9.52 GOODS AND SERVICES TAX

However, supplier of such Name, address and GSTIN of the registered person having the same
service in a screen other than PAN and same State code as ISD
multiplex screens may, at his
A consecutive serial number not exceeding 16 characters, in one or
option, follow the above
multiple series, containing alphabets or numerals or special characters -
procedure.
hyphen or dash and any combination thereof, unique for a FY

It is important to note here that keeping in view the large number of Date of its issue
transactions in banking, insurance and passenger transportation sector, GSTIN of supplier of common service and original invoice number
taxpayers need not mention the address of the customer and the serial whose credit is sought to be transferred to the ISD
number in their invoices. Name, address and GSTIN of the ISD
(ix) Tax invoice in case of Input Service Distributor (ISD) [Rule 54(1) & Taxable value**, rate and amount of the credit to be transferred
54(1A)]
Signature/digital signature of the registered person/his authorized
An ISD invoice or, as the case may be, an ISD credit note issued by an ISD representative
shall contain the following details:-
** The taxable value in the invoice issued hereunder shall be the same as
Name, address and GSTIN of the ISD the value of the common services.

A consecutive serial number not exceeding 16 characters, in one or (x) Tax invoice or bill of supply to accompany transport of goods [Rule 55A]
multiple series, containing alphabets or numerals or special characters Person-in-charge of the conveyance shall carry a copy of the tax invoice or
-hyphen or dash and any combination thereof, unique for a FY the bill of supply issued in accordance with the provisions of rules 46, 46A
Date of its issue or 49 in a case where such person is not required to carry an e-way bill under
these rules.
Name, address and GSTIN of the recipient to whom the credit is
distributed
4. CREDIT AND DEBIT NOTES [SECTION 34]
Amount of credit distributed

Signature/digital signature of ISD/his authorized representative STATUTORY PROVISIONS

However, where the ISD is an office of a banking company or a financial
institution, including NBFC, a tax invoice shall include any document in lieu Section 34 Credit and Debit Notes
thereof, by whatever name called, whether or not serially numbered but
Sub-section Particulars
containing the information as mentioned above.
A registered person, having the same PAN and State code as an ISD, may issue (1) Where one or more tax invoices have been issued for supply of any
an invoice or, as the case may be, a credit/debit note to transfer the credit of goods or services or both and the taxable value or tax charged in
that tax invoice is found to exceed the taxable value or tax payable
common input services to the ISD, which shall contain the following details:-

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.53 1.54 9.54 GOODS AND SERVICES TAX

in respect of such supply, or where the goods supplied are returned

by the recipient, or where goods or services or both supplied are ANALYSIS
found to be deficient, the registered person, who has supplied such
(i) Issuance of Credit Note: During the course of trade or commerce, after the
goods or services or both, may issue to the recipient one or more
invoice has been issued, Credit Note can be issued under the following
credit notes for supplies made in a financial year containing such
circumstances:
particulars as may be prescribed
‰ The supplier has erroneously declared a value which is more than the
(2) Any registered person who issues a credit note in relation to a
actual value of the goods or services provided. (Taxable Value found to
supply of goods or services or both shall declare the details of such
exceed the taxable value in respect of such supply)
credit note in the return for the month during which such credit
note has been issued but not later than the 30th day of November ‰ The supplier has erroneously declared and charged a higher tax rate or
following the end of the financial year in which such supply was tax amount than what was actually applicable and required to be
made, or the date of furnishing of the relevant annual return, charged for the said supply of goods and / or services. (Tax Charged
whichever is earlier, and the tax liability shall be adjusted in such exceeds the Tax payable)
manner as may be prescribed:
‰ The goods supplied are returned by the Recipient (Sales Return)
Provided that no reduction in output tax liability of the supplier
shall be permitted, if the incidence of tax and interest on such ‰ The quality of the goods or services or both supplied is not to the
supply has been passed on to any other person. satisfaction of the recipient (Quality issues)

(3) Where one or more tax invoices have been issued for supply of any ‰ Any other similar reasons
goods or services or both and the taxable value or tax charged in
In order to regularize these kinds of situations, the supplier is allowed to issue
that tax invoice is found to be less than the taxable value or tax
a document called as credit note to the recipient. Once the credit note has
payable in respect of such supply, the registered person, who has
been issued, the tax liability of the supplier will reduce. Simultaneously
supplied such goods or services or both, shall issue to the recipient
one or more debit notes for supplies made in a financial year whenever a Credit Note in consonance with the provisions of Section 34 of
containing such particulars as may be prescribed. the CGST Act, 2017 is issued reducing the liability of GST by the supplier, the
corresponding reduction in Input Tax Credit is envisaged at the recipient’s
(4) Any registered person who issues a debit note in relation to a end.
supply of goods or services or both shall declare the details of such
debit note in the return for the month during which such debit note The credit note is a convenient and legal method by which the value of the
has been issued and the tax liability shall be adjusted in such goods or services in the original tax invoice can be amended or revised. The
manner as may be prescribed. issuance of the credit note easily allows the supplier to decrease his tax
liability in his returns without requiring him to undertake any tedious process
Explanation –– For the purposes of this Act, the expression “debit of refunds.
note” shall include a supplementary invoice.
Section 34(1) provides that where one or more tax invoices have been
issued for supply of any goods or services or both and the taxable value or
tax charged in that/those tax invoice(s) is found to exceed the taxable value
or tax payable in respect of such supply, or where the goods supplied are

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.55 1.56 9.56 GOODS AND SERVICES TAX

returned by the recipient, or where goods or services or both supplied are more debit notes for supplies made in a financial year containing the
found to be deficient, the registered person, who has supplied such goods or prescribed particulars.
services or both, may issue to the recipient one or more credit notes for The issuance of a debit note/supplementary invoice creates additional tax
supplies made in a financial year containing the prescribed particulars. liability. The treatment of a debit note/supplementary invoice is identical to
It is important to note that credit note(s) are the treatment of a tax invoice as far as returns and payment are concerned.
not permitted to be issued in case secondary The debit note/supplementary invoice is a convenient and legal method by
discounts 19 are allowed by the supplier since which the value of the goods and/or services in the original tax invoice can
the tax liability of the supplier does not get be enhanced. The issuance of the debit note allows the supplier to pay his
reduced in such case. However, supplier can issue financial/ commercial enhanced tax liability in his returns without requiring him to undertake any
credit note(s) to reduce the value of supply payable by the recipient to the other tedious process.
supplier [Circular 92/11/2019 GST dated 07.03.2019]. The Tax Liability of the It is to be noted that a debit note issued by the supplier in accordance with
Supplier is not reduced on issuance of Financial / Commercial Credit Notes. the provisions of Section 34 of CGST Act, 2017 is a valid document to take
Input Tax Credit at the end of the recipient [Rule 36(1)(c) of CGST Rules, 2017].
(ii) Issuance of Debit Note: There can be situations when after the invoice has
been issued: (iii) Details of Debit Note/Credit Note to be declared in return
I. Credit Note:
‰ The supplier has erroneously declared a value which is less than the
actual value of the goods or services or both provided. Any registered person who issues a credit note in
relation to a supply of goods or services or both
‰ The supplier has erroneously declared a lower tax rate than what is
shall declare the details of such credit note in the
applicable for the said supply of the goods or services or both supplied.
return for the month during which such credit
‰ Any other similar reasons note has been issued but not later than:
In order to regularize the above situations, the supplier is allowed to issue a (i) 30th November following the end of the financial year in which
document called as debit note to the recipient. such supply was made,
Section 34(3) provides that where one or or
more tax invoices have been issued for (ii) the date of furnishing of the relevant annual return,
Debit note shall include a
supply of any goods or services or both and
supplementary invoice. whichever is earlier.
the taxable value or tax charged in that tax
invoice is found to be less than the taxable The tax liability shall be adjusted in such manner as may be prescribed.
value or tax payable in respect of such supply, the registered person, who has However, no reduction in output tax liability of the supplier shall be
supplied such goods or services or both, shall issue to the recipient one or permitted, if the incidence of tax and interest on such supply has been
passed on to any other person.
A single Credit / Debit Note may also be issued against more than one
19
Secondary discounts are the discounts which are not known at the time of supply/are offered invoice to reduce / increase the tax liability.
after the supply is already over. These discounts are not excluded from the value of supply since
conditions laid down in section 15(3)(b) are not satisfied. Refer Chapter 6 - Value of supply in
Module 1 of the Study Material for detailed discussion on the same.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.57 1.58 9.58 GOODS AND SERVICES TAX

Procedure in case of return of time expired medicines/drugs treatment in such case has already been discussed in Chapter 7:
It is a common trade practice in the pharmaceutical sector that the Input Tax Credit in this Module of the Study Material.
drugs or medicines are sold by the manufacturer to the wholesaler and (B) Return of time expired goods by issuing Credit Note
by the wholesaler to the retailer on the basis of an invoice/bill of supply
The manufacturer/wholesaler who has
as case may be. Such goods have a defined life term which is normally
supplied the goods to the wholesaler/
referred to as the date of expiry. Goods which have crossed their date Expired
retailer has the option to issue a credit
of expiry are colloquially referred to as time expired goods and are
note in relation to the time expired
returned back to the manufacturer, on account of expiry, through the
goods returned. Retailer/wholesaler
supply chain.
may return the time expired goods by
In case of return of time expired medicines/drugs, either of the issuing a delivery challan.
following two options can be followed:
If the credit note is issued within the time limit specified in Point
(A) Return of time expired goods to be treated as fresh supply (iii)(I.) above, the tax liability may be adjusted by the supplier,
In case the person returning the time expired goods is: subject to the condition that the person returning the time
‰ A registered person (other than a composition expired goods has either not availed the ITC or if availed has
taxpayer): he may, at his option, return the said goods by reversed the ITC so availed against the goods being returned.
treating it is as a fresh supply and thereby issuing an invoice However, if said time limit has lapsed, a credit note may still be
for the same (hereinafter referred to as the, “return supply”). issued by the supplier for such return of goods but the tax liability
The value of the said goods as shown in the invoice on the cannot be adjusted by him in his hands.
basis of which the goods were supplied earlier may be taken
Further, if time expired goods are returned beyond the time
as the value of such return supply. The wholesaler/
period specified in Point (iii)(I.) and a credit note is issued
manufacturer, who is the recipient of such return supply,
consequently, there is no requirement to declare such credit note
shall be eligible to avail ITC of the tax levied on the said
on the common portal by the supplier (i.e. by the person who has
return supply subject to the fulfilment of conditions
issued the credit note) as tax liability cannot be adjusted in this
specified in section 16 of the CGST Act.
case.
‰ A composition supplier: he may return the said goods by
Where such returned time expired goods are destroyed by the
issuing a bill of supply and pay tax at the rate applicable to
manufacturer, he/she is required to reverse the ITC attributable to
a composition taxpayer. No ITC will be available to recipient
the manufacture of such goods, in terms of section 17(5)(h) of the
of return supply.
CGST Act.
‰ An unregistered person: he may return the said goods by
The clarification may also be applicable to return of goods for
issuing any commercial document without charging any tax
reasons other than being time expired. [Circular No. 72/46/2018
on the same.
GST dated 26.10.2018].
Where the time expired goods which have been returned by the
retailer/wholesaler are destroyed by the manufacturer, ITC

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.59 1.60 9.60 GOODS AND SERVICES TAX

Example (iv) Particulars of the Debit and Credit Notes [Rule 53(1A)]

Date of Date of Treatment in terms of tax There is no prescribed format, but credit and debit note issued by a supplier
Supply* return** liability & credit must contain the following particulars, namely:–

01.07.2023 20.09.2024 Credit note will be issued by Name, address and GSTIN of the supplier.
supplier (manufacturer/
wholesaler) and the same to be Nature of the document.
uploaded by him on the common
portal. Subsequently, tax liability A consecutive serial number not exceeding 16 characters, in one or
can be adjusted by such supplier multiple series, containing alphabets or numerals or special characters -
provided the recipient (wholesaler hyphen or dash and slash and any combination thereof, unique for a FY.
/ retailer) has either not availed the
ITC or if availed has reversed the Date of issue of the document.
ITC.

01.07.2023 20.10.2024 Credit note will be issued by the Name, address and GSTIN or UIN, if registered, of the recipient.
supplier (manufacturer /
wholesaler) but there is no Name and address of the recipient and the address of delivery, along with
requirement to upload the same the name of State and its code, if such recipient is un-registered.
on the common portal.
Subsequently tax liability cannot Serial number(s) and date(s) of the corresponding tax invoice(s) or, as the
be adjusted by such supplier. The case may be, bill(s) of supply.
ideal course of action in this case
would be that the retailer /
Value of taxable supply of goods or services, rate of tax and the amount
wholesaler returning the time
of the tax credited or, as the case may be, debited to the recipient
expired goods should issue a tax
invoice treating the same as fresh
Signature/digital signature of the supplier/his authorized representative.
supply.
* of goods from manufacturer/ wholesaler to wholesaler/ retailer
**of time expired goods from retailer/ wholesaler to wholesaler/
manufacturer 5. PROHIBITION OF UNAUTHORISED
II. Debit Note: COLLECTION OF TAX [SECTION 32]
Any registered person who issues a debit note in relation to a supply of A person who is not a registered person shall not collect in respect of any supply
goods or services or both shall declare the details of such debit note in of goods or services or both any amount by way of tax under this Act. No registered
the return for the month during which such debit note has been issued. person shall collect tax except in accordance with the provisions of this Act or the
The tax liability shall be adjusted in such manner as may be prescribed. rules made thereunder.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.61 1.62 9.62 GOODS AND SERVICES TAX

(9) Rujuta is engaged in providing grooming services. She is not registered

Time limit for issuance of invoice
under GST law as her turnover is below the threshold limit. Rujuta cannot
collect tax on the grooming services provided by her as a person who is not a
Taxable supply
registered person cannot collect any amount by way of tax under GST law in respect
of any supply of goods or services or both.
Goods Services
6. AMOUNT OF TAX TO BE INDICATED IN TAX
Involving No movement Sale or return Within 30 days**
INVOICE AND OTHER DOCUMENTS movement of of goods supplies from the supply of
goods services
[SECTION 33]
At the Before or at the time of
Notwithstanding anything contained in this Act or any other law for the time At the time **45 days for
time of supply, or within 6
of removal Insurance,
being in force, where any supply is made for a consideration, every person who is delivery months from the removal
Banking
liable to pay tax for such supply shall prominently indicate in all documents – whichever is earlier
relating to assessment, tax invoice and other like documents, the amount of tax
which shall form part of the price at which such supply is made.
In case of •before/at the time each successive statements of accounts
continuous supply is issued or each successive payment is received
of goods
LET US RECAPITULATE
Who can raise a tax invoice?
due date of payment is on/before due date of
ascertainable from the payment
Registered Person In case of contract
continuous not so ascertainable before/at the time of receipt
supply of of payment
services payment is linked to the on/before the date of
Supplying taxable goods or Receiving taxable goods or services completion of an event completion of that event
services from unregistered supplier

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.63 1.64 9.64 GOODS AND SERVICES TAX

Important contents of tax invoice

E-invoicing

A. Class of persons mandatorily required to issue e-invoice [hereinafter

Name & address of
recipient alongwith referred to as notified persons]
Consecutive Serial Name, address &
Name, address & delivery address ,
Number & date of GSTIN of recipient,
GSTIN of supplier name & State
issue if registered
code, if not All registered businesses
registered

Description of Quantity in case of Total Value of

HSN Required to issue E-
goods or services goods supply with an aggregate turnover (based on PAN)
greater than ` 5 crore invoice

Tax rate – Central

Taxable Value of Amount of tax
tax & State tax or Place of supply in any preceding financial year from 2017-18
supply charged
Integrated tax, cess onwards

Signature of B. Important terms

Address of delivery supplier or QR code having
Tax payable on E-invoice schema
where different authorised embedded IRN in it
reverse charge
than place of signatory - not req. - in case if e-
basis
supply if e-invoice issued invoice issued
as per IT Act, 2000
Uniform standard
format
Manner of issuing the invoice

Supply of Goods Supply of services applicable for all

businesses across the Form GST INV-1
country
Triplicate Duplicate

Original copy for recipient Original copy for recipient; and containing mandatory
specified fields to be
Duplicate copy for transporter; and Duplicate copy for supplier reported in electronic
Triplicate copy for supplier format to IRP

The serial number of invoices issued during a month / quarter shall be

furnished electronically in FORM GSTR-1.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.65 1.66 9.66 GOODS AND SERVICES TAX

Invoice Registration Portal [IRP] D. Situations in which e-invoicing is applicable

website Supply of goods and/or services to a registered person by •Applicable

notified person [B2B supplies]
for uploading or reporting of invoices
by notified persons Exports by notified persons •Applicable

Invoice Reference Number [IRN] B2C supplies by notified persons •Not applicable

Unique reference number Invoices issued by Input Service Distributor •Not applicable

Supplies made by notified person, tax on which is payable under •Applicable

generated and returned by IRP reverse charge under section 9(3)
Where specified category of supplies are received by notified
on successful registration of e-invoice
•Not
persons from unregistered persons [attracting reverse charge
applicable
under section 9(4)] or through import of services
GST invoice will be valid only with a valid IRN •Not applicable
Import of goods (Bills of Entry)

C. Advantages of e-invoicing E. No requirement of issuing invoice copies in triplicate/duplicate

Auto-reporting of invoices into GST return No need of issuing invoice copies

Where e-invoicing is applicable
in triplicate/duplicate
Auto-generation of e-way bill
F. Exemption from e-invoicing
Substantial reduction in transcription errors
Special Economic Zone units
Early payment
Insurer/banking company/financial institution including NBFC

Cost reduction GTA supplying services in relation to transportation of goods by road in a goods
carriage
Improved efficiency of business
Supplier of passenger transportation service

Reduction of tax evasion Person supplying services by way of admission to exhibition of cinematograph
films in multiplex screens

Elimination of fake invoices Government Department and local authority

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.67 1.68 9.68 GOODS AND SERVICES TAX

G. Overall work flow of e-invoice J. Amendment of reported invoice

Possible only on GST portal

Taxpayers (suppliers) create GST Taxpayers upload
IRP Amendment of e-invoice
invoices on their own the
generates already uploaded on IRP
Accounting/Billing/ERP systems as per e-invoice schema
IRN Not possible through the IRP
e-invoice schema [Form GST INV-01] to IRP

Revised Tax Invoice

IRP returns IRP digitally signs
Supplier shares the
e- invoice the e-invoice and Revised Tax Invoices to be issued in respect of taxable
e-invoice with receiver
to supplier add QR code supplies effected during this period
(along with QR code)

H. Generation of e-way bill/populating relevant parts of GST return through

e-invoicing data Effective date of Date of issuance of
registration certificate of registration
IRP sends e-invoice data along with IRN

Consolidated Revised Tax Invoice (CRTI) may be issued in respect of taxable

E-way bill supplies made to an unregistered recipient during this period
GST System
system

Auto-populate Auto-populate Parameters e.g. ‘Transporter ID’ and In case of Inter-State supplies, where the value of a supply does not exceed
data into data into ‘Vehicle Number’, etc. reported in e- ` 2,50,000, a CRTI may be issued separately in respect of all unregistered
GSTR-1 of GSTR-2A of invoice schema facilitate generation recipients located in a State.
supplier respective receiver of e-way bill

Consolidated Tax Invoice

I. Cancellation of reported invoice

Value of supply < `200 Consolidated Tax

by reporting IRN Invoice shall be
Cancellation of
allowed by seller on IRP within issued for such
reported invoice Recipient is unregistered
specified time. supplies at the close
be issued

of each day in respect

Recipient does not require such invoice of all such supplies
Tax invoice is not required to

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.69 1.70 9.70 GOODS AND SERVICES TAX

Bill of Supply Invoice and Payment Vouchers

Payment Voucher
Supplying exempted goods or
services or both Receives the supplies taxable
Bill of Where Recipient
Tax Invoice on Reverse Charge basis
Supply is registered
Paying tax under composition levy

Registered Person
under section 9(4)
under section 9(3)
Receipt Voucher

Supplier is
unregistered
Supplier is registered Supplier is unregistered
Advance payment
Supplier Recipient
Receipt Voucher
Recipient will issue a Payment Voucher at the time of making payment to supplier.

Where at the time of receipt of advance, rate of tax/ nature of supply is not
Invoice
determinable

Where at the time of receipt Where Recipient Receives the supplies taxable
of advance is registered on Reverse Charge basis

(i) rate of tax is not tax shall be paid at the rate of 18%
determinable
under section 9(3) under section 9(4)
(ii) nature of supply is not same shall be treated as inter-State supply
determinable
Supplier is
unregistered
Supplier is Supplier is unregistered
Refund Voucher
registered
Advance payment
Recipient shall issue invoice within a
Receipt Voucher
Supplier Supply period of 30 days from the date of receipt
Recipient
Tax Invoice of the said supply of goods and/or
Refund Voucher services.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.71 1.72 9.72 GOODS AND SERVICES TAX

Credit Notes
TEST YOUR KNOWLEDGE
Where one or more tax invoices have been issued for supply of any goods or
services or both 1. Jai, a registered supplier, runs a general store in Ludhiana, Punjab. Some of
the goods sold by him are exempt whereas some are taxable. You are required
to advise him on the following issues:

Taxable value in invoice > (i) Whether Jai is required to issue a tax invoices in all cases, even if he is
where the where goods or selling the goods to the end consumers?
Taxable value in respectt
goods services or both
of such supply OR (ii) Jai sells some exempted as well as taxable goods valuing ` 5,000 to a
supplied are OR supplied are
OR returned by found to be school student. Is he mandatorily required to issue two separate GST
Tax
Tax charged
charged inin invoice
invoice >
> deficient documents?
the recipient
Tax
Tax payable
payable in
in respect
respect of
of
such
such supply
supply (iii) Jai wishes to know whether it’s necessary to show tax amount separately
in the tax invoices issued to the customers. You are required to advise
him.
2. Avtaar Enterprises, Kanpur started trading exclusively in ayurvedic medicines
Registered Supplier may issue one or more from July 1. Its turnover exceeded ` 40 lakh on October 3. The firm applied for
credit notes for Recipient of goods or
of goods or services registration on October 31 and was issued registration certificate on
supplies made in a FY services or both
or both November 5.
Examine whether any revised invoice can be issued in the given scenario. If the
Debit Notes answer to the first question is in affirmative, determine the period for which the
revised invoices can be issued as also the last date up to which the same can
Where one or more tax invoices have been issued for supply of any goods or
services or both be issued.
3. Discuss the provisions relating to issue of an invoice/document in the following
circumstances:
Taxable value in invoice < Taxable value in respect of such supply (i) Advance payment is received against a supply, but subsequently no
supplies are made.
Tax charged in invoice < Tax payable in respect of such supply (ii) Goods are sent on approval for sale or return and are removed before the
supply takes place.
(iii) Mr. Mohan provides continuous supply of services to his client, where the
Registered Supplier may issue one or more due date of payment for such services is not ascertainable. No advance
of goods or services debit notes for supplies has been received in this behalf.
or both made in a FY

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.73 1.74 9.74 GOODS AND SERVICES TAX

4. Pari & Sons is an unregistered dealer of taxable supplies in Kerala. On separately to the school student in respect of supply of the taxable and
10th August, aggregate turnover of Pari & Sons exceeded ` 20,00,000. The firm exempted goods respectively.
applied for registration on 27th August and was granted the registration (iii) As per section 33, where any supply is made for a consideration, every
certificate on 1st September. person who is liable to pay tax for such supply shall prominently
Under CGST Rules, 2017, you are required to advise Pari & Sons as to what is indicate in all documents relating to assessment, tax invoice and other
the effective date of registration in its case. It has also sought your advice like documents, the amount of tax which shall form part of the price at
regarding period for issuance of revised tax invoices. which such supply is made.
As per rule 46(m), a tax invoice shall contain the various particulars, inter
alia, namely, amount of tax charged in respect of taxable goods or
ANSWERS services (central tax, State tax, integrated tax, Union territory tax or
cess);
Hence, Jai has to show the tax amount separately in the tax invoices
1. (i) No, he is not required to issue tax invoice in all cases. As per
issued to customers.
section 31(1), every registered person supplying taxable goods is
required to issue a ‘tax invoice’. Section 31(3)(c) stipulates that every 2. As per section 31(3)(a), a registered person may, within one month from the
registered person supplying exempted goods is required to issue a bill date of issuance of certificate of registration, issue a revised invoice against
of supply instead of tax invoice. the invoice already issued during the period beginning with the effective date
of registration till the date of issuance of certificate of registration to him.
Further, rule 46A provides that a registered person supplying taxable as
Further, rule 10(2) lays down that the registration shall be effective from the
well as exempted goods or services or both to an un-registered person
date on which the person becomes liable to registration where the application
may issue a single ‘invoice-cum-bill of supply’ for all such supplies.
for registration has been submitted within a period of 30 days from such date.
However, as per section 31(3)(b) read with rule 46 and 49, a registered
In the given case, Avtaar Enterprises has applied for registration within 30
person may not issue a tax invoice/bill of supply if:
days of becoming liable for registration. Thus, the effective date of
(i) value of the goods supplied <` 200, registration is the date on which Avtaar Enterprises became liable for
(ii) the recipient is unregistered; and registration i.e., October 3. Therefore, since in the given case there is a time
lag between the effective date of registration (October 3) and the date of
(iii) the recipient does not require such invoice.
grant of certificate of registration (November 5), revised invoices can be
Instead, such registered person shall issue a Consolidated Tax issued. The same can be issued for supplies made during this intervening
Invoice/bill of supply for such supplies at the close of each day in period i.e., for the period beginning with October 3 till November 5. Further,
respect of all such supplies. the revised invoices can be issued for the said period till December 5.
(ii) As per rule 46A, where a registered person is supplying taxable as well 3. (i) As per section 31(3)(e), where advance payment is received against a
as exempted goods or services or both to an unregistered person, a supply for which receipt voucher has been issued, but subsequently no
single “invoice-cum-bill of supply” may be issued for all such supplies are made and no tax invoice is issued in pursuance thereof, a
supplies. Thus, there is no need to issue a tax invoice and a bill of supply refund voucher may be issued to the person who had made the advance
payment.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.75 1.76 9.76 GOODS AND SERVICES TAX

(ii) As per section 31(7), where the goods are sent on approval for sale or Annexure
return and are removed before the supply takes place, the invoice shall
UPLOADING OF E-INVOICES ON INVOICE REGISTRATION PORTAL (IRP)
be issued before or at the time of supply or 6 months from the date of
removal, whichever is earlier. Under E-Invoicing, all the invoices created by accounting software will be
authenticated electronically by GSTN for further use (like return preparation, E-way bill
(iii) As per section 31(5)(b), in case of continuous supply of services, where
creation).
the due date of payment is not ascertainable from the contract, the
invoice shall be issued before or at the time when the supplier of service There are lots of myths or misconception about e-invoice. E-Invoice does not mean
receives the payment generation/creation of invoice from central portal or tax department because
practically it is not possible it will create unnecessary restrictions on trade and industry
4. Section 22(1) provides that every supplier is liable to be registered under this
and different industry have different business requirement, which cannot be met out
Act in the State or Union territory, other than special category States, from
by software.
where he makes a taxable supply of goods or services or both, if his aggregate
turnover in a financial year exceeds the threshold limit (` 20 lakh). E-Invoice is a submission of already generated Invoices from accounting software to
GST Portal and we all are aware that there are hundreds of accounting & billing
Section 25(1) provides that a supplier whose aggregate turnover in a financial
software, which generate invoices, but they all use their own formats to store
year exceeds the threshold limit in a State/UT is liable to apply for registration
information electronically and data in such different formats which GST System cannot
within 30 days from the date of becoming liable to registration (i.e., the date
understand, hence it was not possible to submit the data from accounting software to
of crossing the threshold limit).
GST System.
Where the application is submitted within the said period, the effective date
So, need was felt to issue a standard format (Schema) in which data will be shared with
of registration is the date on which the person becomes liable to registration
other systems, although from user’s prospective it’s same as earlier, there would not
vide rule 10(2); otherwise it is the date of grant of registration in terms of rule
be any change in print or electronically creation of invoice. Only standard schema
10(3).
needs to be implemented by all the accounting and billing software, so that it can
In the given case, since Pari & Sons have applied for registration on generate JSON of each invoice in such format which can be uploaded on GST Portal
27th August which is within 30 days from the date of becoming liable to for further authentication and approval.
registration (10th August), its effective date of registration is 10th August.
The main objective is to enable inter-operability across the entire GST eco-system i.e.
Further, every registered person who has been granted registration with effect an e-invoice generated by one software should be capable of being read by any other
from a date earlier than the date of issuance of registration certificate to him, software. Basically, through machine readability, an invoice can be uniformly
may issue revised tax invoices in respect of taxable supplies effected during this interpreted.
period within one month from the date of issuance of registration certificate
[Section 31(3)(a) read with rule 53(2)].
In view of the same, Pari & Sons may issue revised tax invoices against the
invoices already issued during the period between effective date of
registration (10th August) and the date of issuance of registration certificate
(1st September), on or before 1st October.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.77 1.78 9.78 GOODS AND SERVICES TAX

The overall workflow of e-invoice generation, its reporting/registration and IT (Information Technology) plays a significant role in preparing e-invoices (electronic
receipt of confirmation is depicted in the diagrams below: invoices) efficiently and accurately. E-invoices are standardized digital invoices that are
generated electronically and adhere to specific formats and regulations. Further, the
A. Interaction between the business (supplier) and the Invoice Registration
GST portal ensures that e-invoices generated by a taxpayer get automatically
Portal (IRP).
populated into Form GSTR-1 of the entity (without any manual intervention) and the
figure of outward supplies in Form GSTR-1 automatically gets populated into Form
GSTR-3B. Thus, generating an e-invoice effectively translates into automating the
declaration of the outward supplies in Form GSTR-3B thereby avoiding errors or
mismatches. This e-invoice generation leads to an end-to-end reporting of invoices in
Form GSTR-1 and Form GSTR-3B of the supplier of goods/services and Form GSTR-2B
of the recipient of supplies as well.
By automating e-invoicing, manual effort, errors, and delays in the invoicing process
can be significantly reduced while enhancing customer satisfaction and compliance
with regulatory requirements.

The process for filing bulk invoices on the Invoice Registration Portal (IRP) may vary
based on the specific requirements and systems in place. The IRP is primarily used for
generating and validating e-invoices in compliance with e-invoicing regulations.
Here's a general guide on how to file bulk invoices on the IRP portal:
B. Interaction between the IRP and the GST/E-Way Bill Systems and the
Buyer. Offline Method of Bulk IRN Generation
The sheer number of invoices raised by large businesses can be staggering and
tedious for the taxpayer to generate Invoice Reference Number (IRN). Bulk IRN
generation facility is provided by the Invoice Registration Portal (IRP) where
multiple invoices can be uploaded at once. Generation of IRN is the responsibility
of the supplier who will be required to report the same to Invoice Registration
Portal (IRP) for authentication, After successful verification, the portal will generate
a unique Invoice reference number (IRN) and digitally sign the e-invoice and a QR
code.
The e-invoice system being implemented by tax departments across the globe
consists of two important parts namely,
(a) Generation of invoice in a standard format so that invoice generated on one
system can be read by another system.
(b) Reporting of e-invoice to a central system.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.79 1.80 9.80 GOODS AND SERVICES TAX

Step by Step Process to Generate Invoice reference number 20

The e-invoice system provides a provision of offline method to generate the multiple
Invoice reference number in one-go by the tax payers.

In order to download this tool, visit the e-invoice portal ([Link]

Go to Help> Tools > Bulk Generation Tools option provided in E-Invoice portal as
shown below.

E-invoicing system will display 4 different JSON preparation Tools as Format A, Format
B, Format C and Format D. These formats have been made as per the requirements of The brief description of four formats of utility is discussed as under:-
different classes of tax payers and transactions.
(1) E-Invoice JSON Preparation – Format A
Taxpayer can select and download the most appropriate format of JSON
Format A consists of a single worksheet in which invoice and items details
preparation tool as shown below under ‘Bulk generation Tools. There are four
can be entered to prepare JSON file to upload the large number of e-Invoices
formats of utility available:
by a single upload to the Invoice Registration Portal (IRP). Businesses having
1 or 2 items in the invoice can use this format. This format is advisable for
invoices with B2B transactions. The seller GSTIN details are entered in the
Profile as a one time entry. As the item details are entered in the same
worksheet, it is to be ensured that the same invoice details repeat for all the
items of the invoice.
20
It may be noted that the specific steps and user interface might differ based on the updates and Payment details and Reference details cannot be entered in Format A.
changes made to the IRP portal. Always refer to the official documentation or guidelines provided
by the relevant authorities for accurate and up-to-date instructions on how to file bulk invoices
on the IRP portal.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.81 1.82 9.82 GOODS AND SERVICES TAX

(2) E-Invoice JSON Preparation – Form B After downloading the aforementioned utility, follow these steps:
Format B consists of a two worksheets in which invoice and items details can Step 1: Enter all the seller GSTIN details as required in the ‘Profile’ sheet.
be entered separately. This format is advisable for the businesses having
many items in the invoice. As the item details are entered in different
worksheet, ensure that every item will be referenced with Document number,
Document type and document date of the invoice. Payment details and
Reference details cannot be entered in Format B. The other information such
as Export details can be entered in the Invoice worksheet itself. If e-way bill
needs to be generated, the part-B details can also be entered in the Invoice
sheet.
(3) E-Invoice JSON Preparation – Form C
Format C consists of a five worksheets in which invoice details, items details,
payment details, reference details and additional details can be entered
separately. This format is advisable for the businesses having many items in
the invoice with payment details and reference details etc. As the item details
are entered in different worksheet, ensure that every item will be referenced
with Document number, Document type and document date of the invoice. Step 2: Enter all the details of the invoices in the necessary fields as given in the
The other information such as Export details can be entered in the Invoice ‘Invoice’ sheet.
sheet itself. If e-way bill needs to be generated, the part-B details can also be
entered in the Invoice sheet.

(4) E-Invoice JSON Preparation – Form D

Format D consists of a single worksheet in which invoice details, items details,
payment details, reference details and additional details can be entered in the
same worksheets. This format is advisable for the businesses having large
number of items in the invoice having payment details and reference details
etc. The other information such as Export details can be entered in the Invoice
sheet. If e-waybill needs to be generated, the part-B details can also be
entered in the Invoice sheet itself.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 TAX INVOICE, CREDIT AND DEBIT NOTES 9.83 1.84 9.84 GOODS AND SERVICES TAX

Step 4: Upon successful validation, click on the ‘Prepare JSON’ button. The JSON
file will now be generated containing details of the multiple invoices entered.

Step 5: Log in to the e-invoice portal and go to E-invoice -> E Invoice Bulk Upload
and select the JSON file to be uploaded. It is to be ensured that the JSON file is
not more than 2MB.

Step 3: Once the invoice details are entered, to ensure that e-invoice schema is
followed, validate the details using the ‘Validate’ button.

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 TAX INVOICE, CREDIT AND DEBIT NOTES 9.85 1.86 9.86 GOODS AND SERVICES TAX

Step 6: A summary of the invoices uploaded will be displayed on the screen. Each AMENDMENTS MADE VIDE THE FINANCE ACT, 2025
invoice is assigned a 64-character length IRN, and the same can be invoice excel
utility download or in e-invoice JSON file download. In case any errors are The Finance Act, 2025 has come into force from 29.03.2025. However, most of the
noted, it has to be corrected and re-uploaded. amendments made under the CGST Act and the IGST Act vide the Finance Act, 2025
would become effective only from a date to be notified by the Central Government
in the Official Gazette. Such a notification has not been issued till 30.04.2025.
Therefore, the applicability or otherwise of such amendment for May 2026,
September 2026 and/or, January 2027 examinations shall be informed by the ICAI
by way of an announcement.
In the table given below, the existing provisions of section 34(2) of the CGST Act,
2017 are compared with the provisions as amended by the Finance Act, 2025.

Once the announcement for applicability of such amendments for examination(s)

is made by the ICAI, students should read the amended provisions given hereunder
in place of the related provisions discussed in the chapter.
Section 34 Existing Provisions as Remarks
provisions amended by the
Finance Act, 2025
(2) Any registered Any registered Proviso to sub-
person who issues person who issues section (2) of
a credit note in a credit note in section 34 is
relation to a supply relation to a supply proposed to be
of goods or of goods or amended to
The system will also update the invoice details to E-Way bill system. E-Way bill explicitly
services or both services or both
system will create Part-A of e-way bill using this data to which only vehicle number shall declare the shall declare the provide for
will have to be attached in Part-B of the e-way bill. details of such details of such requirement of
credit note in the credit note in the reversal of
Note:
return for the return for the corresponding
1 The hash computed by e-invoice system will become the IRN (Invoice Reference month during month during input tax credit in
Number of 64 character length) of the e-invoice. which such credit which such credit respect of a credit-
2 The JSON must conform to the e-invoice schema (standards) that is published note has been note has been note, if availed, by
and have the mandatory parameters. The optional parameters can be according issued but not issued but not the registered
to the business need of the supplier. later than the 30th later than the 30th recipient, for the
day of November day of November purpose of
3 Downloading the Bulk IRN Generation Tool is a one-time activity. However, the
following the end following the end reduction of tax
Tool may get updated in future. So, always use the latest version available on the liability of the
of the financial of the financial
E-Invoice Portal.
year in which such year in which such

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 TAX INVOICE, CREDIT AND DEBIT NOTES 9.87

supply was made, supply was made, supplier in respect

or the date of or the date of of the
furnishing of the furnishing of the said credit note.
relevant annual relevant annual
return, whichever return, whichever
is earlier, and the is earlier, and the
tax liability shall be tax liability shall be
adjusted in such adjusted in such
manner as may be manner as may be
prescribed. prescribed.
Provided that no
reduction in Provided that no
output tax liability reduction in
of the supplier output tax
shall be permitted, liability of the
if the incidence of supplier shall be
tax and interest on permitted, if the—
such supply has (i) input tax
been passed on to credit as is
any other person. attributable to
such a credit
note, if
availed, has
not been
reversed by
the recipient,
where such
recipient is a
registered
person
(ii) incidence of
tax on such
supply has
been passed
on to any
other person,
in other cases.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 1.2 10.2 GOODS AND SERVICES TAX

1. INTRODUCTION
CHAPTER 10 Assessment in GST is mainly focused on self-
assessment by the taxpayers themselves. Every
taxpayer is required to self-assess the taxes payable
and furnish a return for each tax period i.e. the
period for which return is required to be filed.
ACCOUNTS AND The compliance verification is done by the
Department through scrutiny of returns and/or investigation. Thus, the compliance
RECORDS; E-WAY BILL verification is to be done through documentary checks rather than physical
controls. This requires certain obligations to be cast on the taxpayer for keeping
The section numbers referred to in the Chapter pertain to CGST Act, unless otherwise and maintaining accounts and records. Such accounts and records may be used
specified. Examples/Illustrations/Questions and Answers, as the case may be, given by the department for compliance verification.
in the Chapter are based on the position of GST law existing as on 30.04.2025.
Every registered person shall keep and maintain all records at his principal place of
business. Responsibility has been casted on the owner or operator of warehouse or
LEARNING OUTCOMES godown or any other place used for storage of goods and on every transporter to
After reading this Chapter, you shall be equipped to: maintain specified records even if they are not registered under GST. They need
not enroll for this purpose.
‰ enumerate the accounts and other records required to be
Further, Commissioner is empowered to notify a class
maintained under GST by registered person.
of taxable persons to maintain additional accounts or
‰ list the additional records required to be maintained by documents for specified purpose or to maintain
agent, manufacturer, service provider. accounts in other prescribed manner. Similarly, the
Commissioner can permit a class of taxable persons to
‰ describe the accounts and records to be maintained by maintain accounts in such manner as may be
person executing works contract, clearing and forwarding prescribed if that class of taxable person is not in a position to keep and maintain
agent. accounts in accordance with the provisions of GST Laws.

‰ Enumerate the accounts and records to be maintained by It is not mandatory to maintain the accounts in electronic form. Accounts and
records may be maintained either electronically or manually. Further, there is no
owner/operator of a warehouse/godown and transporter.
prescribed format for maintaining the
‰ describe the period for which the books of accounts or other accounts.
records are required to be maintained. Chapter VIII – Accounts and Records
‰ explain the provisions relating to e-way bills. [Sections 35 and 36] of the CGST Act and
Chapter VII – Accounts and Records
[Rules 56 to 58] of the CGST Rules, 2017,

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.3 1.4 10.4 GOODS AND SERVICES TAX

enumerates the accounts and records required to be maintained by a taxpayer and ™ Place of business: includes [Section 2(85)]:
the period for which such accounts and records are required to be preserved.
Further, E-way Bill provisions discussed in this Chapter are contained in section 68 a place from where the business is ordinarily carried on, and includes a
read with rules 138, 138A, 138B, 138C 138D and 138E [Chapter XVI] of the CGST warehouse, a godown or any other place where a taxable person stores
his goods, supplies or receives goods or services or both; or
Rules, 2017. State GST laws also prescribe identical provisions in relation to
accounts and records; E-Way Bill.
a place where a taxable person maintains his books of account; or

Provisions relating to Accounts and Records; E-way Bill under CGST Act have
a place where a taxable person is engaged in business through an
also been made applicable to IGST Act vide section 20 of the IGST Act.
agent, by whatever name called.

Before proceeding to understand the accounts and records provisions, let us first
go through few relevant definitions. ™ Taxable person: means a person who is registered or liable to be
registered under section 22 or section 24 [Section 2(107)].

2. RELEVANT DEFINITIONS ™ Principal place of business: means the place of business specified as the
principal place of business in the certificate of registration [Section 2(89)].
™ Agent: means a person, including a factor, broker, commission agent, arhatia,
™ Proper officer: in relation to any function to be performed under this Act,
del credere agent, an auctioneer or any other mercantile agent, by whatever
means the Commissioner or the officer of the central tax who is assigned
name called, who carried on the business of supply or receipt of goods or
that function by the Commissioner in the Board [Section 2(91)].
services or both on behalf of another [Section 2(5)].
™ Commissioner: means the Commissioner of central tax and includes the ™ Registered person: means a person who is registered under section 25,
but does not include a person having a Unique Identity Number [Section
Principal Commissioner of central tax appointed under section 3 and the
Commissioner of integrated tax appointed under the Integrated Goods and 2(94)].
Services Tax Act. [Section 2(24)] ™ Tax period: means the period for which the return is required to be
furnished [Section 2(106)].
™ Common portal: means the common goods and services tax electronic
portal referred to in section 146 [Section 2(26)]. ™ Document: includes written or printed record of any sort and electronic
™ Manufacture: means processing of raw material or inputs in any manner that record as defined in clause (t) of section 2 of the Information Technology
Act, 2000 [Section 2(41)].
results in emergence of a new product having a distinct name, character and
use and the term "manufacturer" shall be construed accordingly. [Section ™ Voucher: means an instrument where there is an obligation to accept it
2(72)] as consideration or part consideration for a supply of goods or services
or both and where the goods or services or both to be supplied or the
™ Taxable supply: means a supply of goods or services or both which is
leviable to tax under this Act [Section 2(108)]. identities of their potential suppliers are either indicated on the
instrument itself or in related documentation, including the terms and
conditions of use of such instrument [Section 2(118)].
™ Conveyance: includes a vessel, an aircraft and a vehicle [Section 2(34)].

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 ACCOUNTS AND RECORDS; E-WAY BILL 10.5 1.6 10.6 GOODS AND SERVICES TAX

™ Works Contract: means a contract for building, construction, fabrication,

(2) Every owner or operator of warehouse or godown or any other
completion, erection, installation, fitting out, improvement, modification,
place used for storage of goods and every transporter, irrespective
repair, maintenance, renovation, alteration or commissioning of any
of whether he is a registered person or not, shall maintain records
immovable property wherein transfer of property in goods (whether as goods of the consigner, consignee and other relevant details of the goods
or in some other form) is involved in the execution of such contract [Section in such manner as may be prescribed.
2(119)]
(3) The Commissioner may notify a class of taxable persons to
maintain additional accounts or documents for such purpose as
3. ACCOUNTS AND OTHER RECORDS [SECTION 35] may be specified therein.

(4) Where the Commissioner considers that any class of taxable

STATUTORY PROVISIONS persons is not in a position to keep and maintain accounts in
accordance with the provisions of this section, he may, for reasons
to be recorded in writing, permit such class of taxable persons to
Section 35 Accounts and Other Records
maintain accounts in such manner as may be prescribed.

Sub-section Particulars
(6) Subject to the provisions of clause (h) of sub-section (5) of section
17, where the registered person fails to account for the goods or
(1) Every registered person shall keep and maintain, at his principal
services or both in accordance with the provisions of sub-section
place of business, as mentioned in the certificate of registration, a
(1), the proper officer shall determine the amount of tax payable
true and correct account of
on the goods or services or both that are not accounted for, as if
(a) production or manufacture of goods; such goods or services or both had been supplied by such person
(b) inward and outward supply of goods or services or both; and the provisions of section 73 or section 74 or section 74A , as
the case may be, shall, mutatis mutandis, apply for determination
(c) stock of goods;
of such tax.
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) such other particulars as may be prescribed
ANALYSIS
Provided that where more than one place of business is specified The provisions relating to accounts and records required to be maintained under
in the certificate of registration, the accounts relating to each GST are contained in sections 35 and 36 read along with Chapter VII - Accounts
place of business shall be kept at such places of business: and Records of CGST Rules, 2017. Relevant provisions of CGST Rules, 2017 have
Provided further that the registered person may keep and been incorporated at relevant places.
maintain such accounts and other particulars in electronic form in
such manner as may be prescribed.

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.7 1.8 10.8 GOODS AND SERVICES TAX

1
(I) Who is required to maintain books of accounts and at which place? ITC availment: It is further clarified that the principal and the auctioneer for
the purpose of auction of tea, coffee, rubber etc., or the principal and the
Every registered person shall keep and maintain, books
auctioneer for the purpose of supply of tea through a private treaty, shall be
of accounts at his principal place of business (hereinafter
eligible to avail ITC subject to the fulfilment of other provisions of the CGST
referred to as PPoB) and books of account relating to
Act read with the rules made thereunder 2 [Circular No. 23/23/2017 GST dated
additional place of business (hereinafter referred to as
21.12.2017 and Circular No. 47/21/2018 GST dated 08.06.2018].
APoB) [as mentioned in the certificate of registration].
Unless proved otherwise, if any documents, registers, or any books of account
Where more than one place of business is specified in the
belonging to a registered person are found at any premises other than those
certificate of registration, the accounts relating to each place shall
e of business shal
mentioned in the certificate of registration, they shall be presumed to be
be kept at such places of business. maintained by the said registered person.

Supply of goods through an auction like tea, rubber, coffee

ff (II) Which accounts and records are required to be maintained?
A true and correct account of following is to be maintained:
In terms of above provision, the books of accounts
relating to each and every place of business are required (a) production or manufacture of goods;
to be maintained in that place itself. However, in case
(b) inward and outward supply of goods or services or
where goods like tea, rubber, coffee, etc. are supplied
both;
through an auction the difficulties were being faced by
the principal and auctioneer in maintaining books of accounts at each and (c) stock of goods;
every APoB related to stock of said goods.
(d) input tax credit availed;
Consequently, it has been clarified that in such cases, the principal and the
(e) output tax payable and paid
auctioneer may declare the warehouses, where such goods are stored, as their
APoB. The buyer is also required to disclose such warehouse as his APoB if (f) such other particulars as may be prescribed
he wants to store the goods purchased through auction in such warehouses. The Commissioner may notify a class of taxable persons to maintain
For the purpose of supply of tea through a private treaty, the principal and additional accounts or documents for such purpose as may be specified
an auctioneer may also comply with the said provisions. therein. 3
Further, the principal and the auctioneer for the purpose of Where the Commissioner considers that any class of taxable persons is not in
auction of tea, coffee, rubber etc., or the principal and the a position to keep and maintain accounts in accordance with the provisions
auctioneer for the purpose of supply of tea through a private of this section, he may, for reasons to be recorded in writing, permit such
treaty, may maintain the books of accounts relating to APoB class of taxable persons to maintain accounts in such manner as may be
at their PPoB instead of such APoB. Such principal and prescribed. 4
auctioneer shall intimate their jurisdictional proper officer in writing about
the maintenance of books of accounts relating to APoB at their PPoB.

2
Refer Chapter 7 – Input Tax Credit in this Module for detailed provisions relating to ITC.
3
Section 35(3)
1 4
Section 35(1) read with rule 56(7) and 56(10) Section 35(4)

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.9 1.10 10.10 GOODS AND SERVICES TAX

The additional records to be maintained by specified persons are as A supplier is required to maintain following records relating to stock of
under:- goods and tax details. However, a supplier who has opted for
composition scheme is not required to maintain such records 7..
(i) Registered person
(a) Stock of goods: Accounts of stock in respect of
In addition to the particulars mentioned in section 35(1), the
goods received and supplied by him, and such
rules also provide that the registered person 5 is required to
accounts shall contain particulars of the opening
maintain a true and correct account of:
balance, receipt, supply, goods lost, stolen, destroyed, written off
‰ the goods/services imported/exported, or disposed of by way of gift or free sample and the balance of
‰ supplies attracting payment of tax on reverse charge along with stock including raw materials, finished goods, scrap and wastage
relevant documents, including invoices, bills of supply, delivery thereof.
challans, credit notes, debit notes, receipt vouchers, payment (b) Details of tax: Account, containing the details of tax payable
vouchers and refund vouchers6. (including tax payable under reverse charge), tax collected and
‰ separate account of advances received, paid and adjustments made paid, input tax, input tax credit claimed, together with a register
thereto. of tax invoice, credit notes, debit notes, delivery challan issued or
received during any tax period.
‰ particulars of:
(ii) Agent 8
9 names and complete addresses of
suppliers from whom he has received Every agent shall maintain accounts depicting the-
the goods or services chargeable to tax (a) particulars of authorisation received by
under the Act; him from each principal to receive or
9 names and complete addresses of the persons to whom he has supply goods/services on behalf of such
supplied goods or services, where required under the provisions principal separately;
of this Chapter. (b) particulars including description, value
‰ particulars of the complete address of the premises where goods and quantity (wherever applicable) of goods /services received on
are stored by him, including goods stored during transit along with behalf of every principal;
the particulars of the stock stored therein. (c) particulars including description, value and quantity (wherever
However, if any taxable goods are found to be stored at any place(s) applicable) of goods/services supplied on behalf of every
other than those so declared without the cover of any valid documents, principal;
the proper officer shall determine the amount of tax payable on such (d) details of accounts furnished to every principal; and
goods as if such goods have been supplied by the registered person.

5
Rule 56(1), (3), (5) and (6)
6 7
The detailed provisions relating to all such documents have already been discussed in Chapter 9: Tax Rule 56(2) and (4)
8
invoice, Credit and Debit Notes of this Module. Rule 56(11)

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.11 1.12 10.12 GOODS AND SERVICES TAX

(e) tax paid on receipts or on supply of goods/services effected on ‰ the names and addresses of suppliers from whom he received
behalf of every principal. goods/services.

(iii) Manufacturer 9 (vi) Custodian/clearing and forwarding agent 12

Apart from other records, every registered person ‰ Any person having custody over the goods in the capacity of a
manufacturing goods has to maintain monthly carrier or a clearing and forwarding agent for delivery or dispatch
production accounts showing quantitative details thereof to a recipient on behalf of any registered person shall
of raw materials/services used in the manufacture maintain true and correct records in respect of such goods handled
and quantitative details of the goods so manufactured including the by him on behalf of such registered person and shall produce the
waste and by products thereof. details thereof as and when required by the proper officer.
(iv) Service Provider 10 (vii) Owner/operator of a warehouse/ godown and transporter 13
Every registered person supplying services has to additionally maintain Every owner or operator of warehouse or godown or any other place
the accounts showing quantitative details of goods used in the used for storage of goods and every transporter, irrespective of whether
provision of services, details of input services utilised and the services he is a registered person or not, shall maintain records of the consigner,
supplied. consignee and other relevant details of the goods in such manner as
may be prescribed.
(v) Person executing works contract 11
Enrolment, if not already registered in GST 14: If such persons are not
Every registered person executing works contract shall keep separate
already registered, they shall obtain a unique enrollment number by
accounts for works contract showing -
applying electronically 15 at the GST Common Portal.
‰ the names and addresses of the
The person enrolled as aforesaid in any other State or Union territory
persons on whose behalf the works
shall be deemed to be enrolled in the State or Union territory.
contract is executed;
Such person may also amend the details furnished in the prescribed
‰ description, value and quantity
form. Such person, once obtained unique enrollment number, shall not
(wherever applicable) of goods or
be eligible to use any of the GSTIN.
services received for the execution
of works contract; ‰ Transporter 16 : Any person engaged in the business of
transporting goods shall maintain records of goods transported,
‰ description, value and quantity (wherever applicable) of
delivered and goods stored in transit by him along with GSTIN of
goods/services utilized in the execution of works contract;
the registered consignor and consignee for each of his branches.
‰ the details of payment received in respect of each works contract;
and
12
Rule 56(17)
13
Section 35(2) read with rule 58
9 14
Rule 56(12) Rule 58(1), 58(2) & 58(3)
10 15
Rule 56(13) in Form GST ENR-01
11 16
Rule 56(14) Rule 58(4)(a)

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.13 1.14 10.14 GOODS AND SERVICES TAX

‰ Owner/operator of a warehouse/ godown 17:- produce, on demand, the relevant records or documents,
duly authenticated by him, in hard copy or in any
Every owner or operator of a warehouse or godown shall maintain
electronically readable format.
books of accounts with respect to the period for which particular
goods remain in the warehouse, including the particulars relating 9 Where the accounts and records are stored electronically by
to dispatch, movement, receipt, and disposal of such goods. any registered person, he shall, on demand, provide the
details of such files, passwords of such files and explanation
The owner or the operator of the godown shall store the goods in
for codes used, where necessary, for access and any other
such manner that they can be identified item-wise and owner-
information which is required for such access along with a
wise and shall facilitate any physical verification or inspection by
sample copy in print form of the information stored in such
the proper officer on demand.
files.
(III) How the accounts and records will be maintained 18?
‰ No entry to be erased/overwritten
‰ Records may be maintained manually
9 Any entry in registers, accounts and
9 Each volume of books of account maintained manually documents shall not be erased,
by the registered person shall be serially numbered. effaced or overwritten.
‰ Records may be maintained in electronic 9 All incorrect entries, otherwise than
form those of clerical nature, shall be scored out under
9 Books of account include any attestation and there after correct entry shall be recorded.
electronic form of data stored on any 9 Where the registers and other documents are maintained
electronic device. electronically, a log of every entry edited or deleted shall be
9 The registered person may keep and maintain such accounts maintained.
and other particulars in electronic form stored on any ‰ Accounts maintained by the registered person together with all
electronic device and record so maintained shall be the invoices, bills of supply, credit and debit notes, and delivery
authenticated by means of a digital signature. challans relating to stocks, deliveries, inward supply and outward
9 Proper electronic back-up of records shall be maintained supply shall be preserved for the period as provided in section 36
and preserved in such manner that, in the event of [discussed subsequently in this Chapter] and shall, where such
destruction of such records due to accidents or natural accounts and documents are maintained manually, be kept at
causes, the information can be restored within a reasonable every related place of business mentioned in the certificate of
period of time. registration and shall be accessible at every related place of
business where such accounts and documents are maintained
9 The registered person maintaining electronic records shall
digitally.

17
Rule 58(4)(b) & rule 58(5) ‰ Every registered person shall, on demand, produce the books of
18 accounts which he is required to maintain under any law for the
Second proviso to section 35(1) read with rule 56(7), (8), (9), (15), (16) and (18) and rule
57 time being in force.

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.15 1.16 10.16 GOODS AND SERVICES TAX

(IV) What are the consequences of failure to maintain the accounts 19 ?

5. ELECTRONIC WAY BILL [SECTION 68 READ
Where the registered person fails to account for the goods and/or
WITH RELEVANT CGST RULES, 2017]
services in accordance with the provisions of section 35(1), the proper
officer shall determine the amount of tax payable on the goods or Under GST regime, for quick and easy
services or both that are not accounted for, as if such goods or services movement of goods across India without any
or both had been supplied by such person and the provisions of section hindrance, all the check posts across the country
73/section 74/ section 74A 20, as the case may be, shall, mutatis are abolished. However, in order to monitor the
mutandis, apply for determination of such tax. movement of goods for controlling any tax
evasion, e-way bill system has been introduced.

4. PERIOD OF RETENTION OF ACCOUNTS Under this system, a taxpayer - prior to

movement of goods via a conveyance - would inform each transaction’s details to
[SECTION 36] the tax department, obtain an acknowledgement number for having thus informed,
Every registered person required to keep and maintain books of account or other and then use this acknowledgement number as a valid document accompanying
records in accordance with the provisions of section 35(1) shall retain them until the conveyance carrying goods.
the expiry of 72 months from the due date of furnishing of annual return for the The idea is that the taxpayer be made to upload the details of each transaction to
year pertaining to such accounts and records. a common portal through the internet, and once uploaded, the common portal
However, a registered person, who is a party to an appeal or revision or any other would automatically generate a document which can be tracked and verified easily
proceedings before any Appellate Authority or Revisional Authority or Appellate by any stakeholder.
Tribunal or Court, whether filed by him or by the Commissioner, or is under Statutory requirement
investigation for an offence under Chapter XIX, shall retain the books of account
Section 68 stipulates that the Government may require the person in charge of a
and other records pertaining to the subject matter of such appeal or revision or
conveyance carrying any consignment of goods of value exceeding such amount
proceedings or investigation for a period of one year after final disposal of such
as may be specified to carry with him such documents and such devices as may be
appeal or revision or proceedings or investigation, or for the period specified
prescribed.
above, whichever is later.
Rule 138 prescribes e-way bill as the document to be carried for the consignment
of goods in certain prescribed cases.
What is e-way bill?
A waybill is a receipt or a document issued by a carrier giving details and
19
Section 35(6) instructions relating to the shipment of a consignment of goods and the details
20
The provisions of section 74A contain provisions relating to determination of
include name of consignor, consignee, the point of origin of the consignment, its
tax not paid/short paid or erroneously refunded or ITC wrongly availed/utilized
destination, and route.
for any reason pertaining to Financial Year 2024-25 onward. Detailed provisions
of this section are discussed in Chapter-19 of Module-3 of the Study material. Electronic Way Bill (E-Way Bill) is a compliance mechanism wherein by way of a
The provisions of sections 73 and 74 are applicable for tax determination relating digital interface the person causing the movement of goods uploads the relevant
to the past period up to the Financial Year 2023–24.

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.17 1.18 10.18 GOODS AND SERVICES TAX

information prior to the commencement of movement of goods and generates Unregistered transporters: If the transporter is generating the e-way bill, but he
e-way bill on the GST portal. In other words, E-way bill is an electronic document is not registered person under GST law, it is mandatory for him to get enrolled on
generated on the GST portal evidencing movement of goods. e-waybill portal before generation of the e-way bill to get 15-digit Unique
Transporter Id called TRANSIN.
What are the benefits of e-way bill?
TRANSIN or Transporter id is a unique number generated by e-way bill system
Following are the benefits of e-way bill mechanism:
for unregistered transporter, once he enrolls on the system. It is similar to GSTIN
(i) Physical interface to pave way for digital interface resulting in elimination of format and is based on State code, PAN and check sum digit. This TRANSIN or
state boundary check-posts Transporter id can be shared by transporter with his clients, who may enter this
(ii) It will facilitate faster movement of goods number while generating e-way bills for assigning goods to him for transportation.

(iii) It will improve the turnaround time of trucks and help the logistics industry Common enrolment process for registered transporters having GSTIN in
by increasing the average distances travelled, reducing the travel time as well multiple states with same PAN: There may be a transporter who is registered and
as costs. has registration in more than one State/UT; then, he would have more than one
GSTIN as well. A transporter who is registered in more than one State/UT having
the same PAN, may apply for a Unique Common Enrolment Number by
submitting the details in prescribed form using any one of his GSTINs.
Upon validation of the details furnished, a unique common enrolment number shall
be generated and communicated to the said transporter. Once a transporter has
obtained a unique common enrolment number, he shall not be eligible to use any
of the GSTIN for the purposes of e-way bills under Chapter XVI of these rules.
E-way Bill is generated electronically in Form GST EWB 01 on the common portal This way the transporters who are GST registered can generate a Common
([Link]). E-way Bill can be generated through various modes like Enrolment number which will allow him to use one registration number for
Web (Online), Android App, SMS, using Bulk Upload Tool and API (Application generating the e-way bills and updating Part-B of e-way bill throughout the
Program Interface) based site to site integration etc. country. Only registered transporters, which are having GSTIN in multiple states
Registration requirement of the person generating the e-way bill with same PAN number, can register in common enrolment process 21.

The facility of generation, cancellation, updation and E-way Bill provisions [as contained in rules 138, 138A, 138B, 138C, 138D and 138E
assignment of e-way bill is available to the supplier, – Chapter XVI of the CGST Rules, 2017] are elaborated as under:
recipient and the transporter, as the case may be. (1) When is e-way bill required to be generated? [Rule 138(1)]
The pre-requisite for generation of e-way bill is that
Whenever there is a movement of goods of consignment value exceeding
the person who generates e-way bill should be a
` 50,000:
registered person on GST portal and he should
register on the e-way bill portal using his GSTIN. (i) in relation to a supply; or

21
Rule 58(1A) of the CGST Rules, 2017

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.19 1.20 10.20 GOODS AND SERVICES TAX

(ii) for reasons other than supply; or the recipient is known at the time of commencement of the movement of
goods.
(iii) due to inward supply from an unregistered person,

the registered person who causes such movement of goods shall furnish the Meaning of consignment value of goods
information relating to the said goods as specified in Part A of Form GST Consignment value of goods shall be the value:
EWB-01 before commencement of such movement. 9 determined in accordance with the provisions of section 15,
It is important to note that “information is to be furnished prior to the 9 declared in an invoice, a bill of supply or a delivery challan, as the case
commencement of movement of goods” and “is to be issued whether may be, issued in respect of the said consignment and
the movement is in relation to a supply or for reasons other than supply”.
9 also includes the Central tax, State or Union territory tax, integrated tax
and cess charged, if any, in the document and
9 shall exclude the value of exempt supply of goods where the invoice is
issued in respect of both exempt and taxable supply of goods.
In case of movement of goods for reasons other than supply, the movement
is occasioned by means of a delivery challan which has to necessarily contain
the value of goods. The value given in the delivery challan should be adopted
in the e-way bill 22.

(1) Bhanupratap Shoe Manufacturers, registered in Punjab, sold

shoes to a retail seller in Gujarat, at a value of ` 48,000 (excluding
GST leviable @ 18%) and wants to send the consignment of such
shoes to Gujarat. The consignment value will be ` 56,640 [` 48,000 × 118%].
Since the movement of goods is in relation to supply of goods and the
consignment value exceeds ` 50,000, e-way bill is mandatorily required to be
issued in the given case.

(2) Sindhi Textiles of Ludhiana, registered in Punjab, sends cloth to a

job worker in Jalandhar, Punjab on a delivery challan. The value of
cloth mentioned in the delivery challan is ` 48,000. Since the
movement of goods is for reasons other than supply, the value given in the
Who causes movement of goods? delivery challan is adopted for the purposes of the e-way bill. Such value does
If supplier is registered and undertakes to transport the goods, movement of not exceed ` 50,000. Consequently, e-way bill is not required to be issued in this
goods is caused by the supplier. If recipient arranges transport, movement is case.
caused by him. If goods are supplied by an unregistered supplier to a
registered recipient, movement shall said to be caused by such recipient , if
22
As clarified by CBIC FAQs on E-way Bill.

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.21 1.22 10.22 GOODS AND SERVICES TAX

Special situations where e-way bill needs to be issued even if the value In this complete scenario. two supplies are involved and accordingly two tax
of the consignment is less than ` 50,000: invoices are required to be issued:
(i) Inter-State transfer of goods by principal to job-worker Invoice -1: which would be issued by ‘B’ to ‘A’.
Where goods are sent by a principal located in one State or Union Invoice -2: which would be issued by ‘A’ to ‘C’.
territory to a job worker located in any other State or Union territory,
It is clarified that as per the CGST Rules, 2017, for the movement of goods
the e-way bill shall be generated either by the principal or the job
which is taking place from “B” to “C” on behalf of “A”, either A or B can
worker, if registered, irrespective of the value of the consignment [Third
generate the e-way bill but it may be noted that only one e-Way Bill is
proviso to rule 138(1)].
required to be generated [Press Release dated 23.04.2018].
(ii) Inter-State transfer of handicraft goods by a person exempted
(2) Information to be furnished in e-way bill:
from obtaining registration
An e-way bill Form GST EWB-01 contains two parts:
Where handicraft goods* are transported from one State or Union
territory to another State or Union territory by a person who has been (I) Part A [comprising of details of GSTIN of supplier & recipient, place of
exempted from the requirement of obtaining registration [under delivery (indicating PIN Code also), document (Tax invoice, Bill of
clauses (i) and (ii) of section 24], the e-way bill shall be generated by Supply, Delivery Challan or Bill of Entry) number and date, value of
the said person irrespective of the value of the consignment [Fourth goods, HSN code, and reasons for transportation, etc.]: to be furnished
proviso to rule 138]. by the registered person** who is causing movement of goods of
consignment value exceeding ` 50,000/- and
*Handicraft goods are the goods specified in Notification No.
56/2018 CT dated 23.10.2018 which exempts the casual taxable (II) Part B (transport details) [Transporter document number (Goods
persons making inter-State taxable supplies of such handicraft goods Receipt Number or Railway Receipt Number or Airway Bill Number or
from obtaining registration upto specified turnover limit [Refer Chapter Bill of Lading Number) and Vehicle number, in case of transport by
8 – Registration]. road]: to be furnished by the person who is transporting the goods.

E-way Bill in case of ‘Bill To Ship To’ Model **However, information in Part-A may be furnished:

In a “Bill To Ship To” model of supply, there are three persons involved in a 9 by the transporter, on an authorization received from such
transaction, namely: registered person [First proviso to rule 138(1)] or

‘A’ is the person who has ordered ‘B’ to send goods directly to ‘C’. 9 by the e-commerce operator or courier agency, where the goods
to be transported are supplied through such an e-commerce
‘B’ is the person who is sending goods directly to ‘C’ on behalf of ‘A’.
operator or a courier agency, on an authorization received from
‘C’ is the recipient of goods. the consignor [Second proviso to rule 138(1)].
Once the consignor/consignee enters all the details in Part-A of e-way
bill, a Part-A slip is generated which contains a temporary number. This
slip can be shared with the transporter or used by the supplier himself

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.23 1.24 10.24 GOODS AND SERVICES TAX

later to enter the details in Part-B of e-way bill and generate the e-way commencement of movement, furnish, information in part B [viz
bill. transport document number (Goods Receipt Number or Railway Receipt
Number or Airway Bill Number or Bill of Lading Number)] on the
This will be useful, when supplier has prepared invoice relating to his
common portal [Rule 138(2A)].
business transaction, but doesn’t have the transportation details. Thus,
he can enter invoice details in Part A of e-way bill and keep it ready for Other important points:
entering details of mode of transportation in Part B of e-way bill.
‰ Where the goods are transported by railways: there is no
Once the goods are ready for movement from the business premises requirement to carry e-way bill along with the goods, but railways has
and transportation details are known, the user can enter the Part-B to carry invoice or delivery challan or bill of supply as the case may be
details and generate the e-way bill for movement of goods. E-way Bill along with goods. Further, e-way bill generated for the movement is
can be generated only after entering the details of Part-B. required to be produced at the time of delivery of the goods. Railways
shall not deliver goods unless the e-way bill required under rules is
(3) Who is mandatorily required to generate e-way bill?
produced at the time of delivery [Proviso to rule 138(2A)].
E-way bill is to be generated by the consignor or consignee himself if the
‰ The registered person or, the transporter may, at his option, generate
transportation is being done in own/hired conveyance or by railways by air
and carry the e-way bill even if the value of the consignment is less than
or by vessel. If the goods are handed over to a transporter for transportation
` 50,000 [First proviso to rule 138(3)].
by road, e-way bill is to be generated by the transporter. Where neither the
consignor nor consignee generates the e-way bill and the value of goods is ‰ Where the movement is caused by an unregistered person either in
more than ` 50,000, it shall be the responsibility of the transporter to his own conveyance or a hired one or through a transporter, he or
generate it. This has been explained in detail below: the transporter may, at their option, generate the e-way bill [Second
proviso to rule 138(3)].
‰ Where the goods are transported by a registered person -
whether as consignor or recipient as the consignee (whether in ‰ Where the goods are supplied by an unregistered supplier to a
his own conveyance or a hired one or a public conveyance, by road), recipient who is registered, the movement shall be said to be caused by
the said person shall have to generate the e-way bill (by furnishing such recipient if the recipient is known at the time of commencement of
information in part B on the common portal) [Rule 138(2)]. the movement of goods [Explanation 1 to rule 138(3)].
‰ Where the e-way bill is not generated by the registered person and ‰ Generation of unique enrolment number
the goods are handed over to the transporter, for transportation of Following persons required to generate the e-way bill shall submit the
goods by road, the registered person shall furnish the information details electronically on the common portal in prescribed form and,
relating to the transporter in Part B on the common portal and the e- upon validation of the details so furnished, a unique enrolment
way bill shall be generated by the transporter on the said portal on the number shall be generated and communicated to the said person:-
basis of the information furnished by the registered person in Part A (i) An unregistered person making
[Rule 138(3)]. inter-State transport of
handicraft goods exempted from
‰ Where the goods are transported by railways or by air or by vessel, obtaining compulsory
the e-way bill shall be generated by the registered person, being the registration and required to
supplier or the recipient, who shall, either before or after the

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.25 1.26 10.26 GOODS AND SERVICES TAX

generate e-way bill irrespective of the value of the In such case, the transporter transferring goods from one conveyance to
consignment. another in the course of transit shall, before such transfer and further
(ii) An unregistered person opting to generate e-way bill movement of goods, update the details of the conveyance.

[Fourth proviso to rule 138(3)] In some cases, consignments are transported by the transporter through
transshipment using multiple vehicles (same mode of transportation) for
(4) When is it not mandatory to furnish the details of conveyance in Part-B?
carrying the same consignment before it is delivered to the recipient at the
E-way bill is valid for movement of goods by road only when the place of destination. Hence for each movement from one place to another,
information in Part-B is furnished 23. the transporter needs to update the vehicle number in which he is
Exceptions: transporting that consignment in part B of the e-way bill.

Details of conveyance may not be furnished in Part-B of the e-way bill where The user can update Part-B (Vehicle details) as many times as he wants for
the goods are transported for a distance of upto 50 km within the movement of goods to the destination. However, the updating should be
State/Union territory: done within the validity period.

‰ from the place of business of the consignor to the place of business There can also be a case where one e-way bill can go through multiple modes
of the transporter for further transportation 24 or of transportation before reaching destination. As per the mode of
transportation, the EWB can be updated with new mode of transportation by
‰ from the place of business of the transporter finally to the place of
using the option of ‘Update Vehicle Number’.
business of the consignee 25.
(3) Babbal Associates is moving the goods from Cochin to
(5) Unique e-way bill number (EBN)
Chandigarh through road, ship, air and road again. First, Babbal
Upon generation of the e-way bill on the common portal, a unique e-way bill Associates generates the EWB by entering first stage of movement
number (EBN) shall be made available to the supplier, the recipient and the (by road) from its place to shipyard and enters the vehicle number. Next, it
transporter on the common portal [Rule 138(4)]. will submit the goods to shipyard and update the mode of transportation as
ship and transport document number on the e-way bill system.
(6) Transfer of goods from one conveyance to another
After reaching Mumbai, Babbal Associates or concerned transporter updates
Where the goods are transferred from one conveyance to another, the
movement as road from shipyard to airport with vehicle number. Thereafter,
consignor or the recipient, who has provided information in Part A, or the
Babbal Associates or transporter updates using ‘update vehicle number’
transporter shall, before such transfer and further movement of goods,
option on the portal, the Airway Bill number.
update the details of conveyance in Part B of the e-way bill on the common
portal [Rule 138(5)]. Again, after reaching Delhi, Babbal Associates updates movement through
road with vehicle number. This way, the e-way bill will be updated with
Consignment of goods may be required to be transferred from the original
multiple modes of transportation.
conveyance to due to unforeseen exigencies like break down of the vehicle.
Assigning the e-way bill number to another transporter
23
Explanation 2 to rule 138(3) The consignor/recipient, who has furnished the information in Part A, or the
24
Third proviso to rule 138(3) transporter, may assign the e-way bill number to another registered/enrolled
25
Proviso to rule 138(5) transporter for updating the information in Part B for further movement of

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 ACCOUNTS AND RECORDS; E-WAY BILL 10.27 1.28 10.28 GOODS AND SERVICES TAX

the consignment [Rule 138(5A)]. However, once the details of the conveyance However, where the goods to be transported are supplied through an e-
have been updated by the transporter in Part B, the consignor or recipient, commerce operator or a courier agency, the information in Part A of Form
as the case may be, who has furnished the information in Part A shall not be GST EWB-01 may be furnished by such e-commerce operator or courier
allowed to assign the e-way bill number to another transporter [Proviso to agency [Proviso to rule 138(7)]. This proviso is not yet effective.
rule 138(5A)].
(8) Information submitted for e-way bill can be used for filing GST Returns
(7) Consolidated E-way bill
The information furnished in Part A of the e-way bill shall be made available
After e-way bill has been generated, where multiple consignments are to the registered supplier on the common portal who may utilize the same
intended to be transported in one conveyance, the transporter may indicate for furnishing the details in Form GSTR-1 [Rule 138(8)].
the serial number of e-way bills generated in respect of each such
However, when the information has been furnished by an unregistered
consignment electronically on the common portal and a consolidated e-way
supplier/unregistered recipient, he shall be informed electronically, if the
bill in Form GST EWB-02 may be generated by him on the said common
mobile number or the e-mail is available [Proviso to rule 138(8)].
portal prior to the movement of goods [Rule 138(6)].
(9) Cancellation of e-way bill
Consolidated e-way bill is a document containing the multiple e-way bills for
multiple consignments being carried in one conveyance (goods vehicle). That Where an e-way bill has been generated, but goods are either not transported
is, the transporter carrying multiple consignments of various consignors and or are not transported as per the details furnished in the e-way bill, the e-way
consignees in a single vehicle can generate and carry a single document - bill may be cancelled electronically on the common portal within 24 hours of
consolidated e-way bill instead of carrying separate document for each generation of the e-way bill [Rule 138(9)].
consignment in a conveyance. However, an e-way bill cannot be cancelled if it has been verified in transit in
Consolidated EWB is like a trip sheet and it contains details of different e-way accordance with the provisions of rule 138B [First proviso to rule 138(9)].
bills in respect of various consignments being transported in one vehicle and Further, unique EWB number generated is valid for a period of 15 days for
these e-way bills will have different validity periods. Hence, Consolidated updation of Part B [Second proviso to rule 138(9)].
EWB does not have any independent validity period. Further, individual
(10) Validity period of e-way bill/consolidated e-way bill [Rule 138(10)]
consignment specified in the Consolidated EWB should reach the destination
as per the validity period of the individual EWB. The validity of e-way bill depends on the distance to be travelled by the
goods. For a distance of less than 200 km the e-way bill will be valid for a
Further, where the consignor/consignee has not generated the e-way bill in
day from the relevant date. For every 200 km thereafter, the validity will be
Form GST EWB-01 and the aggregate of the consignment value of goods
additional one day from the relevant date.
carried in the conveyance is more than ` 50,000, the transporter, except in
case of transportation of goods by railways, air and vessel, shall, in respect of Sl. Distance within Validity period from relevant date*
inter-State supply, generate the e-way bill in Form GST EWB-01 on the basis No. country
of invoice or bill of supply or delivery challan, as the case may be, and may
1. Upto 200 km One day in cases other than Over
also generate a consolidated e-way bill in Form GST EWB-02 on the common
Dimensional Cargo or multimodal
portal prior to the movement of goods [Rule 138(7)]. The generation of Form
shipment in which at least one leg
GST EWB-02 is optional and not mandatory.
involves transport by ship

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.29 1.30 10.30 GOODS AND SERVICES TAX

(4) A consignor hands over his goods for transportation on Friday to

2. For every 200 km or One additional day in cases other than
part thereof Over Dimensional Cargo or multimodal transporter. However, the assigned transporter starts the movement
thereafter shipment in which at least one leg of goods on Monday. The validity period of e-way bill starts only after
involves transport by ship the details in Part B are updated by the transporter for the first time.

3. Upto 20 km One day in case of Over Dimensional In the given situation, consignor can fill the details in Part A on Friday and
Cargo or multimodal shipment in which handover his goods to the transporter. When the transporter is ready to move
at least one leg involves transport by ship the goods, he can fill Part B i.e. the assigned transporter can fill the details in Part
B on Monday and the validity period of the e-way bill will start from Monday
4. For every 20 km or One additional day in case of Over
[CBIC Press Release dated 31.03.2018].
part thereof Dimensional Cargo or multimodal
thereafter shipment in which at least one leg
(5) A registered person has to transport goods from its warehouse to
involves transport by ship
its depot located at a distance of 500 km in a normal cargo. In the
*Relevant date means the date on which the e-way bill has been generated given case, if e-way bill is generated, it will be valid for 3 days.
and the period of validity shall be counted from the time at which the e-way
**Over dimensional cargo means a cargo carried as a single indivisible unit
bill has been generated and each day shall be counted as the period expiring
and which exceeds the dimensional limits prescribed in rule 93 of the Central
at midnight of the day immediately following the date of generation of e-way
Motor Vehicle Rules, 1989, made under the Motor Vehicles Act, 1988.
bill.
Extension of validity period
This can be explained by following examples –
If validity of the e-way bill expires, the goods are not supposed to be moved.
(i) Suppose an e-way bill is generated at 00:04 hrs. on 14th March. Then
In general, the validity of the e-way bill cannot be extended However, the
first day would end on 12:00 midnight of 15 -16 March. Second day will
validity of the e-way bill can be extended in following cases:
end on 12:00 midnight of 16 -17 March and so on.
Extension by Commissioner for certain categories of goods:
(ii) Suppose an e-way bill is generated at 23:58 hrs. on 14th March. Then
Commissioner may, on the recommendations of the Council, by notification,
first day would end on 12:00 midnight of 15 -16 March. Second day will
extend the validity period of an e-way bill for certain categories of goods as
end on 12:00 midnight of 16 -17 March and so on 26.
may be specified therein.
The validity of the e-way bill starts when first entry is made in Part-B i.e.
Extension by transporter in exceptional circumstances: Under
vehicle entry is made first time in case of road transportation or first transport
circumstances of an exceptional nature, including trans-shipment, the goods
document number entry in case of rail/air/ship transportation, whichever is
cannot be transported within the validity period of the e-way bill, the
the first entry. It may be noted that validity is not re-calculated for
transporter may extend the validity period after updating the details in
subsequent entries in Part-B 27.
Part B, if required.
Thus, the transporter, who is carrying the consignment as per the e-way bill
system at the time of expiry of validity period, can extend the validity period.
Such transporter can extend the validity of the e-way bill, if the consignment
26
As clarified by FAQs on E-way Bill by CBIC. is not being reached the destination within the validity period due to
27
As clarified by FAQs on E-way Bill web portal.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 ACCOUNTS AND RECORDS; E-WAY BILL 10.31 1.32 10.32 GOODS AND SERVICES TAX

exceptional circumstance like natural calamity, law and order issues, trans-
shipment delay, accident of conveyance, etc. He needs to explain this reason ࠆ Points to remember
in details while extending the validity period 28. The validity of the 1. E-way bill is not valid for movement of goods without vehicle number on
e-way bill may be extended within 8 hours from the time of its expiry. it.
(11) Acceptance of e-way bill 2. If there is a mistake, incorrect or wrong entry in the e-way bill, then it
cannot be edited or corrected. Only option is cancellation of e-way bill
The details of the e-way bill generated shall be made available to the -
within 24 hours of generation and generate a new one with correct details.
(a) supplier, if registered, where the information in Part A has been
3. E- Way Bill may be updated with vehicle number any number of times.
furnished by the recipient/transporter; or
4. The latest vehicle number should be available on e-way bill and should
(b) recipient, if registered, where the information in Part A has been match with the vehicle carrying it in case checked by the department.
furnished by the supplier/transporter,
5. If multiple invoices are issued by the supplier to recipient, that is, for
on the common portal, and the supplier/recipient, as the case may be, shall movement of goods of more than one invoice of same consignor and
communicate his acceptance or rejection of the consignment covered by the consignee, multiple e-way bills have to be generated. That is, for each
e-way bill [Rule 138(11)]. invoice, one e-way bill has to be generated, irrespective of the fact whether
same or different consignors or consignees are involved. Multiple invoices
In case, the person to whom the information in Part-A is made available, does
cannot be clubbed to generate one e-way bill. However, after generating
not communicate his acceptance or rejection within the specified time, it shall
all these e-way bills, one Consolidated e-way bill can be prepared for
be deemed that he has accepted the said details. The time-limit specified for
transportation purpose, if goods are going in one vehicle.
this purpose is:

(i) 72 hours of the details being made available to him on the common (13) Situations where e-way bill is not required to be generated
portal Notwithstanding anything explained above, no e-way bill is required to be
or generated in the following cases:

(ii) the time of delivery of goods, (a) where the goods being transported are the ones given below:

whichever is earlier [Rule 138(12)]. S. No. Description of Goods

(12) E-way bill generated in one State is valid in another State 1. Liquefied petroleum gas for supply to household and non-
The e-way bill generated under this rule or under rule 138 of the Goods and domestic exempted category (NDEC) customers
Services Tax Rules of any State or Union territory shall be valid in every State 2. Kerosene oil sold under PDS
and Union territory [Rule 138(13)].
3. Postal baggage transported by Department of Posts

4. Natural or cultured pearls and precious or semi-precious

stones; precious metals and metals clad with precious metal
(Chapter 71)
28
As clarified by FAQs on E-way Bill web portal.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 ACCOUNTS AND RECORDS; E-WAY BILL 10.33 1.34 10.34 GOODS AND SERVICES TAX

(i) where the goods being transported are transit cargo from or to Nepal
5. Jewellery, goldsmiths’ and silversmiths’ wares and other
articles (Chapter 71) [excepting imitation Jewellery (7117)] or Bhutan

(j) where the goods being transported are exempt from tax under
6. Currency
Notification No. 7/2017 CT (R) 28.06.2017 [Supply of goods by the CSD
7. Used personal and household effects to the Unit Run Canteens or to the authorized customers and supply of
goods by the Unit Run Canteens to the authorized customers] and
8. Coral, unworked (0508) and worked coral (9601)]
Notification No. 26/2017 CT (R) 21.09.2017 [Supply of heavy water and
(b) where the goods are being transported by a non-motorised conveyance nuclear fuels by Department of Atomic Energy to Nuclear Power
Corporation of India Ltd. (NPCIL)]
(c) where the goods are being transported from the customs port, airport,
air cargo complex and land customs station to an inland container (k) any movement of goods caused by defence formation under Ministry
depot or a container freight station for clearance by Customs of defence as a consignor or consignee

(d) in respect of movement of goods within such areas as are notified under (l) where the consignor of goods is the Central Government, Government
of rule 138(14)(d) of the State or Union territory GST Rules in that of any State or a local authority for transport of goods by rail
particular State or Union territory (m) where empty cargo containers are being transported
(e) where the goods [other than de-oiled cake], being transported, are (n) where the goods are being transported upto a distance of 20 km from
exempt from tax 29 the place of the business of the consignor to a weighbridge for
(f) where the goods being transported are alcoholic liquor for human weighment or from the weighbridge back to the place of the business
consumption, petroleum crude, high speed diesel, motor spirit of the said consignor subject to the condition that the movement of
(commonly known as petrol), natural gas or aviation turbine fuel goods is accompanied by a delivery challan issued in accordance with
rule 55.
(g) where the supply of goods being transported is treated as no supply
under Schedule III of the CGST Act 30 (o) where empty cylinders for packing of liquefied petroleum gas are being
moved for reasons other than supply
(h) where the goods are being transported -
(14) Documents and devices to be carried by a person-in-charge of a
(i) under customs bond from an inland container depot or a
conveyance [Rule 138A]
container freight station to a customs port, airport, air cargo
complex and land customs station, or from one customs station The person-in-charge of a conveyance shall carry -
or customs port to another customs station or customs port, or (a) the invoice or bill of supply or delivery challan, as the case may be; and
(ii) under customs supervision or under customs seal (b) a copy of the e-way bill in physical form or the e-way bill number in
electronic form or mapped to a RFID** embedded on to the conveyance
[except in case of movement of goods by rail or by air or vessel] in such
29
manner as may be notified by the Commissioner.
vide Notification No. 2/2017 CT(R) dated 28.06.2017
30
Provisions of Schedule III have been discussed in detail in Chapter 1 – Supply under GST of
Module 1.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 ACCOUNTS AND RECORDS; E-WAY BILL 10.35 1.36 10.36 GOODS AND SERVICES TAX

*Carrying e-way bill number in electronic form implies that person-in-charge (15) Verification of documents and conveyances [Rule 138B]
of conveyance can merely quote the e-way bill number to the proper tax
The Commissioner or an officer empowered by him in this behalf may
officer. Tax officer will do all the requisite verifications, based on that number.
authorize the proper officer to intercept any conveyance to verify the e-way
**RFIDs are Radio Frequency Identification Device used for identification. bill in physical or electronic form for all inter-State and intra-State movement
of goods.
However, in case of imported goods, the person in charge of a conveyance
shall also carry a copy of the bill of entry filed by the importer of such goods The Commissioner shall get RFID readers installed at places where the
and shall indicate the number and date of the bill of entry in Part A of e-way verification of movement of goods is required to be carried out and
bill. verification of movement of vehicles shall be done through such device
readers where the e-way bill has been mapped with the said device.
Invoice Reference Number in lieu of tax invoice
The physical verification of conveyances shall be carried out by the proper
In case, e-invoice is issued 31, the Quick Response (QR) code having an
officer as authorised by the Commissioner or an officer empowered by him
embedded Invoice Reference Number (IRN) in it, may be produced
in this behalf.
electronically, for verification by the proper officer in lieu of the physical copy
of such tax invoice. However, on receipt of specific information on evasion of tax, physical
verification of a specific conveyance can also be carried out by any other
In such a case, the registered person will not have to upload the information
officer after obtaining necessary approval of the Commissioner or an officer
in Part A of e-way bill for generation of e-way bill and the same shall be auto-
authorised by him in this behalf.
populated by the common portal on the basis of the information furnished in
the prescribed form relating to e-invoice. (16) Inspection and verification of goods [Rule 138C]
The Commissioner may, by notification, require a class of transporters to A summary report of every inspection of goods in transit shall be recorded
obtain a unique RFID and get the said device embedded on to the conveyance online by the proper officer in Part A of a prescribed form within 24 hours of
and map the e-way bill to the RFID prior to the movement of goods. inspection and the final report in Part B of said form shall be recorded within
3 days of such inspection.
Documents in lieu of e-way bill
However, where the circumstances so warrant, the Commissioner, or any
Where circumstances so warrant, the Commissioner may, by notification,
other officer authorised by him, may, on sufficient cause being shown, extend
require the person-in-charge of the conveyance to carry the following
the time for recording of the final report in Part B of said form, for a further
documents instead of the e-way bill:
period not exceeding 3 days.
(a) tax invoice or bill of supply, or bill of entry; or
The period of 24 hours or, as the case may be, 3 days shall be counted from
(b) a delivery challan, where the goods are transported for reasons other the midnight of the date on which the vehicle was intercepted.
than by way of supply.
Where the physical verification of goods being transported on any
conveyance has been done during transit at one place within the State/Union
territory or in any other State/Union territory, no further physical verification
of the said conveyance shall be carried out again in the State/Union territory,

31
in the manner prescribed under sub-rule (4) of rule 48

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 ACCOUNTS AND RECORDS; E-WAY BILL 10.37 1.38 10.38 GOODS AND SERVICES TAX

unless a specific information relating to evasion of tax is made available information in Part A of Form GST EWB-01 in respect of any outward
subsequently. movement of goods of a registered person, who -

The hard copies of the notices/orders issued by a tax authority may be shown (i) being a person paying tax under composition scheme 33 has not
as proof of initiation of action by a tax authority by the transporter/registered furnished the statement for payment of self-assessed tax for 2
person to another tax authority as and when required. consecutive quarters, or

Only such goods and/or conveyances should be detained/confiscated in (ii) being a person paying tax under regular scheme has not furnished the
respect of which there is a violation of the provisions of the GST Acts or the returns for a consecutive period of 2 tax periods, or
rules made thereunder.
(iii) being a person paying tax under regular scheme has not furnished
(6) Where a conveyance carrying 25 consignments is intercepted GSTR-1 (Statement of outward supplies) for any 2 months or quarters,
and the person-in-charge of such conveyance produces valid e- as the case may be.
way bills and/or other relevant documents in respect of 20
(iv) being a person whose registration has been suspended under the
consignments, but is unable to produce the same with respect to the
provisions of rule 21A of the CGST Rules.
remaining 5 consignments, detention/ confiscation can be made only with
respect to the 5 consignments and the conveyance in respect of which the However, Commissioner (jurisdictional commissioner) may, on receipt of an
violation of the Act or the rules made thereunder has been established by the application from a registered person in prescribed form, on sufficient cause
proper officer 32. being shown and for reasons to be recorded in writing, by order, in prescribed
form allow furnishing of the said information in Part A of Form GST EWB-01,
(17) Facility for uploading information regarding detention of vehicle
subject to prescribed conditions and restrictions. An order rejecting said
[Rule 138D]
request shall not be passed without giving the said person a reasonable
Where a vehicle has been intercepted and detained for a period exceeding opportunity of being heard. The permission granted or rejected by the
30 minutes, the transporter may upload the said information in specified Commissioner of State tax or Commissioner of Union territory tax shall be
form on the common portal. deemed to be granted or, as the case may be, rejected by the Commissioner.
(18) Blocking of e-waybill generation facility [Rule 138E] (19) It may be noted that the expressions ‘transported by railways’, ‘transportation
of goods by railways’, ‘transport of goods by rail’ and ‘movement of goods
Blocking of e-waybill generation facility means disabling a taxpayer from
by rail’ used in the provisions discussed above does not include cases where
generating the e-way bill. Blocking of GSTIN for e-way bill generation would
leasing of parcel space by railways takes place.
only be for the defaulting supplier GSTIN and not for the defaulting Recipient
or Transporter GSTIN. Suspended GSTIN cannot generate e-way bill as (7) Mr. A, a registered person paying tax under regular scheme in
supplier. However, the suspended GSTIN can get the e-way bill generated as Delhi, has not filed Form GSTR-1 for last 2 months. Mr. B, Haryana, (a
recipient or as transporter. regular return filer) wants to generate an e-way bill for goods to be
supplied to Mr. A.
As per rule 138E, no person (including a consignor, consignee, transporter,
an e-commerce operator or a courier agency) shall be allowed to furnish the

32 33
As clarified vide Circular No. 49/23/2018 GST dated 21.06.2018 or under Notification No. 2/2019 CT (R) dated 07.03.2019

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 ACCOUNTS AND RECORDS; E-WAY BILL 10.39 1.40 10.40 GOODS AND SERVICES TAX

There will be no restriction in generating e-way Bill for Mr. B who is making 2. Recipient taxpayer shall also maintain accounts and records as required
outward movement of goods, as he is a regular return filer. under rules 56 and 57 [as discussed earlier]. Furthermore, as per rule 56(7),
books of accounts in relation to goods stored at the transporter’s godown
Mr. A wants to generate an e-way bill in respect of an outward an outward supply
(i.e., the recipient taxpayer’s APoB) by the recipient taxpayer may be
of goods to Mr. H. E-way bill generation is blocked in this case as it’s an outward
maintained by him at his PPoB. Thus, the facility of declaring APoB by the
movement of goods of Mr. A who has not filed Form GSTR-1 for past 2 months.
recipient taxpayer is in no way putting any additional compliance requirement
Consignee/ recipient taxpayer storing goods in the transporter’s godown on the transporters. [Circular No. 61/35 /2018 GST dated 04.09.2018]

Generally, textile traders use transporters’

LET US RECAPITULATE
godown for storage of their goods due to
their weak financial conditions. The
Who is required to maintain his books of accounts and at which place?
transporter takes delivery of the goods and
temporarily stores them in his warehouse for further transportation
of the goods till the consignee/recipient taxpayer’s premises. In this case, the recipient
Every registered person
taxpayer has to declare the transporter’s godown as an APoB.

is required to maintain his

books of accounts at

Supplier’s Transporter’s godown Recipient APoB

premises Recipient taxpayer’s APoB taxpayer’s PoB
PPoB APoB
E-way Bill requirements
Accounts and records required to be maintained
The goods in movement including when they are stored in the transporter's
godown (even if the godown is located in the recipient taxpayer’s city/town) prior
to delivery shall always be accompanied by a valid e-way bill. The transportation
under the e-way bill shall be deemed to be concluded once the goods have reached Records which are to be maintained only by a supplier other than a supplier
the transporter’s godown (recipient taxpayer’s APoB). Hence, e-way bill validity in opting for composition levy
such cases will not be required to be extended. Further, whenever the goods move
from the transporter’s godown to the recipient taxpayer’s any other PoB, a valid e-
Account of stock of goods received Account of details of tax
way bill shall be required.
and supplied including opening payable,collected and paid, ITC claimed,
Requirement of maintaining accounts and records balance, receipt, supply, goods together with register of tax invoice,
lost/stolen, destroyed, written off, credit-debit notes, delivery challan
1. Transporter, being a warehouse keeper, has to maintain accounts and gifted, free samples, stock balance. issued/received during any tax period
records as specified in section 35 read with rule 58 [as discussed earlier in this
chapter].

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 ACCOUNTS AND RECORDS; E-WAY BILL 10.41 1.42 10.42 GOODS AND SERVICES TAX

Accounts and records required to be maintained Records to be additionally maintained by a manufacturer and service
provider
A true and correct account of following is to be maintained:

Output raw materials/services

Production Inward and Monthly
Stock of ITC tax Records used in manufacture and
or outward production
manufacture supply of goods availed payable prescribed by
Manufacturer accounts showing
of goods goods or and paid rules
quantitative goods so manufactured
services or details of including waste and by-
both products
A true and correct account of:

quantitative details of
Reverse charge goods used in the
supplies along Goods/ services
imported/ provision of services
with relevant
Suppliers of exported Service provider Accounts showing
documents
goods/services details of input services
chargeable to tax Separate utilised and services
Names and
account of supplied
addresses of
advances
Separate records for works contract to be maintained by a person
Recipient of Address of
executing works contract
goods/services the premises
where goods
are stored Persons on whose
Names and
addresses of behalf the works
contract is executed

Records to be maintained by agent

Separate Supplier from whom
Authorisation received records to goods/services are
Particulars of
from each principal to be received
goods/services
receive/supply maintained
received/supplied on
goods/services on by a person
behalf of every principal
behalf his behalf; executing Description, value
Details of works and quantity of
payment contract goods/services
Tax paid on
received in received
Details of accounts receipts/supply of
respect of each for/utilised in the
furnished to every goods/services effected
works contract execution of works
principal on behalf of every
contract
principal

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.43 1.44 10.44 GOODS AND SERVICES TAX

Records to be maintained by owner or operator of godown or warehouse How the accounts and records will be maintained?
and transporters provider

Records to be maintained by owner or operator of godown or warehouse and

transporters provider
Records in electronic form be Proper electronic back-up of records
authenticated by a digital signature be maintained and preserved

whether registered or not Records in electronic

form
(Books of account
include any electronic
records of the consigner, consignee and other relevant details of the goods in such form of data stored on
manner as may be prescribed any electronic device.)
Such records need to be prodcued, on Details of files, their passwords and
demand, in hard copy or in any explanation for codes,and any other
electronically readable format info required for access
goods transported, delivered

Transporter goods stored in transit by him

Records of
No entry to be erased/overwritten
GSTIN of the registered consignor and
consignee
Incorrect entries, other than those of clerical nature, be scored out under
attestation and there after correct entry be recorded.

for each of his branches

In case electronic records beng maintained, a log of every entry edited or
deleted shall be maintained.

for the period for which particular goods

remain in the warehouse
Owner or Books of account maintained manually be serially numbered
operator of Books of
godown or accounts
warehouse including the particulars relating to
dispatch, movement, receipt, and disposal Books of accounts, are required to be produced, on demand.
of such goods

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 ACCOUNTS AND RECORDS; E-WAY BILL 10.45 1.46 10.46 GOODS AND SERVICES TAX

Failure to maintain the accounts Persons required to furnish Part A of e-way bill

Failure to • PO shall determine the tax payable on the

unaccounted goods and/or services, as if the Registered
same had been supplied by such person Person
maintain the • Provisions of section 73/74/74A shall, mutatis The registered person
accounts mutandis, apply for determination of such tax causing movement of
goods must furnish
Part A.

Period of retention of accounts Transporter

The transporter can
E-commerce furnish Part A if
Operator/Courier authorized.
72 months from the due date of furnishing of annual return for the year
Agency
pertaining to such accounts and records
The e-commerce
operator/courier
1 year after final disposal of such agency can furnish
Where an appeal/ appeal/revision/proceedings/investigation Part A if authorized.
revision/ any other
or
proceedings before any
Appellate/ Revisional 72 months from the due date of
Authority or Appellate furnishing of annual return for the year
Who can generate the E-way bill?
Tribunal or Court, or an pertaining to such accounts and records
investigation is going on whichever is later

E-Way Bill
E-way bill requirement and Exceptions
Registered Transporter
Consignor/
Where neither the
Consignee consignor nor
Generate when consignee
using own/hired generates the e-
conveyance or by way bill and value
railways by air or of goods exceeds
by vessel ѐ 50,000

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.47 1.48 10.48 GOODS AND SERVICES TAX

Navigating E-way bill compliance E-way bill Cancellation

Vehicle Number Editing

Requirement Restrictions
Vehicle number is E-way bills cannot be
essential for e-way bill edited after generation.
validity.

Updation of E-way Invoice Handling

bill Multiple invoices require
separate e-way bills.
E-way bill with vehicle
number can be updated
multiple times.

Consignment Value of Goods

Generating a consolidated E-way bill

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.49 1.50 10.50 GOODS AND SERVICES TAX

Validity period of e-way bill/consolidated e-way bill based on distance Verification of documents and conveyances

Physical Verification
Officer conducts a
thorough inspection upon 4
receipt of information on
tax evasion after
Commissioner approval.

Verify E-way Bill

Officer confirms the e-way 3
bill details.

Intercept
Conveyance
2
Officer stops vehicles to
check documents.

Authorize Officer
1 Commissioner empowers
an officer to oversee
verification.

Inspection and verification of goods

Acceptance/Rejection of e-way bill

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.51 1.52 10.52 GOODS AND SERVICES TAX

Blocking of e-way bill generation facility

TEST YOUR KNOWLEDGE

1. Mala Services Ltd. is a supplier of management consultancy services registered

Supplier Recipient or in Haryana. It has approached you to ascertain the period for which the books
Identify
Block Supplier Cannot Transporter of accounts or other records need to be maintained?
Defaulting
GSTIN Generate E- Can Generate
Supplier
waybill E-waybill 2. Essel Groups has started making taxable supplies and gets registered under GST
law. You are required to advice it about the accounts and records required to
The system The supplier's The supplier is The recipient be maintained by it as required under section 35(1).
identifies a GSTIN is unable to or transporter
supplier who blocked, generate e- can still 3. Swad Restaurant has opted for composition scheme in the current financial
has defaulted preventing e- waybills due generate e-
year. Discuss the records which are not to be maintained by a supplier opting
on GST waybill to the block. waybills using
obligations. generation. their GSTIN. for composition levy though required to be maintained by a normal tax-payer
as enumerated in rule 56.
Restriction on furnishing of information in Part A of Form GST EWB-01
4. ABC Manufacturers Ltd. engages Raghav & Sons as an agent to sell goods on
its behalf wherein the invoice for supply or procurement on behalf of ABC
Manufacturers Ltd. is issued by Raghav & Sons in its own name. For the
purpose, ABC Manufacturers Ltd. has supplied the goods to Raghav & Sons
located in Haryana. Enumerate the accounts required to be maintained by
Suspended Raghav & Sons as per rule 56(11).
Commissioner's
Registration
Discretion 5. Sindhi Toys Manufacturers, registered in Punjab, sold electronic toys to a retail
Persons with suspended
Commissioner's authority GST registration seller in Gujarat, at a value of ` 48,000 (excluding GST leviable @ 18%). It
to allow submission
under prescribed wants to send the consignment of such toys to the retail seller in Gujarat.
conditions
Regular Scheme You are required to advise Sindhi Toys Manufacturers on the following issues:
GSTR-1 Non-Filers
Taxpayer
Taxpayers who haven't (a) Whether e-way bill is mandatorily required to be generated in respect of
filed GSTR-1 for 2 months Taxpayers who haven't
or quarters filed returns for 2 such movement of goods?
consecutive tax periods
(b) If yes, who is required to generate the e-way bill?
Composition (c) What will be the consequences for non-issuance of e-way bill?
Supplier
Suppliers who haven't 6. Power Electricals Ltd., a registered supplier of air-conditioners, is required to
furnished statements for send from Mumbai (Maharashtra), a consignment of parts of air-conditioner to
payment of self assessed
tax for 2 consecutive be replaced under warranty at various client locations in Gujarat. The value of
quarters
consignment declared in delivery challan accompanying the goods is
` 70,000. Power Electricals Ltd. claims that since movement of goods to Gujarat

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.53 1.54 10.54 GOODS AND SERVICES TAX

is caused due to reasons other than supply, e-way bill is not mandatorily 2. Section 35(1) stipulates that a true and correct account of following is to be
required to be generated in this case. maintained:

You are required to examine the technical veracity of the claim made by Power (a) production or manufacture of goods;
Electricals Ltd.
(b) inward and outward supply of goods or services or both;
7. Beauty Cosmetics Ltd. has multiple wholesale outlets of cosmetic products in
(c) stock of goods;
Mumbai, Maharashtra. It receives an order for cosmetics worth ` 1,20,000
(inclusive of GST leviable @ 18%) from Prasannaa, owner of a retail cosmetic (d) input tax credit availed;
store in Delhi. While checking the stock, it is found that order worth ` 55,000 (e) output tax payable and paid
can be fulfilled from the company’s Dadar (Mumbai) store and remaining goods
(f) such other particulars as may be prescribed.
worth ` 65,000 can be sent from its Malad (Mumbai) store. Both the stores are
instructed to issue separate invoices for the goods sent to Prasannaa. The goods 3. Following records are not required to be maintained by a supplier who has
are transported to Prasannaa in Delhi, in a single conveyance owned by Radhey opted for composition scheme as per rule 56(2) and (4), but are required to
Transporters. be maintained by a normal tax payer:

You are required to advise Beauty Cosmetics Ltd. with regard to issuance of (I) Stock of goods: Accounts of stock in respect of goods received and
e-way bill(s). supplied by him, and such accounts shall contain particulars of the
opening balance, receipt, supply, goods lost, stolen, destroyed, written
off or disposed of by way of gift or free sample and the balance of stock
ANSWERS including raw materials, finished goods, scrap and wastage thereof.
(II) Details of tax: Account, containing the details of tax payable (including
1. Section 36 stipulates that every registered person required to keep and
tax payable under reverse charge), tax collected and paid, input tax,
maintain books of account or other records in accordance with the provisions
input tax credit claimed, together with a register of tax invoice, credit
of sub-section (1) of section 35 shall retain them until the expiry of 72 months
notes, debit notes, delivery challan issued or received during any tax
from the due date of furnishing of annual return for the year pertaining to
period.
such accounts and records.
4. Rule 56(11) provides that every agent shall maintain accounts depicting the-
However, a registered person, who is a party to an appeal or revision or any
other proceedings before any Appellate Authority or Revisional Authority or (a) particulars of authorisation received by him from each principal to
Appellate Tribunal or court, whether filed by him or by the Commissioner, or receive or supply goods or services on behalf of such principal
is under investigation for an offence under Chapter XIX, shall retain the books separately;
of account and other records pertaining to the subject matter of such appeal
(b) particulars including description, value and quantity (wherever
or revision or proceedings or investigation for a period of one year after final
applicable) of goods or services received on behalf of every principal;
disposal of such appeal or revision or proceedings or investigation, or for the
period specified above, whichever is later. (c) particulars including description, value and quantity (wherever
applicable) of goods or services supplied on behalf of every principal;
(d) details of accounts furnished to every principal; and

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 ACCOUNTS AND RECORDS; E-WAY BILL 10.55 1.56 10.56 GOODS AND SERVICES TAX

(e) tax paid on receipts or on supply of goods or services effected on behalf Where the goods are handed over to a transporter for transportation
of every principal. by road, the registered person shall furnish the information relating to
the transporter on the common portal and the e-way bill shall be
5. (a) Rule 138(1) provides that e-way Bill is mandatorily required to be
generated by the transporter on the said portal on the basis of the
generated if the goods are moved, inter alia, in relation to supply and
information furnished by the registered person in Part A [Rule 138(3)].
the consignment value exceeds ` 50,000. Further, explanation 2 to
rule 138(1) stipulates that the consignment value of goods shall be the Where the consignor or the consignee has not generated the e-way bill
value, determined in accordance with the provisions of section 15, and the aggregate of the consignment value of goods carried in the
declared in an invoice, a bill of supply or a delivery challan, as the case conveyance is more than ` 50,000/, the transporter, except in case of
may be, issued in respect of the said consignment and also includes transportation of goods by railways, air and vessel, shall, in respect of
CGST, SGST/UTGST, IGST and cess charged, if any, in the document and inter-State supply, generate the e-way bill on the basis of invoice or bill
shall exclude the value of exempt supply of goods where the invoice is of supply or delivery challan, as the case may be, and may also generate
issued in respect of both exempt and taxable supply of goods. a consolidated e-way bill on the common portal prior to the movement
of goods [Rule 138(7)].
Accordingly, in the given case, the consignment value will be as follows:
(c) It is mandatory to generate e-way bill in all cases where the value of
= ` 48,000 × 118%
consignment of goods being transported is more than ` 50,000/- and
= ` 56,640. it is not otherwise exempted in terms of rule 138(14). If e-way bills,
Since the movement of goods is in relation to supply of goods and the wherever required, are not issued in accordance with the provisions
consignment value exceeds ` 50,000, e-way bill is mandatorily required contained in rule 138, the same will be considered as contravention of
to be issued in the given case. rules.

(b) An e-way bill contains two parts namely, Part A to be furnished by the As per section 122(1)(xiv), a taxable person who transports any taxable
registered person who is causing movement of goods of consignment goods without the cover of specified documents (e-way bill is one of
value exceeding ` 50,000/- and part B (transport details) is to be the specified documents) shall be liable to a penalty of ` 10,000/- or tax
furnished by the person who is transporting the goods. sought to be evaded (wherever applicable) whichever is greater.
Moreover, as per section 129(1), where any person transports any goods
Where the goods are transported by the registered person as a
or stores any goods while they are in transit in contravention of the
consignor or the recipient of supply as the consignee, whether in his
provisions of this Act or the Rules made thereunder, all such goods and
own conveyance or a hired one or a public conveyance, by road, the
conveyance used as a means of transport for carrying the said goods
said person shall generate the e-way bill on the common portal after
and documents relating to such goods and conveyance shall be liable
furnishing information in Part B [Rule 138(2)].
to detention or seizure.
Where the goods are transported by railways or by air or vessel, the
6. The goods to be moved to another State for replacement under warranty is
e-way bill shall be generated by the registered person, being the
not a ‘supply’. However, rule 138(1), inter alia, stipulates that every registered
supplier or the recipient, who shall, either before or after the
person who causes movement of goods of consignment value exceeding
commencement of movement, furnish, on the common portal, the
` 50,000:
information in Part B [Rule 138(2A)].
(i) in relation to a supply; or

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 ACCOUNTS AND RECORDS; E-WAY BILL 10.57

(ii) for reasons other than supply; or

(iii) due to inward supply from an unregistered person,

shall, generate an electronic-way bill (E-way Bill) before commencement of

such movement.
CBIC vide FAQs on E-way Bill has also clarified that even if the movement of
goods is caused due to reasons others than supply [including replacement of
goods under warranty], e-way bill is required to be issued.
Thus, in the given case, since the consignment value exceeds ` 50,000,
e-way bill is required to be mandatorily generated. Therefore, the claim of
Power Electricals Ltd. that e-way bill is not mandatorily required to be
generated as the movement of goods is caused due to reasons other than
supply, is not correct.
7. Beauty Cosmetics Ltd. would be required to prepare two separate e-way bills
since each invoice value exceeds ` 50,000 and each invoice is considered as
one consignment for the purpose of generating e-way bills.
The FAQs on E-way Bill issued by CBIC clarify that if multiple invoices are
issued by the supplier to one recipient, that is, for movement of goods of
more than one invoice of same consignor and consignee, multiple e-way bills
have to be generated. In other words, for each invoice, one e-way bill has to
be generated, irrespective of the fact whether same or different consignors
or consignees are involved. Multiple invoices cannot be clubbed to generate
one e-way bill. However, after generating all these e-way bills, one
consolidated e-way bill can be prepared for transportation purpose, if goods
are going in one vehicle.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 1.2 11.2 GOODS AND SERVICES TAX

1. INTRODUCTION
CHAPTER 11 In the GST regime, for any intra-state supply, taxes to be paid are the Central GST
(CGST), going into the account of the Central Government and the State GST
SGST/UTGST, going into the account of the concerned
State Government/ Union Territory. The mechanism for
allocation of such tax amount has been constitutionally
devised in the interest of Centre and all States/Union
territories. For any inter-state supply, tax to be paid is
PAYMENT OF TAX Integrated GST (IGST) which have components of both
CGST and SGST. In addition, certain categories of registered persons will be
The section numbers referred to in the Chapter pertain to the CGST Act, 2017 unless required to pay to the Government, Tax Deducted at Source (TDS) and Tax
otherwise specified. Examples/Illustrations/Questions and Answers, as the case may
Collected at Source (TCS 1). In addition, wherever applicable, interest, penalty, fees
be, given in the Chapter are based on the position of GST law existing as on
and any other payment will also be required to be made.
30.04.2025.
The introduction of Electronic ledger(s) is a unique feature under the GST regime.
LEARNING OUTCOMES Electronic Ledgers or E-Ledgers are of two types. One set is auto-populated upon
the action taken by the taxpayer (i) Electronic Cash Ledger, which gets updated
After studying this Chapter, you will be able to – upon payment made by the taxpayer on GST Portal and (ii) Electronic Credit Ledger,
which gets updated as soon as any input tax credit is claimed or utilized by the
‰ understand three kinds of ledgers/registers available to a registered person- taxpayer on the GST Portal. Second set is “Electronic Liability register” auto-
electronic cash ledger, electronic credit ledger and electronic liability register.
populated on the basis of returns furnished by the Registered person or the amount
‰ comprehend the types of ledger to be utilised for payment of tax/ interest/ of tax, interest, penalty or any other amount payable as determined by a proper
penalty/ other amounts officer in pursuance of any proceedings.
‰ analyse and apply the methodology of cross utilization of credit for payment of
Once a taxpayer is registered on common portal (GSTN), two
taxes
e-ledgers (Cash & Input Tax Credit ledger) and an electronic tax liability register
‰ identify and analyse the circumstances under which penal interest is applicable. related functionality is available which is unique for each GSTIN and is accessible
‰ understand and apply the provisions relating to transfer of amount from one to the taxpayer.
major head to another in electronic cash ledger.
Chapter X of the CGST Act, 2017 prescribes the provisions relating to payment of
‰ explain the procedure for transfer of input tax credit between Central and State
tax containing sections 49 to 53A. Bird’s eye view of coverage under these sections
Government.
is as under-
‰ understand and analyse the provisions relating to TDS, i.e. tax deduction at source
including the list of deductors, standard rate of deduction, value of supply.
‰ explain the remittance period and the time within which the TDS certificate is to
1
be issued. The provisions relating to TCS have been discussed in Chapter-12: Electronic Commerce
Transactions of this Module of the Study Material.

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 PAYMENT OF TAX 1.3
3 11.3 1.4 11.4 GOODS AND SERVICES TAX

x Section 49 discusses the three ledgers namely the electronic cash ledger, The amount of tax deducted is reflected in the Electronic Cash Ledger of the
electronic credit ledger and electronic liability register, deductee respectively.

x Section 49A & 49B discusses about the utilisation of input tax credit and its
order of utilisation. Provisions of payment of tax including TDS under CGST Act, 2017 have also
been made applicable to IGST Act, 2017 vide section 20 of the IGST Act, 2017.
x Section 50 discusses about the interest on delayed payment of tax.

x Section 51 lays down the circumstances in which tax deduction at source Chapter IX of CGST Rules, 2017 containing Rules 85 to 88D deals with provisions
(TDS) becomes mandatory. relating to payment of tax. Amongst these rules, rule 86A and 86B have already
x Section 52 deals with the circumstances when tax is to be collected at source been discussed in detail in Chapter-7: Input tax credit. Rule 88C and Rule 88D will
(TCS) by the Electronic Commerce Operator. be discussed in Chapter-13: Returns.
Before proceeding to understand the provisions of section 49, 49A, 49B, 50,51,53,
x Further, the manner of transfer of ITC is laid down in section 53 and
53A & the relevant rules, let us first go through few relevant definitions.
x Transfer of certain amounts is discussed in section 53A.
TDS stands for Tax Deduction at Source (TDS). Tax Deduction at Source (TDS) is a
system, initially introduced by the Income Tax Department.
2. RELEVANT DEFINITIONS
Under GST, it is one of the modes/methods to collect tax, ™ Agent means a person, including a factor, broker, commission agent, arhatia,
under which, certain percentage of amount is deducted by a del credere agent, an auctioneer or any other mercantile agent, by whatever
recipient at the time of making payment to the supplier in name called, who carries on the business of supply or receipt of goods or
case of specified supply transactions. It facilitates sharing of responsibility of tax services or both on behalf of another [Section 2(5)].
collection between the deductor and the tax administrator. This concept of TDS
™ Authorised bank shall mean a bank or a branch of a bank authorised by the
ensures regular inflow of tax collection to the Government. This mechanism acts as
Government to collect the tax or any other amount payable under this Act
a powerful instrument to prevent tax evasion and expands the tax net, as it provides
[Section 2(14)].
for the creation of an audit trail. Also, with the integration of data furnished by the
Supplier and recipient on the GST common portal, there exists an audit trail to ™ Central Tax means the central goods and services tax levied under Section 9
ensure for harmony of taxes paid by the supplier. [Section 2(21)].

Section 51 2 of CGST Act, 2017 provides for deduction of tax at source in certain ™ Cess shall have same meaning as assigned to it in the Goods and Service Tax
circumstances. This Section specifically lists out the deductor’s who are mandated (Compensation to States) Act [Section 2(22)].
by the Central Government to deduct tax at source, the rate of tax deduction and ™ Common portal means the common goods and services tax electronic portal
the procedure for remittance of the tax deducted. referred to in section 146 [Section 2(26)].
™ Council means the Goods and Services Tax Council established under article
279A of the Constitution [Section 2(36)].
™ Electronic Cash ledger means the electronic cash ledger referred to in
sub-section (1) of Section 49 [Section 2(43)].
2
Students may refer “Standard Operating Procedure on TDS” issued by CBIC from CBIC website.

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 PAYMENT OF TAX 1.5
5 11.5 1.6 11.6 GOODS AND SERVICES TAX

™ Electronic Credit ledger means the electronic credit ledger referred to in x a Development Board constituted under article 371 and article 371J of
sub-section (2) of section 49 [Section 2(46)]. the Constitution; or
™ Integrated tax means the integrated goods and services tax levied under the x a Regional Council constituted under article 371A of the Constitution.
Integrated Goods and Services Tax Act [Section 2(58)]. [Section 2(69)].
™ Input tax in relation to a registered person, means the central tax, State tax, ™ Notification means a notification published in the Official Gazette and the
integrated tax or Union territory tax charged on any supply of goods or expression “notify” and “notified” shall be construed accordingly [Section
services or both made to him and includes— 2(80)].
x the integrated goods and services tax charged on import of goods; ™ Output tax in relation to a taxable person, means the tax chargeable under
x the tax payable under the provisions of sub-sections (3) and (4) of this Act on taxable supply of goods or services or both made by him or by his
section 9; agent but excludes tax payable by him on reverse charge basis [Section 2(82)].

x the tax payable under the provisions of sub-section (3) and (4) of ™ Person includes:-
section 5 of the IGST Act; (a) an individual;
x the tax payable under the provisions of sub-section (3) and sub-section
(b) a Hindu Undivided Family;
(4) of section 9 of the respective State Goods and Services Tax Act; or
(c) a company;
x the tax payable under the provisions of sub-section (3) and sub-section
(4) of section 7 of the Union Territory Goods and Services Tax Act, (d) a firm;

but does not include the tax paid under the composition levy [Section 2(62)]. (e) a limited liability Partnership;

™ Input Tax Credit means the credit of input tax [Section 2(63)]. (f) an association of persons or a body of individuals, whether
™ local authority means- incorporated or not, in India or outside India;

x a “Panchayat” as defined in clause (d) of article 243 of the Constitution; (g) any corporation established by or under any Central Act, State Act, or
Provincial Act or a Government Company as defined in clause (45) of
x a “Municipality” as defined in clause (e) of article 243P of the
section 2 of the Companies Act,2013;
Constitution;
(h) any body corporate incorporated by or under the laws of a country
x a Municipal Committee, a Zilla Parishad, a District Board, and any other
outside India;
authority legally entitled to, or entrusted by the Central Government or
any State Government with the control or management of a municipal (i) a co-operative society registered under any law relating to co-operative
or local fund; societies;
x a Cantonment Board as defined in section 3 of the Cantonments Act, (j) a local authority;
2006;
(k) Central Government or a State Government;
x a Regional Council or District Council constituted under the Sixth
Schedule to the Constitution; (l) society as defined under the Societies Registration Act,1860;

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 PAYMENT OF TAX 1.7
7 11.7 1.8 11.8 GOODS AND SERVICES TAX

(m) trust; and ™ Tax Period means the period for which the return is required to be furnished
[Section 2(106]
(n) every artificial juridical person, not falling within any of the above
[Section 2(84)]. ™ Taxable person means a person who is registered or liable to be registered
under Section 22 or section 24 [Section 2(107)].
™ Recipient of supply of goods or services or both, means—
™ Taxable supply means a supply of goods or services or both which is leviable
(a) where a consideration is payable for the supply of goods or services or
to tax under this Act [Section 2(108)].
both, the person who is liable to pay that consideration;
™ Valid return means a return furnished under sub-section (1) of section 39 on
(b) where no consideration is payable for the supply of goods, the person
which self-assessed tax has been paid in full [Section 2(117)].
to whom the goods are delivered or made available, or to whom
possession or use of the goods is given or made available; and After going through the various definitions relevant to this Chapter, let us
discuss the provisions of Chapter X of the CGST Act.
(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 3. PAYMENT OF TAX, INTEREST, PENALTY AND
construed as a reference to the recipient of the supply and shall include OTHER AMOUNTS [SECTION 49]
an agent acting as such on behalf of the recipient in relation to the
goods or services or both supplied [Section 2(93)].
™ State Tax means the tax levied under any State Goods and Services Tax Act STATUTORY PROVISIONS
[Section2(104)].
™ Supplier in relation to any goods or services or both, shall mean the person Section 49 Payment of tax, interest, penalty and other amounts
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 Sub-Section Clause Particulars
supplied.
(1) Every deposit made towards tax, interest, penalty, fee or any other
Provided that a person who organises or arranges, directly or indirectly, supply amount by a person by internet banking or by using credit or debit
of specified actionable claims, including a person who owns, operates or cards or National Electronic Fund Transfer or Real Time Gross
manages digital or electronic platform for such supply, shall be deemed to be a Settlement or by such other mode and subject to such conditions
supplier of such actionable claims, whether such actionable claims are supplied and restrictions as may be prescribed, shall be credited to the
by him or through him and whether consideration in money or money's worth, electronic cash ledger of such person to be maintained in such
including virtual digital assets, for supply of such actionable claims is paid or manner as may be prescribed.
conveyed to him or through him or placed at his disposal in any manner, and all
(2) The input tax credit as self-assessed in the return of a registered
the provisions of this Act shall apply to such supplier of specified actionable
person shall be credited to his electronic credit ledger, in accordance
claims, as if he is the supplier liable to pay the tax in relation to the supply of
with section 41, to be maintained in such manner as may be
such actionable claims; [Section 2(105)]. prescribed.

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 PAYMENT OF TAX 1.9
9 11.9 1.10 11.10 GOODS AND SERVICES TAX

(3) The amount available in the electronic cash ledger may be used for integrated tax only where the balance of the input tax
making any payment towards tax, interest, penalty, fees or any other credit on account of central tax is not available for
amount payable under the provisions of this Act or the rules made payment of integrated tax
there under in such manner and subject to such conditions and
within such time as may be prescribed. (e) the central tax shall not be utilised towards payment of
State tax or Union territory tax; and
(4) The amount available in the electronic credit ledger may be used for
making any payment towards output tax under this Act or under the (f) the State tax or Union territory tax shall not be utilised
Integrated Goods and Services Tax Act in such manner and subject towards payment of central tax.
to such conditions and restrictions within such time as may be
(6) The balance in the electronic cash ledger or electronic credit ledger
prescribed.
after payment of tax, interest, penalty, fee or any other amount
(5) The amount of input tax credit available in the electronic credit payable under this Act or the rules made thereunder may be
ledger of the registered person on account of–– refunded in accordance with the provisions of section 54.

integrated tax shall first be utilised towards payment of (7) All liabilities of a taxable person under this Act shall be recorded and
(a)
integrated tax and the amount remaining, if any, may be maintained in an electronic liability register in such manner as may
utilised towards the payment of central tax and State tax, be prescribed.
or as the case may be, Union territory tax, in that order;
(8) Every taxable person shall discharge his tax and other dues under
(b) the central tax shall first be utilised towards payment of this Act or the rules made thereunder in the following order,
central tax and the amount remaining, if any, may be namely:–
utilised towards the payment of integrated tax;
(a) self-assessed tax, and other dues related to returns of
(c) the State tax shall first be utilised towards payment of previous tax periods;
State tax and the amount remaining, if any, may be
(b) self-assessed tax, and other dues related to the return of
utilised towards payment of integrated tax;
the current tax period;
Provided that the input tax credit on account of State tax
shall be utilised towards payment of integrated tax only (c) any other amount payable under this Act or the rules
where the balance of the input tax credit on account of made thereunder including the demand determined
central tax is not available for payment of integrated tax; under section 73 or section 74 or section 74A;

(d) the Union territory tax shall first be utilised towards (9) Every person who has paid the tax on goods or services or both
payment of Union territory tax and the amount under this Act shall, unless the contrary is proved by him, be deemed
remaining, if any, may be utilised towards payment of to have passed on the full incidence of such tax to the recipient of
integrated tax; such goods or services or both.
Provided that the input tax credit on account of Union
territory tax shall be utilised towards payment of

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 PAYMENT OF TAX 1.11
1 11.11 1.12 11.12 GOODS AND SERVICES TAX

(10) A registered person may, on the common portal, transfer any (i) “tax dues” means the tax payable under this Act and
amount of tax, interest, penalty, fee or any other amount does not include interest, fee and penalty; and
available in the electronic cash ledger under this Act, to the
electronic cash ledger for,–– (ii) “other dues” means interest, penalty, fee or any
other amount payable under this Act or the rules
(a) integrated tax, central tax, State tax, Union territory tax made there under.
or cess; or
Section 49A Utilisation of input tax credit subject to certain conditions
(b) integrated tax or central tax of a distinct person as
specified in sub-section (4) or, as the case may be, sub- Notwithstanding anything contained in section 49, the input tax
section (5) of section 25, in such form and manner and credit on account of central tax, State tax or Union territory tax
subject to such conditions and restrictions as may be shall be utilised towards payment of integrated tax, central tax,
prescribed and such transfer shall be deemed to be a State tax or Union territory tax, as the case may be, only after the
refund from the electronic cash ledger under this Act: input tax credit available on account of integrated tax has first
been utilised fully towards such payment.
Provided that, no such transfer under clause (b) shall be allowed
if the said registered person has any unpaid liability in his Section 49B Order of utilisation of input tax credit
electronic liability register.
Notwithstanding anything contained in this Chapter and subject
(11) Where any amount has been transferred to the electronic cash to the provisions of clause (e) and clause (f) of sub section (5)
ledger under this Act, the same shall be deemed to be deposited in ofsection 49, the Government may, on the recommendations of
the said ledger as provided in sub-section(1). the Council, prescribe the order and manner of utilisation of the
input tax credit on account of integrated tax, central tax, State
(12) Notwithstanding anything contained in this Act, the Government tax or Union territory tax, as the case may be, towards payment
may, on the recommendations of the Council, subject to such of any such tax.
conditions and restrictions, specify such maximum proportion of
output tax liability under this Act or under the IGST Act, 2017 Section 53 Transfer of input tax credit
which may be discharged through the electronic credit ledger by
a registered person or a class of registered persons, as may be On utilisation of input tax credit availed under this Act for payment
prescribed. of tax dues under the Integrated Goods and Services Tax Act in
accordance with the provisions of sub-section (5) of section 49, as
Explanation––For the purposes of this section,—
reflected in the valid return furnished under sub-section (1) of
section 39, the amount collected as central tax shall stand reduced
(a) the date of credit to the account of the Government in the
by an amount equal to such credit so utilised and the Central
authorised bank shall be deemed to be the date of deposit
Government shall transfer an amount equal to the amount so
in the electronic cash ledger;
reduced from the central tax account to the integrated tax account
in such manner and within such time as may be prescribed.
(b) the expression,—

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Section 53A Transfer of certain amounts or the amount payable under section 10, any amount payable
towards interest, penalty, fee or any other amount under the Act
Where any amount has been transferred from the electronic cash shall be paid by debiting the electronic cash ledger maintained as
ledger under this Act to the electronic cash ledger under the State per rule 87 and the electronic liability register shall be credited
Goods and Services Tax Act or the Union territory Goods and accordingly.
Services Tax Act, the Government shall, transfer to the State tax
account or the Union territory tax account, an amount equal to the (5) Any amount of demand debited in the electronic liability register
amount transferred from the electronic cash ledger, in such manner shall stand reduced to the extent of relief given by the appellate
and within such time as may be prescribed. authority or Appellate Tribunal or court and the electronic tax
liability register shall be credited accordingly.
Chapter IX: Payment of Tax of the CGST Rules
(6) The amount of penalty imposed or liable to be imposed shall stand
Rule 85 Electronic Liability Register reduced partly or fully, as the case may be, if the taxable person
makes the payment of tax, interest and penalty specified in the
(1) The electronic liability register specified under sub- section (7) of
show cause notice or demand order and the electronic liability
section 49 shall be maintained in FORM GST PMT-01 for each
register shall be credited accordingly.
person liable to pay tax, interest, penalty, late fee or any other
amount on the common portal and all amounts payable by him (7) A registered person shall, upon noticing any discrepancy in his
shall be debited to the said register. electronic liability ledger, communicate the same to the officer
exercising jurisdiction in the matter, through the common portal in
(2) The electronic liability register of the person shall be debited by:-
FORM GST PMT-04.
(a) the amount payable towards tax, interest, late fee or any other
Rule 86 Electronic Credit Ledger
amount payable as per the return furnished by the said
person; (1) The electronic credit ledger shall be maintained in FORM GST
PMT-02 for each registered person eligible for input tax credit
(b) the amount of tax, interest, penalty or any other amount
under the Act on the common portal and every claim of input tax
payable as determined by a proper officer in pursuance of any
credit under the Act shall be credited to the said ledger.
proceedings under the Act or as ascertained by the said
person; or (2) The electronic credit ledger shall be debited to the extent of
discharge of any liability in accordance with the provisions of
(d) any amount of interest that may accrue from time to time.
section 49 or section 49A or section 49B.
(3) Subject to the provisions of section 49, section 49A and section 49B,
(3) Where a registered person has claimed refund of any unutilized
payment of every liability by a registered person as per his return
amount from the electronic credit ledger in accordance with the
shall be made by debiting the electronic credit ledger maintained
provisions of section 54, the amount to the extent of the claim shall
as per rule 86 or the electronic cash ledger maintained as per rule
be debited in the said ledger.
87 and the electronic liability register shall be credited accordingly.
(4) If the refund so filed is rejected, either fully or partly, the amount
(4) The amount deducted under section 51, or the amount collected
debited under sub- rule (3), to the extent of rejection, shall be re-
under section 52, or the amount payable on reverse charge basis,

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credited to the electronic credit ledger by the proper officer by an to believe that credit of input tax available in the electronic credit
order made in FORM GST PMT-03. ledger has been fraudulently availed or is ineligible in as much as

(4A) Where a registered person has claimed refund of any amount paid (a) the credit of input tax has been availed on the strength of
as tax wrongly paid or paid in excess for which debit has been made tax invoices or debit notes or any other document
from the electronic credit ledger, the said amount, if found prescribed under rule 36-
admissible, shall be re-credited to the electronic credit ledger by the (i) issued by a registered person who has been found non-
proper officer by an order made in FORM GST PMT-03. existent or not to be conducting any business from any
place for which registration has been obtained; or
(4B) Where a registered person deposits the amount of erroneous
refund sanctioned to him, - (ii) without receipt of goods or services or both; or

(a) under sub-section (3) of section 54 of the Act, or (b) the credit of input tax has been availed on the strength of
tax invoices or debit notes or any other document
(b) under sub-rule (3) of rule 96 prescribed under rule 36 in respect of any supply, the tax
charged in respect of which has not been paid to the
along with interest and penalty, wherever applicable, through Government; or
FORM GST DRC-03, by debiting the electronic cash ledger, on his
own or on being pointed out, an amount equivalent to the amount (c) the registered person availing the credit of input tax has
of erroneous refund deposited by the registered person shall be re- been found non-existent or not to be conducting any
credited to the electronic credit ledger by the proper officer by an business from any place for which registration has been
order made in FORM GST PMT-03A. obtained; or

(5) Save as provided in the provisions of this Chapter, no entry shall be (d) the registered person availing any credit of input tax is not
made directly in the electronic credit ledger under any circumstance. in possession of a tax invoice or debit note or any other
document prescribed under rule 36,
(6) A registered person shall, upon noticing any discrepancy in his
electronic credit ledger, communicate the same to the officer may, for reasons to be recorded in writing, not allow debit of an
exercising jurisdiction in the matter, through the common portal in amount equivalent to such credit in electronic credit ledger for
FORM GST PMT-04. discharge of any liability under section 49 or for claim of any refund
of any unutilised amount.
Explanation For the purposes of this rule, it is hereby clarified that a refund shall
be deemed to be rejected, if the appeal is finally rejected or if the (2) The Commissioner, or the officer authorised by him under sub-rule
claimant gives an undertaking to the proper officer that he shall (1) may, upon being satisfied that conditions for disallowing debit
not file an appeal. of electronic credit ledger as above, no longer exist, allow such
debit.
Rule 86A Conditions of use of amount available in electronic credit
ledger.- (3) Such restriction shall cease to have effect after the expiry of a
period of one year from the date of imposing such restriction.
(1) The Commissioner or an officer authorised by him in this behalf,
not below the rank of an Assistant Commissioner, having reasons

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Rule 87 Electronic Cash Ledger (b) Proper officer or any other officer authorised to recover
outstanding dues from any person, whether registered or
(1) The electronic cash ledger under sub-section (1) of section 49 shall not, including recovery made through attachment or sale
be maintained in FORM GST PMT-05 for each person, liable to of movable or immovable properties;
pay tax, interest, penalty, late fee or any other amount, on the
common portal for crediting the amount deposited and debiting (c) Proper officer or any other officer authorised for the
the payment therefrom towards tax, interest, penalty, fee or any amounts collected by way of cash, cheque or demand draft
other amount. during any investigation or enforcement activity or any ad
hoc deposit:
(2) Any person, or a person on his behalf, shall generate a challan in
FORM GST PMT-06 on the common portal and enter the details Provided further that a person supplying online information and
of the amount to be deposited by him towards tax, interest, penalty, database access or retrieval services from a place outside India to
fees or any other amount. a non-taxable online recipient referred to in section 14 of the
Integrated Goods and Services Tax Act, 2017 (13 of 2017) may also
Provided that the challan in FORM GST PMT-06 generated at the make the deposit under sub-rule (2) through international money
common portal shall be valid for a period of fifteen days. transfer through Society for Worldwide Interbank Financial
(3) The deposit under sub-rule (2) shall be made through any of the Telecommunication payment network, from the date to be notified
following modes, namely:- by the Board.

(i) Internet Banking through authorised banks; Explanation For the purposes of this sub-rule, it is hereby clarified that for
making payment of any amount indicated in the challan, the
(ia) Unified Payment Interface (UPI) from any bank; commission, if any, payable in respect of such payment shall be
borne by the person making such payment.
(ib) Immediate Payment Services (IMPS) from any bank;
(4) Any payment required to be made by a person who is not registered
(ii) Credit card or Debit card through the authorised bank; under the Act, shall be made on the basis of a temporary
(iii) National Electronic Fund Transfer or Real Time Gross identification number generated through the common portal.
Settlement from any bank; or (5) Where the payment is made by way of National Electronic Fund
(iv) Over the Counter payment through authorised banks for Transfer or Real Time Gross Settlement or Immediate Payment
deposits up to ten thousand rupees per challan per tax Service mode from any bank, the mandate form shall be generated
period, by cash, cheque or demand draft: along with the challan on the common portal and the same shall
be submitted to the bank from where the payment is to be made:
Provided that the restriction for deposit up to ten thousand rupees
per challan in case of an Over the Counter payment shall not apply Provided that the mandate form shall be valid for a period of fifteen
to deposit to be made by – days from the date of generation of challan.

(a) Government Departments or any other deposit to be made (6) On successful credit of the amount to the concerned government
by persons as may be notified by the Commissioner in this account maintained in the authorised bank, a Challan
behalf;

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Identification Number shall be generated by the collecting bank (13) A registered person may, on the common portal, transfer any
and the same shall be indicated in the challan. amount of tax, interest, penalty, fee or any other amount available
in the electronic cash ledger under the Act to the electronic cash
(7) On receipt of the Challan Identification Number from the collecting
ledger for integrated tax, central tax, State tax or Union territory tax
bank, the said amount shall be credited to the electronic cash
or cess in FORM GST PMT-09.
ledger of the person on whose behalf the deposit has been made
and the common portal shall make available a receipt to this effect. (14) A registered person may, on the common portal, transfer any
amount of tax, interest, penalty, fee or any other amount available
(8) Where the bank account of the person concerned, or the person
in the electronic cash ledger under the Act to the electronic cash
making the deposit on his behalf, is debited but no Challan
ledger for central tax or integrated tax of a distinct person as
Identification Number is generated or generated but not
specified in sub-section (4) or, as the case may be, sub-section (5)
communicated to the common portal, the said person may
of section 25, in FORM GST PMT-09:
represent electronically in FORM GST PMT-07 through the
common portal to the bank or electronic gateway through which Provided that no such transfer shall be allowed if the said registered
the deposit was initiated. person has any unpaid liability in his electronic liability register.
Provided that where the bank fails to communicate details of Explanation 1 The refund shall be deemed to be rejected if the appeal is finally
Challan Identification Number to the Common Portal, the rejected.
Electronic Cash Ledger may be updated on the basis of e-Scroll of
the Reserve Bank of India in cases where the details of the said e- Explanation 2 For the purposes of this rule, it is hereby clarified that a refund shall
Scroll are in conformity with the details in challan generated in be deemed to be rejected, if the appeal is finally rejected or if the
FORM GST PMT-06 on the Common Portal. claimant gives an undertaking to the proper officer that he shall
not file an appeal.
(9) Any amount deducted under section 51 or collected under section
52 and claimed by the registered taxable person from whom the Rule 88 Identification number for each transaction
said amount was deducted or, as the case may be, collected shall
(1) A unique identification number shall be generated at the common
be credited to his electronic cash ledger.
portal for each debit or credit to the electronic cash or credit ledger,
(10) Where a person has claimed refund of any amount from the as the case may be.
electronic cash ledger, the said amount shall be debited to the
(2) The unique identification number relating to discharge of any
electronic cash ledger.
liability shall be indicated in the corresponding entry in the
(11) If the refund so claimed is rejected, either fully or partly, the electronic liability register.
amount debited under sub-rule (10), to the extent of rejection, shall
(3) A unique identification number shall be generated at the common
be credited to the electronic cash ledger by the proper officer by an
portal for each credit in the electronic liability register for reasons
order made in FORM GST PMT-03.
other than those covered under sub-rule (2).
(12) A registered person shall, upon noticing any discrepancy in his
electronic cash ledger, communicate the same to the officer
exercising jurisdiction in the matter, through the common portal in
FORM GST PMT-04.

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(vi) Over the Counter payment through authorized banks for deposits up to ten
Rule 88A Order of utilization of input tax credit
thousand rupees per challan per tax period, by cash, cheque or demand draft:
Input tax credit on account of integrated tax shall first be utilised towards payment
It may be noted that the restriction for deposit up to ten thousand rupees per
of integrated tax, and the amount remaining, if any, may be utilised towards the
challan in case of an Over the Counter payment will not apply to deposit to
payment of central tax and State tax or Union territory tax, as the case may be, in
any order: be made by –
(a) Government Departments or any other deposit to be made by persons
Provided that the input tax credit on account of central tax, State tax or Union
as may be notified by the Commissioner in this behalf;
territory tax shall be utilised towards payment of integrated tax, central tax, State tax
or Union territory tax, as the case may be, only after the input tax credit available on (b) Proper officer or any other officer authorised to recover outstanding
account of integrated tax has first been utilised fully. dues from any person, whether registered or not, including recovery
made through attachment or sale of movable or immovable properties;

ANALYSIS (c) Proper officer or any other officer authorised for the amounts collected
by way of cash, cheque or demand draft during any investigation or
enforcement activity or any ad hoc deposit.

A. ELECTRONIC CASH LEDGER [SECTION 49(1),(3),(6),(10) & (11)

READ WITH RULE 87 OF CGST RULES] Non-applicability of Over the Counter payment limit on deposits to be made
by
The Electronic Cash Ledger contains a summary of all the deposits/payments made
by a taxpayer. Electronic Cash Ledger is maintained on the GST Portal. The
Electronic Cash Ledger has to be maintained in prescribed form on the common
Proper officer or any other officer authorized
portal by a person liable to pay tax.
Government
Any deposit made towards payment of tax, interest, penalty, late fee or any other Departments
amount will be credited to the electronic cash ledger. Any debit to the electronic
cash ledger represents payment therefrom towards tax, interest, penalty, late fee
to recover
or any other amount. outstanding dues to collect the amount by
including attachment way of
The deposit in the electronic cash ledger shall be made through any of the cash/cheque/demand
proceedings or sale
following modes, namely:- draft during any
of moveable/ Persons notified by
immoveable investigation/enforcemen
(i) Internet Banking through authorised banks; t activity /any ad hoc Commissioner
properties
(ii) Unified Payment Interface (UPI) from any bank; deposit

(iii) Immediate Payment Services (IMPS) from any bank;

(iv) Credit card or Debit card through the authorised bank;

(v) National Electronic Fund Transfer (NEFT) or Real Time Gross Settlement
(RTGS) from any bank; or

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Payment by Challan ‰ How many types of Challans are prescribed for various taxes and
‰ What is CPIN, CIN, BRN and E-FPB? payments to be paid under the GST regime?

CPIN stands for Common portal Identification Number. It is created for every There is single Challan prescribed for all taxes, fees, penalty, interest, and
Challan successfully generated by the taxpayer. It is a 14-digit unique number other payments to be made under the GST regime.
to identify the challan. CPIN remains valid for a period of 15 days. Other Aspects relating to Challan
CIN or Challan Identification Number is generated by the banks, once ‰ Any person, or a person on his behalf, can generate a challan in prescribed
payment in lieu of a generated Challan is successful. It is a 18-digit number form [Form PMT 06] on the common portal and enter the details of the
that is 14-digit CPIN plus 4-digit Bank Code. amount to be deposited by him towards tax, interest, penalty, fees or any
CIN is generated by the authorized banks/Reserve Bank of India (RBI) when other amount.
payment is actually received by such authorized banks or RBI and credited in ‰ E- challan validity is for 15 days. The commission for Validity of
the relevant Government account held with them. It is an indication that the making payment through e-challan has to be borne challan-15 days
payment has been realized and credited to the appropriate Government by the person making the payment.
account. CIN is communicated by the authorized bank to taxpayer as well as
‰ The mandate form obtained after making NEFT/RTGS/IMPS payment has to
to GSTN.
be submitted in the Bank. The validity of the mandate form is 15 days.
BRN or Bank Reference Number is the transaction number given by the bank
‰ On successful credit of amount in the concerned (Central/State) Government
for a payment against a Challan
Account maintained in the authorized bank, a Challan Identification Number
E-FPB stands for Electronic Focal Point Branch. These are branches of (CIN) will be generated by the collecting bank which will be indicated in the
authorized banks which are authorized to collect payment of GST. Each challan.
authorized bank will nominate only one branch as its E-FPB for pan India
‰ On receipt of the CIN from the collecting bank, the said amount is credited
transaction.
into the electronic cash ledger of the person on whose behalf the deposit is
The E-FPB will have to open accounts under each major head for all made and the common portal will generate a receipt to this effect.
governments. Any amount received by such E-FPB towards GST will be
‰ If CIN is not generated even after making payment and submission of
credited to the appropriate account held by such E-FPB. For NEFT/RTGS/IMPS
mandate form or when after generation, it has not been reflected in the
Transactions, RBI will act as E-FPB.
common portal, the person making the deposit or the person on whose
‰ Are manual Challans applicable as allowed under the erstwhile indirect behalf the deposit has been made, can make a representation in prescribed
tax regimes? form i.e. FORM GST PMT-07 through the common portal or e-gateway
Manual or physical Challans are not allowed under the GST regime. It is through which the payment has been made.
mandatory to generate Challans online on the GST Common Portal. ‰ Where the bank fails to communicate details of Challan Identification Number
to the common portal, the Electronic Cash Ledger may be updated on the
basis of e-Scroll of the RBI in cases where the details of the said e-Scroll are
in conformity with the details in challan generated in Form GST PMT-06 on
the common portal.

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‰ Date of credit into the treasury of the State Government/Central Government

is deemed to be the date of debit in the electronic cash ledger and not the Major
j Heads Minor Heads
actual date of deposit of amount in the electronic cash ledger of the taxable IGST Tax
person. CGST Interest
‰ Any amount deducted under section 51 [TDS] or collected under section 52 Penalty
SGST/UTGST
[TCS] and claimed by the registered taxable person from whom the said Fee
amount was deducted or collected shall be credited to his electronic cash CESS Others
ledger.
‰ In case any discrepancy is noticed in electronic cash ledger, the registered
Transfer of amount reflected in Electronic Cash Ledger
person shall communicate the same to the officer exercising jurisdiction in
the matter, through the common portal in prescribed form. Sub-sections (10) and (11) of section 49 of the CGST Act, 2017 facilitates a registered
person to transfer an amount from one (major/minor) head to another (major/minor)
‰ An unregistered person has to make payment through electronic cash ledger on
head in the electronic cash ledger or to transfer any amount available in the
the basis of temporary identification number generated through common
electronic cash ledger, to the electronic cash ledger for IGST/CGST of a distinct
portal.
person, provided there is no unpaid liability in his electronic liability register.
Manner of utilization of amount reflected in Electronic Cash Ledger
The amount available in the electronic cash ledger can be utilised for payment of
Sub-section 3 of section 49 of the CGST Act lays down the following: any liability for the major and minor heads. For instance, if the registered person
The amount reflected in the electronic cash ledger may be used for making any has made a deposit of tax erroneously i.e. by virtue of human error, under a
payment towards tax, interest, penalty, fee, or any other amount in the prescribed particular head instead of a specific head, the same can be transferred to the
manner. respective intended head vide Form GST PMT-09.

In the e-ledger, information is kept minor head-wise for each major head. The
ledger is displayed major head-wise i.e., IGST, CGST, SGST/UTGST, and CESS. Each
major head is divided into five minor heads: Tax, Interest, Penalty, Fee, and Others.
A registered taxpayer can make cash deposits in the recognized Banks through the
prescribed modes to the Electronic Cash Ledger using any of the Online or Offline
modes permitted by the GST Portal. The Cash deposits can be used for making
payment(s) like tax liability, interest, penalties, fee, and others.

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Further, a registered person may, on the common portal, transfer any amount of Other peculiar aspects of Electronic Cash Ledger
tax, interest, penalty, fee or any other amount available in the electronic cash ledger
9 An unregistered person has to make payment through electronic cash ledger
to the electronic cash ledger for central tax or integrated tax of a distinct person as
on the basis of temporary identification number generated through common
specified in sub-section (4) or, as the case may be, sub-section (5) of section 25, in
portal.
Form GST PMT-09.
9 Where the person has claimed refund of any amount from electronic cash
However, no such transfer shall be allowed if the said registered person has any
ledger, the amount of refund claimed would be debited from the electronic
unpaid liability in his electronic liability register.
cash ledger
This Form can be used either for
9 Where the refund claimed by a person is rejected either fully or partly, the
(i) transfer of erroneous deposits under any minor head of a major head to any
amount debited earlier shall be credited to electronic cash ledger by the
other minor head of same or other major heads or
Proper office to the extent of amount of refund rejected.
(ii) transfer of any of the amounts already lying unutilised under any of the minor
Electronic Cash Ledger
heads in Electronic Cash ledger or

(iii) transfer of any amount lying in the electronic cash ledger to the electronic
cash ledger for CGST/IGST of a distinct person
For instance, a registered person has deposited a sum of ` 1,000 under the head of
“Interest” column of CGST & ` 1,000 under the head of “Interest” column of SGST,
instead of the head “Fee”. Such amount can be transferred using Form GST PMT-
09 for making a transfer to the head “Fee”. The said transfer is required using the
above Form, because when the registered person has to make the remittance of
Tax/Interest/Penalty/ Fee/ Other amount at a stage “Offset Liabilities” in any of the
GST Returns/ Forms for Tax payments through Electronic Cash Ledger, adequate
amount should be available under the respective head of account.
Section 53A of the CGST Act provides for transfer of amount between Centre and
States in accordance with section 49 of the CGST Act allowing transfer of an amount
from one head to another head in the electronic cash ledger of the registered person.
A Registered person has to claim the Tax Deducted at Source under Section 51 or
Tax Collected at Source under Section 52 to appear in his Electronic Cash ledger.
There is no automatic updation of this deduction/collection currently on the
common portal. Similar to a claim of TDS credits under Income Tax Act, 1961 at the
time of filing Income tax return, the Registered person has to claim for the TDS/TCS
in his periodical returns to get updated in the Electronic Cash ledger.

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B. ELECTRONIC CREDIT LEDGER [SECTION 49(2), (4) & (5), SECTION 49A, CGST (2) (1) Not allowed
SECTION 49B READ WITH RULE 86, 86A, 86B AND 88A OF CGST [refer 2 & 3(i)] [refer 2 & 3]
RULES] SGST/ UTGST (2) Not allowed x (1)
[refer 2 & 4(i)] x [refer 2 & 4]
Sub-section (2) of section 49 of the CGST Input Tax Credit as self-assessed in
Act provides that the self-assessed input monthly returns will be reflected in 1. Available IGST credit in the credit ledger should first be utilized towards
tax credit (ITC) by a registered person the ITC Ledger. The credit in this payment of IGST. Remaining amount if any, can be utilized towards the
ledger can be used to make payment of CGST and SGST/UTGST in any order and in any proportion, i.e.
shall be credited to his Electronic Credit
payment of ONLY TAX and not other
Ledger or Electronic Input Tax Credit ITC of IGST can be utilized either against CGST or SGST.
amounts such as interest, penalty,
Ledger. This is to be maintained in the fees etc. 2. Entire ITC of IGST is to be fully utilised first before the ITC of CGST or
prescribed form. SGST/UTGST can be utilized.
Non-utilisation of ITC for tax liability under reverse charge mechanism 3. Available CGST Credit in the credit ledger shall first be utilized for payment
The amount available in the electronic credit ledger may be used for making any of CGST. Remaining amount if any, will be utilized for payment of IGST
payment towards output tax under CGST, SGST, UTGST or IGST. It is pertinent to note 4. Available SGST /UTGST credit in the credit ledger shall first be utilized for
that “output tax” ” [as defined in Section 2(18)] in relation to a taxable person, means payment of SGST/UTGST. Remaining amount if any, will be utilized for
the tax chargeable under this Act [i.e. SGST/ UTGST/ CGST Act, 2017 respectively] on payment of IGST, only when credit of CGST is not available for payment of
taxable supply of goods and/or services made by him, but excludes tax payable by him IGST
on reverse charge basis. Thus, ITC available in Electronic Credit ledger, cannot be
utilised for tax payable under reverse charge mechanism under Section 9(3) or 9(4) of
CGST credit cannot be utilized for payment of SGST/UTGST.
CGST/SGST Act, 2017 read with Section 5(3) or 5(4) of IGST Act, 2017.
Similarly, SGST/UTGST credit cannot be utilized for payment of CGST.
Manner of utilisation of ITC [Combined reading of section 49(5), 49A, 49B, rule
Conditions of use of amount available in electronic credit ledger [Rule
88A and Circular No. 98/17/2019 GST dated 23.04.2019] 3
86A]
Manner of utilisation of ITC [Combined reading of section 49(5), 49A, 49B, rule 88A
and Circular No. 98/17/2019 GST dated 23.04.2019] 4 In case the Commissioner or an officer authorised by him in this behalf, not below
the rank of an Assistant Commissioner, has reasons to believe that ITC available in
Output IGST CGST SGST/UTGST the electronic credit ledger has been fraudulently availed or is ineligible, he may ,
Input after recording reasons in writing, prohibit use of ITC for discharge of any liability
under section 49 or for claim of any refund of any unutilised amount. [Such
IGST (1) (2) [refer1(i)] (2) [refer1(i)] provisions have already been discussed in detail in Chapter 7: Input Tax Credit.]

Restrictions on use of amount available in electronic credit ledger [Rule

86B]
3
The detailed provisions have been discussed in Chapter-7: “Input tax credit” of this Module of
the Study Material.
Rule 86B restricts the amount available in electronic credit ledger which a registered
4 person can use to discharge his output tax liability to 99% of such tax liability in
The detailed provisions have already been discussed in Chapter-7: “Input tax credit” of this
Module of the Study Material.

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cases where the value of taxable supply other than exempt supply and zero-rated It is further reiterated that as output tax does not include tax payable under reverse
supply, in a month exceeds ` 50 lakh. [Such provisions have already been discussed charge mechanism, implying thereby that the electronic credit ledger cannot be
in detail in Chapter 7: Input Tax Credit ] used for making payment of any tax which is payable under reverse charge
mechanism.
Other Aspects of Electronic Credit Ledger
Issue 2:
‰ In case any discrepancy is noticed in the electronic credit ledger, the
Whether the amount available in the electronic credit ledger can be used for
registered person shall communicate the same to the officer exercising
making payment of any liability other than tax under the GST laws?
jurisdiction in the matter, through the common portal in prescribed form.
Clarification:
‰ No entry shall be made directly in the electronic credit ledger under any
circumstance except as provided in the provisions. As per section 49(4), the electronic credit ledger can be used for making payment
of output tax only under the CGST Act or the IGST Act. It cannot be used for making
Clarifications 5 regarding utilization of the amounts available in the electronic
payment of any interest, penalty, fees or any other amount payable under the said
credit ledger and the electronic cash ledger for payment of tax and other
Acts. Similarly, electronic credit ledger cannot be used for payment of erroneous
liabilities:-
refund sanctioned to the taxpayer, where such refund was sanctioned in cash.
Issue 1:
Issue 3:
Whether the amount available in the electronic credit ledger can be used for
making payment of any tax under the GST Laws? Whether the amount available in the electronic cash ledger can be used for making
payment of any liability under the GST laws?
Clarification:
Clarification:
In terms of section 49(4), the amount available in the electronic credit ledger may
be used for making any payment towards output tax under the CGST Act or the As per section 49(3), the amount available in the electronic cash ledger may be
IGST Act, subject to the provisions relating to the order of utilisation of ITC as laid used for making any payment towards tax, interest, penalty, fees or any other
down in section 49B read with rule 88A. amount payable under the provisions of the GST laws.

Rule 86(2) provides for debiting of the electronic credit ledger to the extent of
Common Points for Electronic Cash & Credit Ledger
discharge of any liability in accordance with the provisions of section 49/49A/49B.
‰ Where a person has claimed refund of any amount from the electronic cash or credit
Further, output tax in relation to a taxable person (i.e. a person who is registered
ledger, the said amount shall be debited to the electronic cash or credit ledger.
or liable to be registered under section 22 or section 24) is defined in section 2(82)
as the tax chargeable on taxable supply of goods or services or both but excludes ‰ If the refund so claimed is rejected, either fully or partly, the amount debited earlier,
tax payable on reverse charge mechanism. to the extent of rejection, shall be credited to the electronic cash or credit ledger by
Accordingly, it is clarified that any payment towards output tax, whether self- the proper officer by an order made in prescribed form.
assessed in the return or payable as a consequence of any proceeding instituted ‰ A unique identification number shall be generated at the common portal for
under the provisions of GST laws, can be made by utilization of the amount each debit or credit to the electronic cash or credit ledger.
available in the electronic credit ledger of a registered person.
‰ Similarly, the unique identification number relating to discharge of any liability
shall be indicated in the corresponding entry in the electronic liability register.

5
vide Circular No. 172/04/2022 GST dated 06.07.2022

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Electronic Credit Ledger

C. ELECTRONIC LIABILITY REGISTER [SECTION 49(7), (8) & (9) READ
WITH RULE 85 OF CGST RULES]

‰ Sub-section (7) of section 49 enumerates

about the third kind of ledger [Auto updated Electronic Liability Register
on common portal] viz. Electronic Liability will reflect the total tax
Register. While the terms “Electronic Cash liability of a taxpayer for a
Ledger” and “Electronic Credit Ledger” are particular tax period.
defined in the Act, the term “Electronic
Liability Register” is not defined. The Section
lays down that all liabilities of a taxable person will be recorded & maintained in
a separate register named ‘Electronic Liability Register’.
‰ Order of discharge of tax and other dues

Sub-section (8) prescribes the chronological order in which the liability of a

taxable person has to be discharged:
9 self-assessed tax, and other dues related to returns of previous tax
periods have to be discharged first;.
9 self-assessed tax, and other dues related to the return of the current tax
period next.

9 Once these two steps are exhausted, thereafter any other amount
payable under this Act or the rules made thereunder including the
demand determined under section 73 or section 74 or section 74A 6;
comes last. This sequence has to be mandatorily followed.
The expression “tax dues” means the tax payable under this Act and does not
include interest, fee and penalty; and “other dues” referred above mean
interest, penalty, fee or any other amount payable under the Act or the rules
made thereunder.

6
The provisions of section 74A contain provisions relating to determination of tax not
paid/short paid or erroneously refunded or ITC wrongly availed/utilized for any reason
pertaining to Financial Year 2024-25 onward. Detailed provisions of this section are
discussed in Chapter-19 of Module-3 of the Study material. The provisions of sections 73
and 74 are applicable for tax determination relating to the past period up to the Financial
Year 2023–24.

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‰ Presumption that incidence of tax is passed on

Payment of TDS deducted under section
Sub-section (9) contains a deeming clause. This part of the section provides 51, TCS deducted by e-commerce
that when a taxable person has paid the GST under the corresponding Act, operator under section 52, amount
the taxable person is deemed to have passed on the incidence of such payable under reverse charge basis,
payment of tax to the recipient of such goods and /or services. Thus, if tax amount payable under section 10,
amount payable towards payment of
has been paid under the CGST Act, 2017 then the taxable person is deemed
interest, penalty, fee or any other
to have passed on the incidence of such payment of CGST to the recipient.
amount under the Act.
This is subject to the contrary being proved. Onus to establish that incidence
of tax has not been passed on to the recipient, becomes relevant in case of ‰ How do the payment systems benefit the taxpayer and the Commercial Tax
Section 54 dealing with “Refund of tax” Department?
‰ Chapter IX of CGST Rules provide the following:
9 No more queues and waiting for making payments as payments can be
(I) Debit to electronic liability register: made online 24 X 7.

9 all amounts payable towards tax, interest, late fee and any other 9 Instant online receipts for payments made online.
amount as per return filed;
9 Tax Consultants can make payments on behalf of the clients.
9 all amounts payable towards tax, interest, penalty and any other
9 Single Challan form to be created online, replacing the three or four copy
amount determined in a proceeding by
Challan.
9 a proper officer or as ascertained by the said person;
9 Revenue will come earlier into the Government Treasury as compared to
9 interest payable under Section 50 that may accrue from time to time. the old system.
(II) Debit to Electronic Credit/Cash ledger: 9 Greater transparency.

9 Online payments made after 8 pm will be credited to the taxpayer’s

Debit to Electronic Debit to Electronic Cash Ledger and
Credit Ledger and Credit to Electronic Liability account on the same day.
Credit to Electronic Register Electronic Liability Register
Liability Register
The Electronic Liability Register page is displayed in the following manner:-
Payment of all the Payment of all the liabilities of a Part-I: Return related Liabilities
liabilities of a registered registered person as per his return
person as per his return subject to section 49 or section 49A or Part-II: Other than return related liabilities
subject to section 49 or section 49B.
section 49A or section
49B.

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Part - 1 Return related liabilities

4. INTEREST ON DELAYED PAYMENT OF TAX
[SECTION 50]

STATUTORY PROVISIONS

Section 50 Interest on delayed payment of tax

Sub-section Particulars

(1) Every person who is liable to pay tax in accordance with the
provisions of this Act or the rules made thereunder, but fails to pay
the tax or any part thereof to the Government within the period
prescribed, shall for the period for which the tax or any part thereof
remains unpaid, pay, on his own, interest at such rate, not exceeding
eighteen per cent., as may be notified by the Government on the
recommendations of the Council.
Provided that the interest on tax payable in respect of supplies made
during a tax period and declared in the return for the said period
Part - II: Other than return related liabilities furnished after the due date in accordance with the provisions of
section 39, except where such return is furnished after
commencement of any proceedings under section 73 or section 74
or section 74A in respect of the said period, shall be payable on
that portion of the tax that is paid by debiting the electronic cash
ledger.

(2) The interest under sub-section (1) shall be calculated, in such

manner as may be prescribed, from the day succeeding the day on
which such tax was due to be paid.

(3) Where the input tax credit has been wrongly availed and utilised,
the registered person shall pay interest on such input tax credit
wrongly availed and utilised, at such rate not exceeding 24% as may
be notified by the Government, on the recommendations of the
Council, and the interest shall be calculated, in such manner as may
be prescribed.

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Rule 88B Manner of calculating interest on delayed payment of Explanation For the purposes of this sub-rule, -
tax.
(1) Input tax credit wrongly availed shall be construed to have been
(1) In case, where the supplies made during a tax period are declared utilised, when the balance in the electronic credit ledger falls below
by the registered person in the return for the said period and the the amount of input tax credit wrongly availed, and the extent of
said return is furnished after the due date in accordance with such utilization of input tax credit shall be the amount by which the
provisions of section 39, except where such return is furnished after balance in the electronic credit ledger falls below the amount of
commencement of any proceedings under section 73 or section 74 input tax credit wrongly availed.
or section 74A in respect of the said period, the interest on tax
payable in respect of such supplies shall be calculated on the (2) the date of utilisation of such input tax credit shall be taken to
portion of tax which is paid by debiting the electronic cash ledger, be, -
for the period of delay in filing the said return beyond the due date,
(a) the date, on which the return is due to be furnished under
at such rate as may be notified under sub-section (1) of section 50.
section 39 or the actual date of filing of the said return,
Provided that where any amount has been credited in the Electronic whichever is earlier, if the balance in the electronic credit
Cash Ledger as per provisions of sub-section (1) of section 49 on or ledger falls below the amount of input tax credit wrongly
before the due date of filing the said return, but is debited from the availed, on account of payment of tax through the said
said ledger for payment of tax while filing the said return after the return; or
due date, the said amount shall not be taken into consideration
while calculating such interest if the said amount is lying in the said (b) The date of debit in the electronic credit ledger when the
ledger from the due date till the date of its debit at the time of filing balance in the electronic credit ledger falls below the
return. amount of input tax credit wrongly availed, in all other
cases.
(2) In all other cases, where interest is payable in accordance with sub
section (1) of section 50, the interest shall be calculated on the
amount of tax which remains unpaid, for the period starting from ANALYSIS
the date on which such tax was due to be paid till the date such tax
is paid, at such rate as may be notified under sub-section (1) of To promote greater discipline amongst taxpayer and timeliness in payment of tax,
section 50. the tax dues which are not paid within the stipulated time are made liable to
interest payment. This mechanism is automatic in nature by virtue of the provisions
(3) In case, where interest is payable on the amount of input tax credit
wrongly availed and utilized in accordance with sub-section (3) of laid under any tax laws. Interest liability is imposed on taxpayer who has withheld
section 50, the interest shall be calculated on the amount of input the payment of any tax as and when it is due and payable. Basically, it is
tax credit wrongly availed and utilised, for the period starting from compensatory in character and totally different from penalty which is penal in
the date of utilisation of such wrongly availed input tax credit till character.
the date of reversal of such credit or payment of tax in respect of
On similar lines, section 50 of the CGST Act, 2017 provides for applicability of
such amount, at such rate as may be notified under said sub-section
interest for default in payment of taxes within the stipulated time. Under GST law,
(3) of section 50.
a registered person, can make the payment of tax through electronic credit ledger
or electronic cash ledger in terms of section 49 of CGST Act, 2017. Usually, the

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balance in electronic credit ledger is exhausted first (subject to provisions of rule ‰ When interest is payable?
86B) before utilizing the balance available in the electronic cash ledger for Interest is payable in case of delay in payment of tax, in full or in part within
discharging tax liabilities. This practice is adopted for a better working capital the prescribed period.
management.
‰ Rate of interest
In case a registered person does not have sufficient amount available in electronic
credit ledger to pay the tax dues for a particular tax period and also if the registered The rate of interest shall be notified by the Government on the basis of
person does not have sufficient money for making deposit of balance tax amount recommendation of the Council. However, such rate to be notified shall not
in electronic cash ledger then in such a situation, GST common portal doesn’t have exceed 18% in case of belated payment of tax i.e. on failure to pay tax (or
a mechanism to allow a registered person to make part payment of taxes. part of tax) to the Government’s account and in case of wrongful availment
and utilization of input tax credit 8.
If the law maker demands tax dues along with interest on the gross payments i.e.
tax paid through electronic cash ledger and credit ledger both, it may be an ‰ Computation of period for calculation of interest
unhealthy practice from business perspective. To counter such recovery Generally, the period of interest will be from the date following the due date
mechanism, the proviso under Section 50 provides that when a registered person of payment to the actual date of payment of tax.
has paid his taxes through a return specified under Section 39 of CGST Act, 2017
‰ Manner of calculating interest on delayed payment of tax [Rule 88B]
belatedly, interest shall be applicable only on the net taxes paid through electronic
cash ledger and not on the gross taxes paid for such tax period. In case, where the supplies made during a tax period are declared by the
registered person in the return for the said period and the said return is
As per the said proviso, the interest in cases where the tax return has been furnished
furnished after the due date in accordance with provisions of section 39,
after the due date (but furnished before commencement of proceedings under
except where such return is furnished after commencement of any
Section 73 or Section 74 or section 74A 7) shall be levied on that portion of the
proceedings under section 73 or section 74 or section 74A in respect of the
output tax which is being paid by debiting the electronic cash ledger. This means
said period, the interest on tax payable in respect of such supplies shall be
that the interest liability shall not arise on that portion of the output tax liability
calculated on the portion of tax which is paid by debiting the electronic cash
which is paid using the ITC available in the electronic credit ledger.
ledger, for the period of delay in filing the said return beyond the due date,
Accordingly, interest if any payable by the registered person for delay in remittance at such rate as may be notified under section 50(1).
of taxes beyond the stipulated due date on account of delay in filing of return under However, where any amount has been credited in the Electronic Cash Ledger
section 39, shall be demanded only on the net cash liability of taxes and not on the as per provisions of section 49(1) on or before the due date of filing the said
gross tax liability. return, but is debited from the said ledger for payment of tax while filing the
said return after the due date, the said amount shall not be taken into
consideration while calculating such interest if the said amount is lying in the
said ledger from the due date till the date of its debit at the time of filing
7 return.
The provisions of section 74A contain provisions relating to determination of tax not
paid/short paid or erroneously refunded or ITC wrongly availed/utilized for any reason
pertaining to Financial Year 2024-25 onward. Detailed provisions of this section are
discussed in Chapter-19 of Module-3 of the Study material. The provisions of sections 73
8
and 74 are applicable for tax determination relating to the past period up to the Financial Notification No. 13/2017 CT dated 28.06.2017 has notified the rate of interest as 18% per
Year 2023–24. annum.

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In all other cases, where interest is payable under section 50(1), the interest 9 The interest payable under this section shall be debited to the Electronic
shall be calculated on the amount of tax which remains unpaid, for the period Liability Register.
starting from the date on which such tax was due to be paid till the date such
9 The liability for interest can be settled by adjustment with balance in
tax is paid at the rate specified under section 50(1).
Electronic Cash Ledger but not with balance in electronic credit
Where interest is payable on the amount of ITC wrongly availed and utilised ledger.
in accordance with section 50(3), the interest shall be calculated on the
Clarification on charging of interest under section 50(3) in cases of
amount of input tax credit wrongly availed and utilised, for the period starting
wrong availment of IGST credit and reversal thereof 9
from the date of utilisation of such wrongly availed input tax credit till the
date of reversal of such credit or payment of tax in respect of such amount at The issues which arose for consideration are as to:
the rate specified under section 50(3). (i) whether in the cases of wrong availment of IGST credit by a
The explanation to the rule lays down that- registered person and reversal thereof, for the calculation of
interest under rule 88B, whether the balance of ITC available in
(i) input tax credit wrongly availed shall be construed to have been utilised,
when the balance in the electronic credit ledger falls below the amount electronic credit ledger (ECL) under the head of IGST only needs to
of input tax credit wrongly availed, and the extent of such utilisation of be considered or total ITC available in electronic credit ledger,
input tax credit shall be the amount by which the balance in the under the heads of IGST, CGST and SGST taken together, has to be
electronic credit ledger falls below the amount of input tax credit considered.
wrongly availed.
Since the amount of ITC available in ECL, under any of the heads of
(ii) the date of utilisation of such input tax credit shall be taken to be- IGST, CGST or SGST, can be utilized for payment of liability of IGST, it is
(a) the date, on which the return is due to be furnished under section the total ITC available in ECL, under the heads of IGST, CGST and SGST
39 or the actual date of filing of the said return, whichever is taken together, that has to be considered for calculation of interest
earlier, if the balance in the electronic credit ledger falls below the under rule 88B and for determining as to whether the balance in the
amount of input tax credit wrongly availed, on account of ECL has fallen below the amount of wrongly availed ITC of IGST, and to
payment of tax through the said return; or what extent the balance in ECL has fallen below the said amount of
wrongly availed credit.
(b) the date of debit in the electronic credit ledger when the balance
in the electronic credit ledger falls below the amount of input tax Thus, in the cases where IGST credit has been wrongly availed and
credit wrongly availed, in all other cases. subsequently reversed on a certain date, there will not be any interest
liability under section 50(3) if, during the time period starting from such
‰ Other relevant points relating to interest
availment and up to such reversal, the balance of ITC in the ECL, under
9 The term “tax” here means the tax payable under the Act read with the heads of IGST, CGST and SGST taken together, has never fallen below
underlying Rules made thereunder. the amount of such wrongly availed ITC, even if available balance of IGST
9 The payment of interest in case of belated payment of tax should be credit in ECL individually falls below the amount of such wrongly availed
made voluntarily i.e. even without a demand. IGST credit.

9
Circular No. 192/04/2023 GST dated 17.07.2023

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However, when the balance of ITC, under the heads of IGST, CGST and (a) a department or establishment of the Central
SGST of ECL taken together, falls below such wrongly availed amount Government or State Government; or
of IGST credit, then it will amount to the utilization of such wrongly
(b) local authority; or
availed IGST credit and the extent of utilization will be the extent to
which the total balance in ECL under heads of IGST, CGST and SGST (c) Governmental agencies; or
taken together falls below such amount of wrongly availed IGST credit,
and will attract interest as per section 50(3) read with section 20 of the (d) such persons or category of persons as may be notified by
IGST Act, 2017 and of rule 88B(3). the Government on the recommendations of the Council,

(ii) whether the credit of compensation cess available in ECL shall be (hereafter in this section referred to as “the deductor”), to deduct
tax at the rate of one per cent from the payment made or credited
taken into account while considering the balance of ECL for the
to the supplier (hereafter in this section referred to as “the
purpose of calculation of interest under rule 88B(3) in respect of
deductee”) of taxable goods or services or both, where the total
wrongly availed and utilized IGST, CGST or SGST credit. value of such supply, under a contract, exceeds two lakh and fifty
Since ITC in respect of compensation cess can be utilised only towards thousand rupees :
payment of compensation cess. Thus, credit of compensation cess Provided that no deduction shall be made if the location of the
cannot be utilized for payment of any tax under CGST or SGST or IGST supplier and the place of supply is in a State or Union territory
heads and/ or reversals of credit under the said heads. Accordingly, which is different from the State or as the case may be, Union
credit of compensation cess available in ECL cannot be taken into territory of registration of the recipient.
account while considering the balance of ECL for the purpose of
Explanation For the purpose of deduction of tax specified above, the value of
calculation of interest under rule 88B(3) in respect of wrongly availed supply shall be taken as the amount excluding the central tax,
and utilized IGST, CGST or SGST credit. State tax, Union territory tax, integrated tax and cess indicated in
the invoice.

5. TAX DEDUCTION AT SOURCE [SECTION 51 OF (2) The amount deducted as tax under this section shall be paid to the
Government by the deductor within ten days after the end of the
CGST ACT] month in which such deduction is made, in such manner as may
be prescribed.
(3) A certificate of tax deduction at source shall be issued in such form
STATUTORY PROVISIONS and in such manner as may be prescribed.
(5) The deductee shall claim credit, in his electronic cash ledger, of the
Section 51 Tax deduction at source
tax deducted and reflected in the return of the deductor furnished
Sub-Section Clause Particulars under sub-section (3) of section 39, in such manner as may be
prescribed.
(1) Notwithstanding anything to the contrary contained in this Act,
the Government may mandate, — (6) If any deductor fails to pay to the Government the amount
deducted as tax under sub-section (1), he shall pay interest in

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accordance with the provisions of sub-section (1) of section 50, in The following persons have been notified under clause (d) of sub-section (1) of
addition to the amount of tax deducted. section 51 of the CGST Act by the Central Government 10:

(7) The determination of the amount in default under this section shall (a) an authority or a board or any other body, -
be made in the manner specified in section 73 or section 74 or (i) set up by an Act of Parliament or a State Legislature; or
section 74A.
(ii) established by any Government,
(8) The refund to the deductor or the deductee arising on account of
excess or erroneous deduction shall be dealt with in accordance with 51% or more participation by way of equity or control, to carry out
with the provisions of section 54 : any function;

Provided that no refund to the deductor shall be granted, if the It has been clarified vide Circular No. 76/50/2018 GST dated 31.12.2018
amount deducted has been credited to the electronic cash ledger that the rider of 51% or more participation by way of equity or control
of the deductee. is applicable to both the items (i) and (ii). Thus, the provisions of section
51 of the CGST Act are applicable only to such authority or a board or
any other body set up by an Act of parliament or a State legislature or
ANALYSIS established by any Government in which 51% or more participation by
way of equity or control is with the Government.

‰ Deductors of Tax at Source (b) society established by the Central Government or the State Government
or a Local Authority under the Societies Registration Act, 1860;
Under the GST regime, section 51 of the CGST Act, 2017 prescribes the
(c) public sector undertakings;
authority and procedure for ‘tax deduction at source’. The TDS provisions
empower the Central Government to make it mandatory for the following (d) any registered person receiving supplies of metal scrap falling under
persons (the deductor) to deduct tax at source from payments made to the Chapters 72 to 81 in the First Schedule to the Customs Tariff Act, 1975,
suppliers of taxable goods and/or services. from other registered person
‰ Categories of persons not liable to deduct TDS
Central/State Government
department or establishment Local Authority [Section 51(1)(b)] Tax is not liable to be deducted at source in the following cases:-
[Section 51(1)(a)]
(i) When goods and/or services are supplied from a public sector
undertaking (PSU) to another PSU, whether or not a distinct person
Governmental Agencies [Section Notified Persons/category of
51(1)(c)] persons [Section 51(1)(d)]
(ii) When supply of goods and/or services takes place between one person
to another person specified under clauses (a), (b), (c) and (d) of section
51(1) of the said Act, except the person referred to in clause (d).
With respect to deductors under section 51(1)(a), provisions of TDS are
applicable to certain prescribed authorities of Ministry of Defence, remaining
authorities under the Ministry of Defence are exempt. Detailed list has been
specified under Notification 57/2018 CT dated 23.10.2018.
10
Notification No. 50/2018 CT dated 13.09.2018

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Deductees (b) Supplier as well as the place of supply are in different states.
The deductees are the suppliers whose total value of supply of taxable goods In such cases, Integrated tax would be levied. TDS to be deducted would
and/or services under a contract exceeds ` 2,50,000 exclusive of tax & cess as be TDS (Integrated tax) and it would be possible for the supplier (i.e.
per the invoice. the deductee) to take credit of TDS in his electronic cash ledger.

‰ Standard Rate of deduction (c) Supplier as well as the place of supply are in State A and the
recipient is located in State B.
The tax would be deducted @ 1% under CGST TDS-1% +1% [CGST +
Act, 2017 of the payment made to the supplier The supply would be intra-State supply and Central tax and State tax
SGST] on net value of
would be levied. In such case, transfer of TDS (Central tax + State tax of
(the deductee) of taxable goods and/or services, taxable supplies
State B) to the cash ledger of the supplier (Central tax + State tax of
where the total value of such supply, under a
State A) would be difficult. So, in such cases, TDS would not be
contract, exceeds ` 2,50,000 (excluding the deducted.
amount of Central tax, State tax, Union Territory tax, Integrated tax and cess
Thus, when both the supplier as well as the place of supply are different
indicated in the invoice). Thus, individual supplies may be less than
from that of the recipient, no tax deduction at source would be made.
` 2,50,000/-, but if total value of supplies under a contract is more than
` 2,50,000/-, TDS has to be deducted. Location of Place of Registration of TDS u/s 51
The deductors have to deduct tax at the rate of 1% from the payment made Supplier Supply Recipient
or credited to the supplier of taxable goods and/or services under CGST State A State A State A Yes
Act, 2017.
State A State A State B No
It may be noted that Section 20 of IGST Act provides that in the State A State B State B Yes
case of tax deducted at source, the deductor shall deduct tax at
UT1 UT1 UT1 Yes
the rate of 2% from the payment made or credited to the
supplier. UT1 UT2 UT2 Yes
UT1 UT1 UT2 No
‰ NO TDS
The Proviso to Section 51(1) lays down that when the location of the supplier
and the place of supply is in a State/ Union territory which is different from
‰ Value of Supply
the State/ Union territory of registration of the recipient, there will be no TDS. The amount indicated in the invoice excluding the Value of supply
The above statement can be explained in the following situations: Central tax, State tax, Union territory tax, Integrated tax shall exclude
and cess element, is the value of supply for the purpose tax & cess
(a) Supplier, place of supply and recipient are in the same state.
of TDS under Section 51 of CGST Act, 2017.
It would be intra-State supply and TDS (Central plus State tax) shall be
deducted. It would be possible for the supplier (i.e. the deductee) to ‰ Deposit of TDS with the Government
take credit of TDS in his electronic cash ledger. The amount of tax deducted at source should be deposited to the
Government account by deductor by 10th of the succeeding month in which
the deduction is made.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 PAYMENT OF TAX 1.51
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‰ TDS Certificate This is similar to existing practice in income tax relating to E-TDS returns filed
by deductor and 26AS statement available for viewing the TDS remitted in
A TDS certificate is required to be issued by deductor (the person who is
respect of transactions by deductee.
deducting tax) in prescribed form to the deductee (the supplier from whose
payment TDS is deducted). ‰ Determination of amount in Default
The content of Form GSTR 7A (TDS Certificate) are given below: Any default in determination of the amount under Section 51 shall be made
1. TDS Certificate No. in the manner specified in Section 73 or section 74 or section 74A, 11 as the
case may be.
2. GSTIN of deductor
‰ Refund on excess/erroneous deduction
3. Name of deductor
The deductor or the deductee can claim refund of excess deduction or
4. GSTIN of deductee
erroneous deduction. The provisions of section 54 relating to refunds would
5. (a) Legal name of the deductee apply in such cases. However, if the deducted amount is already credited to
(b) Trade name, if any the electronic cash ledger of the supplier, the same shall not be refunded.
6. Tax period in which tax deducted and accounted for in GSTR-7 (1) Supplier makes a supply worth ` 20 lakh to a recipient and the GST
7. Details of supplies at the rate of 18% is required to be paid. The recipient, while making
the payment of ` 20 lakh to the supplier, shall deduct 2% [CGST 1% +
8. Amount of tax deducted
SGST 1%] viz ` 40,000 as TDS.
‰ Non- remittance by the deductor
The value for TDS purpose shall not include 18% GST. The TDS, so deducted,
If the deductor has not remitted the amount deducted as TDS to the shall be deposited in the account of Government by 10th of the succeeding
Government within the prescribed time limit, he is liable to pay interest under month.
Section 50 in addition to the amount of tax deducted.
The TDS so deposited in the Government account shall be reflected in the
‰ Reflection of amount of TDS electronic cash ledger of the supplier (i.e. deductee) who would be able to use
The amount of tax deducted is reflected in the same for payment of tax or any other amount.

¾ Electronic Cash Ledger of deductee. ‰ Registration 12 [Rule 12 of CGST Rules, 2017]

¾ Return filed by deductor under section 39(3).[GSTR-7][Refer Chapter:13 Any person required to deduct tax in accordance with the provisions of
Returns for detailed discussion on GSTR-7]. section 51 shall electronically submit a registration application in prescribed

The deductee can claim credit of the tax deducted, in his electronic cash
11
The provisions of section 74A contain provisions relating to determination of tax not
ledger. This provision enables the Government to cross check whether the
paid/short paid or erroneously refunded or ITC wrongly availed/utilized for any reason
amount deducted by the deductor is correct and that there is no mis-match
pertaining to Financial Year 2024-25 onward. Detailed provisions of this section are
between the amount reflected in the electronic cash ledger and the amount discussed in Chapter-19 of Module-3 of the Study material. The provisions of sections 73
shown in the return filed by deductor. and 74 are applicable for tax determination relating to the past period up to the Financial
Year 2023–24.
12
The provisions relating to registration have already been discussed in Chapter-8 of this Module
of the Study Material..

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form through the common portal. The proper officer shall, after due
verification, grant registration within 3 working days from the date of the LET US RECAPITULATE
application. Also, on a request or upon an enquiry or pursuant to any other
proceeding under the Act, if the proper officer is satisfied that a person is no The provisions relating to payment of tax, interest and other amounts have been
longer liable to deduct tax at source under section 51, then the said officer summarised by way of table and diagrams to help students remember and retain
may cancel the said registration, following procedures as provided in Rule 22 the provisions in a better and effective manner:-
of the CGST Rules for the cancellation of registration. Definitions of certain key terms

Output
6. TRANSFER OF INPUT TAX CREDIT [SECTION Tax
53 OF CGST ACT & SECTION 18 OF IGST ACT] tax payable
means on reverse
If the amount of CGST is utilised towards dues of IGST then, in terms of section 53 excludes charge basis
of the CGST Act, there shall be reduction in the amount of CGST, equal to the credit
so utilized, and the Central Government shall transfer such amount equivalent to CGST on taxable supply of
the amount so reduced in CGST account to the IGST account. goods and /or services
Similarly, if the amount of IGST is utilised towards dues of CGST/UTGST then, in
terms of section 18 of the IGST Act, there shall be reduction in the amount of IGST,
by taxable person by agent of taxable person
equal to the credit so utilized, and the Central Government shall transfer such
amount equivalent to the amount so reduced in IGST account to the CGST/UTGST
account.
Taxable Person
However, if the amount of IGST is utilised towards dues of SGST then, in terms of
section 18 of the IGST Act, there shall be reduction in the amount of IGST, equal to
means
the credit so utilized, and will be apportioned to the appropriate State Government
and the Central Government shall transfer the amount so apportioned to the
account of the respective State Government. Here, "appropriate State" in relation a person
to a taxable person, means the State or Union territory where taxable person is
registered or is liable to be registered under the provisions of the Central Goods
and Services Tax Act. who is registered liable to be registered

under section under section

22 of CGST 24 of CGST
Act Act

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 PAYMENT OF TAX 1.55
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Payments to be made in GST regime What are E-Ledgers/Registers?

Electronic ledgers or E-Ledgers are statements of cash and input tax credit in
respect of each registered taxpayer. In addition, each taxpayer shall also have an
CGST & SGST are electronic liability register.
For Intra-state supply
to be paid.
Types of Electronic ledgers/Registers

IGST to be paid, having Electronic Cash Ledger

For Inter-state supply components of both
CGST & SGST

Electronic
Interest, penalty, fees Ledgers
Wherever applicable and any other amount
also to be paid
Electronic Electronic Credit
Liability Register Ledger
Key Features of Payment process
9 Electronically generated challan from GSTN common portal in all modes of A. Electronic Cash Ledger
payment and no use of manually prepared challan;
9 Facilitation for the tax payer by providing hassle free, anytime, anywhere
mode of payment of tax;
9 Convenience of making payment online;
9 Logical tax collection data in electronic format;

9 Faster remittance of tax revenue to the Government Account;

9 Paperless transactions;
9 Speedy Accounting and reporting;

9 Electronic reconciliation of all receipts;

9 Simplified procedure for banks;
9 Warehousing of Digital Challan.

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 PAYMENT OF TAX 1.57
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Modes of deposit in Electronic Cash Ledger Date of deposit of tax dues

•No limit Which date is considered as date of deposit of the tax dues ?
Internet banking

(i) Date of presentation of cheque ×

•No limit
Credit/Debit card
(ii) Date of payment ×

•No limit (iii) Date of credit of amount in the account of government by Debit ¦
UPI
of Electronic Cash Ledger/Electronic credit ledger

•No limit B. Electronic credit ledger

NEFT/RTGS/IMPS
Order of utilisation of input tax credit available in electronic
credit ledger
•` 10,000 per challan per tax period
Over the counter
ITC Order of utilisation

(1) (2)
Major and minor Heads of payment
IGST IGST CGST/SGST/UTGST- any
order
Each of these Major
ITC of IGST to be completely exhausted first, mandatorily
Heads have the five
Major Heads
following Minor Heads CGST CGST IGST
• IGST
Minor Heads
•CGST
• Tax ITC of CGST has been utilized fully before utilizing SGST for payment of
• SGST/UTGST IGST
• Interest
•CESS
• Penalty
SGST/UTGST SGST/UTGST IGST
• Fee
• Others

The CGST credit cannot be utilized for payment of SGST/UTGST.

The SGST/UTGST credit cannot be utilized for payment of CGST.

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C. Electronic liability register Payment of tax via Electronic Ledger

Order of discharge of liability of taxable person A. Electronic Cash Ledger
(Assume it as an account statement provided by bank, for easy understanding)

Debit Amount (DR) Credit Amount (CR)

3. All dues
including x Credit amount of this ledger may x Any deposit made towards tax,
2. All dues demand
be used for payment of tax, interest, penalty, late fee etc. via
related to determined
current tax under interest, fees etc. internet banking, RTGS, IMPS/
1. All dues period section 73 x Remaining credit balance amount fund transfer etc.
related to and 74/74A
after payment of above tax etc. can x TDS/TCS claimed
previous be claimed as refund by taxable
period
person.
Manner of making payment
B. Electronic Credit ledger
Through debit of Electronic Credit In cash, by debit in the Electronic
Ledger Cash Ledger
Debit Amount (DR) Credit Amount (CR)
Through debit of Credit Ledger of the Payment can be made in cash, by debit
x Credit amount of this ledger may be x Input Tax credit as self-assessed
tax payer maintained on the Common in the Cash Ledger of the tax payer
used for payment of output tax viz in the return in the form of IGST,
portal – ONLY Tax can be paid. maintained on the common portal.
IGST, CGST, SGST, UTGST in the CGST, SGST, UTGST
prescribed order.
E-Ledgers
•It will reflect all deposits made in cash, and TDS/TCS
made on account of the tax payer. C. Electronic Liability Register
Electronic Cash
•This ledger can be used for making ANY PAYMENT
Ledger
towards tax, interest, penalty, fees or any other amount
Debit Amount (DR) Credit Amount (CR)
on account of GST.
•It will reflect Input Tax Credit as self-assessed in monthly x Amount payable towards tax, x Electronic cash ledger
Electronic Credit returns. interest, fees etc.
Ledger •The credit in this ledger can be used to make payment of x Tax or interest payable due to
ONLY TAX i.e. output tax and not other amounts such as mismatch
interest, penalty, fees etc.
x Any other dues

Electronic Liability •Electronic Liability Register will reflect the total tax liability x Amount payable towards output x Electronic credit ledger
Register of a taxpayer (after netting) for the particular month. tax

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 PAYMENT OF TAX 1.61
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Interest on delayed payment of tax [Section 50] Interest payable due to wrongful availment and utilisation of ITC [Section
50(3)]

ITC availed but not ITC availed as well as

If person pays the utilised utilised
unpaid amount on Interest Rate is 18% per annum
his own Interest from the date of
No interest liability
utilisation till reversal date

Interest payable on the net cash liability of taxes [Section 50(1)]

Interest payable on tax declared and paid in GSTR-3B filed after due Rate of TDS
date
under CGST 1%
Rate of TDS
under IGST 2%
Interest applicable
Tax paid through Tax Paid through
only on the Cash
Credit Ledger Cash Ledger TDS
portion of Tax

Person liable to Threshold Rate of

Due date of
Interest payable on the gross tax liability [Section 50(1)] deduct tax at limit deduction NO TDS payment of TDS to
source under CGST
Government

Interest payable on gross liability where return is furnished within Central and 1%
due date State
Government Within 10 days
Total value of
supply under a from the end
contract > of month
Local authority ` 2.5 lakhs, When location
Interest applicable exclusive of of supplier and
GST as per place of supply
Tax paid through Tax Paid through on the tax paid
invoice is different from
Credit Ledger Cash Ledger through Cash and Governmental
the state of
Credit Ledger agencies
registration of
recipient
Notified
persons

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 PAYMENT OF TAX 1.63
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Manner of account of TDS by TDS deductor Consequences of not complying with TDS provisions

1. Such deductor need to get compulsorily registered under section S. No. Event Consequence
24 of the CGST/SGST Act.
1. TDS not deducted Interest to be paid along with the TDS
2. They need to remit such TDS collected by the 10th day of the amount; else the amount shall be
month succeeding the month in which TDS was collected. determined and recovered as per the
law
3. The amount deposited as TDS will be reflected in the electronic
cash ledger of the supplier. 2. TDS deducted but not paid to Interest to be paid along with the TDS
the Government or paid later amount; else the amount shall be
than 10th of the succeeding determined and recovered as per the
Manner of account of TDS by supplier
month law
™ Any amount shown as TDS will be reflected in the electronic cash ledger of
the concerned supplier. Transfer of input tax credit [Section 53 of CGST Act & Section
™ He can utilize this amount towards discharging his liability towards tax, 18 of IGST Act]
interest fees and any other amount.
Amount equivalent to ITC so
Used for payment used is transferred by Central
Applicability of TDS ITC of CGST
of IGST Government (CG) from CGST
account to IGST account.

Situations
used for
payment
ayment o
of Amount
mount equivalent tto
Supplier & place of CGST ITC so used is
Supplier, place of Supplier and place
supply - same State & transferred
ansferred
nsferred by CG fro
from
supply & recipient- of supply-different
recipient located in IGST account to
same State States used for
another State CGST/UTGST account.
ITC of IGST payment of
p
UTGST
Inter-State supply
Intra-State supply Intra-State supply Amount equivalent to ITC so
used for used is transferred by CG
TDS (IGST) to be payment
ayment o
of ffrom IGST account to the
TDS (CGST + SGST)
deducted SGST respective SGST account of
to be deducted
NO TDS the State Government .

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 PAYMENT OF TAX 1.65
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You are required to advise her with reference to legal provisions with brief notes
TEST YOUR KNOWLEDGE on the legal provisions applicable.

2. A makes intra-State supply of goods valued at ` 50,000(excluding taxes) to B

1. Miss Nitya has following balances in her Electronic Cash Ledger as on
28th February as per GST portal. within State of Karnataka. There is no input tax credit balance available with
A. B makes inter-State supply to X Ltd. (located in Telangana) after adding 10%
Major Heads Minor Heads Amount (`) as its margin on the value of goods excluding taxes. Thereafter, X Ltd. sells it to
Y in Telangana (Intra-State sale) after adding 10% as his margin on the value
Tax 40,000
of goods excluding taxes.
CGST Interest 1,000
Assume that the rate of GST chargeable is 18% (CGST and SGST at 9% each
Penalty 800 and IGST chargeable at 18%) and every person involved in the aforesaid
supplies are registered tax payers. Calculate tax payable at each stage of the
Tax 80,000
transactions detailed above. Wherever input tax credit is available and can be
Interest 400 utilized, calculate the net tax payable in cash. At each stage of the transaction,
SGST indicate which Government will receive the tax paid and to what extent.
Penalty 1,200
3. Can one use input tax credit for payment of interest, penalty or payment of GST
Fee 2,000 under reverse charge?
Tax 45,000 4. M/s PPC & Co. have availed input tax credit of ` 42,500 during September
IGST Interest 200 under IGST head, instead of availing ` 21,250 under CGST & SGST heads. Mr.
X, accountant of the above entity would like to use Form GST PMT-09 for
Penalty Nil making a transfer from IGST head to respective CGST & SGST heads.

She furnishes return on monthly basis. Her tax liability for the month of Examine the scenario and offer your comments.
February for CGST and SGST was ` 75,000 each. She failed to pay the tax and 5. ABC Ltd. has belatedly filed GST return (under section 39) for the month of
contacted you as legal advisor on 12th April to advise her as to how much
January after 60 days from the due date for filing such return. Total tax paid
amount of tax or interest she is required to pay, if any. In order to optimize the
in such return is as below:
interest liability as per GST provisions, she is willing to make any transfer from
the cash ledger between any of the major or minor heads as the case may be.
Particulars IGST (`) CGST (`) SGST (`)
She wants to pay the tax on 20th April.
Output tax payable 4,50,000 2,85,000 2,85,000
Other information:
(i) Date of collection of GST was 18th February. Tax payable under reverse charge 18,000 32,000 32,000

(ii) No other transaction after this up to 20th April. Input tax available for utilisation 2,50,000 55,000 55,000

(iii) Ignore penalty and late fee for this transaction. Tax paid through Electronic Cash Ledger 2,18,000 2,62,000 2,62,000

(iv) No other balance is available.

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 PAYMENT OF TAX 1.67
7 11.67 1.68 11.68 GOODS AND SERVICES TAX

Examine the interest payable as per the provisions of GST law with the help of
above information. [Link]. Particulars Total contract Payment
value (inclusive due in
What would be your answer, if entire tax for the month of January has to be
of GST) (` ) October (`)
paid through Electronic Credit Ledger except taxes to be paid on reverse charge
basis?
(i) Supply of stationery to Fisheries 2,60,000 15,000
6. Examine the taxes to be paid for the month of July on the basis of below Department, Kolkata
information furnished by M/s Zinc & Co.:
(ii) Supply of car rental services to 2,95,000 20,000
Particulars IGST (`) CGST (`) SGST (`) Municipal Corporation of Delhi
Output tax payable 14,75,000 28,34,000 28,34,000
(iii) Supply of a heavy machinery to 5,90,000 25,000
Tax payable under reverse 36,000 1,44,000 1,44,000 Public Sector Undertaking
charge located & registered in
Balance in Electronic Credit 26,52,000 18,32,000 18,32,000 Uttarakhand
Ledger
(iv) Supply of taxable goods to Delhi 6,49,000 50,000
Output tax reported under IGST column pertains to the month of February, office of National Housing
which was not paid for the said period. Also, note that input tax credit available Bank, a society established by
in Electronic Credit Ledger pertains to input tax on purchases made during the Government of India under the
month of July and no opening balance exists from previous tax period. It Societies Registration Act, 1860
furnishes return on monthly basis.
7. M/s Neptune & Co. is registered under GST in the state of Maharashtra. They (v) Interior decoration of Andhra 12,39,000 12,39,000
have made zero-rated supply of goods worth ` 84,50,000 without payment of Bhawan located in Delhi.
IGST for ` 10,14,000 during the month of May. The refund application under Service contract is entered into
section 54 for the above supply has been rejected by the proper officer. with the Government of Andhra
Pradesh (registered only in
Mr. A, taxation manager of the firm, has sought for recrediting the Electronic
Andhra Pradesh)
Credit Ledger as per the provisions of rule 86 for the above rejection. Examine
the scenario and offer your comments. (vi) Supply of printed books and 9,72,000 50,000
8. Manihar Enterprises, registered in Delhi, is engaged in supply of various goods printed post cards to a West for books &
and services exclusively to Government departments, agencies etc. and persons Delhi Post Office [Out of total 20,000 for
notified under section 51. It has provided the information relating to the contract value of printed post
supplies made, their contract values and the payment due against each of them ` 9,72,000, contract value for cards
in the month of October, respectively as under: supply of books (exempt from
GST) is ` 7,00,000 and for
supply of printed post cards

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 PAYMENT OF TAX 1.69
9 11.69 1.70 11.70 GOODS AND SERVICES TAX

(taxable under GST) is (2) Supply of air conditioner to GST department located & registered in Delhi.
` 2,72,000.] Total contract value is ` 2,55,000 (exclusive of GST)
(3) Supply of a generator renting service to Municipal Corporation of Jaipur.
(vii) Maintenance of street lights in 3,50,000 3,50,000 Total contract value is ` 3,50,000 (inclusive of GST)
Municipal area of East Delhi*
[The maintenance contract
entered into with the Municipal ANSWERS
Corporation of Delhi also
involves replacement of defunct
lights and other spares. 1. As per section 49(10) of the CGST Act, 2017, any amount of tax, interest,
However, the value of supply of penalty, fee or any other amount available in the electronic cash ledger under
goods is not more than 25% of the CGST Act, 2017 can be transferred to the electronic cash ledger for
the value of composite supply.] integrated tax, central tax, State tax, Union territory tax or cess, in such form
*an activity in relation to any and manner and subject to such conditions and restrictions as may be
function entrusted to a prescribed. Thus, amount entered under any Minor head (Tax, Interest,
Municipality under article 243W Penalty, etc.) and Major Head (CGST, IGST, SGST/UTGST) of the Electronic
of the Constitution Cash Ledger can be transferred to any other major or minor head.
Consequently, cross-utilization among Major and Minor heads is also
You are required to determine amount of tax, if any, to be deducted from each possible.
of the receivable given above assuming the rate of CGST, SGST and IGST as 9%,
Further, as per rule 88B of the CGST Rules, 2017, where any amount has been
9% and 18% respectively.
credited in the Electronic Cash Ledger as per provisions of section 49(1) on
Will your answer be different, if Manihar Enterprises is registered under or before the due date of filing the said return, but is debited from the said
composition scheme? ledger for payment of tax while filing the said return after the due date, the
9. Yash Shoppe, a registered supplier of Jaipur, is engaged in supply of various said amount shall not be taken into consideration while calculating such
goods and services exclusively to Government departments, agencies, local interest if the said amount is lying in the said ledger from the due date till the
authority and persons notified under section 51. date of its debit at the time of filing return.

Receivables are given below (independent cases). Assume that the payments Thus, as per section 49(10) read with rule 88B, since the amount available in
as per the contract values are made on 31st October. The rates of CGST, SGST the Electronic Cash Ledger from the due date till the date of its debit at the
and IGST may be assumed to be 6%, 6% and 12% respectively. time of filing return is more than the GST payable, no interest is payable in
the given case.
(1) Supply of computer stationery to Public Sector Undertaking (PSU) located
& registered in Mumbai. Total contract value is ` 2,72,000 (inclusive of
GST)

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 PAYMENT OF TAX 1.71
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Further, Miss Nitya is liable to pay the following amount of tax as under: II. Inter-State supply of goods by B to X Ltd. – Margin @ 10%

CGST SGST `
(``) (``)
Value charged for supply of goods (` 50,000 x 110%) 55,000
Tax Liability 75,000 75,000
Add: IGST @ 18% 9,900
Balances in Electronic cash ledger in same 40,000 80,000
major/minor head Total price charged by B from X Ltd. 64,900

Balance transferred from other major/minor head 35,000 Nil Computation of IGST payable by B to Central Government in cash
(Note )
`
Amount payable in cash Nil Nil
IGST payable 9,900
Note – ` 35,000 shortfall amount has been transferred from cash ledger
balance available in Major Head IGST. Since there is no restriction in intra-
Less: Credit of CGST 4,500
head or inter-head transfer of available balance in cash ledger as per the
relevant provisions, it is upon the taxpayer to decide from which account the Less: Credit of SGST 4,500
shortfall has to be made good.
IGST payable to Central Government in cash 900
2. I. Intra-State supply of goods by A to B

` Credit of CGST and SGST can be used to pay IGST provided the SGST
credit shall be utilised towards payment of IGST only where the balance
Value charged for supply of goods 50,000 of CGST credit is not available for payment of IGST. [Section 49(5) of the
Add: CGST @ 9% 4,500 CGST Act, 2017].
III. Intra-State supply of goods by X Ltd. to Y
Add: SGST @ 9% 4,500

Total price charged by A from B 59,000 `

A does not have credit of CGST, SGST or IGST. Thus, the entire CGST Value charged for supply of goods (` 55,000 x 110%) 60,500
(` 4,500) & SGST (` 4,500) charged will be paid in cash by A, which shall
be allocated to Central Government and Karnataka Government in Add: CGST @ 9% 5,445
specified manner.
Add: SGST @ 9% 5,445

Total price charged by X Ltd. from Y 71,390

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 PAYMENT OF TAX 1.73
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Computation of CGST and SGST payable by X Ltd in cash It is important to note that only amounts available under Electronic Cash
Ledger can be transferred to the respective heads using Form GST PMT-09
` and not otherwise.

CGST payable 5,445 Accordingly, contention of the Accountant Mr. X of M/s PPC & Co., is not
valid for transfer of ` 42,500 from head IGST to respective CGST & SGST in
Less: Credit of IGST 5,445 Electronic Credit Ledger.

CGST payable to Central Government in cash Nil 5. Proviso to section 50 lays down that the interest on tax payable in respect of
supplies made during a tax period and declared in the return for the said period
SGST payable 5,445 furnished after the due date in accordance with the provisions of section
39, except where such return is furnished after commencement of any
Less: Available Credit of IGST [` 9,900 – ` 5,445] 4,455 proceedings under section 73 or section 74 or section 74A in respect of the
said period, shall be levied on that portion of the tax that is paid by debiting
SGST payable to Telangana Government in cash 990
the electronic cash ledger.
Credit of IGST shall first be utilised towards payment of IGST and the amount In the given scenario, ABC Ltd. has filed its return belatedly and as per the
remaining, if any, may be utilised towards the payment of CGST and above provisions, interest is payable on the tax component paid through
SGST/UTGST, as the case may be, in any order and in any proportion. Here, Electronic Cash Ledger only. A point relevant to note here is that tax payable
there is no payment to be made with respect to IGST so its credit balance will on reverse charge basis also carries interest for the period of delay in
be directly utilised for making payment of CGST or SGST, in any order. Central remittance of tax and input tax credit cannot be used to pay the same (i.e. tax
Government will transfer IGST of R` 4,455 utilised in the payment of SGST to payable under reverse charge has to be paid in cash).
Telangana Government. Accordingly, interest under section 50 payable for the tax paid through
Electronic Cash Ledger is computed as below:
3. No, as per section 49(4) the amount available in the electronic credit ledger
may be used for making any payment towards ‘output tax’. IGST: 218,000 *18%*60/365 = 6,450

As per section 2(82), output tax means, the CGST/SGST chargeable under this CGST: 262,000*18%*60/365 = 7,752
Act on taxable supply of goods and/or services made by him or by his agent SGST: 262,000*18%*60/365 = 7,752
and excludes tax payable by him on reverse charge basis. Therefore, input tax
Further, if entire tax payable for January is paid through Electronic Credit
credit cannot be used for payment of interest, penalty or GST payment under ledger, except for the taxes to be paid under reverse charge basis, then
reverse charge. interest under section 50 is applicable only on the remittance of tax under
4. As per provisions of section 49(10) read with rule 87(13) of CGST Rules, 2017, reverse charge basis and not for tax payable on forward charge basis. Interest
“A registered person may, on the common portal, transfer any amount of tax, payable is given as below:
interest, penalty, fee or any other amount available in the electronic cash IGST: 18,000 * 18% * 60/365 = 533 (rounded off)
ledger under the Act to the electronic cash ledger for integrated tax, central CGST: 32,000 * 18% * 60/365 = 947 (rounded off)
tax, State tax or Union territory tax or cess in FORM GST PMT-09”.
SGST: 32,000 * 18% * 60/365 = 947 (rounded off)

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 PAYMENT OF TAX 1.75
5 11.75 1.76 11.76 GOODS AND SERVICES TAX

6. Payment of taxes is governed as per the provisions laid in section 49 read Total amount payable through electronic cash ledger
with section 49A and 49B of CGST Act, 2017 along with rule 88A of CGST
Rules, 2017 Particulars IGST CGST SGST
Also, section 49(8) of CGST Act, stipulates that every taxable person shall
Amount payable through Electronic cash Nil 4,13,500 4,13,500
discharge his tax and other dues under this Act or the rules made thereunder
ledger under forward charge
in the following order, namely:
(a) self-assessed tax, and other dues related to returns of previous tax Amount payable through electronic cash 36,000 1,44,000 1,44,000
periods; ledger under reverse charge [Refer Note-2]

(b) self-assessed tax, and other dues related to the return of the current tax
Total amount payable through electronic 36,000 5,57,500 557,500
period; cash ledger
(c) any other amount payable under this Act or the rules made thereunder
including the demand determined under section 73 or section 74 or Notes:-
section 74A;”
1 After utilization of IGST credit towards output IGST liability, balance has
As per the above provisions, self-assessed tax of previous tax period i.e. been utilized equally amongst CGST & SGST
February shall be paid first and later self-assessed tax of current tax period 2 Input tax credit cannot be utilized for discharging tax liability under
i.e. July shall be paid. reverse charge basis, thus payable vide electronic cash ledger.
Payment of taxes under forward charge Since, M/s Zinc & Co., have defaulted in payment of taxes for the month of
February and the same has been paid during July, interest is payable as per
Particulars IGST CGST SGST
the provisions of section 50 of the CGST Act, 2017
Balance in electronic credit ledger for 26,52,000 18,32,000 18,32,000 7. Rule 86 of CGST Rules provides that where a registered person has claimed
utilization refund of any unutilized amount (i.e. ITC) from the electronic credit ledger in
accordance with the provisions of section 54, the amount to the extent of the
Output tax payable for July 14,75,000 28,34,000 28,34,000
claim shall be debited in the said ledger.
Less: Utilization of input tax credit: If the refund so filed is rejected, either fully or partly, the amount so debited
to the extent of rejection, shall be re-credited to the electronic credit ledger
a. IGST [Refer Note1] 14,75,000 5,88,500 5,88,500 by the proper officer.

b. CGST 0 18,32,000 0 In the present case, M/s Neptune & Co., have made zero-rated supply without
payment of IGST for ` 10,14,000 and the refund for the same has been
c. SGST 0 0 18,32,000 rejected by the proper officer. Therefore, contention of Mr. A is not
sustainable as debit entry in the Electronic Credit Ledger has not been made
Amount payable through electronic Nil 4,13,500 4,13,500
as per sub-rule (3) of Rule 86 towards “refund of any unutilized amount”.
cash ledger

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 PAYMENT OF TAX 1.77
7 11.77 1.78 11.78 GOODS AND SERVICES TAX

8. As per section 51 read with section 20 of the IGST Act, 2017 and Notification
S. Particulars Total Payment Tax to be deducted
No. 50/2018 CT 13.09.2018, following persons are required to deduct CGST No. contract due
@ 1% [Effective tax 2% (1% CGST + 1% SGST/UTGST)] or IGST @ 2% from the value (`
`) (`) CGST SGST IGST
payment made/credited to the supplier (deductee) of taxable goods or (`) (`) (`)
services or both, where the total value of such supply, under a contract,
(i) Supply of stationery to 2,60,000 15,000 --
exceeds ` 2,50,000: Fisheries Department,
(a) a department or establishment of the Central Government or State Kolkata (Note-1)
Government; or
(ii) Supply of car rental 2,95,000 20,000 --
(b) local authority; or services to Municipal
Corporation of Delhi
(c) Governmental agencies; or (Note-2)
(d) an authority or a board or any other body, -
(iii) Supply of a heavy 5,90,000 25,000 500
(i) set up by an Act of Parliament or a State Legislature; or machinery to Public
Sector Undertaking
(ii) established by any Government, located in Uttarakhand
with 51% or more participation by way of equity or control, to carry out (Note-3)
any function; or
(iv) Supply of taxable goods 6,49,000 50,000 500 500
(e) Society established by the Central Government or the State Government to Delhi office of
or a Local Authority under the Societies Registration Act, 1860, or National Housing Bank,
a society established by
(f) Public sector undertakings. Government of India
under the Societies
Further, for the purpose of deduction of tax, the value of supply shall be taken
Registration Act, 1860
as the amount excluding CGST, SGST/UTGST, IGST and GST Compensation
(Note-4)
Cess indicated in the invoice.
(v) Interior decoration of 12,39,000 12,39,000 --
Since in the given case, Manihaar Enterprises is supplying goods and services
Andhra Bhawan located
exclusively to Government departments, agencies etc. and persons notified in Delhi (Note-5)
under section 51, applicability of TDS provisions on its various receivables is
examined in accordance with the above-mentioned provisions as under: (vi) Supply of printed books 9,72,000 --
and printed post cards
to a West Delhi Post
Office (Note-6)

(vii) Maintenance of street 3,50,000 3,50,000 --

lights in Municipal area
of East Delhi (Note-7)

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 PAYMENT OF TAX 1.79
9 11.79 1.80 11.80 GOODS AND SERVICES TAX

Notes: Since the total value of supply under the contract exceeds ` 2,50,000,
National Housing Bank, Delhi is required to deduct tax @ 2% (1% CGST
1. Being an inter-State supply of goods, supply of stationery to Fisheries
+ 1% SGST) of ` 50,000, i.e. ` 1,000.
Department, Kolkata is subject to IGST @ 18%. Therefore, total value
of taxable supply [excluding IGST] under the contract is as follows: 5. Proviso to section 51(1) of the CGST Act, 2017 stipulates that no tax
shall be deducted if the location of the supplier and the place of supply
= ` 2,60,000 × 100 / 118
is in a State or Union territory which is different from the State or as the
= ` 2,20,339 (rounded off) case may be, Union territory of registration of the recipient.
Since the total value of supply under the contract does not exceed Section 12(3) of the IGST Act, 2017, inter alia, stipulates that the place
` 2,50,000, tax is not required to be deducted. of supply of services, directly in relation to an immovable property,
2. Being an intra-State supply of services, supply of car rental services to including services provided by interior decorators, shall be the location
Municipal Corporation of Delhi is subject to CGST and SGST @ 9% each. at which the immovable property is located or intended to be located.
Therefore, total value of taxable supply [excluding CGST and SGST] Accordingly, the place of supply of the interior decoration of Andhra
under the contract is as follows: Bhawan shall be Delhi.

= ` 2,95,000 × 100 / 118 Since the location of the supplier (Manihar Enterprises) and the place
of supply is Delhi and the State of registration of the recipient i.e.
= ` 2,50,000
Government of Andhra Pradesh is Andhra Pradesh, no tax is liable to be
Since the total value of supply under the contract does not exceed deducted in the given case.
` 2,50,000, tax is not required to be deducted.
6. If the contract is made for both taxable supply and exempted supply,
3. Being an inter-State supply of goods, supply of heavy machinery to PSU tax shall be deducted if the total value of taxable supply in the contract
in Uttarakhand is subject to IGST @ 18%. Therefore, total value of exceeds ` 2,50,000. Being an intra-State supply of goods, supply of
taxable supply [excluding IGST] under the contract is as follows: printed post cards to a West Delhi Post Office is subject to CGST and
= ` 5,90,000× 100 / 118 SGST @ 9% each. Therefore, total value of taxable supply [excluding
CGST and SGST] under the contract is as follows:
= ` 5,00,000
= ` 2,72,000× 100 / 118
Since the total value of supply under the contract exceeds ` 2,50,000, PSU
in Uttarakhand is required to deduct tax @ 2% of ` 25,000, i.e. ` 500. = ` 2,30,509 (rounded off)

4. Being an intra-State supply of goods, supply of taxable goods to Since the total value of taxable supply under the contract does not
National Housing Bank, Delhi is subject to CGST and SGST @ 9% each. exceed ` 2,50,000, tax is not required to be deducted.
Therefore, total value of taxable supply [excluding CGST and SGST] 7. Composite supply of goods and services in which the value of supply of
under the contract is as follows: goods constitutes not more than 25% of the value of the said composite
= ` 6,49,000× 100 / 118 supply provided to, inter alia, local authority by way of any activity in
relation to any function entrusted to a Municipality under article 243W
= ` 5,50,000
of the Constitution is exempt from GST. Thus, maintenance of street
lights (an activity in relation to a function entrusted to a Municipality)

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 PAYMENT OF TAX 1.81
1 11.81 1.82 11.82 GOODS AND SERVICES TAX

in Municipal area of East Delhi involving replacement of defunct lights inter-State supply)] does
and other spares where the value of supply of goods is not more than not exceed ` 2,50,000, tax is
25% of the value of composite supply is a service exempt from GST. not required to be
deducted.]
Since tax is liable to be deducted from the payment made or credited
to the supplier of taxable goods or services or both, no tax is required (2) Supply of air conditioner to 2,55,000 -- 5,100
to be deducted in the given case as the supply is exempt. GST Department in Delhi
The answer will remain unchanged even if Manihar Enterprises is registered [Since the total value of
under composition scheme. Tax will be deducted in all cases where it is supply under the contract
[excluding IGST (being
required to be deducted under section 51 of the CGST Act, 2017 including
inter-State supply)] exceeds
the scenarios when the supplier is registered under composition scheme. ` 2,50,000, tax is required to
be deducted.]
9. As per section 51 of the CGST Act, 2017, Government departments, agencies,
local authority and notified persons are required to deduct tax @ 2% (1% (3) Supply of a generator 3,12,500 3,125 3,125
CGST + 1% SGST/UTGST) or IGST @ 2% from payment made to the supplier renting service to Municipal [3,50,000×
of taxable goods and/ or services where the total value of such supply Corporation of Jaipur 100 / 112]
[excluding tax and compensation cess indicated in the invoice], under a [Since the total value of
contract, exceeds ` 2,50,000. supply under the contract
[excluding CGST and SGST
Since in the given case, Yash Shoppe is supplying goods and services (being intra-State supply)]
exclusively to Government departments, agencies, local authority and exceeds ` 2,50,000, tax is
persons notified under section 51 of the CGST Act, 2017, applicability of TDS required to be deducted.]
provisions on its various receivables is examined in accordance with the
Total 3,125 3,125 5,100
above-mentioned provisions as under:

S. Particulars Total Tax to be deducted

No. contract
value due CGST SGST IGST @ 2%
to be @ 1% @ 1% (`)
received (`) (`)
[excluding
GST] (`
`)

(1) Supply of computer 2,42,857 -- --

stationery to PSU in [2,72,000 ×
Mumbai 100 / 112]
[Since the total value of
supply under the contract
[excluding IGST (being

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 12.2 GOODS AND SERVICES TAX

CHAPTER 12 1. INTRODUCTION
Electronic commerce (e-commerce) has taken a
center stage in India’s business landscape in recent
years revolutionizing the way commerce is
conducted, by redefining business strategies and
conventional market boundaries. It is the backbone
E ELECTRONIC COMMERCE of the modern digital economy and has transformed
the way businesses and consumers interact. It enables
TRANSACTIONS the seamless exchange of goods, services and
information through the internet, breaking geographical barriers and creating
global marketplaces.
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless
otherwise specified. Examples/illustrations/Questions and Answers given in the With the convenience of shopping anytime and anywhere, coupled with secure
Chapter are based on the position of GST law existing as on 30.04.2025. digital payment systems, e-commerce has redefined customer experiences and
expanded opportunities for businesses of all sizes. Companies like Flipkart,
Amazon and Myntra have become household names while small businesses and
LEARNING OUTCOMES startups leverage platforms like Shopify and Meesho to reach a broader audience.

After studying this chapter, you will be able to – As e-commerce continues to

expand its reach and influence,
‰ comprehend the meaning of electronic commerce and both businesses and consumers
electronic commerce operator are utilizing advanced channels
and technologies to streamline
‰ explain the taxability of electronic commerce transactions
transactions and enhance the
‰ describe and analyse the provisions relating to the tax shopping experience. India
collected at source proudly stands as one of the
largest and most dynamic e-
‰ understand the registration requirements of electronic commerce markets globally,
commerce operator and of the persons supplying goods driving innovation and setting new benchmarks for growth.
and/or services through electronic commerce operator
2. RELEVANT DEFINITIONS
™ Agent: means a person, including a factor, broker, commission agent, arhatia,
del credere agent, an auctioneer or any other mercantile agent, by whatever
name called, who carries on the business of supply or receipt of goods or
services or both on behalf of another [Section 2(5)].
 ELECTRONIC COMMERCE TRANSACTIONS 13.3 12.3 12.4 GOODS AND SERVICES TAX

™ Aggregate turnover: means the aggregate value of all taxable supplies

(excluding the value of inward supplies on which tax is payable by a person
3. TAXABILITY OF ELECTRONIC COMMERCE
on reverse charge basis), exempt supplies, exports of goods or services or TRANSACTIONS UNDER GST
both and inter-State supplies of persons having the same Permanent Account
Number, to be computed on all India basis but excludes central tax, State tax,
Union territory tax, integrated tax and cess [Section 2(6)].
STATUTORY PROVISIONS
™ Inward supply: in relation to a person, shall mean receipt of goods or
Section 2(44) of
services or both whether by purchase, acquisition or any other means with or Definition of electronic commerce
the CGST Act
without consideration [Section 2(67)].
Electronic commerce means the supply of goods or services or
™ Outward supply: in relation to a taxable person, means supply of goods or both, including digital products over digital or electronic
services or both, whether by sale, transfer, barter, exchange, licence, rental, network.
lease or disposal or any other mode, made or agreed to be made by such
Section 2(45) of
person in the course or furtherance of business [Section 2(83)]. Definition of electronic commerce operator
the CGST Act
™ Taxable supply: means a supply of goods or services or both which is leviable
Electronic commerce operator means any person who owns,
to tax under this Act [Section 2(108)]. operates or manages digital or electronic facility or platform
for electronic commerce.
™ 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 Section 9(5) of
Levy and collection (CGST)
as such on behalf of such supplier in relation to the goods or services or both the CGST Act
supplied.
The Government may, on the recommendations of the
However, a person who organises or arranges, directly or indirectly, supply of Council, by notification, specify categories of services the tax
specified actionable claims, including a person who owns, operates or manages on intra-State supplies of which shall be paid by the electronic
commerce operator if such services are supplied through it,
digital or electronic platform for such supply, shall be deemed to be a supplier
and all the provisions of this Act shall apply to such electronic
of such actionable claims, whether such actionable claims are supplied by him commerce operator as if he is the supplier liable for paying
or through him and whether consideration in money or money's worth, including the tax in relation to the supply of such services:
virtual digital assets, for supply of such actionable claims is paid or conveyed to Provided that where an electronic commerce operator does
him or through him or placed at his disposal in any manner, and all the provisions not have a physical presence in the taxable territory, any
person representing such electronic commerce operator for
of this Act shall apply to such supplier of specified actionable claims, as if he is
any purpose in the taxable territory shall be liable to pay tax:
the supplier liable to pay the tax in relation to the supply of such actionable
Provided further that where an electronic commerce operator
claims [Section 2(105)]. does not have a physical presence in the taxable territory and
also he does not have a representative in the said territory,
 ELECTRONIC COMMERCE TRANSACTIONS 13.5 12.5 12.6 GOODS AND SERVICES TAX

such electronic commerce operator shall appoint a person in consideration with respect to such supplies is to be collected
the taxable territory for the purpose of paying tax and such by the operator.
person shall be liable to pay tax.
Explanation For the purposes of this sub-section, the expression "net value
Section 5(5) of of taxable supplies" shall mean the aggregate value of taxable
the IGST Act, Levy and collection of tax (IGST) supplies of goods or services or both, other than services
2017 notified under sub-section (5) of section 9, made during any
month by all registered persons through the operator reduced
The Government may, on the recommendations of the by the aggregate value of taxable supplies returned to the
Council, by notification, specify categories of services, the tax suppliers during the said month.
on inter-State supplies of which shall be paid by the electronic
commerce operator if such services are supplied through it, (2) The power to collect the amount specified in sub-section (1)
and all the provisions of this Act shall apply to such electronic shall be without prejudice to any other mode of recovery from
commerce operator as if he is the supplier liable for paying the operator.
the tax in relation to the supply of such services:
(3) The amount collected under sub-section (1) shall be paid to
Provided that where an electronic commerce operator does
the Government by the operator within ten days after the end
not have a physical presence in the taxable territory, any
of the month in which such collection is made, in such manner
person representing such electronic commerce operator for
as may be prescribed.
any purpose in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator (4) Every operator who collects the amount specified in sub-
does not have a physical presence in the taxable territory and section (1) shall furnish a statement, electronically,
also does not have a representative in the said territory, such containing the details of outward supplies of goods or services
electronic commerce operator shall appoint a person in the or both effected through it, including the supplies of goods or
taxable territory for the purpose of paying tax and such services or both returned through it, and the amount collected
person shall be liable to pay tax. under sub-section (1) during a month, in such form and
manner as may be prescribed, within ten days after the end
Section 52 of Collection of tax at source of such month:
the CGST Act
Provided that the Commissioner may, for reasons to be
Sub-section Particulars recorded in writing, by notification, extend the time limit for
furnishing the statement for such class of registered persons
(1) Notwithstanding anything to the contrary contained in this as may be specified therein:
Act, every electronic commerce operator (hereafter in this Provided further that any extension of time limit notified by
section referred to as the "operator"), not being an agent, the Commissioner of State tax or the Commissioner of Union
shall collect an amount calculated at such rate not exceeding territory tax shall be deemed to be notified by the
one per cent., as may be notified by the Government on the Commissioner.
recommendations of the Council, of the net value of taxable
supplies made through it by other suppliers where the
 ELECTRONIC COMMERCE TRANSACTIONS 13.7 12.7 12.8 GOODS AND SERVICES TAX

(5) Every operator who collects the amount specified in sub- (12) Any authority not below the rank of Deputy Commissioner
section (1) shall furnish an annual statement, electronically, may serve a notice, either before or during the course of any
containing the details of outward supplies of goods or services proceedings under this Act, requiring the operator to furnish
or both effected through it, including the supplies of goods or such details relating to —
services or both returned through it, and the amount collected
under the said sub-section during the financial year, in such (a) supplies of goods or services or both effected through
form and manner as may be prescribed, before the thirty first such operator during any period; or
day of December following the end of such financial year
(b) stock of goods held by the suppliers making supplies
Provided that the Commissioner may, on the
through such operator in the godowns or warehouses,
recommendations of the Council and for reasons to be
by whatever name called, managed by such operator
recorded in writing, by notification, extend the time limit for
and declared as additional places of business by such
furnishing the annual statement for such class of registered
suppliers,
persons as may be specified therein:
Provided further that any extension of time limit notified by as may be specified in the notice.
the Commissioner of State tax or the Commissioner of Union
territory tax shall be deemed to be notified by the (13) Every operator on whom a notice has been served under sub-
Commissioner. section (12) shall furnish the required information within
fifteen working days of the date of service of such notice.
(6) If any operator after furnishing a statement under sub-section
(4) discovers any omission or incorrect particulars therein, (14) Any person who fails to furnish the information required by
other than as a result of scrutiny, audit, inspection or the notice served under sub-section (12) shall, without
enforcement activity by the tax authorities, he shall rectify prejudice to any action that may be taken under section 122,
such omission or incorrect particulars in the statement to be be liable to a penalty which may extend to twenty-five
furnished for the month during which such omission or thousand rupees.
incorrect particulars are noticed, subject to payment of
interest, as specified in sub-section (1) of section 50: (15) The operator shall not be allowed to furnish a statement
under sub-section (4) after the expiry of a period of three
Provided that no such rectification of any omission or
years from the due date of furnishing the said statement:
incorrect particulars shall be allowed after the thirtieth day of
November following the end of the financial year or the Provided that the Government may, on the recommendations
actual date of furnishing of the relevant annual statement, of the Council, by notification, subject to such conditions and
whichever is earlier. restrictions as may be specified therein, allow an operator or
a class of operators to furnish a statement under sub-section
(7) The supplier who has supplied the goods or services or both (4), even after the expiry of the said period of three years from
through the operator shall claim credit, in his electronic cash the due date of furnishing the said statement.
ledger, of the amount collected and reflected in the statement
of the operator furnished under sub-section (4), in such Explanation For the purposes of this section, the expression “concerned
manner as may be prescribed. supplier” shall mean the supplier of goods or services or both
making supplies through the operator.
 ELECTRONIC COMMERCE TRANSACTIONS 13.9 12.9 12.10 GOODS AND SERVICES TAX

Chapter VIII: Returns of the CGST Rules

ANALYSIS
Rule 67 Form and manner of submission of statement of supplies
through an e-commerce operator (i) Meaning of electronic commerce
In simple words, electronic commerce or e-
(1) Every electronic commerce operator required to collect tax at
source under section 52 shall furnish a statement in FORM commerce, means buying and selling the
GSTR-8 electronically on the common portal, either directly goods or services over internet or computer
or from a Facilitation Centre notified by the Commissioner, mediated network. As per the definition provided under section 2(44),
containing details of supplies effected through such operator electronic commerce means the supply of goods and/or services, including
and the amount of tax collected as required under sub-section digital products over digital or electronic network.
(1) of section 52.
It includes trading through online platforms, digital
(2) The details of tax collected at source under section 52(1) marketplaces, online travel agencies and any other
furnished by the ECO shall be made available electronically means of electronic communication. The definition
to each of the registered suppliers on the common portal after includes supply of both goods and services which
filing of Form GSTR-8 for claiming the amount of tax collected implies that the concept of e-commerce covers the
in his electronic cash ledger after validation. transactions involving
the sale of tangible
Rule 78 Matching of details furnished by the e-commerce
operator with the details furnished by the supplier goods as well as the
provision of intangible services. The definition
The following details relating to the supplies made through specifically includes digital products, implying
an e-commerce operator, as declared in FORM GSTR-8, shall that supplies of downloadable or electronically
be matched with the corresponding details declared by the delivered products, such as e-books, software,
supplier in FORM GSTR-1, as amended in FORM GSTR-1A, if digital music, online courses and digital videos,
any,
are also considered part of e-commerce. The term "electronic network"
(a) State of place of supply; and encompasses various digital platforms, such as websites, mobile applications
(b) net taxable value. and any other electronic means used for buying or selling of goods and/or
Provided that where the time limit for furnishing FORM GSTR- services. Thus, the definition has a broad scope and is intended to cover a
1 under section 37 has been extended, the date of matching wide range of online transactions and digital activities involving the buying
of the above-mentioned details shall be extended accordingly. and selling of goods and services.
Provided further that the Commissioner may, on the
recommendations of the Council, by order, extend the date of
matching to such date as may be specified therein.
 ELECTRONIC COMMERCE TRANSACTIONS 13.1112.11 12.12 GOODS AND SERVICES TAX

(ii) Meaning of electronic commerce operator (1) Amazon, Flipkart, Alibaba, Myntra, etc.

In simple words, electronic

Similarly, suppliers of services provide services like cab services, food
commerce operator (hereinafter
delivery services through these platforms.
referred as ECO), is a person who
owns, operates or manages a digital platform/marketplace where supply of (2) Uber, Ola, Zomato, Swiggy, etc.
goods and/or services take place directly or indirectly. As per the definition
2. Direct Sales Model: In the direct sales model, businesses sell their
provided under section 2(45), electronic commerce operator means any
products or services directly to consumers through their own online
person who owns, operates or manages digital or electronic facility or
stores or websites. Customers browse the company's website, select
platform for electronic commerce.
products/services, and complete the purchase directly with the supplier.
The platform could be in the form of a
(3) Urban ladder, Biba, etc.
website, mobile application or any other
electronic medium. ECO’s role is to provide a
3. Inventory Model: In the inventory model, inventory of goods/services
digital platform where sellers/suppliers can
is owned by the ECO that it supplies to customers. The platform takes
list their products or services, and buyers/recipients can place orders/make
responsibility for warehousing, inventory management, and fulfillment
purchases. The definition of ECO is wide enough to cover various types of
of orders. This model is typical for traditional retailers who also have an
e-commerce platforms, such as online marketplaces, online travel agencies,
online presence.
food delivery platforms, ride-hailing apps, and other digital platforms that
facilitate transactions between sellers and buyers. (4) Amazon, Flipkart, Snapdeal, etc.

(iii) Various electronic commerce models Above e-commerce business models are not exhaustive, and many
Before understanding the taxability of e-commerce transactions, we should e-commerce businesses may adopt a combination of these models to suit
first be conversant with the various business models employed by their specific needs and industry dynamics. E-commerce industry is constantly
e-commerce industry to facilitate transactions between suppliers and evolving, and new innovative models may emerge over time.
recipients. These are as follows: Another way of classifying the e-commerce transactions is on the basis of
1. Online Marketplace Model: In the online marketplace model, an supplier-recipient combination, for instance, Business-to-Consumer (B2C),
online centralised platform is provided connecting manufacturers/ Business-to-Business (B2B), Consumer-to-Consumer (C2C), Consumer to
retailers with potential customers. The platform itself does not own or Business (C2B), Consumer to Government (C2G), Government to Consumer
stock the products or has the expertise to provide services being sought (G2C) and Business to Government (B2G).
by the customers; instead it merely facilitates the transactions and may (iv) Taxability of e-commerce transactions
offer additional services such as payment processing, customer support
E-commerce transactions for supply of goods or services or both are leviable
and logistics. The actual supply of goods is done by the respective
to GST similar to other supply transactions unless otherwise specifically
suppliers. The platform generates revenue by charging from the
supplier the fees or commissions for using the marketplace and exempted from GST. However, the taxability mechanism for E-commerce
accessing its customer base. The commission is typically a percentage transactions and compliances for the suppliers and ECOs have been
of each supply made by the supplier.
 ELECTRONIC COMMERCE TRANSACTIONS 13.1312.13 12.14 GOODS AND SERVICES TAX

separately carved out in the law. Following provisions merit consideration in In such cases, where a supplier supplies
this regard: GOODS AND/OR SERVICES through an
ECO portal and the payment for that supply
TCS to be collected by
is collected by the ECO, the Government has
ECO: There are many e-
placed a responsibility on such ECO to
commerce operators,
collect an amount @ 0.5% from such
like Amazon, Flipkart,
supplier.
Myntra, Meesho, etc.
operating in India. These ECO shall pay the supplier the price of the
operators also display/ product /services, less the amount calculated @ 0.5%. The said amount will
list on their portal be calculated on the net value of the goods/ services supplied (i.e. after
products as well as considering returns) through the portal of the ECO.
services which are
(5) Suppose a certain product is sold at ` 1,000/- through an ECO
supplied by some other person to the consumer.
by a seller. The ECO would collect tax @ 0.5% of the net value of
The goods or services belonging to other suppliers are also displayed on the ` 1000/- i.e. ` 5/-.
portals of the ECOs and consumers buy such goods/services through these
Exceptions:
portals.
(1) Where a suppler supplies through an ECO those SERVICES which
On placing the order for a particular
are notified under section 9(5) of the CGST Act/ section 5(5) of
product/ service by the consumer, the
the IGST Act [hereinafter referred as notified services or services
actual supplier supplies the selected
notified under section 9(5)], the tax on such services is to be paid
product/services to the consumer. The
by the ECO as if he is the supplier liable to pay tax on the supply
collection of supply consideration for
of such services.
the product/services, handling of goods,
etc. is undertaken by the ECOs (2) Where a supplier supplies the goods or
depending upon the arrangement between the supplier and ECO – Online services or both on his own account
Marketplace Model. The ECO thereafter deducts its commission from the through a web site hosted by him, there
consideration for the goods or services collected by it and passes on the net is no requirement to collect tax at
consideration to the supplier. source.

The provisions of section 9(5) of the CGST Act/

section 5(5) of the IGST Act have been
discussed in detail in next heading.
 ELECTRONIC COMMERCE TRANSACTIONS 13.1512.15 12.16 GOODS AND SERVICES TAX

(v) Tax payable by the electronic commerce operator on notified such service through electronic commerce operator is liable for
services registration under section 22(1).
((C)
C
C) services by way of house-keeping, such as plumbing, carpentering
(A) Notified Services
etc, except where the person supplying such service through
The Government may, on the electronic commerce operator is liable for registration under section
recommendations of the GST Council, 22(1).
notify specific categories of services the
(D)
(D) supply of restaurant service other than the services supplied by
tax [CGST/SGST/IGST] on supplies of D
restaurant, eating joints etc. located at specified premises.
which shall be paid by the ECO if such
services are supplied through it. Such ((E)
E) services by way of transportation of passengers
E
services shall be notified on the by an omnibus except where the person
recommendations of the GST Council. supplying such service through electronic
commerce operator is a company.

Transportation of passengers Accommodation service **The tax on services by way of transportation of passengers by an
omnibus provided by a company through ECO is not payable by ECO. It
Notified Services will be payable by the company itself.

House-keeping services Restaurant service Meaning of various terms

(i) Radio taxi: means a taxi including a radio cab, by whatever

Notification No. 17/2017 CT (R) dated 28.06.2017/ Notification No. name called, which is in two- way radio communication with a
14/2017 IT (R) dated 28.06.2017 as amended has notified the central control office and is enabled for tracking using Global
Positioning System (GPS) or General Packet Radio Service
following categories of services supplied through ECO for this
(GPRS).
purpose:
(A)
(A)
A) services by way of transportation of passengers by (ii) Maxi cab: means any motor vehicle constructed or adapted to
a radio-taxi, motorcab, maxicab, motorcycle, or any carry more than 6 passengers, but not more than 12 passengers,
other motor vehicle except omnibus. excluding the driver, for hire or reward.
Motor cab: means any motor vehicle constructed or adapted to
((B
(B)
B)
B services by way of providing
carry not more than 6 passengers excluding the driver for hire
accommodation in hotels, inns, guest
or reward.
houses, clubs, campsites or other
Motor car: means any motor vehicle other than a transport
commercial places meant for
vehicle, omnibus, road-roller, tractor, motorcycle or invalid
residential or lodging purposes,
carriage.
except where the person supplying
 ELECTRONIC COMMERCE TRANSACTIONS 13.1712.17 12.18 GOODS AND SERVICES TAX

Omnibus: means any motor vehicle constructed or adapted to (D) Taxability of the notified services: In terms of the provisions of
carry more than 6 persons excluding the driver. section 9(5) of the CGST Act/section 5(5) of the IGST Act read with
relevant notifications, taxability of the services notified under section
(iii) Specified premises: mean premises providing hotel 9(5)/section 5(5) will be as follows:
accommodation service having declared tariff of any unit of
accommodation above ` 7,500 per unit per day or equivalent. (I) In case where services by way of transportation p
passeng
pa
n of passengers
((A)
(A
A)
or restaurant service [as mentioned in pointss (A), (D
D),
A , (D),
), and
(iv) Company: means a company incorporated under the Companies
(E)
E ) above] are being provided: ECO is
Act 2013 or any previous company law.
liabl
liable to pay tax on such services supplied
(B) Provisions applicable to supplier liable for paying the tax through it in all the
applicable to ECO: Tax on notified services supplied through ECO shall cases irrespective of
be paid by the ECO. All the provisions of the CGST/IGST Act shall apply the fact whether the
to such ECO as if he is the supplier liable for paying the tax in relation
person supplying
to the supply of such notified services. This implies that the invoice for
notified services will be issued by the ECO only and not by suppliers. such services
through it is registered/ liable to
1
It is important to note here that registration under section 22 or not .
the above provision shall apply (II) In case where accommodation or housekeeping service [as
only in case of supply of
(B)
mentioned in pointss (B)
B aand ((C
d (C) above] are being provided:
CC) a
SERVICES.
ECO is liable to pay tax h servi
ax on ssuch services supplied through it only
when the person supplying such services
through it is NOT liable to registration
(C) Person liable to pay tax on notified services
under section 22, i.e. the aggregate
Person liable to pay tax
turnover of supplier of services does not
If the ECO is located in taxable ECO exceed the threshold limit of ` 20 lakh
territory
(`
` 10 lakh in case of Special
If the ECO does not have Person representing the Category States of Mizoram,
physical presence in the ECO for any purpose in
the taxable territory Tripura, Manipur and Nagaland).
taxable territory
However, where the person
If the ECO has neither the supplying such service through
Person appointed by the
physical presence nor any
ECO for the purpose of
representative in the taxable 1
paying the tax Provisions relating to registration under e-commerce transactions are discussed subsequently in
territory
this chapter.
 ELECTRONIC COMMERCE TRANSACTIONS 13.1912.19 12.20 GOODS AND SERVICES TAX

ECO is liable for registration under section 22(1), the provisions of (vi) Tax collected at source (TCS) by ECO [Section 52]
section 9(5) of the CGST Act/ section 5(5) of the IGST Act will not (A) What is TCS?
be applicable on such services.
In such a case, supplier shall obtain the registration and pay the
tax on such services. In that case, ECO will not be liable to pay tax What is TCS?
on such services. Further, TCS provisions shall apply in such cases.
(6) Champak of Delhi avails the services of a carpenter online
through an ECO – [Link]. The carpenter is
unregistered under GST since his turnover has not yet crossed Every ECO (not being an agent) is required to collect an amount
the threshold limit. In this case, GST on the services availed by Champak calculated at the rate not exceeding 0.5% (0.5% IGST or 0.25% CGST and
shall be paid by [Link] in terms of section 9(5) and TCS 0.25% SGST, as the case may be), as notified by the Government on the
provisions will not apply. recommendations of the Council, of the net value of taxable supplies
made through it, where the consideration with respect to such supplies
(7) Sampat of Delhi avails the services of a carpenter – M/s Dhruvtara
is to be collected by such ECO. The amount so collected is called as Tax
Enterprises - online through an ECO – [Link]. M/s Dhruvtara
Collection at Source (hereinafter referred as TCS).
Enterprises is registered under GST.
Provisions of TCS under CGST Act have also been made applicable
In this case, GST on the services availed by Sampat shall be paid by M/s
to IGST Act vide section 20 of the IGST Act. It may be noted that
Dhruvtara Enterprises since it is registered. In other words, provisions
section 20 of the IGST Act provides that in case of tax collected at
of section 9(5) will not be applicable. Further, TCS provisions will apply.
source, the operator shall collect tax at such rate not exceeding 2%, as
[Link] will collect TCS in this case.
may be notified on the recommendations of the Council (actual rate
(E) Manner of reporting of notified services in GSTR-3B: The ECO may, notified is 0.5% - discussed subsequently herein), of the net value of
on notified services, including on restaurant service provided through taxable supplies.
ECO, pay GST, by furnishing the details in Form GSTR-3B 2, reporting (B) Who is liable to collect TCS and from whom?
them as OUTWARD TAXABLE SUPPLIES.
Every Electronic Commerce Operator (ECO), not being an agent, has
been mandated to collect tax at source (TCS) on the net value of taxable
Payment of tax on notified services is not allowed through supplies made through it by suppliers, where the ECO collects the
input tax credit of ECO. It has to be paid in cash only 3. consideration on behalf of the supplier for such supplies.
However, it is important to note here that practically, ECOs don’t
actually collect this amount from the suppliers; they simply retain the
TCS amount and their commission from the consideration received by
them for supply of supply of goods/services made by the suppliers, and
2 pay the remaining amount to the suppliers.
Provisions relating to GST return in Form GSTR-3B have been discussed in Chapter 13 – Returns
in this Module of the Study Material.
3
Circular No. 167/23/2021 GST dated 17.12.2021
 ELECTRONIC COMMERCE TRANSACTIONS 13.2112.21 12.22 GOODS AND SERVICES TAX

ECO who is required to collect

ٌ A composition taxpayer 4 cannot make supplies of tax at source under section 52
services through an ECO [Section 10(2)(d)]. However, has been notified as the class
a composition taxpayer can make supplies of goods of persons who shall follow
through an ECO. As a corollary, TCS has to be collected the following special
only in respect of supplies of goods made by the composition procedure in respect of supply
taxpayer through an ECO. A special procedure is required to be of goods made through it by
followed by ECOs in respect of supplies of goods through them by the composition suppliers,
composition taxpayers. This is outlined below. namely: —
(i) the ECO shall not allow any inter-State supply of goods through
Special procedure to be followed by ECOs in respect of supplies of it by the said person;
goods through them by composition taxpayers
(ii) the ECO shall collect tax at source under section 52(1) in respect
A special procedure 5 has been laid down of supply of goods made through it by the said person and pay
under section 148 to be followed by ECO to the Government as per provisions of section 52(3); and
through which composition supplier
(iii) the ECO shall furnish the details of supplies of goods made through
supplies goods under which the ECOs
it by the said person in the statement in Form GSTR-8 electronically
would be required to declare the supplies
on the common portal.
made by such composition dealers
through them through GSTR-8 statement 6. (C) What is the rate of TCS notified?
ECOs would also be mandated to ensure Rate of TCS notified is 0.25% of the net value of intra-State taxable
that no inter-State supply through them is supplies (under the CGST Act, 2017 and the respective SGST Act / UTGST
COM POSIT ION
allowed in respect of supplies made by the Act respectively) and 0.5% of the net value of inter-State taxable
SUPPLIER OF GOODS
composition dealers by making necessary supplies (under the IGST Act, 2017).
checks and validations on their
(D) What is the value on which TCS is to be collected?
system/platform since a composition supplier cannot make an inter-
State outward supply. TCS is collected @ 0.5% on net value of taxable supplies. The “net
value of taxable supplies” means the aggregate value of taxable
supplies of goods or
services or both, other than
the services on which entire
tax is payable by ECO u/s 9(5), made during any month by all registered
persons through such ECO reduced by the aggregate value of taxable
4 supplies returned to the suppliers during the said month.
Provisions relating to composition taxpayer have been discussed in detail in Chapter 2 – Charge
of GST in Module 1 of this Study Material.
5 It is important to note here that the value of net taxable supplies is
vide Notification No. 36/2023 CT dated 04.08.2023.
6 calculated at GSTIN level on monthly basis. Further, the value of only
GSTR-8 statement has been explained in detail subsequently in this chapter.
ELECTRONIC COMMERCE TRANSACTIONS 13.2312.23 12.24 GOODS AND SERVICES TAX

TAXABLE SUPPLIES is to be taken into consideration. Moreover, an

ECO is required to collect tax only on the NET value of taxable supplies ٌ Since TCS is to be collected on “net value of
made through it. In other words, value of the supplies which are supplies” made through it, TCS is not
returned (supply return) are to be adjusted from the aggregate value of required to be collected on supplies.
taxable supplies made by each supplier. This is to adjust the return of ٌ TCS is not required to be collected on supplies on
goods made by the customers to ECOs which is a very common feature which the recipient is required to pay tax on reverse charge basis.
of said business.
ٌ TCS is not liable to be collected on
Sometimes sales return are more than sales. . Since import of goods would fall within the domain of
However, negative amount cannot be the Customs Act, 1962, it is outside the purview of TCS. Further,
declared. There will be no impact in next tax TCS is not liable to be collected on import of services since the
period also. In other words, if returns are more recipient is liable to pay tax on said supplies under the reverse
than the supplies made during any tax period, charge mechanism.
the same would be ignored in current as well as future tax period(s).
(9) Shiksha Book Depot is selling books through an ECO -
(8) If two suppliers “A” and “B” are making supplies through
Zamazon Ltd. Books are exempted/zero-tax goods. As per
an ECO, the “net value of taxable supplies” would be
section 52(1), TCS is to be collected on “net value of taxable
calculated separately in respect of “A” and “B”. If the value of
supplies” made through an ECO. When the supply itself is not taxable,
returned supplies is more than supplies made on behalf of any of such
the question of TCS does not arise. Thus, Zamazon Ltd. is not required
supplier during any tax period, the same would be ignored in his case.
to collect TCS on the sale of books.
(E) Which monthly statement is required to be furnished by an ECO?
[Sub-sections (3), (4), (6) and (7) of section 52 read with rule 67]
(a) Form GSTR-8
Aggregate value of taxable
Taxable supplies
supplies of goods and / or An ECO liable to collect TCS shall furnish a monthly statement in
returned to suppliers
services Form GSTR-8 electronically
through the common portal.
OTHER Form GSTR-8 contains the
THAN details of supplies of goods or
Services
Se notified under
services or both effected
section 9(5) (discussed earlier)
sectio
through ECO including the
supplies of goods or services
or both returned through it,
amount of consideration GST R-8
collected by ECO pertaining to
ELECTRONIC COMMERCE TRANSACTIONS 13.2512.25 12.26 GOODS AND SERVICES TAX

supplies made through ECO and the amount of TCS collected on (10) If the TCS has been collected in the month of July,
such supplies. the amount has to be remitted into the Government
Treasury on or before 10th August.
CONTENTS OF GSTR- 8
(c) TCS details available to registered suppliers on common
Table 3 Details of supplies attracting TCS portal and claiming of TCS by suppliers
Table 3.1 Details of supplies made by unregistered
The details of TCS furnished by the ECO in GSTR-8 shall be made
suppliers
available electronically to each of the
Table 4 Amendments to details of supplies attracting
registered suppliers who supplied goods
TCS
Table 4.1 Amendments to supplies made by and/or services through ECO on the
unregistered suppliers common portal after filing of GSTR-8 for
Tables 6 & 7 Payment of Tax claiming the amount of tax collected in
his electronic cash ledger after validation.
(b) Last date of filing statement and for deposit of TCS
The amount of TCS shall be credited to the cash ledger of the said
The details in GSTR-8 should be furnished on/before 10th day of
supplier who has supplied the goods/services through the ECO in
the month succeeding the calendar month in which tax has been
the respective tax head in which TCS amount was deposited by
collected at source.
ECO. The said credit can be used at the time of discharge of tax
The due date of filing GSTR-8 may be extended by the liability by the actual supplier.
Commissioner/Commissioner of State GST/Commissioner of
If the supplier is not able to use the amount lying in the said cash
UTGST for a class of taxable persons by way of a notification.
ledger, the actual supplier may claim refund of the excess balance
Further, the amount of tax collected lying in his electronic cash ledger in accordance with the
by ECO (TCS amount) is also required provisions contained in section 54(1) 7.
to be deposited separately under the
respective tax head (i.e. Central tax / State tax / Union Territory (d) Rectification of errors/omissions in GSTR-8
tax / Integrated tax) by 10th day of the month succeeding the If after submission of GSTR-8, the ECO discovers any discrepancy
calendar month in which TCS has been collected. therein on his own - not being the result of any scrutiny, audit,
inspection or enforcement proceedings - he should rectify such
Due date for filing GSTR-8 10th of next month discrepancy in GSTR-8 to be filed for the month during which such
discrepancy is noticed, subject to payment of interest under
section 50.
Due date for payment 10th of next month
Maximum time limit within which such amendments are
permissible is earlier of the following dates:
The ECO can file Form GSTR 8 only when full TCS liability has been
discharged.
7
The provisions relating to refund of excess balance in electronic cash ledger has been discussed
in detail in Chapter 15 – Refunds under GST in Module 3 of this Study Material.
ELECTRONIC COMMERCE TRANSACTIONS 13.2712.27 12.28 GOODS AND SERVICES TAX

‰ 30th day of November following the end of the financial year period in which TCS has been collected or details are auto
to which such details pertain or populated in Table 4 8 9.
‰ Date of filing of the relevant annual statement [GSTR-9B]. (g) Maximum time-limit for furnishing Form GSTR-8
(e) Late fees for delay in filing GSTR-8 [Section 47] Maximum time-limit upto which ECO can furnish Form
GSTR-8 is 3 years from the relevant due date of filing such
Following late fee is applicable for delay in furnishing of TCS
statement. This time limit can be extended by the Government for
statement in Form GSTR-8:
an ECO or a class of ECOs subject to such conditions and
`200 [`100 under CGST & restrictions as may be specified therein.
``100 under SGST/UTGST] for (F) Which annual statement is required to be furnished by an ECO?
Quantum every day during which such
e
An ECO required to collect TCS is required to
of late fee failure continues.
file an annual statement referred to in section
` 10,000 [`5,000 under CGST 52(5) in Form GSTR-9B (yet to be notified).
& `5,000 under SGST/UTGST] The statement for a financial year needs to be filed by 31st December
of the next financial year.
(f) Whether Nil GSTR-8 needs to be filed in case if there is no TCS The due date of filing annual statement may be extended by the
liability in a tax period? Commissioner/Commissioner of State GST/Commissioner of UTGST for
Filing of GSTR-8 for every tax period is not mandatory. ECO is a class of taxable persons by way of a notification.
required to file Form GSTR-8 for a particular tax period, only when (G) Interest on non-collection of TCS [Section 52(6)]
goods are supplied through such ECO and they have collected any
As per section 52(6), interest is applicable on omission as well in case
TCS during the said tax period or they have to amend any details
of incorrect particulars noticed. In case of non-collection of TCS,
declared in earlier return on their own or on account of any details
interest is applicable since it is a case of omission. Further penalty under
rejected by supplier.
section 122(vi) 10 would also be leviable.
If ECO does not have any TCS liability in any particular tax period
(H) At what time should the ECO collect TCS?
and also there is no transaction that has been auto-populated in
Table 4 of GSTR-8 of that particular tax period due to rejection of TCS is to be collected once supply has been made through the ECO and
TCS details by the supplier in TDS/TCS credit received table, filing where the business model is that the consideration is to be collected by
of Form GSTR-8 will not be mandatory for the said tax period. the ECO, irrespective of the actual collection of the consideration.
Otherwise, it is mandatory to file Form GSTR-8 for a particular tax

8
It is not necessary to file Form GSTR-8 for the tax period in which there are only rejected
documents in table 4 and there is no TCS liability.
9
Based on the FAQs on Form GSTR-8 given on [Link]
10
Penal provisions have been discussed in detail in Chapter 21 – Offences and Penalties and
Ethical aspects of GST in Module 3 of this Study Material.
 ELECTRONIC COMMERCE TRANSACTIONS 13.2912.29 12.30 GOODS AND SERVICES TAX

(11) If the supply has taken place through the ECO on ANSWER
30th October, but the consideration for the same has been As per the definitions in sections 2(44) and 2(45), Nishpaksh Associates will
collected in the month of November, then TCS for such supply come under the definition of an “electronic commerce operator”.
has to be collected and reported in the statement for the month of
However, according to section 52, TCS is required to be collected on the net
October.
value of taxable supplies made through it by other suppliers where the
(I) Authority not below the rank of Deputy Commissioner may serve a consideration is to be collected by the ECO. In cases where someone is selling
notice requiring ECO to furnish the details of their supplies of their own products through a website, there is no requirement to collect TCS
goods or services or both as well as stock of goods held by the as per the provisions of this section. These transactions will be liable to GST
suppliers at the prevailing rates.
The power conferred on the ECO to collect TCS, is without prejudice to Thus, Nishpaksh Associates is not required to collect TCS on the supplies
other modes of recovery from ECO. The powers of ECO is restricted made by it through its own website.
only to the extent of TCS under circumstances specified therein and
ILLUSTRATION 2
nothing more.
If Sitcom Technologies Ltd. purchases goods from different vendors and
An officer not below the rank of Deputy Commissioner can issue notice thereafter sells them on its own website under its own billing. Is TCS required
to an ECO, asking him to furnish the details relating to volume of the to be collected on such supplies?
goods/ services supplied, stock of goods lying in warehouses/ godowns
ANSWER
etc. The ECO is required to furnish such details within 15 working days.
No. According to section 52, TCS is required to be collected on the net value
In case an ECO fails to furnish the information, besides being liable for
of taxable supplies made through ECO by other suppliers where the
penal action under section 122, it shall also be liable for general penalty
consideration is to be collected by the ECO. In this case, there are two
up to ` 25,000.
transactions - Sitcom Technologies Ltd. purchases the goods from the
vendors, and thereafter those goods are sold through its own website.
Payment of TCS by ECO is not allowed through input
For the first transaction, GST is leviable, and will need to be paid to vendor,
tax credit of ECO. This implies that TCS has to be
on which credit is available to Sitcom Technologies Ltd. The second
paid in cash only.
transaction is a supply on own account of Sitcom Technologies Ltd., and not
by other suppliers and there is no requirement to collect TCS. The transaction
ILLUSTRATION 1 will attract GST at the prevailing rates.
Nishpaksh Associates is a supplier selling its own products through a web site (vii) Clarification on service supplied by restaurants through ECOs
hosted by it. Does it fall under the definition of an “electronic commerce
As seen earlier, supply of restaurant service other than the services supplied
operator”? Whether Nishpaksh Associates is required to collect TCS on such
by restaurant, eating joints etc. located at specified premises is a notified
supplies?
service for the purposes of section 9(5). Circular No. 167/23/2021 GST dated
17.12.2021 has clarified the following issues with regard to said service:
 ELECTRONIC COMMERCE TRANSACTIONS 13.3112.31 12.32 GOODS AND SERVICES TAX

(i) ECOs not to collect TCS in respect of restaurant services so notified (v) Restaurant services provided through ECO not to be considered as
ECOs will not be required to collect TCS and furnish Form GSTR-8 in inward supply for ECOs
respect of restaurant services since it pays tax on such services in terms ECOs are not the recipient of restaurant service supplied through them.
of section 9(5). Since these are not input services to ECO, these are not to be reported
(ii) ECOs not required to take separate registration for paying tax on as inward supply (liable to reverse charge) in Form GSTR-3B. Indeed,
restaurant service supplied through them they are reported as Outward Taxable Supplies in GSTR-3B.
As ECOs are already registered in accordance with (vi) GST to be paid by the supplier on services not notified under
rule 8 (as a supplier of their own goods or services), section 9(5) but supplied through ECO
there would be no mandatory requirement of taking
ECO is required to pay GST on services notified under section 9(5),
separate registration by ECOs for payment of tax on
besides the services/other supplies made on his own account.
restaurant service under section 9(5) 11.
On any supply that is not notified under section 9(5), that is supplied by
(iii) ECO to pay tax on restaurant services supplied through them by an
a person through ECO, the liability to pay GST continues on such
unregistered person
supplier and ECO shall continue to collect TCS on such supplies.
ECOs will be liable to pay GST on any restaurant service supplied
Thus, present dispensation continues for ECO, on supplies other than
through them including services supplied by an unregistered
restaurant services. On such supplies (other than restaurant services
person.
made through ECO) GST will continue to be billed, collected and
(iv) Supply of restaurant services to be included in aggregate turnover deposited in the same manner as is being done at present. ECO will
of person supplying restaurant services through ECO deposit TCS on such supplies.
The aggregate turnover of person supplying (vii) ECO to raise invoice in respect of restaurant service supplied
restaurant service through ECOs shall be through ECO
computed in accordance with definition of
The invoice in respect of restaurant service supplied through ECO under
aggregate turnover under section 2(6) and
section 9(5) will be issued by ECO.
shall include the aggregate value of supplies
made by the restaurant through ECOs. (viii) Billing in case of ‘restaurant service’ and goods/services other than
Accordingly, for threshold consideration or any other purpose in the restaurant service being sold by a restaurant to a customer under
CGST Act, the person providing restaurant service through ECO shall the same order
account for such services in his aggregate turnover. There can a situation where ‘restaurant service’ and goods or services
other than restaurant service are sold by a restaurant to a customer
under the same order. The question arises as to who shall be liable for
raising invoices in such cases.
11
Separate registration apart from regular registration is only required in case where ECO is
liable to collect TCS under section 52. Registration requirements of ECOs have been discussed
subsequently in this chapter.
 ELECTRONIC COMMERCE TRANSACTIONS 13.3312.33 12.34 GOODS AND SERVICES TAX

Considering that liability to pay GST on supplies other than ‘restaurant inputs and input services proportionately under section 17(1)/17(2)
service’ through the ECO, and other to the extent of supplies
compliances under the CGST Act, made under section 9(5).
including issuance of invoice to customer, It is further clarified that o ECO liable to pay tax under
continues to lie with the respective ECO will be required to pay section 9(5) for specified
suppliers (and ECOs being liable only to the full tax liability on services.
collect tax at source (TCS) on such account of supplies under o NO REVERSAL of ITC on inputs
supplies), it is advisable that ECO raises separate bill on restaurant section 9(5) in cash, i.e. & input services used to
service in such cases where ECO provides other supplies to a customer only through electronic facilitate such supplies.
under the same order. cash ledger. The credit o Full tax liability under section
availed by him in relation 9(5) to be paid in CASH.
(ix) Reversal of proportionate ITC on input goods and services not to the inputs and input
required by ECO services used to facilitate
ECOs provide their own services as an electronic platform and an such supplies cannot be
intermediary for which it would acquire inputs/input services on which used for discharge of such tax liability under section 9(5).
ECOs avail input tax credit (ITC). However, such credit can be utilized by him for discharge of tax
The ECO charges commission/fee etc. for the services it provides. The liability in respect of supply of services on his own account 12.
ITC is utilised by ECO for payment of GST on services provided by ECO (vii) Clarification on TCS liability in case of multiple ECOs in one
on its own account (say, to a restaurant).
transaction
The situation in this regard remains unchanged even after ECO is made
In the current platform-centric model of e-commerce, the buyer interface and
liable to pay tax on restaurant service. ECO would be eligible to ITC as
seller interface are operated by the same ECO.
before.
Accordingly, it is clarified that ECO shall not be required to reverse ITC This ECO:
on account of restaurant services on which it pays GST in terms of x collects the consideration from the buyer,
section 9(5). However, it may also be noted that on restaurant service
so notified, ECO shall pay the entire GST liability in cash (No ITC could x deducts the TCS under section 52,
be utilised for payment of GST on restaurant service supplied through x credits the deducted TCS amount to the GST cash ledger of the seller and
ECO). This principle also applies to the supplies made in respect of
other services specified under section 9(5). x passes on the balance of the consideration to the seller after deducting their
service charges.
Thus, it is clarified that ECO, who is liable to pay tax under section
9(5) on notified services, is not required to reverse the ITC on his

12
Circular No. 167/23/2021 GST dated 17.12.2021 read with Circular No. 240/34/2024 GST
dated 31.12.2024
 ELECTRONIC COMMERCE TRANSACTIONS 13.3512.35 12.36 GOODS AND SERVICES TAX

In the case of the ONDC Network (Open (12) Buyer-side ECO collects payment from the buyer, deducts its
Network for Digital Commerce) or similar other fees/commissions and remits the balance to Seller-side ECO. Here,
arrangements, there can be multiple ECOs in a the Seller-side ECO will release the payment to the supplier after
single transaction - one providing an interface to deduction of his fees/commissions and therefore will also be required to
the buyer and the other providing an interface collect TCS, as applicable and pay the same to the Government in accordance
to the seller. In this setup, buyer-side ECO could collect consideration, deduct with section 52 and also make other compliances under section 52.
their commission and pass on the consideration to the seller-side ECO. In this
In this case, the Buyer-side ECO will neither be required to collect TCS nor will
context, clarity has been sought as to which ECO should
be required to make other compliances in accordance with section 52 with
deduct TCS and make other compliances under section
respect to this particular supply.
52 in such situations, as in such models having multiple
Issue 2: In a situation where multiple ECOs are involved in a single transaction
ECOs in a single transaction, both the Buyer-side ECO
of supply of goods or services or both through ECO platform and the Supplier-
and the Seller-side ECO qualify as ECOs as per section
side ECO is himself the supplier of the said supply, who is liable for
2(45).
compliances under section 52 including collection of TCS?
CBIC has clarified following issues in this
regard: Buyer-side Supplier
Buyer
Issue 1: In a situation where multiple ECOs are
ECO (also an ECO)
involved in a single transaction of supply of
goods or services or both through ECO Clarification: In such a situation, TCS is to be collected by the Buyer-side ECO
platform and where the supplier-side ECO while making payment to the supplier for the particular supply being made
himself is not the supplier in the said supply, who is liable for compliances under through it.
section 52 including collection of TCS? (13) Buyer-side ECO collects payment from the buyer, deducts its
fees and remits the balance to the supplier [who is itself an ECO as
Buyer- Supplier-
Buyer Supplier per the definition in Sec 2(45)] In this scenario, the Buyer-side ECO
side ECO side ECO
will also be required to collect TCS, as applicable, pay the same to the
Government in accordance with section 52 and also make other compliances
Clarification: In such a situation where multiple ECOs are involved in a single
under section 52.
transaction of supply of goods or services or both through ECO platform and
[Circular No. 194/06/2023 GST dated 17.07.2023]
where the supplier-side ECO himself is not the supplier of the said goods or
services, the compliances under section 52, including collection of TCS, is to be
done by the supplier-side ECO who finally releases the payment to the supplier
for a particular supply made by the said supplier through him.
 ELECTRONIC COMMERCE TRANSACTIONS 13.3712.37 12.38 GOODS AND SERVICES TAX

4. REGISTRATION REQUIREMENTS way of extending deposits, loans or advances in so far as the

consideration is represented by way of interest or discount.

Section 24 Compulsory registration in certain cases

STATUTORY PROVISIONS
(Relevant
Extract)
Section 22 Persons liable for registration
(Relevant Clause Particulars
Extract)
Notwithstanding anything contained in sub-section (1) of section
Sub- Particulars 22, the following categories of persons shall be required to be
section registered under this Act,-

(1) Every supplier shall be liable to be registered under this Act in the (iv) persons who are required to pay tax under sub-section (5) of
State or Union territory, other than special category States, from section 9
where he makes a taxable supply of goods or services or both, if
his aggregate turnover in a financial year exceeds twenty lakh (ix) persons who supply goods or services or both, other than supplies
rupees. specified under sub-section (5) of section 9, through such
electronic commerce operator who is required to collect tax at
Provided that where such person makes taxable supplies of goods
source under section 52
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 (x) every electronic commerce operator who is required to collect tax
year exceeds ten lakh rupees. at source under section 52
Provided further that the Government may, at the request of a
special category State and on the recommendations of the
Council, enhance the aggregate turnover referred to in the first
Chapter III – Registration of the CGST Rules
proviso from ten lakh rupees to such amount, not exceeding
twenty lakh rupees and subject to such conditions and limitations, Rule 12 Grant of registration to persons required to deduct tax at
as may be so notified. source or to collect tax at source
Provided also that the Government may, at the request of a State
and on the recommendations of the Council, enhance the (1) Any person required to deduct tax in accordance with the
aggregate turnover from twenty lakh rupees to such amount not provisions of section 51 or a person required to collect tax at
exceeding forty lakh rupees in case of supplier who is engaged source in accordance with the provisions of section 52 shall
exclusively in the supply of goods, subject to such conditions and electronically submit an application, duly signed or verified
limitations, as may be notified. through electronic verification code, in FORM GST REG-07 for the
grant of registration through the common portal, either directly
Explanation––For the purposes of this sub-section, a person shall
or through a Facilitation Centre notified by the Commissioner.
be considered to be engaged exclusively in the supply of goods
even if he is engaged in exempt supply of services provided by (1A) A person applying for registration to deduct or collect tax in
accordance with the provisions of section 51, or, as the case
 ELECTRONIC COMMERCE TRANSACTIONS 13.3912.39 12.40 GOODS AND SERVICES TAX

maybe, section 52, in a State or Union territory where he does not Special provisions for grant of registration in case of persons required
have a physical presence, shall mention the name of the State or to collect TCS under section 52 [Rule 12]
Union territory in PART A of the application in FORM GST REG- An ECO has to obtain separate
07 and mention the name of the State or Union territory in PART registration for TCS irrespective of
B thereof in which the principal place of business is located which the fact whether ECO is already
may be different from the State or Union territory mentioned registered under GST as a supplier
in PART A.
or otherwise and has GSTIN.
(2) The proper officer may grant registration after due verification Application for registration has to
and issue a certificate of registration in FORM GST REG-06 within be submitted by such persons in a
a period of three working days from the date of submission of the different prescribed form at GST
application. Common Portal. They would be
(3) Where, on a request made in writing by a person to whom a granted registration within 3
registration has been granted under sub-rule (2) or upon an working days from the date of
enquiry or pursuant to any other proceeding under the Act, the submission of application after due
proper officer is satisfied that a person to whom a certificate of verification.
registration in FORM GST REG-06 has been issued is no longer
Sometimes, an ECO is required to collect tax in a State/UT where it does not
liable to deduct tax at source under section 51 or collect tax at
have physical presence since suppliers listed on their e-commerce platform
source under section 52, the said officer may cancel the
registration issued under sub-rule (2) and such cancellation shall are located in said State/UT.
be communicated to the said person electronically in FORM GST However, registration for TCS is required in each such State / UT as the
REG-08: obligation for collecting TCS would be there for every intra-State or inter-
Provided that the proper officer shall follow the procedure as State supply. In such case, in Part-A of the prescribed registration form,
provided in rule 22 for the cancellation of registration. State/UT for which registration is required needs to be mentioned.
However, in Part-B of the registration form, the ECO may declare the Head
ANALYSIS Office as its place of business for obtaining registration in that State / UT
where it does not have physical presence.
(i) Registration requirements of ECO Registration will be cancelled if proper officer is satisfied that such person is
Every ECO who is required to collect TCS under section 52 as well as an ECO no longer liable to collect tax at source. Cancellation of registration will be
who is required to pay tax under section 9(5) are required to obtain communicated to such person electronically in prescribed form. Proper
registration compulsorily under section 24 irrespective of the quantum of Officer shall follow the procedure laid down for cancellation of registration
their aggregate turnover. prescribed under this Act and rules therein.

Further, following special procedure has been laid down for registration of
ECOs liable to collect TCS:
 ELECTRONIC COMMERCE TRANSACTIONS 13.4112.41 12.42 GOODS AND SERVICES TAX

(ii) Registration requirements of supplier making supplies of goods or (iii) such persons shall be required to have a PAN issued under the
services through ECO Income-tax Act, 1961;
(A) Persons making supplies of GOODS through an ECO who is required (iv) such persons shall, before making any supply of goods through
to collect tax at source under section 52: are required to obtain ECO, declare on the common portal:
REGISTRATION MANDATORILY as per section 24 13.
a. their PAN
However, unregistered persons can make supply of goods through
b. address of their place of business and
ECOs subject to specified conditions. They would be required to declare
their PAN and principal place of business so that it can be verified from c. State/UT in which such persons seek to make such supply,
the PAN that the turnover is less than the threshold limit. which shall be subjected to validation on the common portal;
The details of these supplies made by the unregistered persons through (v) such persons have been granted an enrolment number on the
their PAN will be given in the GSTR 8 filed by the ECOs. In cases where common portal on successful validation of the PAN declared
the total supply approaches the threshold limit, it would be flagged to above;
the concerned supplier to take registration and to officers for
(vi) such persons shall not be granted more than one enrolment
information. Further, the suppliers would not be required to pay any tax
number in a State/UT;
upto supplies of applicable threshold limits and ECOs would not collect
TCS till the suppliers cross the threshold limit. (vii) no supply of goods shall be made by such persons through ECO
unless such persons have been granted an enrolment number on
Accordingly, the persons making
the common portal; and
supplies of goods through an ECO
who is required to collect TCS under (viii) where such persons are subsequently granted registration under
section 52 and having an aggregate section 25, the enrolment number shall cease to be valid from the
turnover in the preceding financial effective date of registration 14.
year and in the current financial year
Special procedure to be followed by ECO through which
not exceeding the threshold limit in
unregistered persons supply goods
accordance with the provisions of
section 22(1), are exempted from A special procedure has been laid down under section 148 to be
obtaining registration, subject to the followed by ECO through which above unregistered persons supply
following conditions, namely: goods 15. The ECOs would ensure that no inter-State supply would be
made and the supply made by such unregistered person (PAN-wise)
(i) such persons shall not make any inter-State supply of goods;
would be declared in their monthly GSTR 8. The aggregate of total
(ii) such persons shall not make supply of goods through ECO in turnover made through different ECOs would be done PAN wise. In
more than one State/Union territory; online mode, there would be a PAN based trail.

14
Notification No. 34/2023 CT dated 31.07.2023
13 15
Provisions of section 9(5) also do not apply in case of supply of goods through ECO. Notification No. 37/2023 CT dated 04.08.2023
 ELECTRONIC COMMERCE TRANSACTIONS 13.4312.43 12.44 GOODS AND SERVICES TAX

Said notification provides that the ECO who is Thus, the THRESHOLD LIMIT OF ` 20 LAKH OR ` 10 LAKH IS
required to collect tax at source under section APPLICABLE in case of person supplying services other than those
52 has been notified as the class of persons notified under section 9(5) through an ECO otherwise liable to collect
who shall follow the following special TCS.
procedure in respect of supply of goods made
Since such suppliers are not liable for registration, ECOs are not
through it by said unregistered persons
required to collect TCS on supply of services being made by such
(hereinafter referred as said person):
suppliers through their portal 16..
(i) ECO shall allow the supply of goods
(14) Sudhakar Salon Services is engaged in providing salon
through it by the said person only if
services through an electronic commerce platform owned by
enrolment number has been allotted on the common portal to
Zykom Technologies Ltd.
the said person;
Since Sudhakar Salon Services is supplying services other than notified
(ii) ECO shall not allow any inter-State supply of goods through it
services through the e-commerce platform owned by Zykom
by the said person;
Technologies Ltd., it is exempted from obtaining compulsory
(iii) ECO shall not collect tax at source under section 52(1) in respect registration since its aggregate turnover has not yet crossed the
of supply of goods made through it by the said person; and threshold limit for registration.
(iv) ECO shall furnish the details of supplies of goods made through Consequently, it is unregistered under GST. Thus, Zykom Technologies
it by the said person in the statement in Form GSTR-8 Ltd. is not required to collect TCS on supply of services being made by
electronically on the common portal. Sudhakar Salon Services through its portal.
Where multiple ECOs are involved in a single supply of goods through (C) Persons making supplies of SERVICES notified under section 9(5)
ECO platform, “ECO” shall mean the ECO who finally releases the through an ECO 17: Such persons will be entitled for threshold exemption
payment to the said person for the said supply made by the said person for registration of ` 20 lakh (`` 10 lakh in case of Special Category States
through him. of Mizoram, Tripura, Manipur and Nagaland).
(B) Persons making supplies of SERVICES, other than services specified
under section 9(5) through an ECO who is required to collect TCS
under section 52: are required to obtain REGISTRATION
MANDATORILY as per section 24.
However, unregistered persons having an aggregate turnover (to be
computed on all India basis) not exceeding an amount of ` 20 lakh (``
10 lakh in case of Special Category States of Mizoram, Tripura, Manipur
and Nagaland), in a financial year can make supply of services (other
than notified services) through ECOs subject to specified conditions.
16
Notification No. 65/2017 CT dated 15.11.2017
17
As per the provisions of section 52, such ECO will not be liable to collect TCS.
 ELECTRONIC COMMERCE TRANSACTIONS 13.4512.45 12.46 GOODS AND SERVICES TAX

Required to obtain compulsory registration

LET US RECAPITULATE ECO
Required to collect TCS u/s 52 @ 1%

Supply of
goods Required to obtain compulsory registration (except
supply of goods where aggregate turnover of intra-State supplier with
Supplier enrollment no. in preceding FY & current FY does not
supplying goods exceed threshold limit)
supply of through ECO
means Can take credit of the TCS collected by ECO and pay
services
rest of the tax
supply of goods
ECO is liable to pay tax in all
and services
In case off ((A)
A) cases
Electronic A)
Commerce includes digital products (D
(D)
DD)) and
d ((E) Supplier is entitled to threshold
E
limit of ` 20 lakh/
services
ces
` 10 lakh for registration
digital network Supply of
notified services ECO is liable to pay tax on such
over services only when the person
electronic In case of
supplying such services is NOT

E-commerce taxability and registration

network (B)
B) aand liable to registration

(C)
(C
(C Supplier is entitled to threshold

(Where supplier supplies goods or services through ECO)

limit of ` 20 lakh/
services
i
` 10 lakh for registration
Supply of
services
owns Required to obtain compulsory

facility/
facilit
registration

Required to collect TCS u/s 52 @

ECO
0.5%
Electronic any
Commerce means person operates

lect
May not collect TCS if supplier is

electronic
Operator who Supply of other unregistered.
than notified
services Entitled to threshold limit of
` 20 lakh/ ` 10 lakh for
Supplier
registration

Digital/
Digita
platform for e-commerce
manages supplying
services Can take credit of the TCS
through ECO
collected by ECO and pay rest of
the tax
 ELECTRONIC COMMERCE TRANSACTIONS 13.4712.47 12.48 GOODS AND SERVICES TAX

TEST YOUR KNOWLEDGE

RATE OF TCS
under 1. Starkart Limited owns and operates a web portal in the name of “Starkart” and
CGST/SGST/ 0.25% is registered with the jurisdictional GST authorities in Delhi as an electronic
UTGST commerce operator and is liable to collect tax at source under section 52.
Rate of TCS
Starkart provides listing service to various sellers for selling the goods to
under IGST 0.5% ultimate customers. Besides this, Starkart also sells its own products through
the same web portal.

TCS
For the listing services provided to sellers, Starkart charges a listing fee at the
rate of 10% of turnover of goods sold by the seller in a particular month. Such
listing fee is recovered from the seller irrespective of any return of goods sold
Value on which Due date of deposit
Person liable to Threshold through Starkart. The customers can choose from wide range of goods listed
TCS to be of TCS to
collect TCS limit
computed Government on the web portal and place an online order for goods.
The payment is made by the customers through the payment gateway in online
10th day of the
Nil month succeeding the mode only. At the time of monthly settlement, Starkart makes the payment to
Net value of
ECO taxable supply calendar month in the sellers after adjusting the tax collection at source at the applicable rates.
which TCS has been
collected The invoice for goods sold on Starkart is issued by the seller in the name of
customers and tax is charged on the basis of location of seller and customer.
The goods are shipped directly by the seller to the customer and there is no
NET VALUE OF TAXABLE SUPPLIES
responsibility of shipping the goods on Starkart for such third-party sellers.
other than
Aggregate value of In case of return of goods by the customer, the shipping is arranged by Starkart.
notified services
taxable supplies of It charges a fee equivalent to 20% of the value of goods returned as cancellation
goods and/or services
charges and refunds the balance amount to the customer.
Net value of Further, 10% of the value of goods returned is collected from the seller by
Taxable
Supplies Starkart as handling charges for return of goods.
In the month of January, Pulkit, a resident of Rajasthan, purchased following
Taxable supplies
returned to supplier goods from Starkart:
a. Laptop having a value of ` 50,000 and a printer having a value of
` 10,000. Both the products are sold by Infocom Limited, a seller listed
on Starkart and registered under GST in the State of Uttar Pradesh.
 ELECTRONIC COMMERCE TRANSACTIONS 13.4912.49 12.50 GOODS AND SERVICES TAX

b. Mobile phone having a value of ` 30,000 sold by Starkart in its own 6. X booked a Hotel in Udaipur, Rajasthan through an e-commerce portal for an
capacity. amount of ` 25,000. As per the terms and conditions, the amount was payable
c. CCTV camera system having a value of ` 1,00,000 sold by Secure World, at the hotel at the time of check in. Whether TCS provisions shall apply in the
listed on Starkart and registered under GST in the State of Gujarat. present case?

All the amounts given above are exclusive of GST, wherever applicable. 7. Sumitra Nandan books a Hotel – Hillpoint Residency, registered under GST- via
Zitcom Technologies Ltd. – an ECO - who in turn is integrated with another
The opening balance of input tax credit for the relevant tax period for Starkart,
ECO-Techsuper Ltd. who has agreement with Hillpoint Residency. You are
Infocom Limited and Secure World is nil. Further, there is no other inward or
required to determine who is required to collected TCS in the given case.
outward supply transaction for Starkart, Infocom Limited and Secure World in
January apart from the aforementioned transactions. Subject to the 8. AB Pvt. Ltd., Pune, Maharashtra, provides house-keeping services. The company
information given above, assume that all the other conditions necessary for supplies its services exclusively through an e-commerce website owned and
availing ITC have been fulfilled. managed by Hi-Tech Indya Pvt. Ltd., Pune. The turnover of AB Pvt. Ltd. in the
current financial year is ` 18 lakh.
GST is applicable on all inward and outward supplies at the following rates
unless otherwise specified:
CGST - 9%, SGST - 9%, IGST - 18% ANSWERS
Compute the net tax liability (including amount collected as TCS) of Starkart
Limited and net GST payable in cash (after set-off of credits, if any) of Infocom 1. Computation of net tax liability (including amount collected as TCS) of
Limited and Secure World, for the month of January. Starkart Limited for January:

2. Whether the rate of tax of 0.5% notified under section 52 is CGST or SGST or a Particulars `
combination of both CGST and SGST?
TCS to be collected from Infocom Limited on supply of Laptop 300
3. Is every e-commerce operator required to collect tax on behalf of actual and a printer to Pulkit
supplier?
[Starkart is an ECO since it owns and operates a web portal
4. State whether the provisions pertaining to tax collected at source under section through which Infocom Limited supplies goods. Further, IGST
52, will be applicable in below mentioned scenarios - is applicable on said inter-State transaction since supplier -
Infocom Limited is located in the State of Uttar Pradesh and
(a) Fitan sells watch on its own through its own website place of supply is Rajasthan [i.e. where movement of goods
(b) ABC limited who is dealer of Fitan brand sells watches through Slipkart, terminates in terms of section 10(1)(a) of the IGST Act, 2017].
an electronic commerce operator Thus, Starkart will collect TCS @ 0.5% of [` 50,000 + ` 10,000]

5. A is an e-commerce operator supplying goods through its electronic portal in GST to be paid by Starkart on supply of mobile phone made 5,400
capacity of an agent. The goods belong to B and the consideration for such on its own account @ 18% (IGST) of ` 30,000. IGST is applicable
supplies is received by A and remitted to B as per the contractual arrangement. on said inter-State transaction since supplier - Starkart is
A requires your help in arriving at the rate at which tax shall be collected from located in Delhi and place of supply is Rajasthan [i.e. where
movement of goods terminates in terms of section 10(1)(a) of
the amount which is received by it against the supplies?
 ELECTRONIC COMMERCE TRANSACTIONS 13.5112.51 12.52 GOODS AND SERVICES TAX

the IGST Act, 2017]. Since supply has been made by Starkart Computation of net GST payable in cash by Secure World for the month
on its own account, no TCS needs to be collected. of January

TCS to be collected from Secure World on supply of CCTV 500 Gross GST Liability 18,000
camera system to Pulkit
[18% of turnover for January (` 1,00,000)]
[ECO - Starkart is liable to collect TCS on this transaction.
Further, IGST is applicable on said inter-State transaction since Less: ITC of GST payable on listing services received from [(10% (1,800)
supplier - Secure World is located in the State of Gujarat and of ` 1,00,000) ×18%]
place of supply is Rajasthan [i.e. where movement of goods Net GST payable from Electronic Cash Ledger 16,200
terminates in terms of section 10(1)(a) of the IGST Act, 2017].
Thus, Starkart will collect TCS @ 0.5% of ` 1,00,000] Less: TCS credited to Electronic Cash Credit Ledger (500)

Listing services provided by Starkart to Infocom Limited and 2,880

Net GST payable in cash 15,700
Secure Limited @ 10% of turnover for the month of January.
Turnover of Infocom Limited and Secure Limited is ` 60,000
and ` 1,00,000 respectively. 2. The rate of TCS as notified under CGST Act is payable under CGST and the
IGST @ 18% on (` 1,60,000 × 10%) is applicable on said inter- equal rate of TCS is expected under the SGST Act also, in effect aggregating
State transaction since supplier – Starkart is located in Delhi to 0.5%.
and place of supply is Uttar Pradesh and Gujarat respectively
[i.e. location of recipient in terms of section 12(2) of the IGST 3. Yes, every e-commerce operator is required to collect tax where consideration
Act, 2017] with respect to the supply made through it is being collected by the e-
commerce operator.
Total GST liability (including TCS) of Starkart for January 9,080
However, no TCS is required to be collected in the following cases:-
Computation of net GST payable in cash by Infocom Limited for the
(i) on supply of services notified under section 9(5) of the CGST Act, 2017.
month of January
(ii) on exempt supplies
Particulars `
(iii) on supplies on which the recipient is required to pay tax on reverse
Gross GST liability 10,800 charge basis.
[18% of turnover for January (` 50,000 + ` 10,000)] 4. Answers for both the scenarios is as follows:

Less: ITC of GST payable on listing services received from [(10% (1,080) As per section 52, every electronic commerce operator not being an agent,
of ` 60,000) ×18%] shall collect an amount calculated at such rate not exceeding one per cent.,
9,720 as may be notified by the Government on the recommendations of
Net GST payable from Electronic Cash Ledger
(a) the Council, of the net value of taxable supplies made through it by
Less: TCS credited to Electronic Cash Credit Ledger (300)
other suppliers where the consideration with respect to such supplies is
Net GST payable in cash 9,420 to be collected by the operator.
 ELECTRONIC COMMERCE TRANSACTIONS 13.5312.53 12.54 GOODS AND SERVICES TAX

Hence, if the person sells on his own, provisions pertaining to tax Section 2(45) defines ECO as any person who owns, operates or manages
collected at source (TCS) won’t be applicable. digital or electronic facility or platform for electronic commerce. Electronic
commerce is defined under section 2(44) to mean the supply of goods or
(b) If ABC limited who is dealer of Fitan brand sells watches through
services or both, including digital products over digital or electronic network.
Slipkart, then the provision of TCS will be applicable to Slipkart.
Since Hi-Tech Indya Pvt. Ltd. owns and manages a website for e-commerce
5. As per section 52(1), the TCS provisions are not applicable in cases where the where both goods and services are supplied, it will be classified as an ECO
ECO is an agent of the supplier. In the present case, A being an ECO is under section 2(45).
supplying goods through the electronic portal in capacity of an agent and
Notification No. 17/2017 CT (R) dated 28.06.2017 issued under section 9(5)
hence the liability to collect tax as per Section 52 shall not arise in this case.
specifies services by way of house-keeping, except where the person
6. No, as per the provisions under section 52, the TCS provisions shall trigger supplying such service through ECO is liable for registration under section
only when the ECO is receiving the consideration for supply from the recipient 22(1), as one such service where the ECO is liable to pay tax on behalf of the
of supply. In the present case, the supplier i.e. the hotel is directly receiving suppliers.
the consideration from the recipient of the services i.e. X. Hence, the present
In the given case, AB Pvt. Ltd. provides house-keeping services through an
transactions shall not trigger the TCS provisions under section 52.
ECO. It is presumed that Hi-Tech Indya is an ECO which is required to collect
7. The given case is a case of multiple e-commerce model wherein a customer tax at source under section 52. However, house-keeping services provided by
orders supplies via ECO-1 who in turn is integrated with ECO-2 who has AB Pvt. Ltd., which is not liable for registration under section 22(1) as its
agreement with the supplier. In this case, ECO-1 will not have any GST turnover is less than `20 lakh, is a service notified under section 9(5). Thus,
information of the supplier. TCS is to be collected by that e-commerce AB Pvt. Ltd. will be entitled for threshold exemption for registration and will
operator who is making payment to the supplier for the particular supply not be required to obtain registration even though it supplies services
happening through it, which is in this case will be ECO-2. through ECO.
Thus, in the given case, TCS is to be collected by ECO-Techsuper Ltd. who is
making payment to Hillpoint Residency for the supply happening through it,
8. As per section 22, every supplier of goods or services or both is required to
obtain registration in the State/ Union territory from where he makes the
taxable supply if his aggregate turnover exceeds threshold limit in a financial
year.
However, section 24 enlists certain categories of persons who are mandatorily
required to obtain registration, irrespective of their turnover. Persons who
supply goods or services or both through such electronic commerce operator
(ECO), who is required to collect tax at source under section 52, is one such
person specified under clause (ix) of section 24. However, where the ECO is
liable to pay tax on behalf of the suppliers of services under a notification
issued under section 9(5), the suppliers of such services are entitled for
threshold exemption.
 1.2 13.2 GOODS AND SERVICES TAX

R
1. INTRODUCTION
CHAPTER 13 The term “return” ordinarily means statement of information (facts) furnished by
the taxpayer, to tax administrators, at regular
intervals. The information to be furnished in the
return generally comprises of the details
pertaining to the nature of activities/business
operations forming the subject matter of
taxation; the measure of taxation such as sale
RETURNS price, turnover, or value; deductions and
exemptions; and determination and discharge
The section numbers referred to in the Chapter pertain to CGST Act and rule numbers of tax liability for a given period.
referred to in the Chapter pertain to CGST Rules, unless otherwise specified.
In any tax law, “filing of returns”
Examples/Illustrations/Questions and Answers given in the Chapter are based on the
constitutes the most important
position of GST law existing as on 30.04.2025.
compliance procedure which enables
the Government/ tax administrator to
estimate the tax collection for a
LEARNING OUTCOMES particular period and determine the
correctness and completeness of the
After studying this Chapter, you will be able to – tax compliance of the taxpayers.

The returns serve the following

‰ comprehend and analyse provisions relating to statements purposes:
furnishing details of outward supplies and inward supplies
a) Mode for transfer of information
‰ understand and analyse provisions relating to furnishing of to tax administration;
returns under section 39 b) Compliance verification program
‰ understand and analyse provisions relating to furnishing of other of tax administration;
returns/statements c) Finalization of the tax liabilities of the taxpayer within stipulated period of
‰ provide an overview of provisions relating to default/delay in limitation;
furnishing return d) Providing necessary inputs for taking policy decision;

‰ explain the provisions relating to GST practitioner e) Management of audit and anti-evasion programs of tax administration

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.3 13.3 1.4 13.4 GOODS AND SERVICES TAX

The taxpayer is generally required to

Section 40 First return
furnish the return in a specific statutory
format. These formats are, therefore, Section 41 Availment of input tax credit**
designed to take care of all the Filing of GST returns helps in
provisions of the law that have a Section 44 Annual Return
determination of tax liability of
bearing on computation of tax liability the return filer and at the same Section 45 Final Return
of a taxpayer. Hence, a study of various time it also has a huge bearing
fields contained in the form of return on determination of tax Section 46 Notice to return defaulters
vis-à-vis the relevant corresponding liability of other persons with
whom the former has entered Section 47 Levy of late fee
provisions of the tax law, can facilitate
into taxable activities.
overall understanding of the tax law in Section 48 Goods and services tax practitioners
a better manner.
Section 150 Obligation to furnish information return
Under the GST laws, the correct and
timely filing of returns is of utmost importance because of two reasons. Firstly, Section 123 Penalty for failure to furnish information return
under GST laws, a taxpayer is required to estimate his tax liability on “self-
Apart from this, section 52, inter alia, prescribes a statement for tax collection at
assessment” basis and deposit the tax amount along with the filing of such return.
source to be furnished by Electronic Commerce Operator. The same has already
The return, therefore, constitutes a kind of working
been discussed in Chapter 12 – Electronic Commerce Transactions in this Module of
sheet/supporting document for the tax authorities
the Study Material.
that can be relied upon as the basis on which the tax
has been computed by the taxpayer. Secondly, under **Provisions of section 41 relating to availment of input tax credit have already been
the GST regime, filing of returns not only determines discussed in Chapter 7 – Input Tax Credit in this Module of the Study Material; thus,
the tax liability of the person filing the same, but it said provisions are not discussed here. The provisions relating to forms and manner,
also has a huge bearing on determination of tax in which information is to be furnished through returns, are given under Chapter
liability of other persons with whom the former has entered into transactions in VIII of the CGST Rules [Rules 59-84 2]. State GST laws also prescribe identical
course or furtherance of business. provisions in relation to filing of returns.

Chapter IX of the CGST Act [Sections 37 to 48 1] and sections 150 & 123 prescribe
the provisions relating to filing of returns as under: Provisions of returns, other than late fee, under CGST Act have also been
made applicable to IGST Act vide section 20 of the IGST Act.
Section 37 Furnishing details of outward supplies

Section 38 Furnishing details of inward supplies All the returns under GST laws are to be filed electronically. Taxpayers can file
the statements and returns by various modes. Firstly, they can file their statement
Section 39 Furnishing of returns and returns directly on the GST common portal online. However, this may be

1 2
Sections 42, 43 and 43A have been omitted. Rules 69, 70, 71, 72, 73, 74, 75, 76, 77 and 79 have been omitted.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.5 13.5 1.6 13.6 GOODS AND SERVICES TAX

tedious and time consuming for taxpayers with large number of invoices. For such ™ Electronic credit ledger means the electronic credit ledger referred to in
taxpayers, offline utilities have been provided by GSTN that can be used for sub-section (2) of section 49 [Section 2(46)].
preparing the statements offline after downloading the auto populated details and
™ Exempt supply means supply of any goods or services or both which attracts
uploading them on the common portal. GSTN has also developed an ecosystem of
nil rate of tax or which may be wholly exempt from tax under section 11, or
GST Suvidha Providers (GSP) that will integrate with the common portal.
under section 6 of the Integrated Goods and Services Tax Act, and includes
non-taxable supply [Section 2(47)].
™ Goods and services tax practitioner means any person who has been
approved under section 48 to act as such practitioner [Section 2(55)].
™ Invoice or tax invoice means the tax invoice referred to in section 31
[Section 66].
™ Inward supply in relation to a person, shall mean receipt of goods or services
or both whether by purchase, acquisition or any other means with or without
consideration [Section 2(67)].
The details furnished by the taxpayer in the form of returns shall be consolidated
™ Input service distributor means an office of the supplier of goods or services
and stored at the common portal which will be common for both, i.e. Central
or both which receives tax invoices issued under section 31 towards the
Government and State Governments.
receipt of input services and issues a prescribed document for the purposes
of distributing the credit of central tax, State tax, integrated tax or Union
2. RELEVANT DEFINITIONS territory tax paid on the said services to a supplier of taxable goods or services
or both having the same Permanent Account Number as that of the said office
™ Common portal means the common goods and services tax electronic portal
[Section 2(61)].
referred to in section 146 [Section 2(26)].
™ Non-resident taxable person means any person who occasionally
™ Credit note means a document issued by a registered person under sub-
undertakes transactions involving supply of goods or services or both,
section (1) of section 34 [Section 2(37)].
whether as principal or agent or in any other capacity, but who has no fixed
™ Casual taxable person means a person who occasionally undertakes place of business or residence in India [Section 2(77)].
transactions involving supply of goods or services or both in the course or
™ Outward supply in relation to a taxable person, means supply of goods or
furtherance of business whether as principal, agent or in any other capacity,
services or both, whether by sale, transfer, barter, exchange, licence, rental,
in a State or a Union Territory where he has no fixed place of business
lease or disposal or any other mode, made or agreed to be made by such
[Section 2(20)].
person in the course or furtherance of business [Section 2(83)].
™ Debit note means a document issued by a registered person under sub-
™ Prescribed means prescribed by rules made under this Act on the
section (3) of section 34 [Section 2(38)].
recommendations of the Council [Section 2(87)].
™ Electronic cash ledger means the electronic cash ledger referred to in sub-
section (1) of section 49 [Section 2(43)].

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.7 13.7 1.8 13.8 GOODS AND SERVICES TAX

™ Proper officer in relation to any function to be performed under this Act, However, a person who organises or arranges, directly or indirectly, supply of
means the Commissioner or the officer of the central tax who is assigned that specified actionable claims, including a person who owns, operates or
function by the Commissioner in the Board [Section 2(91)]. manages digital or electronic platform for such supply, shall be deemed to
be a supplier of such actionable claims, whether such actionable claims are
™ Quarter shall mean a period comprising three consecutive calendar months, supplied by him or through him and whether consideration in money or
ending on the last day of March, June, September and December of a money's worth, including virtual digital assets, for supply of such actionable
calendar year [Section 2(92)]. claims is paid or conveyed to him or through him or placed at his disposal in
™ Recipient of supply of goods or services or both, means— any manner, and all the provisions of this Act shall apply to such supplier of
specified actionable claims, as if he is the supplier liable to pay the tax in
x where a consideration is payable for the supply of goods or services or relation to the supply of such actionable claims [Section 2(105)].
both, the person who is liable to pay that consideration;
™ Tax period means the period for which the return is required to be furnished
x where no consideration is payable for the supply of goods, the person [Section 106].
to whom the goods are delivered or made available, or to whom
™ Taxable person means a person who is registered or liable to be registered
possession or use of the goods is given or made available; and
under section 22 or section 24 [Section 2(107)].
x where no consideration is payable for the supply of a service, the person
™ Taxable supply means a supply of goods or services or both which is leviable
to whom the service is rendered,
to tax under this Act [Section 2(108)].
and any reference to a person to whom a supply is made shall be construed
™ Valid return means a return furnished under sub-section (1) of section 39 on
as a reference to the recipient of the supply and shall include an agent acting
which self-assessed tax has been paid in full [Section 2(117)].
as such on behalf of the recipient in relation to the goods or services or both
supplied [Section 2(93)]. ™ Online information and database access or retrieval services means
services whose delivery is mediated by information technology over the
™ Registered person means a person who is registered under section 25 but
internet or an electronic network and the nature of which renders their supply
does not include a person having a Unique Identity Number [Section 2(94)].
impossible to ensure in the absence of information technology and includes
™ Return means any return prescribed or otherwise required to be furnished by electronic services such as,––
or under this Act or the rules made thereunder [Section 2(97)].
(i) advertising on the internet;
™ Reverse charge means the liability to pay tax by the recipient of supply of
(ii) providing cloud services;
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- (iii) provision of e-books, movie,
section (3) or sub- section (4) of section 5 of the Integrated Goods and music, software and other
Services Tax Act [Section 2(98)]. intangibles through
telecommunication
™ Supplier in relation to any goods or services or both, shall mean the person
networks or internet;
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.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.9 13.9 1.10 13.10 GOODS AND SERVICES TAX

(iv) providing data or information, retrievable or otherwise, to any person ™ supplier of online information and database access or retrieval services
in electronic form through a computer network; (OIDAR) located in non-taxable territory and providing such services to
a non-taxable online recipient [Provisions relating to OIDAR services and
(v) online supplies of digital content (movies, television shows, music and
non-taxable online recipient have been discussed in detail in Chapter 14:
the like);
Import and Export under GST in Module 3 of this Study Material.]
(vi) digital data storage; and
i ISD
(vii) online gaming [Section 2(17) of the IGST Act] i Non-resident taxable person
All registered i Composition taxpayer
™ Zero rated supply means any of the following supplies of goods or services Persons persons
or both, namely:–– required including i Person deducting tax at source
to file casual i Person collecting tax at source
(a) export of goods or services or both; or registered i Supplier of OIDAR services
GSTR-1
person located in non-taxable territory
(b) supply of goods or services or both for authorised operations to a
providing services to non-
Special Economic Zone developer or a Special Economic Zone unit taxable online recipient
[Section 16 of the IGST Act].
(ii) What is the form for submission of details of outward supplies?
[Section 37(1) read with rule 59(1)]
3. FURNISHING DETAILS OF OUTWARD
The details of outward supplies are required to be furnished, electronically, in
SUPPLIES [SECTION 37 READ WITH RULE 59] Form GSTR-1 for the month or quarter. Such details can be furnished
(i) Who is required to furnish the details of outward supplies? through the common portal, either directly or from a Facilitation Centre
[Section 37(1) read with rule 59(1)] notified by the Commissioner.

The details of outward supplies (see definition under Relevant Definitions) of Further, a Nil GSTR-1 can be filed through an SMS using the registered mobile
both goods and services are required to be furnished by every registered number of the taxpayer.
person including casual registered person except g
p the following: (iii) What is the due date of submission of GSTR-1? [Section 37(1)]
™ input service distributor (ISD) GSTR-1 for a particular tax period is filed on or
™ non-resident taxable person (NRTP) before the 10th day of the immediately succeeding
tax period. In other words, GSTR-1 of a
™ person paying tax under composition
month/quarter can be filed any time between 1st
scheme
and 10th day of the succeeding month/quarter. The
™ person deducting tax at source due date of filing GSTR-1 may be extended by the
™ person collecting tax at source i.e., e- Commissioner/ Commissioner of State GST/
commerce operator (ECO), not being an Commissioner of UTGST for a class of taxable persons by way of a notification.
agent

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.11 13.11 1.12 13.12 GOODS AND SERVICES TAX

The time limit for furnishing the details of outward supplies in Form GSTR-1 as the details submitted using IFF will be reflected in the GSTR-2A, GSTR-2B,
is extended 3 as follows: GSTR-4A 5 or GSTR-6A 6 of the recipients, as the case may be.
Taxpayers opting for QRMP Scheme may furnish the details of such outward
Class of registered person Time limit for furnishing the details
supplies to a registered person, as he may consider necessary, for the 1st and
of outward supplies in Form GSTR-1
for each quarter/month 2nd months of a quarter, upto a cumulative value of ` 50 lakh in each of the
first 2 months of the quarter using IFF electronically on the common portal.
Registered persons opting for 13th day of the month succeeding such However, invoices pertaining to last month of a quarter are to be uploaded
QRMP scheme 4 quarter in GSTR-1 only.

11th day of the month succeeding such The invoices are to be furnished in IFF till the 13th day of the succeeding
Others
month month. After 13th of the month, this facility for furnishing IFF for previous
month would not be available.

(iv) Invoice Furnishing Facility [IFF] for taxpayers opting for QRMP (1) The facility for the month of January will expire by 13th of
Scheme [Sub-rules (2) and (3) of rule 59] February.

Invoice Furnishing Facility (IFF) is a facility provided to quarterly taxpayers As a facilitation measure, continuous upload of invoices would also be
who are in QRMP scheme, to file their details of outward supplies in first two provided for the registered persons wherein they can save the invoices in IFF
months of the quarter, to pass on the credit to their recipients. from the 1st day of the month till 13th day of the succeeding month. The said
facility would however be available, say for the month of July, from 1st August
Invoice furnishing facility (IFF) is not mandatory, but an optional facility made
till 13th August. Similarly, for the month of August, the said facility will be
available to the registered persons under the QRMP scheme. At his option, a
available from 1st September till 13th September 7.
registered person may choose to furnish the details of outward supplies made
during a quarter in Form GSTR-1 only, without using the IFF. The details of invoices furnished using IFF in the first 2 months of the quarter
are not required to be furnished again in GSTR-1 for the said quarter.
The facility of furnishing details of invoices in IFF has been provided so as to
allow details of such supplies to be duly reflected in the Form GSTR-2A and (2) A registered person who has availed the QRMP scheme wants
Form GSTR-2B of the concerned recipient. Otherwise, in case where a buyer to declare 2 invoices out of the total 10 invoices issued in the
has made purchases from a person opting for QRMP scheme, he could not 1st month of quarter since the recipient of supplies covered by those
have claimed full ITC but due to introduction of IFF, such delay will not occur 2 invoices desires to avail ITC in that month itself. Details of these 2 invoices
may be furnished using IFF.
The details of the remaining 8 invoices shall be furnished in Form GSTR-1 of

5
Form GSTR-4A is the system generated statement of inward supplies of a composition supplier.
It has been discussed subsequently in this chapter.
3 6
vide Notification No. 83/2020 CT dated 10.11.2020 Form GSTR-6A is the system generated statement of inward supplies of an ISD. It has been
4
QRMP scheme - a Quarterly Return scheme where payment has to be made on monthly basis - discussed subsequently in this chapter.
7
has been discussed in detail subsequently in this chapter. Circular No. 143/13/2020 GST dated 10.11.2020

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.13 13.13 1.14 13.14 GOODS AND SERVICES TAX

the said quarter. The two invoices furnished in IFF shall be reflected in Form he has not furnished the return in Form GSTR-3B for preceding tax
GSTR-2B of the concerned recipient of the 1st month of the quarter and period.
remaining 8 invoices furnished in Form GSTR-1 shall be reflected in (iii) a registered person, to whom an intimation has been issued on the
Form GSTR-2B of the concerned recipient of the last month of the quarter. common portal under the provisions of rule 88C(1) in respect of a tax
period, shall not be allowed to furnish the details of outward supplies
There will be no late fee applicable on late filing of IFF, as IFF is Form GSTR-1 or using IFF for a subsequent tax period, unless he has
neither mandatory nor allowed to be filed after the due date. However, either deposited the amount specified in the said intimation or has
if a registered person does not opt to upload invoices using IFF, then he has furnished a reply explaining the reasons for any amount remaining
to upload invoice details for all the 3 months of the quarter in unpaid, as required under the provisions of rule 88C(2). Rule 88C has
Form GSTR-1. been discussed subsequently in this chapter.
(iv) a registered person, to whom an intimation has been issued on the
(v) What are the cases where a registered person is debarred from
common portal under the provisions of rule 88D(1) in respect of a tax
furnishing details of outward supplies in GSTR-1/IFF? [Section
period/periods, shall not be allowed to furnish GSTR-1/IFF for a
37(4) read with rule 59(6)]
subsequent tax period, unless he has either paid the amount equal to
A registered person shall not be the excess ITC as specified in the said intimation or has furnished a reply
allowed to furnish the details of explaining the reasons in respect of the amount of excess ITC that still
outward supplies for a tax period, if remains to be paid, as required under the provisions of rule 88D(2).
the details of outward supplies for Rule 88D has been discussed subsequently in this chapter.
any of the previous tax periods has (v) a registered person shall not be allowed to furnish GSTR-1/IFF, if he has
not been furnished by him. not furnished the details of the bank account as per the provisions of
However, the Government may, on rule 10A 8.
the recommendations of the Council,
by notification, subject to such A taxpayer cannot file GSTR-1 before the end of the current tax
conditions and restrictions as may be specified therein, allow a registered period.
person or a class of registered persons to furnish the details of outward However, following are the exceptions to this rule:
supplies, even if he has not furnished the details of outward supplies for one
or more previous tax periods [Section 37(4)]. a. Casual taxpayers, after the closure of their business

Further, rule 59(6) stipulates that: b. Cancellation of GSTIN of a normal taxpayer

(i) a registered person shall not be allowed to furnish the details of A taxpayer who has applied for cancellation of registration will be
outward supplies in Form GSTR-1, if he has not furnished the return in allowed to file GSTR-1 after confirming receipt of the application.
Form GSTR-3B for the preceding month.
(ii) a registered person, opting for QRMP scheme shall not be allowed to
furnish the details of outward supplies in Form GSTR-1 or using IFF, if 8
Provisions of rule 10A have been discussed in Chapter 9 – Registration in this Module of the
Study Material.

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 RETURNS 1.15 13.15 1.16 13.16 GOODS AND SERVICES TAX

(vi) What are the contents of GSTR-1? the supply is intra-State or inter-State. Let us first understand what is B2B
supply and what is B2C supply?
CONTENTS OF GSTR- 1

Basic & Other Details Details of Outward Supplies

B2C means business to
• GSTIN • B2B including UIN holders B2B means business to consumer transaction. In
• Legal name • B2C inter-State supplies business transaction. In such type of transactions,
• Trade name, if any where invoice value ! ` 2.5 such type of transactions, the recipient is consumer
• Aggregate turnover in lakh the recipient is also a or unregistered and
previous year • Consolidated details of other registered supplier and
• Year and Month B2C supplies
hence, will not take or
hence, takes ITC. cannot take ITC.
• HSN-wise summary of • Zero rated and 32
outward supplies • Deemed exports
• Details of documents • Debit/ Credit notes issued
issued during the tax • Nil rated/ Exempted/ Non- (A) Details of outward supplies required to be furnished in IFF
period GST
• Amendments for prior In the IFF, the registered person has to submit the B2B (business to
period business) invoice details of both inter-State and intra-State supply
• Advances received/advances transactions along with debit and credit notes of the B2B invoices
adjusted issued during the month.

The details of outward supplies furnished using IFF shall include the –
GST is a destination-based consumption tax. Hence, the tax (a) invoice wise details of inter-State and intra-State supplies made
revenue is transferred to the State which is the place of to the registered persons;
supply 9 of the particular transaction. Since, the place of supply is
(b) debit and credit notes, if any, issued during the month for such
crucial for determining the share of every State in the tax revenue,
GSTR-1 also captures information relating to place of supply. invoices issued previously.

From the above discussion, it can be inferred that IFF shall include
(vii) What kind of details of outward supplies are required to be
invoices pertaining to B2B supplies irrespective of whether they are
furnished in GSTR-1 and IFF? [Explanation to section 37 read
intra-State or inter- State supplies. This is so because the recipients will
with sub-rules (4) and (5) of rule 59]
take ITC basis such invoices.
Uploading of invoices in IFF and GSTR-1 depends on whether the supply is
B2B or B2C. Further, uploading of invoice in GSTR-1 also depends on whether

9
Principles determining the place of supply have been discussed in detail in Chapter 3 – Place
of Supply in Module 1 of this Study Material.

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 RETURNS 1.17 13.17 1.18 13.18 GOODS AND SERVICES TAX

(B) Details of outward supplies required to be furnished in For B2C supplies, uploading in general is not required as the buyer will
GSTR-1/GSTR-1A not be taking ITC. However, still in order to implement the destination-
based principle, invoices of value more than ` 1 lakh in inter-State B2C
The registered person is required to furnish:-
supplies need to be uploaded. For inter-State B2C invoices upto
(i) details of invoices and revised invoices issued in relation to ` 1 lakh, State wise summary is sufficient and for all intra-State B2C
supplies made by him to registered and unregistered persons invoices, only consolidated details need to be given.
(i.e. B2B as well as B2C supplies) and debit notes and credit notes
(3) Mr. XY makes intra-State taxable supplies for ` 10,000 and
in GSTR-1 and
` 50,000 to Mr. AB, a registered person and ` 2,60,000 to
(ii) additional details or the amendments of the details of outward Mr. DE, an unregistered person. He also makes inter-State
supplies of goods or services or both furnished in Form GSTR- taxable supplies for ` 1,00,000 and ` 45,000 to Mr. RS, a registered
1A, as per the requirement of the registered person person and ` 90,000 to Mr. OP, an unregistered person.
in the following manner: Mr. XY will report invoice-wise details of, intra-State supplies made to
Mr. AB and inter-State supplies made to Mr. RS, in GSTR-1 to be filed
Sl. Invoice-wise Consolidated Debit and
by him.
No. details of ALL details of ALL credit notes
Invoices related details can be uploaded any time during the tax period
(i) Inter-State and Intra-State supplies Issued during
and not just at the time of filing of IFF/ GSTR-1.
Intra-State supplies made to unregistered the month for
made to registered persons for each rate invoices Details related to invoices can be modified/deleted any number of times till
persons, i.e. B2B of tax issued the submission of IFF/ GSTR-1 of a tax period. The uploaded invoice details
supplies. previously are in a draft version till the time IFF/GSTR-1 is submitted and can be changed
(ii) Inter-State Inter-State supplies irrespective of due date.
supplies made to made to unregistered
unregistered persons with invoice Scanned copies of invoices are not required to be uploaded. Only
persons with value upto ` 1,00,000 certain prescribed fields of information from invoices need to be
invoice value for each rate of tax furnished e.g., invoice no., date, value, taxable value, rate of tax, amount
exceeding separately for each of tax etc. In case there is no consideration, but the activity is a supply
` 1,00,000, i.e. B2C State
by virtue of Schedule I of CGST Act, the taxable value will have to be
supplies
worked out as prescribed and furnished.

From the above discussion, it can be inferred that for B2B supplies,
Description of each item in the invoice need not be furnished. Only
details of all invoices need to be uploaded in GSTR-1/ Form GSTR-1A
HSN (Harmonized System of Nomenclature) code in respect of supply of
irrespective of whether they are intra-State or inter- State supplies. This
goods and accounting code in respect of supply of services need to be
is so because the recipient will take ITC basis such invoices.
fed.

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 RETURNS 1.19 13.19 1.20 13.20 GOODS AND SERVICES TAX

Indication of HSN details (viii)How are the details of outward supply furnished in the current
period amended? [Proviso to rule 59(1)]
The minimum number of digits of HSN code that a filer has to upload depend
on his turnover in the last year. In cases where a taxpayer, after having filed Form GSTR-1, realizes that some
amendment (downward or upward) is required to be made in his tax liability
in Form GSTR-1, an optional Form GSTR-1A is provided to him.
HSN or HS (Harmonized Commodity Description and Coding
System) is a standardized system of nomenclature of different This allows him to add any particulars of the
goods developed by World Customs Organization, which is current tax period missed out in reporting in
accepted globally. Form GSTR-1 of current tax period or amend
any particulars already declared in Form GSTR-
HSN uses 6-digits uniform codes to classify different goods. India uses
1 of current tax period (including those
eight-digits codes for more specific and precise classification.
declared in IFF, for the first and second months
of a quarter, if any, for quarterly taxpayers).

The tax payer will be required to report HSN in GSTR-1 as under 10: A registered person may, after furnishing the details of outward supplies of
goods or service or both in Form GSTR-1 for a tax period but before filing of
Aggregate Annual turnover in Number of Digits of HSN Code return in Form GSTR-3B for the said tax period, at his own option, amend or
the preceding financial year furnish additional details of outward supplies of goods or services or both in
Form GSTR-1A for the said tax period [Proviso to rule 59(1)].
Upto ` 5 crore For B2B supply - 4
(5) A supplier issued two invoices INV1 and INV2 in the month of
For B2C supply – 4 (optional)
January. Then, he furnished the details of the invoice INV1 on 8th
More than ` 5 crore 6 Feb in Form GSTR-1. However, he misses one invoice INV2 and
furnishes the details of the same in Form GSTR-1A on 15th Feb.
(4) The aggregate turnover of Yellow Lemon Pvt. Ltd., Red Pepper
In this case, INV1 will go to Form GSTR-2B of the recipient for the month of
Pvt. Ltd. and Blue Berry Pvt. Ltd. in the previous financial year are `
January made available on 14th Feb. Further, INV2 will be made available in
1.5 crore, ` 4.8 crore and ` 6 crore respectively. While Yellow Lemon Form GSTR-2B of the recipient for the month of February made available on
Pvt. Ltd. and Red Pepper Pvt. Ltd. will be required to upload 4 digits of HSN 14th March.
code of the goods sold to registered persons, uploading of 4 digits HSN code
(6) A supplier issued two invoices INV 3 and INV 4 in the month of
will be optional for the two companies when the goods are sold to
January. Then, he furnished the details of the invoice INV 3 on 15th
unregistered persons. Blue Berry Pvt. Ltd. will have to upload 6 digits of HSN
Feb in Form GSTR-1.
code of goods sold by it.
However, he declared INV 4 in Form GSTR-1A on 16th Feb. In this case, both
INV3 and INV4 will be made available in Form GSTR-2B of the recipient for
the month of February made available on 14th March.

10
Notification No. 78/2020 CT dated 15.10.2020

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.21 13.21 1.22 13.22 GOODS AND SERVICES TAX

Key features of Form GSTR-1A are as follows: 1 (Quarterly), whichever is later, and will be available till the actual
‰ Form GSTR-1A is an optional facility. filing of Form GSTR-3B of the same tax period.

‰ It can be filed only once for a return period. ™ The supplies reported in Form GSTR-1 of the current tax period
(including those declared in IFF, for the first month, M1 and
‰ It allows to amend the records filed in the Form GSTR-1 of current tax second month, M2 of a quarter, if any) can be amended through
period only. corresponding quarterly GSTR-1A.
‰ The corresponding effect of the ™ From the liability perspective, the net impact of the particulars
changes made through declared in GSTR 1A (Quarterly), along with particulars furnished
Form GSTR-1A on the liability of the GSTR-1A in Form GSTR-1 (Quarterly) (or through IFF of Month M1 and M2,
taxpayer shall be reflected in Form if filed), shall be auto-populated in Form GSTR-3B (Quarterly) of
GSTR-3B for the same tax period. the same tax period.
‰ At the recipient’s end, the ITC for the ™ There will be no separate amendment facility available for records
supplies declared or amended by the furnished through IFF for the months M1 and M2, during the
suppliers through Form GSTR-1A will be months M1 and M2.
available to the recipient in Form GSTR- Amendment of outward supplies
2B generated for the next tax period. ‰ In case where change is required to be made in GSTIN of a recipient for
for current tax period
a supply reported in Form GSTR-1 of a tax period, the same can be
‰ It can be amended only electronically rectified through Form GSTR-1 for the subsequent tax period only.
through the common portal, either directly or through a Facilitation
Centre as may be notified by the Commissioner. (ix) How are the details of outward supply furnished in prior
periods amended? [Section 37(3)]
‰ There is no due date for filing of GSTR-1A. For the taxpayers filing Form
GSTR-1 on monthly basis: (a) Scope of amendment/ correction entries
™ Form GSTR-1A will be available on the portal every month from Tables 9, 10 and 11(II) of GSTR-1 provide for amendments in details of
the due date of filing of Form GSTR-1 or the actual date of filing taxable outward supplies furnished in earlier periods (hereinafter
of Form GSTR-1, whichever is later, and will be available till the referred to as “Amendment Table”).
actual filing of corresponding Form GSTR-3B of the same tax
period. The details of original debit notes/ credit notes / refund vouchers issued
by the tax-payer in the current tax period as also the revision in the
™ From the liability perspective, the net impact of particulars
declared or amended through Form GSTR-1A, along with the debit notes/ credit notes / refund vouchers issued in the earlier tax
particulars declared in Form GSTR-1, shall be auto-populated in periods are required to be shown in Table 9 of the GSTR-1.
Form GSTR-3B for the same tax period as that of Form GSTR-1. Ordinarily, in Amendment Table, the supplier is required to give details
‰ For the QRMP taxpayers, who files Form GSTR-1 on Quarterly basis: of original invoice (No and Date), the particulars of which have been
™ Form GSTR-1A shall be available quarterly after actual filing of wrongly entered in GSTR-1 of the earlier months and are now sought
Form GSTR-1 (Quarterly) or the due date of filing of Form GSTR - to be amended.

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 RETURNS 1.23 13.23 1.24 13.24 GOODS AND SERVICES TAX

(8) An entity has furnished the annual return for the

previous financial year on 15th August in the current financial
year. An error is discovered in respect of a transaction
by way of pertaining to the month of November of the previous financial year. In
Amendment this case, any error pertaining to the transaction in the month of
Particulars Tables given in November of the previous financial year cannot be rectified beyond 15th
furnished in GSTR-1 of August in the current financial year.
GSTR-1 of subsequent

can be amended
prior periods periods It may be noted that, the expression ‘due date’ is missing in
time limit prescribed for making amendments u/s 37(3) [GSTR-1].
Therefore, such date apparently means actual date of filing and not
the due date.
(b) Rectification of errors
(x) Nil GSTR-1 [Rule 67A]
If the supplier discovers any error or omission, he shall rectify the same
in the tax period during which such error or omission is noticed, and Filing of GSTR-1 is mandatory for all normal and casual taxpayers, even if
pay the tax and interest, if any, in case there is short payment, in the there is no business activity in any particular tax period. For such tax
return to be furnished for such tax period. period(s), a Nil GSTR-1 is required to be filed as prescribed under rule 67A.

(7) A supplier discovers a mistake in details of the invoice A Nil GSTR-1 does not have any entry. For example, a Nil GSTR-1 for a tax
furnished in GSTR-1 for the month of August, in October. period cannot be filed, if the taxpayer has made any outward supply
He can rectify the said mistake in the GSTR-1 for the month (including exempt, nil rated or non-GST supplies), or it has received supplies
of October. on which tax is payable under reverse charge or an amendment needs to be

(c) Time limit for rectification made to any of the supplies declared in an earlier return or any credit or debit
notes is to be declared / amended etc.
In above example, suppose for some reason, supplier could not make
correction at the time of filing of GSTR-1 for the month of October then A Nil GSTR-1 can be filed through an SMS using the registered mobile
number of the taxpayer. GSTR-1 submitted through SMS is verified by
he can make such amendments in the subsequent periods. However,
the maximum time limit within which such amendments are permissible registered mobile number-based OTP facility.

is earlier of the following dates: A taxpayer can file Nil GSTR-1, anytime from 1st day of the month subsequent
of the tax period. For example, GSTR-1 for the calendar month of April, can
‰ 30th day of November following the end of the financial year to
be filed from 1st May onwards. GSTR-1 for the quarter of April to June can
which such details pertain or
be filed from 1st July onwards.
‰ Date of filing of the relevant annual return

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 RETURNS 1.25 13.25 1.26 13.26 GOODS AND SERVICES TAX

The second thing would be to ensure that taxpayers

ٌ Taxpayer opting for voluntary cancellation of GSTIN has follow up on uploading the invoices of their inward
d Follow up with
suppliers to upload
to file GSTR-1 for active period. supplies by their suppliers. This would be helpful in
the invoices of
ٌ In cases where a taxpayer has been converted from a normal ensuring that the ITC is available without any hassle and
d inward supplies
taxpayer to composition taxpayer at the beginning of any financial delay.

year, GSTR-1 will be available for filing only for the period during Recipients can also encourage their suppliers to upload their invoices on a regular
which the taxpayer was registered as normal taxpayer. The GSTR-1 for basis instead of doing it on or close to the due date. The system would allow recipients
the said period, even if filed with delay would accept invoices for the to see if their suppliers have uploaded invoices pertaining to them.
period prior to conversion. (xi) Maximum time-limit for furnishing Form GSTR-1 [Section
37(5)]
What are the precautions that a taxpayer is required to take for a hassle-free Maximum time-limit upto which a registered person can furnish the details
compliance under GST? of outward supplies in Form GSTR-1 for a tax period is 3 years from the due
One of the most important things under GST is the timely uploading of the details of date of furnishing such details. This time limit can be extended by the
Government for a registered person or a class of registered persons subject
outward supplies in GSTR-1. How best this can be ensured will depend on the number
to such conditions and restrictions as may be specified therein.
of B2B invoices that the taxpayer issues.

If the number is small, the taxpayer can upload all the information in one go.
4. COMMUNICATION OF DETAILS OF INWARD
However, if the number of invoices is large, the invoices (or debit/ credit notes) should
be uploaded on a regular basis. SUPLIES AND INPUT TAX CREDIT
GST common portal allows regular uploading of details of
[SECTION 38 READ WITH RULE 60]
Regular invoices. Till the return is actually submitted, the system also The details of outward supplies furnished by the registered persons under section
uploading of allows the taxpayer to modify the uploaded invoices’ details. 37(1) and of such other supplies as may be prescribed, and an
invoices Auto-Generated Statement containing the details of ITC shall be made available
Therefore, it would always be beneficial for the taxpayers to
electronically to the recipients of such supplies in such form and manner, within
regularly upload the invoices.
such time, and subject to such conditions and restrictions as may be prescribed.
Last minute rush makes uploading difficult and comes with higher risk of possible
failure and default. For bulk uploading of invoices, offline utilities or ERP software
can be used.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.27 13.27 1.28 13.28 GOODS AND SERVICES TAX

Unless the taxpayer either deposits the amount specified in the said intimation or
(A)
(i) by any registered person within such furnishes a reply explaining the reasons for any amount remaining unpaid, such a
Details of inward period of taking registration as may be person should not be allowed to file Form GSTR-1/ IFF for the subsequent tax period.
supplies in respect of prescribed
which ITC may be Rule 88C reads as follows:
available to the (ii) by any registered person, who has
recipient defaulted in payment of tax and where such Where the tax payable by a registered person, in accordance with the statement of
default has continued for such period as outward supplies furnished by him in Form GSTR-1 or using the IFF in respect of a tax
may be prescribed
period, exceeds the amount of tax payable by such person in accordance with the
(iii) by any registered person, the output
return for that period furnished by him in Form GSTR-3B, by such amount and such
tax payable by whom in accordance with
Auto-
(B) GSTR-1 furnished by him during such period, percentage, as may be recommended by the Council, the said registered person shall
generated as may be prescribed, exceeds the output tax
statement be intimated of such difference.
Details of supplies in paid by him during the said period by such
respect of which such limit as may be prescribed**
Such registered person shall be intimated in prescribed form, electronically on the
ITC cannot be availed,
whether wholly or (iv) by any registered person who,
common portal, and a copy of such intimation shall also be sent to his e-mail address*.
partly, by the recipient, during such period as may be prescribed,
has availed ITC of an amount that exceeds
In said intimation, the said difference between GSTR-1 and GSTR-3B will be highlighted
on account of the
details of the said an be av
the credit that can availed by him in and he will be directed to:
accordance with h , b
by such limit as may
supplies being (A)
be prescribed ## # (a) pay the differential tax liability, along with interest under section 50, through
furnished under sub-
section (1) of section 37 (v) by any registered person, who has prescribed form; or
defaulted in discharging his tax liability in
accordance with the provisions of section (b) explain the aforesaid difference in tax payable on the common portal,
49(12) subject to such conditions and
restrictions as may be prescribed; or within a period of 7 days.

*email address which registered person has provided at the time of registration or as amended
(vi) by such other class of persons as
may be prescribed from time to time

Such registered person shall, upon receipt of the aforesaid intimation, either:
(a) pay the amount of the differential tax liability, as specified in intimation, fully or
**Manner of dealing with difference in liability reported in statement of partially, along with interest under section 50, and furnish the details thereof
outward supplies and that reported in return [Rule 88C] electronically on the common portal; or

Rule 88C provides the mechanism for dealing with difference in liability reported in (b) furnish a reply electronically on the common portal, incorporating reasons in
statement of outward supplies between Form GSTR-1 and Form GSTR-3B. Accordingly, respect of that part of the differential tax liability that has remained unpaid, if
where the tax liability as per Form GSTR-1 for a tax period exceeds the tax liability as any,
per Form GSTR-3B for that period by more than a specified extent, the registered within the period of 7 days.
person would be intimated on the portal of such difference and be directed to either
(i) pay the differential tax liability along with interest, or (ii) explain the difference, Where any amount specified in the said intimation remains unpaid within 7 days’
within 7 days’ period. period and where no explanation or reason is furnished by the registered person in

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.29 13.29 1.30 13.30 GOODS AND SERVICES TAX

default or where the explanation or reason furnished by such person is not found to form electronically on the common portal, and a copy of such intimation shall also
be acceptable by the proper officer, the said amount shall be recoverable in be sent to his e-mail address provided at the time of registration or as amended
accordance with the provisions of section 79 11. from time to time. Said intimation shall highlight the said difference and will direct
## Manner of dealing with difference in ITC available in Form GSTR-2B and Form him to —
GSTR-3B [Rule 88D]
(a) pay an amount equal to the excess ITC availed in the said Form GSTR-3B,
Rule 88D provides the mechanism which allows system-based intimation to the along with interest payable under section 50, through prescribed form, or
taxpayer about the excess availment of ITC in Form GSTR-3B vis-a-vis that reported
(b) explain the reasons for the aforesaid difference in ITC on the common portal,
in Form GSTR-2B, above a particular threshold and with provision for self-
compliance on the portal by the said taxpayer. A system-based intimation is sent within a period of 7 days.
to the registered person in those cases where difference between the ITC availed Such registered person shall, upon receipt of said intimation, either,
as per GSTR-3B and that available as per GSTR-2B exceeds such amount and such
(a) pay an amount equal to the excess ITC, as specified in intimation, fully or
percentage as may be recommended by the Council. In such cases, the registered
partially, along with interest payable, through prescribed form and furnish the
person shall be directed to pay an amount equal to the said excess amount of ITC
details thereof, electronically on the common portal, or
availed along with interest or to give a reasonable explanation and if neither of
these is done, then the amount can be demanded under section 73 or section 74 (b) furnish a reply, electronically on the common portal, incorporating reasons in
12 respect of the amount of excess ITC that has still remained to be paid,
or section 74A .

This provision would help in safeguarding the revenue by controlling the difference within 7 days’ period.
in ITC availed in Form GSTR-3B and that available as per Form GSTR-2B of the Where any amount specified in the intimation remains to be paid within 7 days’
taxpayers and will reduce the ITC mismatches. period and where no explanation/reason is furnished by the registered person in
New rule 88D provides as follows: default or where the explanation/reason furnished by such person is not found to
be acceptable by the proper officer, the said amount shall be liable to be demanded
Where the amount of ITC availed by a registered person in the return for a tax
in accordance with the provisions of section 73/ section 74 or section 74A.
period(s) furnished by him in Form GSTR-3B exceeds the ITC available to such
person in accordance with the auto-generated statement containing the details of Form and manner of ascertaining details of inward supplies – GSTR-
ITC in Form GSTR-2B in respect of the said tax period(s), by specified amount and 2A and GSTR-2B [Rule 60]
percentage, the said registered person shall be given an intimation in prescribed Form GSTR-2A
Form GSTR-2A - is a system generated read only statement of
11 inward supplies for a recipient. This statement is updated on
Section 79 provides the provisions relating to recovery of tax. Same has been discussed in detail
in Chapter 19 – Demands and Recovery in Module 3 of this Study Material. a real time basis.
12
Section 74A contains the provisions relating to determination of tax not paid/short paid or
erroneously refunded or ITC wrongly availed/utilized for any reason pertaining to Financial Year Details of outward supplies furnished by the supplier in Form GSTR-1 or using the
2024-25 onwards. Further, the provisions of sections 73 and 74 are applicable for tax IFF is made available electronically to the concerned registered persons (recipients)
determination relating to the past period up to the Financial Year 2023–24. Section 74A has been in Form GSTR-2A. Further, Form GSTR-4A is the system generated statement of
discussed in detail in Chapter 19 – Demands and Recovery in Module 3 of this Study Material.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.31 13.31 1.32 13.32 GOODS AND SERVICES TAX

inward supplies for composition taxpayer. System generated statement of inward the due date of furnishing details using the IFF for the 1st month of the
supplies for an ISD is GSTR-6A. quarter;
Details of invoices furnished by a non-resident taxable person (NRTP) in Form (b) for the 2nd month of the quarter, between the day immediately after
GSTR-5, details of invoices furnished by an ISD in Form GSTR-6, details of TDS by the due date of furnishing details using the IFF for the 1st month of the
deductor furnished in Form GSTR-7 and details of TCS by an e-commerce operator quarter to the due date of furnishing details using the IFF for the 2nd
furnished in Form GSTR-8 13, are made available to the recipient, deductee or month of the quarter;
concerned person, in Form GSTR-2A.
(c) for the 3rd month of the quarter, between the day immediately after
Further, details of the IGST paid on the import of goods or goods brought in DTA the due date of furnishing of details using the IFF for the 2nd month of
from SEZ unit/developer on a bill of entry are also made available in the quarter to the due date of furnishing of Form GSTR-1 for the
Form GSTR-2A. quarter.

The details become available to the recipient for view/download and are updated (iii) additional details or amendments in details of outward supplies furnished by
incrementally as and when supplier(s) upload or change details in their respective his supplier in Form GSTR-1A filed between the day immediately after the due
form of return/statement, for the given tax period. date of furnishing of Form GSTR-1 for the previous tax period to the due date
of furnishing of Form GSTR-1 for the current tax period
Form GSTR-2B
(iv) the details of IGST paid on the import of goods or goods brought in the DTA
Form GSTR-2B – an auto-generated statement containing the
from SEZ unit/developer on a bill of entry in the month.
details of eligible ITC - is made available to the registered
person (recipient) for every month. Form GSTR-2B consists of all documents filed by suppliers/ISD in their
It is a static statement and is available only once a month. Form GSTR-1, 5 & 6, between the cut-off dates. It also consists of import data for
the period which are received within 13th of the succeeding month.
It consists of –
In case of monthly Form GSTR-1, the cut-off date is 00:00 hours on
(i) the details of outward supplies furnished by the suppliers in Form GSTR-1,
12th of the relevant month to 23:59 hours, on 11th of the succeeding month.
other than a supplier who has opted for QRMP scheme, between the day
Whereas for quarterly Form GSTR-1/IFF, Form GSTR-5 and Form GSTR-6, the
immediately after the due date of furnishing of Form GSTR-1 for the previous
month to the due date of furnishing of Form GSTR-1 for the month. cut-off date is 00:00 hours on 14th day of relevant month to 23:59 hours, on 13th
day of succeeding month.
(ii) the details of invoices furnished by a non-resident taxable person in GSTR-5,
details of invoices furnished by an ISD in his return in GSTR-6 and the details The details filed in Form GSTR-1 & 5 (by supplier) & Form GSTR-6 (by ISD) would
of outward supplies furnished by his supplier who has opted for QRMP reflect in the next open Form GSTR-2B of the recipient irrespective of
scheme, in Form GSTR-1 or using the IFF, as the case may be,- supplier’s/ISD’s date of filing.

(a) for the 1st month of the quarter, between the day immediately after (9) If a supplier opting for QRMP files an invoice dated 15th July on 13th
the due date of furnishing of Form GSTR-1 for the preceding quarter to August, it will get reflected in GSTR-2B of July (generated on 14th August).

13
Form GSTR-8 has been discussed in detail in Chapter 12 – E-Commerce Transactions in this
Module of the Study Material.

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 RETURNS 1.33 13.33 1.34 13.34 GOODS AND SERVICES TAX

The statement in Form GSTR-2B for every month shall be made available to the services located in non-taxable territory providing such services to non-
registered person,- taxable online recipient in such form and manner, and within such time, as
may be prescribed.
(a) for the 1st and 2nd month of a quarter, a day after the due date of furnishing
of details of outward supplies for the said month, However, the Government may, on the recommendations of the Council,
notify certain class of registered persons who shall furnish a return for every
‰ in the IFF by a registered person opting for QRMP, or
quarter or part thereof, subject to the specified conditions and restrictions.
‰ in Form GSTR-1 by a registered person other than opting for QRMP, Under this proviso, QRMP scheme has been notified which has been
whichever is later. discussed in subsequent paras.

(b) in the 3rd month of the quarter, a day after the due date of furnishing of (b) Return to be filed in Form GSTR-3B
details of outward supplies for the said month, in Form GSTR-1 by a GSTR-3B is the form prescribed for
registered person opting for QRMP. filing return under section 39. It
(10) For the quarter July-September, Form GSTR-2B for a registered contains summary of outward
person (recipient) who has received supplies from QRMP suppliers supplies, inward supplies liable to
as well as from other suppliers will be generated as follows: reverse charge, eligible ITC,
payment of tax etc. Thus, GSTR-3B
Month Date of generation of GSTR 2B does not require invoice-wise data
of outward supplies.
July 14th August
GSTR-3B can be submitted
August 14th September electronically through the common
portal, either directly or through a
September 14th October Facilitation Centre notified by the
Commissioner. Further, a Nil
GSTR-3B can be filed through an SMS using the registered mobile number of
5. FURNISHING OF RETURNS UNDER SECTION 39 the taxpayer. GSTR-3B can be filed monthly or quarterly.

1. GSTR-3B [Section 39(1) read with rule 61 & 61A] (c) Due date for filing return

(a) Person eligible to file return [Section 39(1)] (1) Monthly GSTR-3B -on or before 20th of the month succeeding the
month for which return is furnished.
Section 39(1) prescribes a monthly return for every
registered person, other than an input service (2) Quarterly GSTR-3B- on or before 22nd or 24th of the month
distributor or a non-resident taxable person or a succeeding the quarter for which return is furnished in case of a
composition taxpayer, a person deducting tax at GSTR-3B taxpayer opting for QRMP scheme - (discussed below).
source, a person collecting tax at source, i.e. an
electronic commerce operator and supplier of OIDAR

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 RETURNS 1.35 13.35 1.36 13.36 GOODS AND SERVICES TAX

(d) Quarterly Return Monthly Payment (QRMP) Scheme aggregate turnover, details furnished in returns for tax periods in the
preceding financial year shall be taken into account.
Quarterly Return Monthly Payment (QRMP) Scheme is a trade facilitation
measure which Condition to be fulfilled for becoming eligible to opt for QRMP
further eases scheme
the process of
Registered persons under QRMP scheme must have furnished the
doing business.
return for the preceding month, as due on the date of exercising such
QRMP Scheme is an optional return filing scheme, introduced for small option. A registered person shall not be eligible to opt for QRMP
taxpayers having aggregate annual turnover (PAN based) of upto ` 5 crore in scheme if he has not furnished the last return due on the date of
the preceding financial year to furnish their Form GSTR-1 and exercising such option.
Form GSTR-3B on a quarterly basis while paying their tax on a monthly
(11) If a registered person intending to avail of QRMP scheme
basis through a simple challan.
for the quarter ‘July to September’ is exercising his option on
This will significantly reduce the compliance burden on such taxpayers as now 27th July for the said quarter, he must have furnished the
the taxpayers need to file only 4 GSTR-3B returns instead of 12 GSTR-3B return for the month of June which was due on 20th July.
returns in a year. Similarly, they would be required to file only 4 GSTR-1
(B) Manner of exercising option of QRMP scheme
returns since Invoice Filing Facility (IFF) is provided under this scheme.
A registered person intending to opt for QRMP scheme for any quarter
Opting of QRMP scheme is GSTIN
shall indicate his preference for furnishing of return on a quarterly basis
wise. Distinct persons can avail QRMP
from 1st day of the 2nd month of the preceding quarter till the last day
scheme option for one or more
of the 1st month of the quarter for which the option is being exercised.
GSTINs. It implies that some GSTINs
for a PAN can opt for the QRMP (12) A registered person intending to avail of QRMP scheme
scheme and remaining GSTINs may not opt for the said scheme. for the quarter ‘July to September’ can exercise his option
from 1st May to 31st July.
(A) Eligibility for QRMP scheme
No need to exercise option every quarter
Registered persons 14, having an aggregate turnover up to ` 5 crore
in the preceding financial year, and who have opted to furnish quarterly Registered persons under QRMP scheme are not required to exercise
return under QRMP scheme 15 as the class of persons who shall furnish the option every quarter. Where such option has been exercised once,
a return for every quarter and pay the tax due every month 16. they shall continue to furnish the return as per the selected option for
future tax periods, unless they revise the said option.
Thus, the taxpayers whose aggregate turnover is up to ` 5 crore in the
preceding financial year are eligible for QRMP scheme. For computing Further, where such option has been exercised once, the said registered
person shall continue to furnish the return on a quarterly basis for
14
future tax periods, unless he–
other than supplier of online information and database access or retrieval services (OIDAR)
located in non-taxable territory and providing such services to a non-taxable online recipient (a) becomes ineligible for this scheme as per the conditions and
15
opted under rule 61A of the CGST Rules, 2017 restrictions notified in this regard; or
16
in accordance with the first proviso to section 39(7)

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 RETURNS 1.37 13.37 1.38 13.38 GOODS AND SERVICES TAX

(b) opts for furnishing of return on a monthly basis, electronically, on Uttar Pradesh, Bihar, Sikkim, Arunachal succeeding such
the common portal. Pradesh, Nagaland, Manipur, Mizoram, quarter.
(C) Option of QRMP scheme to lapse Tripura, Meghalaya, Assam, West Bengal,
Jharkhand or Odisha, the Union territories of
In case where a registered person’s aggregate turnover crosses ` 5 crore Jammu and Kashmir, Ladakh, Chandigarh or
during a quarter in a financial year, he shall not be eligible for furnishing Delhi.
of return on quarterly basis from the first month of the succeeding
(e) Nil GSTR-3B
quarter. He shall opt for furnishing of return on a monthly basis,
electronically, on the common portal, from the first month of the Filing of GSTR-3B is mandatory for all normal and casual taxpayers, even if
quarter, succeeding the quarter during which his aggregate turnover there is no business activity in any particular tax period. For such tax
exceeds ` 5 crore. period(s), a Nil GSTR-3B is required to be filed.

The facility for opting out of the scheme for a quarter will be available A Nil GSTR-3B does not have any entry in any of its tables. For example, a Nil
from 1st day of 2nd month of preceding quarter to the last day of the 1st GSTR-3B for a tax period cannot be filed, if the taxpayer has made any
month of the quarter. outward supply (including nil-rated, exempt or non-GST supplies) or has
received any supplies which are taxable under reverse charge or it intends to
(D) Form and manner of filing return – GSTR-3B under QRMP scheme
take ITC etc.
Due date for filing return in case of a taxpayer opting for QRMP
A Nil GSTR-3B can be filed through an SMS using the registered mobile
scheme - Quarterly GSTR-3B on or before 22nd or 24th of the month
number of the taxpayer. GSTR-3B submitted through SMS is verified by
succeeding the quarter for which return is furnished (Refer the Table
registered mobile number-based OTP facility.
given below for details**).
A taxpayer may file Nil GSTR-3B, anytime on or after the 1st day of the
**Due dates for taxpayers opting for QRMP scheme
subsequent month/quarter for which the return is being filed for.
Class of registered persons Due date (f) Maximum time-limit for furnishing Form GSTR-3B [Section 39(11)]
nd
Registered persons whose principal place of 22 day of the Maximum time-limit upto which a
business is in the States of Chhattisgarh, month registered person can furnish the return in
Madhya Pradesh, Gujarat, Maharashtra, succeeding such Form GSTR-3B for a tax period is 3 years
Karnataka, Goa, Kerala, Tamil Nadu, Telangana, quarter. from the due date of furnishing such return.
Andhra Pradesh, Union territories of Daman &
This time limit can be extended by the
Diu & Dadra & Nagar Haveli, Puducherry,
Government for a registered person or a
Andaman and Nicobar Islands or
class of registered persons subject to such
Lakshadweep.
conditions and restrictions as may be
Registered persons whose principal place of 24th day of the specified therein.
business is in the States of Himachal Pradesh, month N

Punjab, Uttarakhand, Haryana, Rajasthan,

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.39 13.39 1.40 13.40 GOODS AND SERVICES TAX

(g) Broad contents of GSTR-3B In GST since the returns are built from details of individual
The broad contents of GSTR-3B are given below transactions, there is no requirement for having a revised return. Any
need to revise a return may arise due to the need to change a set of
CONTENTS OF GSTR- 3B invoices or debit/ credit notes.

Instead of revising the return already submitted, the system allows

Basic Details Other details relating to supplies changing the details of those transactions (invoices or debit/credit
notes) that are required to be amended. They can be amended in any
• GSTIN • Summarised details of outward
of the future GSTR- 3B in the tables specifically provided therein for
supplies and inward supplies liable to
• Legal name of the the purposes of amending previously declared details.
reverse charge
registered person
• Summarised details of inter-State Omission or incorrect particulars discovered in the returns filed u/s 39
• Year and Month/
supplies made to unregistered (including return filed by a composition supplier, return for TDS, ISD return
Quarter
persons, composition taxable persons and return by NRTP) can be rectified in the return to be filed for the tax period
and UIN holders during which such omission or incorrect particulars are noticed.
• Eligible and ineligible ITC
Any tax payable as a result of such error or omission will be required to be
• Values of exempt, nil-rated and non- paid along with interest.
GST inward supplies
Exception
• Payment of tax
It is important to note that section 39(9) does not permit rectification of error
• TDS/TCS credit
or omission discovered on account of scrutiny, audit, inspection or
enforcement activities by tax authorities.
(g) Rectification of errors/omissions [Section 39(9)] Hence, taxpayer may not be able to pass on the ITC to the receiver in respect
of tax payments made by him in pursuance of any of the aforementioned
situations.
If a return has been filed,
how can it be revised if Time limit for making rectification
some changes are required
to be made? The maximum time limit within which the rectification of errors/omissions is
permissible is earlier of the following dates:

‰ 30th day of November following the end of the financial year to which
such details pertain or

‰ Actual date of filing of the relevant annual return

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.41 13.41 1.42 13.42 GOODS AND SERVICES TAX

The last date of filing of annual return for a financial year is 31st December A composition supplier is required to file
of next financial year. a return on yearly basis in Form GSTR-4.

Hence, if annual return for a financial year is filed before 30th November (of GSTR-4 for a financial year or part of a
next financial year), then no rectification of errors/omissions in returns financial year should be filed
pertaining to the said financial year would be permitted thereafter. electronically through the common
portal either directly or through a
ٌ A return furnished under section 39(1) on which Facilitation Centre notified by the Commissioner.
self-assessed tax has been paid in full is considered as a valid Quarterly statement for payment of self-assessed tax
return.
ٌ Filing of returns for current month is possible only when returns for Every composition supplier shall pay to
CMP-08-Statement for payment
any of the previous tax periods and GSTR-1 for the said tax period has the Government, the tax due taking into of self-assessed tax

been furnished by him 17. account turnover in the State or Union

ٌ A taxpayer needs to electronically sign the submitted returns territory, inward supplies of goods or
otherwise it will be considered not-filed. services or both, tax payable, and such
other particulars during a quarter, in such
ٌ Taxpayers can electronically sign their returns using a DSC
form and manner, and within such time, as
(mandatory for all types of companies and LLPs), E-sign (Aadhaar-based
may be prescribed.
OTP verification), or EVC (Electronic Verification Code sent to the
registered mobile number of the authorized signatory). The composition supplier are required to furnish a statement in the
Form GST CMP-08 containing details of payment of self-assessed tax,
2. GSTR-4 – Return for composition supplier [Section 39(2) and second for every quarter (or part of the quarter), by 18th day of the month
succeeding such quarter.
proviso to section 39(7) read with rule 62]

(a) Person eligible to file return, periodicity and form of return

While a composition supplier is required to file the
A registered person paying tax under composition levy (provisions of return GSTR-4 yearly, he is required to pay the tax
section 10), shall, for each financial year or part thereof, furnish a return, quarterly.
electronically, of turnover in the State or Union territory, inward
supplies of goods and/or services, tax payable, tax paid and such other (b) Due date for filing Form GSTR-4 and Form GST CMP-08
particulars in such form and manner, and within such time, as may be GSTR-4 for a financial year should be furnished by 30th June of the
prescribed. succeeding financial year.

17 Due date of filing By 30th day of June

The Government may, on the recommendations of the Council, by notification, subject to
such conditions and restrictions as may be specified therein, allow a registered person or a GSTR-4 for a financial following the end of
class of registered persons to furnish the return, even if he has not furnished the returns for year such financial year
one or more previous tax periods or has not furnished the details of outward supplies under
sub-section (1) of section 37 for the said tax period [Proviso to section 39(10)].

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.43 13.43 1.44 13.44 GOODS AND SERVICES TAX

GST CMP-08 (quarterly statement for payment of self-assessed tax) (e) Nil GST CMP-08 [Rule 67A]
should be furnished by 18th day of the month succeeding such quarter. Filing of GST CMP-08 is mandatory for all taxpayers who have opted to
pay tax under composition scheme, even if there is no business activity
Due date of filing GST By 18th day of the month in any particular tax period. For such tax period(s), a Nil GST CMP-08 is
CMP-08 for a quarter succeeding such quarter required to be filed.
A Nil GST CMP-08 does not have any entry in any of its tables. For
example, a Nil GST CMP-08 for a tax period cannot be filed, if the
(c) What kind of details of outward supplies are required to be
taxpayer has made any outward supplies or has received any supplies
furnished in GSTR-4?
which are taxable under reverse charge.
GSTR-4 shall include the—
A Nil GST CMP-08 can be filed through an SMS using the registered
(a) invoice-wise inter-State and intra-State inward supplies received mobile number of the taxpayer. A Nil GST CMP-08 submitted through
from registered and unregistered persons; and SMS is verified by registered mobile number-based OTP facility.
(b) consolidated details of outward supplies made. (f) Broad contents of GSTR-4
(d) Auto-population of inward supplies CONTENTS OF GSTR- 4
The inward supplies of a composition supplier received from registered
persons filing GSTR-1 will be auto populated in Form GSTR-4A for
Details regarding Inward and
viewing. Basic & Other Details
Outward Supplies
The broad contents of GSTR-4 are given below. • GSTIN • Invoice-wise details of all inward
• Legal name and supplies (i.e., intra and inter-State
ՙ Consolidated details of outward supplies Trade name supplies and from registered and
• TDS/TCS credit unregistered persons) including
Composition taxpayers are neither entitled for any ITC nor entitled received [Table 7] reverse charge supplies and
to pass on any ITC to its customers. Therefore, composition • Tax, interest, late fee import of services [Table 4]
taxpayers are required to provide consolidated details of outward payable and paid • Summary of self-assessed liability
supplies in GSTR-4 (Table 6) and not invoice-wise details. However, [Table 8] as per GST CMP-08 (Net of
details of inter-State and intra-State inward supplies received from • Refund claimed from advances, credit & debit notes
registered and un-registered persons are to be provided invoice- Electronic cash ledger and any other adjustments due to
[Table 9] amendments etc.) [Table 5]
wise (Table 4).
• Tax rate wise details of outward
supplies/inward supplies
ՙ Discharge of Tax liability attracting reverse charge (Net of
advances, credit & debit notes
Since composition suppliers are not eligible to take ITC, they
and any other adjustments due
discharge their tax liability only by debiting electronic cash ledger. to amendments etc.) -
Consolidated details of outward
supplies [Table 6]

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.45 13.45 1.46 13.46 GOODS AND SERVICES TAX

(g) Statements/ return for the period prior to opting for The provisions explained in points (f) and (g) above have been explained
composition scheme by way of a diagram given at next page:
If a registered person opts to pay tax under composition scheme from
the beginning of a financial year, he will, where required, furnish As per section 29(2), a proper officer is empowered to cancel
statements/return relating to the period prior to paying tax under the registration of a taxable person if, inter alia,:
composition scheme till the
(a) a person paying tax under composition scheme has not
‰ due date of furnishing the return for the month of September furnished his GSTR-4 for a financial year beyond 3 months
of the succeeding financial year, or from the due date of furnishing the said return
‰ furnishing of annual return of the preceding financial year, (b) any other taxable person has not furnished returns for such
whichever is earlier. continuous tax period as may be prescribed.

The composition supplier will not be eligible to avail ITC on receipt of

invoices or debit notes from the supplier for the period prior to their
opting to pay tax under composition scheme.
Regular Composition taxpayer Regular
(h) GSTR-4 for the period prior to exiting from composition scheme
taxpayer taxpayer
A registered person opting to withdraw from the composition scheme
at his own motion or where option is withdrawn at the instance of the
proper officer will, where required, furnish-
Opting for composition scheme Exit from composition scheme
(1) GST CMP-08 (2) GSTR-4

relating to the period prior to his exiting from composition Statements/Return relating
to period prior to opting for GST CMP-08 for
scheme GSTR 4 for period
composition scheme to be period prior to
TILL prior to exit from
filed exit from
composition
composition
scheme to be
scheme to be
filed by
till filed by
18th of the month succeeding 30th April 18 following the i due date of furnishing
the quarter in which the date end of the financial year the return for the
of withdrawal falls during which such month of September of 30th April
18th day of the
withdrawal falls the succeeding following the
month
financial year end of the
succeeding the
OR financial year
quarter in which
18 i furnishing of annual the date of during which
As stated earlier, due date for filing Form GSTR-4 shall be 30th June following the end of such
return of the preceding such withdrawal
financial year, from FY 2024-25 onwards. withdrawal falls
financial year falls
WHICHEVER IS EARLIER

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.47 13.47 1.48 13.48 GOODS AND SERVICES TAX

3. GSTR-5 - Return for Non-Resident Taxable Persons [Section 39(5)

read with rule 63]
A NRTP is not
Non-Resident Taxable Persons (NRTPs) are those suppliers who do not have required to file
a business establishment in India and have come for a short period to make an annual return.
supplies in India. They would normally import their products into India and
make local supplies. The concept of Non-Resident Taxable Person has been
discussed in detail in Chapter 8 – Registration in this Module of the Study 4. GSTR-6 – Return for Input Service Distributor [Section 39(4) read with
Material. rule 65]

(a) Monthly return An ISD is required to distribute both eligible as well as ineligible credit as per
rule 39.
A registered NRTP is not required to
file the Statement of Outward Supplies (a) Monthly Return
and return which are otherwise ISD is not required to file statement of
applicable for a normal taxpayer.
outward supplies with its return. It
In place of the same, a simplified needs to file only a monthly return in
monthly tax return has been Form GSTR-6 for distribution of ITC
prescribed in Form GSTR-5 for a NRTP amongst its units.
for every calendar month or part
thereof. The details of outward Form GSTR-6 contains the details of ITC
supplies and inward supplies of an received for distribution, total ITC/
NRTP are incorporated in GSTR-5. eligible/ ineligible ITC to be distributed for the tax period, distribution
of ITC (ISD invoices & ISD credit notes), details of debit/ credit notes
(b) Last date of filing return
received, etc.
GSTR-5 should be furnished within 13 days after the end of the calendar
(b) Last date of filing return
month or within 7 days after the last day of validity period of the
registration, whichever is earlier 19. The details in GSTR-6 should be furnished on/before 13th of the
(c) Payment of interest, penalty, fees or any other amount payable month succeeding the calendar month.

An NRTP should pay the tax, interest, penalty, fees or any other amount
By 13th day of the
payable under the CGST Act or the provisions of the Returns Chapter
under CGST Rules till the last date of filing GSTR-5.
Due date of filing month suceeding
monthly GSTR-6 the calender
month
19
As per rule 63, GSTR-5 needs to be furnished within 20 days after the end of the tax period or
within 7 days after the last day of the validity period of registration, whichever is earlier.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.49 13.49 1.50 13.50 GOODS AND SERVICES TAX

(c) Auto-population of ITC received for distribution (c) TDS details available to deductee on common portal

The details of ITC received for distribution by an ISD will be auto populated The details of TDS furnished by the deductor in GSTR-7 shall be made
available electronically to each of the deductees on the common portal
in Form GSTR-6A when the registered
after filing of Form GSTR-7. The supplier can take this amount as credit
suppliers file their GSTR-1. in his electronic cash ledger after validation and use the same for
Form GSTR-6A is a system generated ‘draft’ payment of tax or any other liability.
statement of inward supplies for an ISD and (d) Tax Deduction at Source (TDS) Certificate
is a read only form. ISD can view the auto- A TDS certificate is generated by the system in Form GSTR-7A for both
populated details of ITC received for deductor (the person who is deducting tax) and deductee (the supplier
distribution in GSTR-6A. from whose payment, TDS is deducted). The certificate is generated
once the deductor furnishes a return in Form GSTR-7 on the GST Portal
(d) Nil Return
and the deductee accepts the details uploaded by the deductor and
A ‘Nil’ return is to be filed in case of no ITC being available for files his return. It contains the details pertaining to value on which tax
distribution or no ITC is being distributed during the month. has been deducted, rate of deduction, amount of tax deducted at
source and amount paid to the Government.
5. GSTR-7 - Return for tax deducted at source [Section 39(3) and section 51
Note - It is not mandatory to file a nil Form GSTR-7 if no TDS is deducted in
read with rule 66] the tax period.
Normally, whenever taxable goods or
services or both are supplied to a
6. DUE DATE FOR PAYMENT OF TAX [SECTION
Central/ State Government’s
Department/ establishment or, local 39(7)]
authority, or Governmental agencies,
Every registered person who is required to furnish a return under sub-section (1),
recipient is required to deduct tax at
other than the person referred to in the proviso thereto, or sub-section (3) or
source under section 51 where the total
sub-section (5), shall pay to the Government the tax due as per such return not
value of such supply exceeds ` 2,50,000.
later than the last date on which he is required to furnish such return.
(a) Monthly return
However, every registered person furnishing return under QRMP scheme shall pay
Deductor shall furnish a monthly return in Form GSTR-7 for every to the Government, in such form and manner, and within such time, as may be
calendar month of the deductions made during the month.
prescribed –
Deductor shall furnish said return for every calendar month
whether or not any deductions have been made during the said (a) an amount equal to the tax due taking into account inward and outward
month. supplies of goods or services or both, ITC availed, tax payable and such other
(b) Last date of filing return particulars during a month; or

The details in GSTR-7 should be furnished on/ or before 10th day of (b) in lieu of the amount referred to in clause (a), an amount determined in such
the month succeeding the calendar month. manner and subject to such conditions and restrictions as may be prescribed.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.51 13.51 1.52 13.52 GOODS AND SERVICES TAX

Due dates for payment of tax in respect of the persons required to file monthly Form GST PMT-06, for specified class of taxable persons. Further, any extension of
GSTR-3B, GSTR-5 and GSTR-7 are linked with the due dates for filing of such time limit notified by the Commissioner of State tax/UT shall be deemed to be
returns, i.e. the last dates (due dates) of filing such returns are also the due dates notified by the Commissioner:
for payment of tax in respect of persons required to file such returns. While making a deposit of tax, such a registered person may –
However, due dates for payment of tax in respect of the persons required to file (a) for the 1st month of the quarter, take into account the balance in the
st
quarterly GSTR-3B under QRMP Scheme for 1 two months of the quarter is electronic cash ledger.
delinked. Every registered person under QRMP scheme shall pay the tax due for (b) for the 2nd month of the quarter, take into account the balance in the
each of the first 2 months of the quarter, by depositing the said amount in, by the electronic cash ledger excluding the tax due for the 1st month.
25th day of the month succeeding such month.
At the time of filing the return for the said quarter in Form GSTR-3B, the amount
Similarly, in case of registered persons paying tax under composition scheme, the deposited by the registered person in the first 2 months of the quarter shall be
due date for payment of tax and filing of GSTR-4 is delinked. While GSTR-4 debited.
for a financial year is required to be filed by 30th June of the following financial
This amount is debited solely for the purposes of offsetting the liability furnished
year, tax for a quarter is to be paid by 18th of the month succeeding such quarter. in that quarter’s Form GSTR-3B. However, any amount left after filing of that
Further, NRTPs or casual taxable persons are required to make advance deposit quarter’s Form GSTR-3B may either be claimed as refund or may be used for any
of an amount equivalent to their estimated tax liability for the period for which other purpose in subsequent quarters.
registration is sought or extension of registration is sought in terms of section 27(2). Options for making monthly payment of tax
20
Every registered person required to furnish return shall, discharge their liability While generating the challan, taxpayers should select “Monthly payment for
towards tax, interest, penalty, fees or any other amount payable under GST law by quarterly taxpayer” as reason for generating the challan. The said person can use
debiting the electronic cash ledger or electronic credit ledger and include the any of the following two options provided below for monthly payment of tax during
details in the return. the first 2 months –

Monthly payment of tax under QRMP Scheme [First proviso to section 39(7)
read with sub-rules (3) and (4) of rule 61] Fixed sum method
Options for making monthly
The registered person under the QRMP Scheme would be required to pay the tax payment of tax
due in 1st month or 2nd month or both the Self-assessment method
months of the quarter by depositing the tax due in
GST PMT-06. The payment is to be made by
(a) Fixed sum method: If a taxpayer chooses this option, a facility is available
25th day of the month succeeding such month.
on the GST portal for generating an auto-generated/pre-filled challan in Form
However, the Commissioner may, on the recommendations of the Council, by GST PMT-06. The challan amount is calculated by the system which cannot
notification, extend the due date for depositing the said amount in be edited. The amount is equal to:

20
subject to the provisions of section 49

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.53 13.53 1.54 13.54 GOODS AND SERVICES TAX

(i) 35% of the tax paid in cash in the return for the preceding quarter However, no such amount may be required to be deposited-
where the return was furnished quarterly; or (a) for the 1st month of the quarter, where the balance in the
(ii) tax liability paid in cash in the return for the last month of the electronic cash ledger/electronic credit ledger is adequate for the
immediately preceding quarter where the return was furnished tax liability for the said month or where there is nil tax liability;
monthly. (b) for the 2nd month of the quarter, where the balance in the
electronic cash ledger/electronic credit ledger is adequate for the
For easy understanding, the same is explained by way of examples given
cumulative tax liability for the 1st and the 2nd month of the quarter
below:
or where there is nil tax liability
(i) In case the last return filed was on quarterly basis for quarter Monthly tax payment through this method would not be available
ending March: to those registered persons who have not furnished the return for
a complete tax period preceding such month.
Tax paid in cash in quarter Tax required to be paid in
(January - March) each of the months – April A complete tax period means a tax period in which the person is
and May registered from the first day of the tax period till the last day of
the tax period.
CGST 100 CGST 35
(b) Self-Assessment Method: The said persons, in any case, can pay the
SGST 100 SGST 35 tax due by considering the tax liability on inward and outward supplies
and the ITC available, in Form GST PMT-06. In order to facilitate
IGST 500 IGST 175
ascertainment of the ITC available for the month, an auto-drafted input
Cess 50 Cess 17.5 tax credit statement has been made available in Form GSTR-2B, for
every month.
(ii) In case the last return filed was monthly for tax period March:
The registered person under QRMP is free to avail either of the two tax
payment methods above in any of the two months of the quarter.
Tax paid in cash Tax required to be paid in each of the
in March months – April and May As already discussed earlier, at the time of filing the return for a quarter in
Form GSTR-3B, the amount deposited by the registered person in the first 2
CGST 50 CGST 50
months of the quarter shall be debited. Further, any amount left after filing
of that quarter’s Form GSTR-3B may either be claimed as refund or may be
SGST 50 SGST 50 used for any other purpose in subsequent quarters.
However, such refund claim 21 shall be permitted only after the return in Form
IGST 80 IGST 80
GSTR-3B for the said quarter has been furnished. Further, this deposit cannot
be used by the taxpayer for any other purpose till the filing of return for the
Cess - Cess - quarter.

21
Provisions relating to refund are discussed in Chapter 15 – Refunds in Module 3 of this Study
Material.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.55 13.55 1.56 13.56 GOODS AND SERVICES TAX

Applicability of interest (14) A registered person, who has opted for the QRMP
A. For registered person making payment of tax by opting Fixed Sum Scheme, had paid a total amount of ` 100/- in cash as tax
Method liability in the previous quarter of October to December. He
opts to pay tax under fixed sum method. He therefore pays ` 35/- each
No interest would be payable in case the tax due is paid in the first 2
on 25th February and 25th March for discharging tax liability for the first
months of the quarter by way of depositing auto-calculated fixed sum
2 months of quarter viz. January and February.
amount (as discussed above) by the due date.
In other words, if while furnishing return in Form GSTR-3B, it is found In his return for the quarter, it is found that total liability for the quarter
that in any or both of the first 2 months of the quarter, the tax liability net of available credit was ` 125, but he files the return on 30th April.
net of available credit on the supplies made /received was higher than Interest would be payable at applicable rate on ` 55 [` 125 – ` 70
the amount paid in challan, then, no interest would be charged (deposit made in cash ledger in first and second month)] for the period
provided they deposit system calculated amount for each of the first 2 between due date of quarterly GSTR 3B and 30th April.
months and discharge their entire liability for the quarter in Form GSTR-
B. For registered person making payment of tax by opting self-
3B of the quarter by the due date.
assessment method
In case such payment of tax by depositing the system calculated amount
Interest amount would be payable as per the provision of section 50 for
in Form GST PMT-06 is not done by due date, interest would be payable
tax or any part thereof (net of ITC) which remains unpaid / paid beyond
at the applicable rate, from the due date of furnishing Form GST PMT-
06 till the date of making such payment. the due date for the first 2 months of the quarter.

Further, in case Form GSTR-3B for the quarter is furnished beyond the Interest payable, if any, shall be paid through Form GSTR-3B.
due date, interest would be payable as per the provisions of section 50 Note: It is clarified that no late fee is applicable for delay in payment of
for the tax liability net of ITC. tax in first 2 months of the quarter.
(13) A registered person, who has opted for the QRMP
Scheme, had paid a total amount of ` 100/- in cash as tax
liability in the previous quarter of October to December. 7. OTHER RETURNS/ STATEMENTS
He opts to pay tax under fixed sum method. He therefore pays ` 35/-
(i) First return [Section 40]
each on 25th February and 25th March for discharging tax liability for the
first 2 months of quarter viz. January and February. When a person becomes liable to registration
after his turnover crosses the threshold limit, he
In his return for the quarter, it is found that liability, based on the
may apply for registration within 30 days of so
outward and inward supplies, for January was ` 40/- and for February it
becoming liable. Thus, there might be a time lag
was ` 42/-. However, no interest would be payable for the lesser
between a person becoming liable to registration
amount of tax (i.e. ` 5 and ` 7 respectively) discharged in these 2
and grant of registration certificate. During the
months provided that he discharges his entire liability for the quarter in
intervening period, such person might have
the Form GSTR-3B of the quarter by the due date.
made the outward supplies, i.e. after becoming liable to registration but
before grant of the certificate of registration.

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 RETURNS 1.57 13.57 1.58 13.58 GOODS AND SERVICES TAX

Now, in order to enable such registered person to declare the taxable supplies The Commissioner may, on the
made by him for the period between the date on which he became liable to recommendations of the Council, by
registration till the date on which registration has been granted so that ITC notification, exempt any class of registered
GSTR-9
can be availed by the recipient on such supplies, firstly, the registered person persons from filing annual return under
may issue revised tax invoices against the invoices already issued during said this section.
period within 1 month from the date of issuance of certificate of registration
The annual return for a financial year
[Section 31(3)(a) read with rule 53– Discussed in detail in Chapter-9: Tax
needs to be filed by 31st December of the next financial year.
Invoice, Credit and Debit Notes in this Module of the Study Material].
(b) What is the prescribed form for annual return/statement?
Further, section 40 provides that registered person shall declare his outward
supplies made during said period in the first return furnished by him after The annual return is to be filed electronically in Form GSTR-9 through
grant of registration. The format for this return is the same as that for regular the common portal.
return. Person registered under composition levy: A person paying tax under
(ii) GSTR – 8 - Statement for tax collection at source [The provisions relating composition scheme is required to file the annual return in
to GSTR-8 have already been discussed in detail in Chapter 12 – Electronic Form GSTR-9A.
Commerce Transactions in this Module of the Study Material.]
It may be noted that an ECO 22 required to collect tax at source
(iii) GSTR – 9/9A and GSTR-9B - Annual Return & Annual Statement [Sections
has to file an annual statement referred to in section 52(5) in
44, 52(5) read with rule 80]
Form GSTR-9B (yet to be notified). The statement for a financial year
(a) Who is required to furnish the annual return and what is the due needs to be filed by 31st December of the next financial year.
date for the same?
(c) Who is required to furnish a self-certified reconciliation statement?
All registered persons are required to file an annual return. However,
(i) All registered persons are required to file furnish a self-certified
following persons are not required to file annual return:
reconciliation statement alongwith annual return if their
(i) Casual taxable persons aggregate turnover during a financial year exceeds
(ii) Non-resident taxable person ` 5 crores. However, following persons are not required to file
self-certified reconciliation statement:
(iii) Input service distributors
(a) Casual taxable persons
(iv) Persons authorized to deduct/collect tax at source under section
51/52, and (b) Non-resident taxable person
(c) Input service distributors

22
The provisions relating to ECOs have been discussed in detail in Chapter 12 – Electronic
Commerce Transactions in this Module of the Study Material.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.59 13.59 1.60 13.60 GOODS AND SERVICES TAX

(d) Persons authorized to deduct/collect tax at source under Government for a registered person or a class of registered persons
section 51/52, and subject to such conditions and restrictions as may be specified therein.
(ii) Such registered person should furnish, electronically, the annual (iv) GSTR - 10 - Final Return [Section 45 read with rule 81]
return along with a copy of self-certified reconciliation
(a) Who is required to furnish final return?
statement, duly certified, in Form GSTR-9C 23.
Every registered person who is required to
Self-certified reconciliation statement will reconcile the value of furnish return u/s 39(1) and whose
supplies declared in the return furnished for the financial year with registration has been cancelled is required
the audited annual financial statement. to file a final return electronically in Form
GSTR-10 through the common portal.
(b) What is the time-limit for furnishing final return?

The final return has to be filed within 3 months of the:

(i) date of cancellation

Value of supplies declared in or

Value of supplies declared
in Annual return audited Annual Financial Statement (ii) date of order of cancellation

(d) Exemption from the requirement of furnishing annual return whichever is later.
including self-certified reconciliation statement
(v) GSTR – 11 - Details of inward supplies of persons having UIN [Rule 82]
The department of the Central/State Government or a local authority,
Every person who has been issued a Unique Identity Number (UIN) is required
whose books of account are subject to audit by the Comptroller and
Auditor-General of India or an auditor appointed for auditing the to furnish the details of inward supplies in Form GSTR-11.
accounts of local authorities under any law for the time being in force, (a) When UIN is issued for claiming refund of taxes paid on inward
are exempt from the requirement of furnishing an annual return supplies
including self-certified reconciliation statement.
Such person shall furnish the details of
(e) Maximum time-limit for furnishing annual return
those inward supplies of taxable goods
Maximum time-limit upto which a registered person can furnish an and/or services on which refund of taxes
annual return for a financial year is 3 years from the due date of
has been claimed in Form GSTR-11, along
furnishing said annual return. This time limit can be extended by the
with application for such refund claim.
23
Notification No. 15/2025 CT dated 17.09.2025 exempts a registered person whose aggregate
turnover in the financial year 2024-25 is up to ` 2 crore rupees from filing annual return for the
said financial year. This is only for information of the students and is not relevant for the
examination purposes.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.61 13.61 1.62 13.62 GOODS AND SERVICES TAX

(b) When UIN is issued for purposes other than refund of taxes paid
8. DEFAULT/DELAY IN FURNISHING RETURN
Such person shall furnish the details of inward supplies of taxable goods
[SECTIONS 46 & 47]
and/or services as may be required by the proper officer in
(i) Notice to return defaulters [Section 46 read with rule 68]
Form GSTR-11.
A notice in prescribed form is issued, electronically,
(vi) GSTR-5A – Return for persons providing OIDAR services to non-taxable to a registered person who fails to furnish return
online recipient (NTOR) or registered person other than NTOR or online under section 39 [Normal Return] or section 44
money gaming from a place outside India to a person in India [Rule 64] [Annual Return] or section 45 [Final Return] or
section 52 [TCS Statement].
Every registered person either providing:
The notice requires the registered person to furnish
(i) online money gaming from a place the return within 15 days, failing which the tax liability will be assessed under
outside India to a person in India, section 62, based on the relevant material available with the proper officer.
In addition to tax so assessed, applicable interest and penalty will also be
or payable.

(ii) providing OIDAR services (see definition (ii) Late fees for delay in filing return [Section 47]
from Relevant Definitions) from a place outside India: Late fee is applicable for delay in furnishing of return / details of outward
supply as per the provision of section 47.
(a) to a non-taxable online recipient referred to in section 14 of the
Delay in filing any of the following by their respective due dates, attracts late
IGST Act
fee:
or (A) Statement of Outward Supplies
(b) to a registered person other than a non-taxable online recipient, [Section 37]
(B) Returns (including returns under
shall file return in Form GSTR-5A by 20th day of
QRMP Scheme) [Section 39]
the month succeeding the calendar month/part
(C) Final Return [Section 45]
thereof.
(D) TCS Statement [Section 52]
Form GSTR-5A needs to be filed even if there is no
business activity (i.e. it is a Nil Return) for a tax
Quantum of late fee prescribed by section 47 is as under:
period.
`100 for every day during
Quantum of late w
which such failure continues.
fee
` 5,000

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 RETURNS 1.63 13.63 1.64 13.64 GOODS AND SERVICES TAX

(ii) For delayed filing of GSTR-1 and/or GSTR-3B:-

It may be noted that the late fee payable by a registered Amount of late fee payable under section 47 by the registered person
person for delayed filing of a return and/or annual return who fail to furnish Form GSTR-1 and/or Form GSTR-3B by the due date,
under section 47 is with reference to only the CGST Act. An shall be as follows:
equal amount of late fee is payable by such person under the respective
SGST/UTGST Act as well. Hence, the late fee amount mentioned herein
pertains to both CGST as well as SGST/UTGST.

Rationalisation of late fees for delayed filing of Forms GSTR-1, GSTR-3B,

GSTR-4, GSTR-7 and GSTR-9
The late fee can be waived off partially or fully by the Central Government
[Section 128 24]. In view of this, late fees for delayed filing of Forms GSTR-1,
GSTR-3B, GSTR-4, GSTR-7 and GSTR-9 have been rationalized 25 as follows:
(i) For delayed filing of GSTR-7:-
Total amount of late fee payable under section 47 by any registered
person, required to deduct tax at source under the provisions of section
51 for delayed filing of GSTR-7, shall be as follows:

` 50 (`25 each under CGST

& SGST/UTGST) for every
Quantum of day during which such
late fee failure continues.

` 1,000

Where the total amount of Central and State tax deducted at source in a
month is Nil, the total amount of late fee stands waived.

24
Section 128 has been discussed at the Final level.
25
vide Notification No. 4/2018 CT dated 23.01.2018, Notification No. 73/2017 CT dated
29.12.2017, Notification No. 76/2018 CT dated 31.12.2018, Notification Nos 19-22/2021 CT all
dated 01.06.2021 and Notification No. 07/2023 CT dated 31.03.2023

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.65 13.65 1.66 13.66 GOODS AND SERVICES TAX

(iii) For delayed filing of GSTR-4:- (iv) For delayed filing of GSTR-9:-

Amount of late fee payable under section 47 by a composition supplier Class of registered persons Quantum of Late fee
who fails to furnish Form GSTR-4 by the due date, shall be as follows:
Class of registered persons Quantum of late fee

` 50 per day (` 25 CGST

` 500 (` 250 each Registered
+ ` 25 SGST/UTGST)
under CGST & persons having
aggregate
SGST/UTGST) turnover • ` 5 0.04 % of of turnover in
crores in the the State or Union
relevant FY territory (0.02% CGST +
0.02% SGST/UTGST)
(1) Total tax
payable in GSTR- ` 20 (` 10 CGST +
4 is Nil Registered persons ` 100 per day (` 50 CGST +
` 10 having following ` 50 SGST/UTGST)
SGST/UTGST) for aggregate turnover:
every day during ` 5 crores < aggregate 0.04 % of turnover in
which such failure WXUQRYHU• ` 20 crores in the State or Union
the relevant FY territory (0.02% CGST +
continues
Where 0.02% SGST/UTGST)

` 200 for every day during

` 2,000 (` 1,000 which such failure
Registered continues (` 100 CGST +
Delayed filing of Annual return
each under CGST
persons having ` 100 SGST/UTGST)
(2) Registered & SGST/UTGST) aggregate
persons other turnover > ` 20
than those crores in the 0.50% of the turnover of
covered in (1) relevant FY the registered person in
above ` 50 (` 25 CGST + the State/Union Territory
` 25 SGST/ (0.25% CGST + 0.25%
UTGST) for every SGST/UTGST)
day during which
such failure
continues
Clarification on applicability of late fee for delay in furnishing of Form
GSTR-9C
Late fee is leviable:

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.67 13.67 1.68 13.68 GOODS AND SERVICES TAX

(a) for delay in furnishing of complete annual return (Form GSTR-9 + GSTN provides separate user
Form GSTR-9C 26) ID and Password to GSTP to
enable him to work on behalf
(b) for the period from the due date of furnishing of the said annual
of his clients without asking
return upto the date of furnishing of the complete annual return, i.e.:
for their user ID and
i. where Form GSTR-9C is not required to be furnished, the date passwords.
of furnishing of Form GSTR-9;
They can do all the work on
ii. where Form GSTR-9C is required to be furnished along with behalf of taxpayers as
Form GSTR-9, allowed under GST Law.
a. date of furnishing of Form GSTR-9, if Form GSTR-9C is A taxpayer may choose a
furnished alongwith Form GSTR-9; or different GSTP by simply GST PRACT IT IONER
b. date of furnishing of Form GSTR-9C, if Form GSTR-9C is unselecting the previous one
furnished subsequent to furnishing of Form GSTR-9. and then choosing a new
GSTP on the GST portal.
Late fee is not separately leviable for delayed furnishing of Form GSTR-9
and Form GSTR-9C. Standardized formats have been prescribed for making application for enrolment
as GSTP, certificate of enrolment, show cause notice for disqualification, order of
[Circular No. 246/03/2025 GST dated 30.01.2025]
rejection of application of enrolment, list of approved GSTPs, authorisation letter
and withdrawal of authorisation.
9. GOODS AND SERVICES TAX PRACTITIONERS
A GSTP enrolled in any State or Union Territory shall be treated as enrolled in the
[SECTION 48] other States/Union territories.
Section 48 provides for the authorisation of an eligible person to act as approved
(i) What is the eligibility criteria for GSTP?
Goods and Services Tax Practitioner (GSTP). A registered person may authorise
an approved GSTP to furnish information, on his behalf, to the Government. The eligibility criteria for GSTP has been explained by way of diagrams given
at following page.
The manner of approval of GSTPs, their eligibility conditions, duties and
obligations, manner of removal and other conditions relevant for their functioning
have been prescribed in the rules 83, 83A and 84.

26
where FORM GSTR-9C is also required to be furnished

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.69 13.69 1.70 13.70 GOODS AND SERVICES TAX

Indian citizen (i) Graduate or postgraduate degree or its equivalent examination having a
degree in Commerce, Law, Banking including Higher Auditing, or Business
Administration or Business Management from any Indian University established
by any law for the time being in force
Person of sound
mind (ii) Degree examination of any Foreign University recognised by any Indian
A University as equivalent to the degree examination mentioned in sub-clause (i)
person (iii) Any other examination notified by the Government, on the
Not adjudicated as recommendation of the Council, for this purpose
who is insolvent
(iv) Any degree examination of an Indian University or of any Foreign University
recognized by any Indian University as equivalent of the degree examination

Prescribed Qualifications
(v) Has passed final examination of ICAI/ ICSI/ Institute of Cost Accountants of
Not been convicted India.
by a competent court

(ii) What are the activities which can be undertaken by a GSTP?

A GSTP can undertake any/all of the following activities on behalf of a
registered person, if so authorised by him:

Retired officer of Commercial Tax Department of any Furnish Make deposit Furnish Furnish details
State Govt./CBIC who, during service under Government Furnish details
monthly, for credit into information for of challan in
of outward
had worked in a post not lower than the rank of a annual or final electronic cash generation of the prescribed
supplies
Group-B gazetted officer for a period – 2 years return ledger e-way bill form

Enrolled as a Sales Tax Practitioner or Tax Return File an File an intimation

Preparer under the earlier indirect tax laws for a period application for to pay tax under File an application
of not less than 5 years amendment or the composition File a claim for for amendment/
cancellation of scheme or refund cancellation of
enrolment withdraw from the registration
under rule 58 said scheme
Has acquired any of the prescribed qualifications

satisfies any of the conditions

(mentioned below)
Also allowed to appear as authorized
representative before any officer of Department,
Appellate Authority or Appellate Tribunal, on Confirmation from the registered
behalf of such a registered person provided he is person shall be sought
enrolled as GSTP under rule 83.

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 RETURNS 1.71 13.71 1.72 13.72 GOODS AND SERVICES TAX

Furnishing returns through GSTP: When a registered person opts to furnish (iv) What is the procedure for enrolment as GSTP?
his return through GSTP, such registered person:
The procedure for enrolment of GSTP has been depicted by way of a diagram
is given below:
Before confirming submission ENROLMENT OF GSTP
Gives his consent in of any statement prepared by
prescribed form to any GSTP GSTP, ensures that the facts
to prepare and furnish his mentioned in the return are An application in The application In case, the
return true and correct. prescribed form may shall be scrutinised application is
be made and GST rejected,
Thus, the responsibility for correctness of any particulars furnished in the electronically practitioner proper reasons
through the common certificate shall be shall have to
return or other details filed by the GSTP continues to rest with the registered be given.
portal for enrolment granted in the
person on whose behalf such return and details are furnished. The registered as GSTP. prescribed form.
person before confirming, should ensure that the facts mentioned in the
return are true and correct before signature. However, failure to respond to Any person who has been enrolled
request for confirmation is treated as deemed confirmation. as GSTP by virtue of him being No person enrolled
enrolled as a Sales Tax Practitioner as a GSTP is eligible The enrolment
(iii) Other points or Tax Return Preparer under the to remain enrolled once done
earlier Indirect Tax law shall remain unless he passes remains valid
‰ A registered person gives his consent and authorises a GSTP in the enrolled only for a period of 30 such examination till it is
prescribed form by listing the authorised activities in which he intends months from the appointed date conducted at such cancelled.
unless he passes the said periods by NACIN
to authorise the GSTP. The GSTP accepts the authorisation in Part B of examination within the said period
the same form. of 30 months.

‰ The GSTP can undertake only such tasks as indicated in the prescribed
form. The registered person may, at any time, withdraw such
authorization. 10. INFORMATION RETURN [SECTIONS 150 & 123]
‰ Any statement furnished by the GSTP is made available to the registered (i) Who shall furnish the information return? [Section 150(1)]
person on the common portal. For every statement furnished by the
Information return is based on the idea of verifying the compliance levels of
GSTP, a confirmation is sought from the registered person over email
or SMS. registered persons through information procured from independent third
party sources.
‰ The GSTP should prepare all statements with due diligence and affix his
digital signature on the statements prepared by him or electronically Authorities who are responsible for maintaining record of registration or
verify using his credentials. statement of accounts or any periodic return or document containing details
of payment of tax and other details of transaction of goods or services or
‰ If the GSTP is found guilty of misconduct, his enrolment will be liable to
both or transactions related to a bank account or consumption of electricity
be cancelled and a show cause notice would be issued to him.

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.73 13.73 1.74 13.74 GOODS AND SERVICES TAX

or transaction of purchase, sale or exchange of goods or property or right or Taxable p

person
interest in a property under any law for the time being in force, shall furnish State Government's authority responsible for the collectiof VAT/sales tax/ State
an Information Return of the same in respect of such periods, within such excise duty or Central Government's authority responsible for the collection of
excise duty or customs duty
time, in such form and manner and to such authority/agency as may be
prescribed. The authorities required to furnish Information Return are given Income tax authority
subsequently by way of a diagram.
Banking company within the meaning of section 45A(a) of the RBI Act, 1934
(ii) Defective Information Return [Section 150(2)]
State Electricity Board or an electricity distribution or transmission licensee under
Where the Commissioner, or an officer authorised by him in this behalf, the Electricity Act, 2003 or any other entity entrusted with such functions by the
Central Government or the State Government
considers that the information furnished in the information return is
defective, he may intimate the defect to the person who has furnished such Registrar/Sub-Registrar appointed under section 6 of the Registration Act, 1908
information return.
Local authority /other public body/association
He shall give such person an opportunity of rectifying the defect within a
period of 30 days from the date of such intimation or within such further
Registrar within the meaning of the Companies Act, 2013
period which, on an application made in this behalf, the said authority may
allow.
Registering Authority empowered to register motor vehicles under the Motor
However, if the defect is not rectified within the said period of 30 days or, the Vehicles Act, 1988
further period so allowed], then, notwithstanding anything contained in any
Collector referred to in clause (c) of section 3 of the Right to Fair Compensation
other provisions of this Act, such information return shall be treated as not and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
furnished and the provisions of this Act shall apply.
Recognised stock exchange
(iii) Issuance of notice for failure to furnish the information return within
stipulated time [Section 150(3)] Depository
Where a person who is required to furnish information return has not
Officer of the RBI
furnished the same within the specified time*, the said authority may serve
upon him a notice requiring furnishing of such information return within a
GSTN
period not exceeding 90 days from the date of service of the notice and such
person shall furnish the information return. UIN holder

*time specified in sub-section (1) or sub-section (2) of section 150 Any other specified person

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.75 13.75 1.76 13.76 GOODS AND SERVICES TAX

(iv) Penalty for failure to furnish information return [Section 123] 3. Furnishing details of outward supplies [Section 37 read
If the person to whom the notice has been issued under section 150(3) fails with rule 59]
to furnish the information return within the period specified in said notice,
Who is required to furnish the details of outward supplies?
the proper officer may direct that such person shall be liable to pay a penalty.

`100 (`50 each under CGST &

SGST/UTGST) for every day
Quantum of during which such failure All registered persons including Casual registered
To be Filed by
penalty continues person
` 5,000 (` 2,500 each under Input Service Distributor (ISD)
CGST & SGST/UTGST)

Non-resident taxable person

Services
LET US RECAPITULATE Composition taxpayer

1. Meaning of Returns Exclusions

Person deducting tax at source
A statement of information furnished by the

Return of Outward supply of Goods and

taxpayer, to tax administrators, at regular intervals.
Person collecting tax at source
Filing of returns constitutes the most important
Supplier of OIDAR services located in non-taxable

Return
compliance procedure which enables the
Government/ tax administrator to estimate the tax territory providing services to non-taxable online
collection for a particular period and determine the recipient
correctness and completeness of the tax
compliance of the taxpayers. What is the form for submission of details of outward supplies?

2. Modes of filing returns FORM for filing Return of Outward Supply

All the returns are to be filed online.

GSTN portal ([Link])

GSTR-1
Offline utilities provided by GSTN

return
Can be furnished or through a
GST Suvidha Providers (GSPs)
electronically on portal Facilitation centre

Modes of filing
© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.77 13.77 1.78 13.78 GOODS AND SERVICES TAX

Due Dates for Submission of Form GSTR-1 What are the cases where a registered person is debarred from furnishing
details of outward supplies in GSTR-1/IFF?

Class of registered person Time limit for furnishing the details

of outward supplies in Form GSTR-1
for each quarter/month
GSTR-1 return not furnished in Form GSTR-3B for the preceding month
th
Registered persons opting for 13 day of the month succeeding
QRMP scheme such quarter
person, opting for QRMP scheme, has not furnished
GSTR-3B for preceding tax period
Others 11th day of the month succeeding said
month
person to whom intimation has been issued under rule 88C
unless he deposits the amount mentioned in intimation or
Invoice Furnishing Facility [IFF] for taxpayers opting for QRMP Scheme furnishes a reply explaining reasons for unpaid amount

GSTR-
1/IFF person to whom intimation has been issued under rule 88D(1)
unless he pays the amount of excess ITC mentioned in
an optional facility intimation or furnishes a reply in respect of excess ITC

registered person has not furnished the details of the bank

Registered person not allowed to furnish

provided to quarterly taxpayers who are in QRMP scheme,
account as per the provisions of rule 10A

to file their details of outward supplies in first 2 months of the What kind of details of outward supplies are required to be furnished in
quarter, GSTR-1/ GSTR-1A and IFF?
IFF
between the 1st day of the succeeding month till the 13th day of Details to be furnished through IFF
the succeeding month
Outward Taxable Supplies
upto a cumulative value of ` 50 lakh in each of the first 2
months of the quarter B2B supplies

to pass on the credit to their recipients

Inter-state
e sup
supplies Intra-state
stat supplies

x Invoice-wise details of all supplies to be uploaded

x Debit/credit notes issued during the month for such invoices
issued previously to be uploaded

© The Institute of Chartered Accountants of India © The Institute of Chartered Accountants of India
 RETURNS 1.79 13.79 1.80 13.80 GOODS AND SERVICES TAX

Details to be furnished in GSTR-1/ GSTR-1A Rectification of errors in GSTR-1/ GST filed for previous periods

Outward Taxable Supplies

by way of
Particulars furnished in Amendment Tables given
B2B supplies B2C supplies GSTR-1 of prior periods in GSTR-1 of subsequent
can be amended periods

Inter-state Intra-state
Inter-state Intra-state
supplies supplies Maximum time limit within which such amendments are permissible is earlier
supplies supplies
of the following dates:
Rate-wise ‰ 30th day of November following the end of the financial year to which
Invoices > Invoices • consolidated such details pertain or
Invoice-wise details of all
` 1,00,000 ` 1,00,000
details of all invoices to be ‰ Date of filing of the relevant annual return
supplies to be uploaded
uploaded Invoice-wise details State-wise rate-wise consolidated
to be uploaded details to be uploaded
Filing of Nil GSTR-1

Amendment of GSTR-1 for current period

• Filing of GSTR-1 is mandatory
for all normal and casual
an optional facility
Nil GSTR-1 taxpayers, even if there is no
business activity in any
to add new records which taxpayer missed out while particular tax period.
filing in form GSTR-1, and/or

to amend records which were already reported in same

GSTR-1A
period in form GSTR-1

after furnishing GSTR-1 for a tax period but before filing

GSTR-3B for said tax period.

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 RETURNS 1.81 13.81 1.82 13.82 GOODS AND SERVICES TAX

4. Furnishing details of inward supplies [Section 38 read Form and manner of ascertaining details of inward supplies – GSTR-2A and
GSTR-2B
with rule 60]
who is a new registrant.
(Specified period from taking GSTR- 2A and its features
Details of inward registration will be prescribed
supplies in respect of for this purpose.)
which ITC may be System generated read only statement of
available to the Updated on Real Time basis
inward supplies
recipient who has defaulted in payment
of tax for a prescribed period.
Reflects details of invoices furnished by a
Reflects details of invoices furnished by
whose output tax payable as non-resident taxable person in Form GSTR-
Input Service Distributor in Form GSTR-6
per GSTR-1/IFF exceeds the 5
output tax paid in GSTR-3B for
a particular tax period by
prescribed limit. Reflects details of TDS by deductor Reflects details of TCS by an e-commerce
furnished in Form GSTR-7 operator furnished in Form GSTR-8
who has availed ITC of an
amount that exceeds the

statement
credit that can be availed by

Auto-generated
him as per GSTR-2B during
prescribed period and by
Details of supplies prescribed limit.
GSTR- 2B and its features
in respect of which
such ITC cannot be
availed, whether who has defaulted in Auto-generated statement containing Available once a month
discharging his tax liability in the details of eligible ITC
wholly or partly, by
the recipient, on accordance with the
account of the provisions of section 49(12) Reflects details of outward supplies
details of the said read with rule 86B, i.e. who Static statement furnished by the suppliers in Form GSTR-1, 5
supplies being has discharged more tax & 6, between the cut-off dates
furnished by a liability from electronic credit
registered supplier ledger than prescribed under
Details of outward supplies furnished by Reflects details of IGST paid on the import
rule 86B. the supplier who has opted for QRMP of goods, goods brought in the DTA from
other specified classes of scheme, in Form GSTR-1 or using the IFF SEZ unit/developer
persons between the cut off dates

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 RETURNS 1.83 13.83 1.84 13.84 GOODS AND SERVICES TAX

Due dates for furnishing Form GSTR-3B

System generated statement System generated statement GSTR-3B can be filed monthly or quarterly and due date for filing are as follows:
of inward supplies for an ISD of inward supplies for ™ Monthly GSTR-3B on or before 20th of the month succeeding the month for
composition taxpayer
which return is furnished.

GSTR-6A
GSTR-4A
™ Quarterly GSTR-3B on or before 22nd and 24th of the month (Depending
upon State) succeeding the quarter for which return is furnished in case of a
taxpayer opting for QRMP scheme.
5. Furnishing of returns under section 39
QRMP scheme
Return forms under section 39

Optional return filing scheme

GSTR-3B GSTR-4 GSTR-5 GSTR-7

Quarterly Return
(For all registered (For Composition (For Non-Resident (For Tax Deducted at
persons) Taxpayers) Taxable Persons Source)
Monthly payment

•Taxpayers having aggregate turnover of up to ` 5

excluding Eligibility
crore in the preceding financial year

Condition to be fulfilled for •Taxpayer must have furnished the last return, as due
ISD becoming eligible on the date of exercising such option

•Taxpayers can opt in for any quarter from 1st day of

NRTP 2nd month of preceding quarter to the last day of
Manner of Exercising option
the first month of the quarter for which the option is
being exercised
Composition taxpayer
•Taxpayers are not required to exercise their option
every quarter. Where such option has been
Person deducting tax at source Validity of option once
exercised once, they shall continue to furnish the
exercised
return as per the selected option for future tax
periods, unless they revise the said option.
Person collecting tax at source

Supplier of OIDAR services located in non-taxable territory

providing services to non-taxable online recipient

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 RETURNS 1.85 13.85 1.86 13.86 GOODS AND SERVICES TAX

Form GSTR-4 and GST CMP-08: For Composition dealers

™ A composition supplier is required to file the return GSTR-4 yearly and is
Opting of QRMP
required to pay the tax quarterly in Form GST CMP-08.
Scheme is GSTIN A person may avail
wise QRMP scheme option
Details to be Due Date:
for some GSTIN(s) and
furnished:
not for other GSTIN(s) GSTR-4 By 30th day
(i) Invoice wise Frequency: of June
(Yearly inward supplies Yearly following the
Return)
(ii) Consolidated end of such
Opting out of the QRMP Scheme outward supplies financial year

•Aggregate turnover has exceeded ` 5

Taxpayers opting out of the crore in the financial year Details to be Due Date:
GST CMP-08
QRMP Scheme furnished: By 18th day of
(For quarterly Frequency:
Details of month
payment of Quarterly
payment of self- succeeding
tax)
assessed tax such quarter
•Available from from 1st day of 2nd month
Availability of facility of opting of preceding quarter to the last day of the Note:
out of QRMP Scheme for a first month of the quarter (1) The inward supplies of a composition supplier received from registered
quarter persons filing GSTR-1 will be auto populated in FORM GSTR-4A for
viewing.
(2) Filing of NIL GST CMP-08 is mandatory for all taxpayers who have
Nil GSTR-3B opted to pay tax under composition scheme if there is no business
activity in any tax period.

• Filing of GSTR-3B is mandatory for all Form GSTR-5: For Non-Resident Taxable Person (NRTPs)
normal and casual taxpayers, even if
Nil GSTR-3B Details to be Due Date:
there is no business activity in any furnished: (i) within 13 days after the
particular tax period. (i) Details of end of the calendar month,
inward Frequency: or
GSTR-5 supplies Monthly (ii) within 7 days after the
(ii) Details of last day of validity period
outward of the registration
supplies whichever is earlier

Note: An NRTP is not required to file an Annual Return.

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 RETURNS 1.87 13.87 1.88 13.88 GOODS AND SERVICES TAX

Form GSTR-6: Return for Input Service Distributors (ISDs) 6. Due date for payment of tax

Details to be furnished:
(i) ITC received for Monthly GSTR-
distribution Due Date: 3B, GSTR-5 and Last date of filing returns
(ii) Total ITC/ eligible/ Frequency: within 13 days GSTR-7
ineligible ITC to be after the end
distributed for the tax Monthly

GSTR-6
of the calendar
period
month
(iii) Debit/credit notes
received Tax for a quarter is to be paid by 18th of
GSTR-4
the month succeeding such quarter

Due dates for payment of tax

for the person required to file
Note: An ISD is not required to file an Annual Return.

Form GSTR-7: For Tax Deducted at Source (TDS) Payment of tax under QRMP scheme
™ GSTR-7 is a return for tax deducted at source, whenever taxable goods or
services or both are supplied to a Central/ State Government’s Department/ Tax due in each of the first 2 months of the quarter
establishment or, local authority, or Governmental agencies, recipient is
required to deduct tax at source and total value of supply exceeds ` 2,50,000.
™ GSTR-7A- Form for issue of TDS certificate by deductor to the deductee. To be paid by depositing in pre filled Form GST PMT-06

Due Date: Payment to be made by 25th of the succeeding month

GSTR-7* Frequency:
On/before 10th of the month
(For TDS) Monthly
succeeding the calendar month
Options for making monthly payment of tax under QRMP scheme

*GSTR-7 would be furnished even for a month, where no TDS is required to be

deducted.
Fixed sum method

Options for making monthly payment of tax

Self assessment method

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 RETURNS 1.89 13.89 1.90 13.90 GOODS AND SERVICES TAX

Method 1: Fixed Sum Method Applicability of Interest -

(1) For Fixed Sum method taxpayers

35% of the tax paid in cash in the

return for the preceding quarter where
the return was furnished quarterly Where auto-calculated •No interest would be applicable even if the liability for
Pay tax due in each of the fixed sum amount for the said month was found higher
first two months of the first 2 months of quarter •If GSTR-3B of the quarter is filed by the due date by
quarter Tax liability paid in cash in the return is paid by due date discharging the entire liability
for the last month of the immediately
preceding quarter where the return
Deposit in PMT-06 by was furnished monthly
25th day of the month
Where tax payer makes
succeeding such month •Interest is payable at the applicable rate from due date
monthly payment
of furnishing GST PMT-06 till date of making payment

Fixed sum method

beyond due date

Monthly tax payment through this method would not be available to those Where Form GSTR-3B
•Interest payable as per provisions of section 50 of the
is furnished beyond
registered persons who have not furnished the return for a complete tax period CGST Act, 2017 for the tax liability net of ITC
due date
preceding such month.

(2) For Self-assessment method taxpayers

Method 2: Self Assessment Method

Taxpayers can pay tax by

considering tax liability on Interest payable as per provisions of section 50 of the CGST Act
inward and outward
supplies and ITC available
for tax or any part thereof (net of ITC) which remains unpaid/ paid beyond
Self assessment method the due date

in Form GST PMT-06

for the first 2 months of the quarter

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 RETURNS 1.91 13.91 1.92 13.92 GOODS AND SERVICES TAX

7. Rectification of errors/omissions (ii) GSTR – 8 - Statement for tax collection at source

Monthly statement for Filed by:

Statement Due date:
Revision for TCS E-Commerce Operator E-
depicting supplies 10th of the
of return Commerce
(GSTR-8) effecting through it next month
Operator

Rectification
Rectification on account of
in scrutiny, audit, (iii) Final return
inspection or
subsequent enforcement Taxable person
return activities Within 3 months of the date
Final whose registration
of cancellation or date of
Return has been
order of cancellation,
(GSTR-10) surrendered or
cancelled. whichever is later.
Maximum time limit for rectification
30th day of November of next FY
(iv) Annual Return & Annual Statement
OR
Actual date of filing annual return Annual return
Whichever is earlier

8. Other returns/ statements Furnished by:

Prescribed form
All registered persons
(i) First return

excluding GSTR-9 (For registered

persons)
Registered person to declare
outward supplies in the period Casual Taxable Person
First
Return between the date on which he after grant of GSTR-9A (Composition tax
became liable to registration till registration
(GSTR-10) ISD payer)
the date on which registration
has been granted
GSTR-9B (ECO) [not yet
NRTP
notified]85

Person deducting tax at source

Person collecting tax at source

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 RETURNS 1.93 13.93 1.94 13.94 GOODS AND SERVICES TAX

9. Information return
Annual Self-certified Reconciliation Statement
(i) Who shall furnish the information return?

All registered persons Prescribed form Taxable person

are required to file furnish the statement alongwith GSTR-9C
annual return if their aggregate turnover during a Local authority /other public body/association
financial year exceeds ` 5 crores.
State/Central Government's authority responsible for the collectiof VAT/sales tax/
excluding State excise duty or excise duty or customs duty respectively
Income tax authority
Casual Taxable Person

Banking company
ISD

State Electricity Board or an electricity distribution or transmission or any other

NRTP entity entrusted with such functions
Registrar/Sub-Registrar appointed under the Registration Act
Person deducting tax at source
Registrar within the meaning of the Companies Act, 2013
Person collecting tax at source
Registering Authority empowered to register motor vehicles under the Motor
(v) GSTR – 11 - Details of inward supplies of persons having UIN Vehicles Act, 1988
Collector referred to in clause (c) of section 3 of the Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013
Persons who have been Details of inward Recognised stock exchange
GSTR-11 issued a Unique Identity supplies of persons
Number (UIN) having UIN
Depository

Officer of the RBI

(vi) GSTR – 5A - Return for persons providing OIDAR services

Registered person providing (i) online Due date: GSTN

money gaming from a place outside 20th day of the
India to a person in India or (ii) OIDAR month succeeding UIN holder
services from a place outside India to the calendar

GSTR-5A
non-taxable online recipient (NTOR) or month/part
registered person other than NTOR thereof Any other specified person

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 RETURNS 1.95 13.95 1.96 13.96 GOODS AND SERVICES TAX

(ii) Defective Information Return that if the late fee has been paid as per the provisions under the CGST Act, there
is no requirement of paying the late fee under the SGST Act for the same default.
Commissioner/
He may intimate Whether B Ltd. has taken a correct view? Examine.
any authorised Defect to be
defect to the Otherwise,
officer, considers rectified within 7. Tax authorities have been scrutinizing the returns furnished by A Ltd. During the
information
information person who has 30 days from the return shall scrutiny process, A Ltd. has been made aware by the authorities about an incorrect
furnished in the furnished such date of such be treated as disclosure in a return under section 39 filed by it for a particular tax period.
information information intimation or
return to be not furnished
return extended time A Ltd. seeks your opinion to rectify the incorrect disclosure made in the return.
defective
8. ABC Ltd. applied for cancellation of GST registration in the month of March. In the
month of September, the consultant of ABC Ltd. suggested to furnish the final
(iii) Issuance of notice for failure to furnish the information return within
return in said month. He advised the company that a final return needs to be
stipulated time
furnished before the due date of furnishing the return for the month of September
within a of subsequent financial year or before furnishing of annual return (for the financial
Commissioner/ period not year in which cancellation has been sought for), whichever is earlier. However, the
Where a person requiring him to
any authorised exceeding 90 jurisdictional authorities have yet not passed the order of cancellation due to
required to furnish furnish such
officer, may days from reasons not known to ABC Ltd.
information return information
serve a notice the date of
has not furnished it return
on such person service of the Whether the advice given by the consultant of ABC Ltd. is correct? Examine.
notice
9. XYZ Ltd. has deducted TDS from the consideration payable to A Ltd. for supplies
made by it. The deductee, i.e. A Ltd., seeks your advice on taking credit for the TDS
deducted by XYZ Ltd. Also, whether the tax deducted by XYZ Ltd. will be shown in
TEST YOUR KNOWLEDGE the electronic credit ledger or electronic cash ledger of A Ltd.?

1. Which type of taxpayers need to file annual return under section 44? Enumerate. 10. Whether GSTPs are required to furnish any return for disclosure of activities carried
out by them for any of the registered person during a tax period? Elucidate.
2. Is an annual return under section 44 and a final return one and the same? Explain.
3. Do input service distributors (ISDs) need to file separate statement of outward
supplies (GSTR-1) with their return? Discuss. ANSWERS
4. Is it compulsory for a taxpayer to file return by himself? Explain.
1. Every registered person, other than ISD’s, casual/non-resident taxpayers, tax
5. Mr. Anand Kumar, a regular taxpayer, filed GSTR-1 for the month of August before deductors at source, tax collector at source are required to file an annual
the due date. Later, in the month of February next year, he discovers error in the return in Form GSTR-9. Taxpayer under composition scheme are required to
GSTR-1 of the month of August already filed and wants to revise it. file annual return in Form GSTR-9A. The department of the Central/State
You are required to advise him on the future course of action in this scenario. Government or a local authority, whose books of account are subject to audit
by the Comptroller and Auditor-General of India or an auditor appointed for
6. B Ltd. has filed the return for the month of October belatedly. At the time of
auditing the accounts of local authorities under any law for the time being in
computing the late fee to be paid for delay in filing return, B Ltd. has taken a view
force, are exempt from the requirement of furnishing the annual return.

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 RETURNS 1.97 13.97 1.98 13.98 GOODS AND SERVICES TAX

2. No. Annual return has to be filed by every registered person paying tax as a In the present case, since the incorrect disclosure has been highlighted to A
normal taxpayer, with certain exceptions. Final return has to be filed only by Ltd. by the tax authorities during the process of scrutiny, the rectification of
those registered persons whose registration under GST has been cancelled. the incorrect disclosure cannot be made by A Ltd. on its own.
The final return has to be filed within three months of the date of cancellation
8. No, the advice of the consultant is not correct.
or the date of cancellation order, whichever is later.
In terms of section 45 read with rule 81, every registered person who is
3. No, the ISDs need to file only a return in Form GSTR-6 and the return has the
required to furnish GSTR-3B and whose registration has been cancelled is
details of credit received by them from the service provider and the credit
required to file a final return within three months of the date of cancellation
distributed by them to the recipient units. Since their return itself covers these
or date of order of cancellation, whichever is later.
aspects, there is no requirement to file separate statement of outward supplies.
In the given case, the registration of the company has not been cancelled.
4. No. A registered taxpayer can also get his return filed through a Goods and
Therefore, requirement of filing final return will arise only when the registration
Services Tax Practitioner(GSTP) as authorised by him subject to confirmation
of the company gets cancelled.
of registered person over mail or SMS each time when return filed by GSTP .
9. In terms of section 51(5) read with rule 66, the deductee shall claim credit, in
5. The mechanism of filing revised return for any correction of errors/omission
his electronic cash ledger, of the tax deducted and reflected in GSTR-7 of the
is not available under GST. The rectification of errors/omission is allowed in
deductor, after validation. Similarly, rule 87(9), inter alia, provides that any
the subsequent returns.
amount deducted under section 51 shall be credited to the electronic cash
Therefore, Mr. Anand Kumar who discovered an error in GSTR-1 for the month ledger of the deductee.
of August cannot revise it. However, he should rectify said error in the GSTR-
Therefore, in the present case, A Ltd., can take credit of TDS amount deducted
1 filed for the month of February and should pay the tax and interest, if any,
by XYZ Ltd. in its electronic cash ledger and use the same for payment of tax,
in case there is short payment, in the return to be furnished for February. The
interest, penalty, late fee or any other amount.
error can be rectified by furnishing appropriate particulars in the
“Amendment Tables” contained in GSTR-1. 10. In terms of section 48(2), a registered person may authorise an approved
GSTP to furnish the details of outward supplies under section 37, the details
However, as per section 37(3), no rectification of details furnished in GSTR-1
of inward supplies under section 38 and the return under section 39 or annual
shall be allowed after 30th day of November following the end of the financial
return under section 44 or final return under section 45 and to perform other
year to which such details pertain, or furnishing of the relevant annual return,
prescribed functions. Thus, the GSTP can furnish the specified documents or
whichever is earlier.
information on behalf of the registered person with prior authority of the
6. The understanding of B Ltd. is incorrect. For arriving at the late fee payable registered person.
on account of delayed filing of GST return, the computation of late fee is
However, there is no specific return furnishing mechanism for GSTP itself to
made separately for CGST and SGST/UTGST. This is because the provisions
disclose the activities carried out by it for any of the registered person during
of late fee on delayed filing of return are prescribed in both CGST Act and
a tax period.
SGST/UTGST Act although a common return is filed for both the laws.
7. In terms of section 39(9), any rectification in the return (under section 39)
furnished by the registered person is allowed only when the error or omission
is discovered on account of reasons other than scrutiny, audit, inspection, or
enforcement activity by the tax authorities.

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 RETURNS 1.99 13.99 1.100 13.100 GOODS AND SERVICES TAX

AMENDMENTS MADE VIDE THE FINANCE ACT, 2025 conditions and restrictions as may be
restrictions as may be prescribed.
The Finance Act, 2025 has come into force from 29.03.2025. However, most of the prescribed.
amendments made under the CGST Act and the IGST Act vide the Finance Act, 2025
38(2) The auto-generated The statement Section 38(2) is to
would become effective only from a date to be notified by the Central Government
statement under sub- referred in sub- be amended by
in the Official Gazette. Such a notification has not been issued till 30.04.2025.
section (1) shall consist section (1) shall consist omitting the
Therefore, the applicability or otherwise of such amendment for May 2026,
of- of- expression “auto
September 2026 and/or January 2027 examinations shall be informed by the generated” with
(a) details of inward (a) details of inward
ICAI by way of an announcement. supplies in supplies in respect to statement
In the table given below, the existing provisions of sections 38 and 39 are compared respect of which respect of which of input tax credit in
with the provisions as amended by the Finance Act, 2025. credit of input tax credit of input said sub section and
may be available tax may be also to insert the
Once the announcement for applicability of such amendments for examination(s) to the recipient; available to the expression
is made by the ICAI, students should read the amended provisions given hereunder and recipient; “including” after the
in place of the related provisions discussed in the chapter. (b) details of (b) details of words “by the
supplies in supplies in recipient” in clause
Section Existing provisions Provisions as Remarks respect of which respect of which (b) of said sub-
amended by the such credit such credit section to make the
Finance Act, 2025 cannot be cannot be said clause more
availed, whether availed, whether inclusive.
38(1) The details of outward The details of outward Section 38(1) is to
wholly or partly, wholly or partly, Further, a new
supplies furnished by supplies furnished by be amended to omit
by the recipient, by the recipient, clause (c) is to be
the registered persons the registered persons the expression “auto
on account of the including oninserted in the said
under sub-section (1) under sub-section (1) generated” with
details of the said account of the sub-section to
of section 37 and of of section 37 and of respect to statement
supplies being details of the provide for an
such other supplies as such other supplies as of input tax credit in
furnished under said supplies enabling clause to
may be prescribed, and may be prescribed, the said sub section.
sub-section (1) of being furnished prescribe other
an auto-generated and a statement
section 37,-- under sub-details to be made
statement containing containing the details
(i) by any section (1) of available in
the details of input tax of input tax credit shall
registered section 37,-- statement of input
credit shall be made be made available
available electronically electronically to the person (i) by any tax credit.
to the recipients of recipients of such within such registered
such supplies in such supplies in such form period of person
form and manner, and manner, within taking within such
within such time, and such time, and subject registration period of
subject to such to such conditions and as may be taking

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 RETURNS 1.101 13.101 1.102 13.102 GOODS AND SERVICES TAX

prescribed; registration exceeds the may be

or as may be output tax prescribed,
(ii) by any prescribed; paid by him exceeds
registered or during the the output
person, (ii) by any said period tax paid by
who has registered by such him during
defaulted in person, limit as may the said
payment of who has be period by
tax and defaulted prescribed; such limit
where such in payment or as may be
default has of tax and (iv) by any prescribed;
continued where such registered or
for such default has person (iv) by any
period as continued who, during registered
may be for such such period person
prescribed; period as as may be who,
or may be prescribed, during such
(iii) by any prescribed; has availed period as
registered or credit of may be
person, the (iii) by any input tax of prescribed,
output tax registered an amount has availed
payable by person, the that credit of
whom in output tax exceeds the input tax of
accordance payable by credit that an amount
with the whom in can be that
statement accordance availed by exceeds
of outward with the him in the credit
supplies statement accordance that can be
furnished of outward with clause availed by
by him supplies (a), by such him in
under the furnished limit as may accordance
said sub- by him be with clause
section under the prescribed; (a), by such
during such said sub- or limit as
period, as section (v) by any may be
may be during such registered prescribed;
prescribed, period, as person, or

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 RETURNS 1.103 13.103 1.104 13.104 GOODS AND SERVICES TAX

who has (v) by any under the provisions of paying tax under the filing of return
defaulted in registered section 10 or section provisions of section under the said sub-
discharging person, 51 or section 52 shall, 10 or section section.
his tax who has for every calendar 51 or section 52 shall,
liability in defaulted month or part thereof, for every calendar
accordance in furnish, a return, month or part thereof,
with the discharging electronically, of furnish, a return,
provisions his tax inward and outward electronically, of
of sub- liability in supplies of goods or inward and outward
section (12) accordance services or both, input supplies of goods or
of section with the tax credit availed, tax services or both, input
49 subject provisions payable, tax paid and tax credit availed, tax
to such of sub- such other particulars, payable, tax paid and
conditions section (12) in such form and such other particulars,
and of section manner, within such in such form and
restrictions 49 subject time, as may be manner, within such
as may be to such prescribed: time, and subject to
prescribed; conditions such conditions and
or and restrictions, as may be
(vi) by such restrictions prescribed:
other class as may be
of persons prescribed;
as may be or
prescribed. (vi) by such
other class
of persons
as may be
prescribed.
(c) such other
details as may
be prescribed.

39(1) Every registered Every registered Section 39(1) is to

person, other than an person, other than an be amended so as to
Input Service Input Service provide for an
Distributor or a non- Distributor or a non- enabling clause to
resident taxable person resident taxable prescribe conditions
or a person paying tax person or a person and restriction for

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