Levy Of And Exemption From Tax

Where is the power to levy GST derived from?

Article 246A of the Constitution, which was introduced by the Constitution (101st Amendment) Act, 2016 confers concurrent powers to both parliament and state legislatures to make laws with respect to GST. However, -clause 2 of Article 246A read with Article 269A provides exclusive power to the Parliament to legislate with respect to inter-state trade or commerce.

What is the taxable event under GST?


Supply of goods and/or services. CGST & SGST will be levied on intra-state supplies while IGST will be levied on inter-state supplies. The charging section is section 7 (1) of CGST/SGST Act and Section 4(1) of the IGST Act.

Is the reverse charge mechanism applicable only to services?


No, reverse charge applies to supplies of both goods and services.

What will be the implications in case of purchase of goods from unregistered dealers?


No, reverse charge applies to supplies of both goods and services.

In respect of exchange of goods from customers to suppliers for restaurant services will the transaction be taxable?


No. In the above case the transaction of supply of watch from consumer to the restaurant will not be an independent supply as the same is not in the course of business. It is a consideration for a supply made by the restaurant to him. The same will be a taxable supply by the restaurant.

Whether supplies made without consideration will also come within the purview of Supply under GST?


Yes only those cases which are specified under Schedule I to the Model GST Law.

Who can notify a transaction to be supply of goods and/or services?


Central Government or State Government on the recommendation of the GST Council can notify a transaction to be the supply of goods and/or services.

Will a taxable person be eligible to opt for composition scheme only for one out of 3 business verticals?


No, composition scheme would become applicable for all the business verticals/registrations which are separately held by the person with same PAN.

Can composition scheme be availed if the taxable person effects inter-State supplies?


No, composition scheme is applicable subject to the condition that the taxable person does not affect inter-state supplies.

Can the taxable person under composition scheme claim input tax credit?


No, the taxable person under composition scheme is not eligible to claim input tax credit.

Can the customer who buys from a taxable person who is under the scheme claim composition tax as input tax credit?


No, customer who buys goods from taxable person who is under composition scheme is not eligible for composition input tax credit because a composition scheme supplier cannot issue a tax invoice

Can composition tax be collected from customers?


No, the taxable person under composition scheme is restricted from collecting tax. It means that a composition scheme supplier cannot issue a tax invoice.

What is the threshold for opting to pay tax under the composition scheme?


The threshold for composition scheme is Rs. 50 Lakhs of aggregate turnover in financial year.

How to compute ‘aggregate turnover’ to determine eligibility for composition scheme?


The methodology to compute aggregate turnover is given in Section 2(6). Accordingly, ‘aggregate turnover’ means ‘Value of all supplies (taxable and non-taxable supplies + Exempt supplies + Exports) and it excludesTaxes levied under CGST Act, SGST Act and IGST Act, Value of inward supplies + Value of supplies taxable under reverse charge of a person having the same PAN.

What are the penal consequences for a person who violates the condition under Composition scheme?


Taxable person who was not eligible for the composition scheme would be liable to pay tax, interest and in addition he shall also be liable to a penalty equivalent to the amount of tax payable. (Section 8 (3) of the MGL).

What is the minimum rate of tax prescribed for composition scheme?



When exemption from whole of tax collected has been granted unconditionally, can taxable person pay tax?


No, the taxable person providing such goods or services shall not collect the tax on such goods or services.

What is remission of tax/duty?


It means relieving the tax payer from the obligation to pay taxon goods when they are lost or destroyed due to any natural causes. Remission is subject to conditions stipulated under the law and rules made thereunder.

Whether remission is allowed under GST law?


Yes, proposed section 11 of Model GST law permits remission of tax on supply of goods

Whether remission is allowed for goods lost or destroyed before supply?


Remission of tax will apply only when tax is payable as per law i.e. taxable event should have happened and tax is required to be paid as per law. Under GST Law, levy is applicable upon supply of goods. Where goods are lost or destroyed before supply, taxable event does not occur in order to pay tax. Accordingly, question of remission of tax does not rise.