The Parliament of India has enacted four laws for enforcement of Goods and Services Tax in India, viz., Central Goods and Services Tax Act, 2017 (CGST), Integrated Goods and Services Tax Act, 2017 (IGST), Union Territories Goods and Services Tax Act, 2017 (UTGST) and Goods And Services Tax (Compensation To States) Act, 2017 (“Compensation Act”). At the outset, it is important to understand the levy and the extent on a broad level under the four Acts, which is captured as under:
The four Acts govern four different levies under the GST regime whereby CGST governs the levy of Central portion of GST on all intrastate transactions, IGST Act governs the levy of GST on all inter state transactions, UTGST Act governs the levy of GST in Union Territories and Compensation Act governs the levy of Compensation Cess to compensate the states loosing revenue on enactment of GST.
All type of Goods shall be exigible to GST. However, GST shall not be levied on alcoholic liquor for human consumption. Also, based on recommendations of both the 13th Finance Commission and Empowered Committee, GST on following products shall be levied from a date to be notified by the GST Council
- Petroleum Crude
- High Speed Diesel
- Motor Spirit (commonly known as Petrol)
- Natural Gas
- Aviation Turbine Fuel
Levy under the CGST Act
Section 9 is the charging Section under CGST and provides for four categories of levy of GST on intra state transactions viz., forward charge, reverse charge on purchase from unregistered dealers, reverse charge on specified goods and services and levy on e commerce companies. The Section further provides for deferment of levy of CGST on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel which shall be levied with effect from a later date as may be notified by the Government on the recommendations of the Council.
Levy of GST under forward charge
The first sub section of Section 9 of CGST Act provides that CGST shall be levied on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. Such levy is to be paid by the Supplier and all compliances need to be made by him accordingly.
Levy of GST under reverse charge
Sub Section 3 of the Section 9 of CGST Act provides for reverse charge liability on certain categories of supply of goods or services or both, which shall be notified by the Government. The tax under this levy shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Thus, in such cases, the liability has been shifted from the supplier of services to the recipient of services.
Levy of GST under reverse charge when purchasing from unregistered dealer
Sub Section 4 of Section 9 of CGST Act provides for the levy of CGST on a registered person who purchases taxable goods or services or both from an unregistered person. It is immaterial whether such person who is the supplier is liable for registration or not, as long as he is unregistered, the liability on such taxable supplies has been shifted to registered taxable person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Thus, in other words, Government by shifting liability in case of supplies received from unregistered suppliers has penalized the purchaser for such supplies by making him liable for compliance of tax on such count.
However, an exmeption has been provided to a registered person from payment of GST under reverse charge on supplies received from unregistered person when such supplies from any or all unregistered person (taken together) does not exceed Rs 5,000 per day. In case it exceeds Rs 5000 in a day, then whole fo the amount shall be exigible to GST i.e. no exemption of Rs 5000 shall be available on that day. The limit is to be seen as per state since the person is a distinct person in each state for the purpose of the respective Acts.
Further, it is important to note that all supplies
Levy of GST in case of e commerce companies
Sub Section 5 of Section 9 of CGST Act provides for the levy of CGST on an electronic commerce operator in respect of notified categories of intra-State supplies of services if such services are supplied through an electronic commerce operator. In this case neither the supplier, nor the receiver of supply is liable but the electronic commerce operator through which such supplies are made shall be the person liable to pay tax and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services. It is pertinent to mention that this provision shall apply to notified categories of services only and goods are not covered within the ambit of this provision. The person liable to pay in such cases has been provided as follows:
As a unique aspect, Section 10 of CGST Act provides for an option to small supplier of goods and restaurant and caterers whose turnover not exceed fifty lakh rupees to pay, in lieu of the tax payable by him under Section 9, an amount calculated at such rate as may be prescribed, but not exceeding as under:
|In case of a manufacturer||1% of his turnover in state or UT|
|In case of restaurants and caterers||2.5% of his turnover in state or UT|
|In case of other suppliers||0.5% of his turnover in state or UT|
Similar levy shall be enforced under the respective SGST Acts and accordingly, a person opting to pay under Composition shall need to pay twice the rate specified above.
Levy under the IGST Act
Section 5 of IGST Act provides of levy of IGST on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. It is important to note that the Act draws the valuation for the levy purpose from section 15 of the Central Goods and Services Tax Act. Further, since IGST incorporates levy by Centre only, it shall be approximately the sum of CGST and SGST and shall not exceeding forty per cent. It is important to note that tax on Import of services shall be levied under this Act only. Also, it has been provided that integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975. Like CGST, IGST provides for levy of tax on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel from a future date. Further, like CGST, IGST shall also be levied on notified categories of purchase from unregistered dealers, and specified categories of goods and services under reverse charge along with liability on e commerce operators.
Levy under the UTGST Act
Section 7 of UTGST Act provides of levy of UTGST on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. It is important to note that the Act draws the valuation for the levy purpose from section 15 of the CGST Act. Further, UTGST shall be levied at a rate not exceeding twenty per cent. Like CGST, UTGST provides for levy of tax on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel from a future date. Provisions in respect of reverse charge remains same in this Act as well.
Thus, the liability to pay taxes of GST by different class of persons who are liable for levy under the different acts are summarized as under:
|Category of Person||Liability to pay tax|
|Category of Supply||Supplier of all goods and services except those specified in other column||Supplier of specified petroleum products||Supplier of Alcohol for human consumption||Registered Recipient||Unregistered recipient||E Commerce Operator|
|All Supplies except the ones specified below||Liable||Liable||Liable||Not Liable||Not Liable||Not Liable|
|Supply of Alcohol for human consumption||Not Liable||Not Liable||Not Liable||Not Liable||Not Liable||Not Liable|
|Supply of specified Petroleum products||Not Liable||Not Liable||Not Liable||Not Liable||Not Liable||Not Liable|
|Supplies by an unregistered person||Not Liable||Not Liable||Not Liable||Liable||Not Liable||Liable|
|Specified Supplies through E Commerce operator||Not Liable||Not Liable||Not Liable||Not Liable||Not Liable||Liable|
- Accounts and Records
- Anti Profiteeing Clause
- Classification of Supply
- Composition Levy
- Complaince Manual
- Constitutional Amendment Act
- Demand and Recovery
- Determination of Valuation of Supply
- Extent of Levy
- Input tax Credit
- Late fees, Penalties and Prosecution under the GST Law
- Levy of Tax under Constitution prior to GST
- Payment of Tax under GST
- Place of Supply
- Position of taxing articles post Constitutional Amendment
- Rate of Tax in GST
- Registration under GST
- Returns under GST Law
- Structure of GST Law
- Taxable Supply
- TCS in case of E Commerce operator
- Time of Supply
- Transitional Provisions
- Understanding GST
- Who is a Taxable Person