Important Keyword: Section 7 IGST Act, Section 14 IGST Act, Section 5 IGST Act, Section 16 IGST Act, Section 20 IGST Act.
3rd Edition: 15th December 2018
(Note: Changes announced in GST Council meeting held on 22nd December 2018 are being incorporated and the updated edition will be uploaded shortly)
Table of Contents
Contents
- Overview of Goods and Services Tax (GST)
- Levy of and Exemption from Tax
2.1 Composition Levy - Registration
3.1 Amendment of Registration
3.2 Cancellation of Registration - Meaning and Scope of Supply
- Time of Supply
- Valuation in GST
- GST Payment of Tax
7.1 TDS Scheme - Electronic Commerce and Tax Collected at Source
- Job Work
- Input Tax Credit
- Concept of Input Service Distributor in GST
- Returns Process
- Assessment and Audit
13.1 Invoice, Credit and Debit Note
13.2 Accounts and Records under GST
13.3 E Way Bill - Refunds
14.1 Refunds by UINs - Demands and Recovery
- Appeals/Revision
- Advance Ruling
- Inspection, Search, Seizure and Arrest
- Offences, Penalties, Prosecution and Compounding
- Overview of the IGST Act
- Exports and Imports
21.1 Exports
21.2 Export of Services
21.3 Duty Drawback Scheme
21.4 Special Economic Zone(SEZ)
21.5 Export Oriented Units
21.6 Imports - Place of Supply of Goods and Service
22.1 Place of Supply of Goods
22.2 Place of Supply of Services (Location of supplier as well as recipient are in India)
22.3 Place of Supply of Services (Location of supplier or recipient is outside India) - GSTN and Frontend Business Process on GST Portal
- Transitional Provisions
- Anti-profiteering provisions
CENTRAL BOARD OF INDIRECT TAXES & CUSTOMS
NEW DELHI
20 Overview of the IGST Act
Q 1. What is IGST?
Ans. “Integrated Goods and Services Tax” (IGST) means tax levied under the IGST Act on the supply of any goods and/ or services in the course of inter-State trade or commerce.
Q 2. What are inter-state supplies?
Ans. A supply of goods and/or services in the course of inter-State trade or commerce means any supply where the location of the supplier and the place of supply are in different States, two different union territory or in a state and union territory Further import of goods and services, supplies to SEZ units or developer, or any supply that is not an intra state supply. (Section 7 of the IGST Act).
Q 3. How will the Inter-State supplies of Goods and Services be taxed under Goods and Services Tax?
Ans. Integrated Goods and Services Tax shall be levied and collected by Centre on inter- state supplies. Integrated Goods and Services Tax would be broadly Central Goods and Services Tax plus SGST and shall be levied on all inter-State taxable supplies of goods and services. The inter-State seller will pay Integrated Goods and Services Tax on value addition after adjusting available credit of Integrated Goods and Services Tax, Central Goods and Services Tax, and SGST on his purchases. The Exporting State will transfer to the Centre the credit of SGST used in payment of Integrated Goods and Services Tax. The Importing dealer will claim credit of Integrated Goods and Services Tax while discharging his output tax liability in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST. The relevant information is also submitted to the Central Agency which will act as a clearing house mechanism, verify the claims and inform the respective governments to transfer the funds.
Q 4. What are the salient features of the draft Integrated Goods and Services Tax Law?
Ans. The draft IGST law contains 25 sections divided into 9 Chapters. The law, inter alia, sets out the rules for determination of the place of supply of goods. Where the supply involves movement of goods, the place of supply shall be the location of goods at the time at which the movement of goods terminates for delivery to the recipient. Where the supply does not involve movement of goods, the place of supply shall be the location of such goods at the time of delivery to the recipient. In the case of goods assembled or installed at site, the place of supply shall be the place of such installation or assembly. Finally, where the goods are supplied on board a conveyance, the place of supply shall be the location at which such goods are taken on board.
The law also provides for determination of place of supply of service where both supplier and recipient are located in India (domestic supplies) or where supplier or recipient is located outside India (international supplies). This is discussed in details in the next Chapter.
It also provides for certain other specific provisions like payment of tax by online information and database access service provider located outside India to an unregistered person in India, upon taking registration in India, under the Integrated Goods and Services Tax Act, following a simplified provision (section 14 of the Integrated Goods and Services Tax Act),
Q 5. What are the advantages of Integrated Goods and Services Tax Model?
Ans. The major advantages of Integrated Goods and Services Tax Model are:
- Maintenance of uninterrupted ITC chain on inter- State transactions;
- No upfront payment of tax or substantial blockage of funds for the inter-State seller or buyer;
- No refund claim in exporting State, as ITC is used up while paying the tax;
- Self-monitoring model;
- Ensures tax neutrality while keeping the tax regime simple;
- Simple accounting with no additional compliance burden on the taxpayer;
- Would facilitate in ensuring high level of compliance and thus higher collection efficiency. Model can handle ‘Business to Business’ as well as ‘Business to Consumer’ transactions.
Q 6. How will imports/exports be taxed under Goods and Services Tax?
Ans. All imports/exports will be deemed as inter-state supplies for the purposes of levy of Goods and Services Tax (Integrated Goods and Services Tax). The incidence of tax will follow the destination principle and the tax revenue in case of State Goods and Services Tax will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available as ITC of the Integrated Goods and Services Tax paid on import on goods and services. Exports of goods and services will be zero rated. The exporter has the option either to export under bond without payment of duty and claim refund of ITC or pay Integrated Goods and Services Tax at the time of export and claim refund of Integrated Goods and Services Tax. The Integrated Goods and Services Tax on imports is leviable under the provisions of the Customs Tariff Act and shall be levied at the time of imports along with the levy of the Customs Act (Section 5 of the Integrated Goods and Services Tax Act)
Q 7. How will the Integrated Goods and Services Tax be paid?
Ans. The Integrated Goods and Services Tax payment can be done utilizing ITC or by cash. However, the use of ITC for payment of IGST will be done using the following hierarchy, –
- First available ITC of Integrated Goods and Services Tax shall be used for payment of Integrated Goods and Services Tax;
- Once ITC of Integrated Goods and Services Tax is exhausted, the ITC of Central Goods and Services Tax shall be used for payment of Integrated Goods and Services Tax;
- If both ITC of Integrated Goods and Services Tax and ITC of Central Goods and Services Tax are exhausted, then only the dealer would be permitted to use ITC of State Goods and Services Tax for payment of Integrated Goods and Services Tax.
Remaining Integrated Goods and Services Tax liability, if any, shall be discharged using payment in cash. Goods and Services Tax System will ensure maintenance of this hierarchy for payment of Integrated Goods and Services Tax using the credit.
Q 8. How will the settlement between Centre, exporting state and importing state be done?
Ans. There would be settlement of account between the Centre and the states on two counts, which are as follows-
- Centre and the exporting state: The exporting state shall pay the amount equal to the ITC of State Goods and Services Tax used by the supplier in the exporting state to the Centre.
- Centre and the importing state: The Centre shall pay the amount equal to the ITC of Integrated Goods and Services Tax used by a dealer for payment of SGST on intra- state supplies.
The settlement would be on cumulative basis for a state taking into account the details furnished by all the dealer in the settlement period. Similar settlement of amount would also be undertaken between Central Goods and Services Tax and Integrated Goods and Services Tax account.
Q 9. What treatment is given to supplies made to SEZ units or developer?
Ans. Supplies to SEZ units or developer shall be zero rated in the same manner as done for the physical exports. Supplier shall have option to make supplies to SEZ without payment of taxes and claim refunds of input taxes on such supplies (section 16 of the Integrated Goods and Services Tax Act).
Q 10. Are business processes and compliance requirement same in the IGST and CGST Acts?
Ans. The procedure and compliance requirement are same for processes likes registration, return filing and payment of tax. Further, the Integrated Goods and Services Tax act borrows the provisions from the Central Goods and Services Tax Act as relating to assessment, audit, valuation, time of supply, invoice, accounts, records, adjudication, appeal etc. (Section 20 of the Integrated Goods and Services Tax Act)
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Read More: FREQUENTLY ASKED QUESTIONS (FAQs) ON FINAL GOODS AND SERVICES TAX (GST) Part- 19
Download Pdf: https://gstcouncil.gov.in/sites/default/files/faq/Final-GST-FQ-31218.pdf
