FAQ

 

Input Tax Credit


Q 1. Whether capital goods can be considered as inputs

No. 'Inputs' are defined under Section 2(59) of the CGST Act to mean any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. 'Capital goods' are defined under Section 2(19) of the CGST Act to mean goods, the value of which is capitalized in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business.

Q 2. What is Input Tax credit.

Input tax credit means the credit of central tax, state/ union territory tax and integrated tax available to a registered person on the inward supply of goods or services or both, made to him excluding the tax paid on supplies liable to composite tax. It further includes the integrated tax applicable on import of goods and the tax payable under reverse charge mechanism.

Q 3. What are the conditions to be fulfilled for entitlement of input tax credit.

A registered person will be entitled to claim input tax credit only upon fulfillment of the following conditions:

  • He is in possession of tax invoice/ debit note issued by a registered supplier or
  • any other tax paying documents; He has received the goods and /or services or both;
  • The tax charged on such supply is paid to the Government (by way of cash or by
  • utilizing input tax credit) He has furnished a valid return.

Q 4. Whether Input tax credit on Inputs and Capital Goods is allowed in one installment.

Yes. Input tax credit will be available in full with respect to inputs and capital goods, subject to fulfillment of the prescribed conditions under Section 16(2) of the CGST Act.. The existing concept of partial credit on purchase of capital goods under the CENVAT Credit Rules, 2004 (i.e. 50% in the year of receipt and 50% in subsequent years) has been done away with.

Q 5. One of the conditions to claim credit is that the receiver is in possession of tax invoice or debit note or any other tax paying documents. What are the tax paying documents.

The tax paying documents have been prescribed under Rule 1 of the Input Tax Credit Rules, 2017 as under: An invoice issued by supplier of goods or services.

  • Bill of Entry
  • Invoice raised by the recipient in case of inward supplies from unregistered
  • persons or reverse charge mechanism supplies ISD Invoice issued by an Input Service Distributor for distribution of credit
  • A debit note issued by supplier of goods or services

Q 6. What is the time limit within which the recipient of supply is liable to pay the value of supply with taxes to the supplier of service to avail the input tax credit.

The time limit prescribed is one hundred and eighty days (180 days) from the date of issue of invoice by the supplier of service/goods. If the recipient fails to do pay the value of supply (with tax) within 180 days, such input tax credit would be payable by the recipient along with applicable interest. The above time limit is not applicable to supplies that are liable to tax under reverse charge mechanism.

Q 7. In case the amount is paid partly to the supplier of service, whether full taxes can be adjusted first? If No then whether it has to be calculated proportionately.

No. there is no provision under the GST law to allocate part payment of the invoice towards the taxes first so that the input tax credit can be allowed. Second proviso to Section 16(2) of the CGST Act clearly provides that the entire value of supply (with tax) is to be paid within 180 days from the date of issue of invoice. Therefore, as long as the entire payment is made within 180 days, the recipient would be entitled to claim the credit in full. Assuming that only part payment is made within 180 days, availing of proportionate credit based on such part payment is not provided for under the CGST law and thus, would be subject to litigation.

Q 8. One of the conditions to claim credit is that the receiver has received the goods. Is there any provision for deemed receipt of goods in case of transfer of document of title before or during the movement of goods? Input Tax Credit 37 Indirect Taxes Committee.

Yes. Explanation to Section 16(2)(b) of the CGST Act provides for deemed receipt of goods where the goods are delivered by the supplier to the recipient or any other person on the direction of the recipient, whether acting as agent or otherwise, before or during movement of goods.

Q 9. Whether the registered person can avail the benefits of input tax credit and depreciation on the tax component of capital goods and plant and machinery.

No. Section 16(3) provides that input tax credit will not be allowed on the tax component of cost of capital goods/ plant and machinery, if the depreciation on the said tax component is claimed under the provision of Income Tax Act, 1961 by the taxable person. Therefore, the registered person has an option to either claim depreciation (under the Income Tax Act, 1961) or claim credit under the GST law, on the said tax component. For example: Cost of Asset = Rs. 1000/- Tax = Rs. 100/- Total = Rs. 1100/- If depreciation is charged on Rs. 1000/-, then credit will be available under the GST law and if depreciation is charged on Rs. 1100/- then credit will not be available.

Q 10. What is the maximum time limit to claim the Input tax credit.

A registered person is not entitled to claim input tax credit in respect of any supply of goods or services after the earlier of following two events:

  • Filing of the monthly return under Section 39 of the Act for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains;
  • Furnishing of the annual return under Section 44 of the Act. However, in cases of credit in special circumstances like new registration, voluntary registration, etc. the credit will not be available after the expiry of one year from the date of issue of tax invoice. Apportionment of credit and blocked credits (Section 17) Section 17 of CGST Act, made applicable to IGST vide Section 20 of IGST Act and Section 21 of UTGST

Q 11. If certain goods/ services are used partly for business and partly for non-business purposes, will the credits be allowed in full or proportionately.

The credit on goods/ services used partly for business and partly for non-business purposes will be allowed proportionately to the extent it is attributable for business

Q 12. Credit attributable to exempt supplies is not available to a registered person. What are the supplies that are included in exempt supplies.

'Exempt Supplies' for this purposes means all supplies other than taxable and zero rated supplies and specifically include the following: Supplies liable to tax under reverse charge mechanism;

  • Transactions in securities;
  • Sale of land;
  • Sale of building.

Q 13. Will compliance of the provisions of Section 17(2) regarding restriction of credits relatable to exempt supplies be mandatory to a Banking Company/ Financial Institution engaged in accepting deposits or extending loans or.

  • No. A Banking Company/ Financial Institution engaged in supplying services by way of accepting deposits, extending loans or advances has the following options: Comply with the provisions of Section 17(2) regarding restriction of credits
  • relatable to exempt supplies in the manner prescribed; or Avail 50% of the eligible input tax credit every month on inputs, capital goods and
  • input services and the remaining 50% shall not be available. The option exercised cannot be withdrawn in the same year. The restriction of 50% will not apply to the tax paid on supplies made by one registered person to another registered person having the same PAN.

Q 14. Whether the above option can be withdrawn in between the financial year.

No. The option once exercised by the Banking Company/ Financial Institution cannot be withdrawn during the remaining part of the financial year.

Q 15. Whether input tax credit will be available on taxable goods which are given by way of gift or free samples under the sales promotion.

No. Section 17(5) (h) specifically restricts input tax credit on goods disposed of by way of gift or free samples.

Q 16. Whether input tax credit is allowed on inputs which become waste and is sold as scrap.

Section 17(5) (h) specifically restricts input tax credit on goods lost, stolen, destroyed, written off or disposed by way of gift or free samples. Therefore, If the goods have been destroyed in full, input tax credit will not be available. However, if in the process of manufacture some inputs become waste and are sold as scrap, credit shall not be denied. Further, output tax shall be payable on sale of such waste/scrap. Input Tax Credit 39 Indirect Taxes Committee

Q 17. Whether Input destroyed/pilfered and shortage also is covered.

Yes. Section 17(5) (h) specifically restricts input tax credit on goods lost, stolen, destroyed, written off or disposed by way of gift or free samples. Therefore, input tax paid on goods which are destroyed/pilfered and shortage will not be eligible.

Q 18. Whether Input tax credit is available in respect of Input tax paid on use of mobile phones/laptops/as given to employees.

Yes. The mobile phones/ laptops would be covered under the definition of 'inputs' as they are used in the course/ furtherance of business and hence, the input tax paid on such goods will be available as input tax credit.

Q 19. Whether input tax paid on Motor vehicle and other conveyances which is used for courier agency, outdoor catering, pandal and shamiana and tour operator is eligible.

The restriction of input tax credit on motor vehicles and conveyances provided under Section 17 (5) (a) is on such motor vehicles/ conveyances except when they are used for further supply of vehicles/ conveyances, transportation of passengers, imparting training or for transportation of goods only. Therefore, input tax credit will be available when it is used by courier agency, outdoor catering, pandal and shamiana and tour operator as it covers use of vehicles for transportation of goods/ transportation of passengers.

Q 20. Whether benefit of input tax credit would be available if the company procures health insurance services for benefit of its employees. Procurement of such services is mandatory under Factories Act .

Yes. Section 17(5) (b)(iii)(A) provides that tax paid w.r.t rent a cab services, life/ health insurance services will be eligible as input tax credit where the Government notifies that such services are obligatory for an employer to provide to its employees under any law for the time being in force.

Q 21. What are the conditions to avail the input tax credit on Rent a cab, life Insurance, Health Insurance

Tax paid w.r.t rent a cab services, life/ health insurance services will be eligible as input tax credit subject to the following conditions: If the Government notifies that such services are obligatory for an employer to

  • provide to its employees under any law for the time being in force, or Such services are used by a registered person for making an outward taxable
  • supply of the same category of goods or services or both or as part of a taxable composite or mixed supply.

Q 22. Whether input tax credit can be availed on input services and capital goods (lying in stock) when there is application for new registration or during voluntary registration under section 18.

No. In case of new registrations and voluntary registrations, input tax credit can be availed only on the stock held (inputs, semi-finished goods or finished goods) preceding the day when he is liable to pay tax or preceding to the date of grant of voluntary registration. Input service and capital goods lying in stock are not eligible for ITC.

Q 23. What is the difference between the availment of credit in case of Compulsory Registration and Voluntary Registration?

In case of compulsory registration, the input tax credit can be availed on the stocks held immediately preceding the date from which he becomes liable to pay tax (date of grant of registration may be later) and in case of voluntary registration, the input tax credit can be availed on the on stocks held immediately preceding the date of grant of registration.

Q 24. In case of change of scheme from composition scheme to Regular scheme whether input tax credit on capital goods is eligible.

Ans. Yes. In such a scenario, the registered person will be entitled to claim input tax credit on the stock held (inputs, semi-finished goods or finished goods) and on the capital Input Tax Credit 41 Indirect Taxes Committee goods preceding the day when he is liable to pay tax under the regular scheme. The credit of capital goods shall stand reduced by five percentage points for every quarter.

Q 25. When an exempt supply becomes taxable supply then in such case credit on inputs and capital goods exclusively used for such exempted supply is eligible? What about input tax credit pertaining to capital goods used for both taxable and exempt supply?

Ans. In terms of Section 18(1)(d) of the Act, where an exempt supply made by a person becomes taxable supply, such a person will be entitled to claim credit of tax paid on stock held (inputs, semi-finished goods or finished goods) relatable to exempt supply and on the capital goods exclusively used for exempt supply preceding the day when the supply becomes taxable. Tax paid on capital goods used for both, taxable and exempt supply will not be eligible as input tax credit.

Q 26. When there is change in the constitution of registered taxable person without specific provision of transfer of liabilities is it possible to transfer unutilized input tax credit?

Ans. No. In terms of Section 18(3) of the Act, transfer of unutilized input tax credit is permissible only when there is change in constitution of the business with the specific provision of transfer of liabilities.

Q 27. In case of switchover from taxable to exempt transactions or from Regular to composition whether input tax credit is fully restricted?

Ans. Yes. In terms of Section 18(4) of the CGST Act, an amount equal to the credit of tax paid on stock held (inputs, semi-finished goods or finished goods) and capital goods (reduced by percentage points) on the day preceding the date of opting for composition/ effecting exempt supplies will have to be paid. The same can be paid by utilization of credit/ cash payments.

Q 28. Whether Input tax credit availed on capital goods is to be reversed in case of supply of such capital goods?

Ans. Yes. In terms of Section 18(6) of CGST Act, in case of supply of capital goods or plant and machinery on which input tax credit has been taken, the registered person will have to pay an amount equal to: Input tax credit taken on the said capital goods/ plant and machinery reduced by

  • the percentage points specified ; or the tax on the transaction value of such goods
  • whichever is higher.

Q 29. Whether Input tax credit availed on refractory bricks, moulds and dies, jigs and fixtures is to be reversed in case of supply of such goods?

Ans. Yes. In terms of proviso to Section 18(6) of CGST Act, in case of supply of such goods as scrap, the registered person is required to pay the tax on the transaction value of such goods. Taking input tax credit in respect of inputs and capital goods sent for job work (Section 19) Section 19 of CGST Act, made applicable to IGST vide Section 20 of IGST Act and Section 21 of UTGST

Q 30. What is the time limit beyond which the inputs/capital goods sent for job work shall be treated as supply?

Ans. The time limit prescribed for return of goods sent to job work under the exemption route is 1 year of being sent out (for inputs) and 3 years of being sent out (for capital goods). Therefore, if the inputs/ capital goods are returned to the principal after 1 year/ 3 years (as applicable), then such return of goods to the principal after the said period would be treated as 'supply'. This time limit is not applicable to moulds and dies, jigs, fixtures, and tools.

Q 31. Whether the principal is entitled to take input tax credit even when the principal has not received the goods and directly sent to job worker by the vendor?

Ans. Yes. Section 19(2) and Section 19 (5) allows the principal to take input tax credit of goods not received by him, if the goods are sent directly to the job workers premises by the vendor.

Q 32. Whether time limit of one year or three years in case of goods sent for job work is applicable to moulds and dies, jigs and fixtures or tools sent out to job worker.

Ans. No. The time limit of one year and three years is not applicable to return of moulds and dies, jigs, fixtures, and tools by the job worker to the principal. Input Tax Credit 43 Indirect Taxes Committee Manner of distribution of credit by the Input service distributor (Section 20) Section 20 of CGST Act, made applicable to IGST vide Section 20 of IGST Act and Section 21 of UTGST

Q 33. Whether the distributor and the recipient situated in different states can have same PAN or different PAN number?

It is mandatory that the Input Service Distributor and the recipient of credit are persons having the same PAN, whether or not they are located in the same State.

Q 34. What is the manner in which Input Service Distributor should distribute the credit where distributor and recipient are located in different states?

  • The Input Service Distributor is permitted to distribute the credit as follows:
  • Central tax as central tax or integrated tax;
  • Integrated tax as integrated tax or central tax.

Q 35. Whether CGST can be distributed as SGST and whether SGST can be distributed as CGST within the states and between the states?

No. Section 20(1) does not permit distribution of CGST as SGST and vice versa. This flows from the fundamentals of the GST law wherein the credit of CGST cannot be utilized against SGST and vice versa.

Q 36. What are the conditions applicable to Input service distributor to distribute the credit?

  • In terms of Section 20(2) of CGST Act, an Input Service Distributor can distribute the credit subject to the following conditions: The credit should be distributed to recipient against a document containing such
  • details as may be prescribed; The amount of credit distributed shall not exceed the amount of credit available
  • for distribution; The credit of tax paid on input service attributable to a recipient of credit shall be
  • distributed only to that recipient; If credit is applicable to more than one recipient, then it shall be distributed only
  • among such recipient(s) to whom the input service is attributable on pro rata basis of the turnover in a State of such supplier during the relevant period, to the aggregate of the turnover of all such recipients If credit is applicable to all recipients, the above method of allocation on pro rata
  • may be applied with reference to all recipients

Q 37. Whether recovery provisions can be initiated in case of wrong distribution of credit?

Yes. In terms of Section 21 of the Act, the recovery provisions can be initiated if the Input Service Distributor distributes credit in contravention of the law resulting in excess distribution of credit to one/ more recipients of credit. Such credit can be recovered from the recipients along with applicable interest

GST Registration


Q1. What is advantage of taking registration in GST.

Registration under Goods and Service Tax (GST) regime will confer following advantages to the business:

  • Legally recognized as supplier of goods or services.
  • Proper accounting of taxes paid on the input goods or services which can be utilized for payment of GST due on supply of goods or services or both by the business.
  • Legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on the goods or services supplied to purchasers or recipients.
  • Getting eligible to avail various other benefits and privileges rendered under the GST laws.

Q 2. Can a person without GST registration claim ITC and collect tax.

No, a person without GST registration can neither collect GST from his customers nor can claim any input tax credit of GST paid by him.

Q 3. What will be the effective date of registration.

  • Where the application for registration has been submitted within thirty days from the date on which the person becomes liable to registration, the effective date of registration shall be the date on which he became liable for registration.
  • Where an application for registration has been submitted by the applicant after thirty days from the date of his becoming liable to registration, the effective date of registration shall be the date of grant of registration.
  • In case of a person taking registration voluntarily while being within the threshold exemption limit for paying tax, the effective date of registration shall be the date of order of registration.

Q 4. Who are the persons liable to take a Registration under the Model GST Law.

  • As per Section 22 of the CGST/SGST Act 2017, every supplier (including his agent) who makes a taxable supply i.e. supply of goods and / or services which are leviable to tax under GST law, and his aggregate turn over in a financial year exceeds the threshold limit of twenty lakh rupees shall be liable to register himself in the State or the Union territory of Delhi or Puducherry from where he makes the taxable supply.
  • In case of eleven special category states (as mentioned in Art.279A(4)(g) of the Constitution of India), this threshold limit for registration liability is ten lakh rupees. Besides, Section 24 of the Act mentions certain categories of suppliers, who shall be liable to take registration even if their aggregate turnover is below the said threshold limit of 20 lakh rupees.
  • On the other hand, as per Section 23 of the Act, an agriculturist in respect of supply of his agricultural produce; as also any person exclusively making supply of non-taxable or wholly exempted goods and/or services under GST law will not be liable for registration.

Q 5. What is aggregate turnover.

  • As per section 2(6) of the CGST/SGST Act "aggregate turnover" includes the aggregate value of:
  • all taxable supplies,
  • all exempt supplies,
  • exports of goods and/or service, and,
  • all inter-state supplies of a person having the same PAN.
    • The above shall be computed on all India basis and excludes taxes charged under the CGST Act, SGST Act, UTGST Act, and the IGST Act.
  • Aggregate turnover shall include all supplies made by the Taxable person, whether on his own account or made on behalf of all his principals.
  • Aggregate turnover does not include value of supplies on which tax is levied on reverse charge basis, and value of inward supplies.
  • The value of goods after completion of job work is not includible in the turnover of the job-worker. It will be treated as supply of goods by the principal and will accordingly be includible in the turnover of the Principal.

Q 6. Which are the cases in which registration is compulsory.

  • As per Section 24 of the CGST/SGST Act, the following categories of persons shall be required to be registered compulsorily irrespective of the threshold limit:
  • persons making any inter-State taxable supply;
  • casual taxable persons;
  • persons who are required to pay tax under reverse charge;
  • electronic commerce operators required to pay tax under sub-section (5) of section 9;
  • non-resident taxable persons;
  • persons who are required to deduct tax under section 51;
  • persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise;
  • Input service distributor (whether or not separately registered under the Act)
  • persons who are required to collect tax under section 52;
  • every electronic commerce operator
  • every person supplying online information and data base retrieval services from a place outside India to a person in India, other than a registered person.

Q 7. What is the time limit for taking a Registration under GST.

A person should take a Registration, within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as is prescribed under the Registration Rules. A Casual Taxable person and a non-resident taxable person should however apply for registration at least 5 days prior to commencement of business.

Q 8. If a person is operating in different states, with the same PAN number, whether he can operate with a single Registration.

No. Every person who is liable to take a Registration will have to get registered separately for each of the States where he has a business operation and is liable to pay GST in terms of Sub-section (1) of Section 22 of the CGST/SGST Act.

Q 9. Whether a person having multiple business verticals in a state can obtain for different registrations.

Yes. In terms of the proviso to Sub-Section (2) of Section 25, a person having multiple business verticals in a State may obtain a separate registration for each business vertical, subject to such conditions as may be prescribed.

Q 10. Is there a provision for a person to get himself voluntarily registered though he may not be liable to pay GST.

Yes. In terms of Sub-section (3) of Section 25, a person, though not liable to be registered under Section 22 may get himself registered voluntarily, and all provisions of this Act, as are applicable to a registered taxable person, shall apply to such person.

Q11. Is possession of a Permanent Account Number (PAN) mandatory for obtaining a Registration.

Yes, As per Section 25(6) of the CGST/SGST Act every person shall have a Permanent Account Number issued under the Income Tax Act,1961(43 of 1961) in order to be eligible for grant of registration. However as per the proviso to the aforesaid section 25(6), a person required to deduct tax under Section 51, may have, in lieu of a PAN, a Tax Deduction and Collection Account Number issued under the said Income Tax Act, in order to be eligible for grant of registration. Also, as per Section 25(7) PAN is not mandatory for a nonresident taxable person who may be granted registration on the basis of any other document as maybe prescribed.

Q 12. Whether the Department through the proper officer, can suo-moto proceed to register of a Person under this Act.

Yes. In terms of sub-section (8) of Section 25, where a person who is liable to be registered under this Act fails to obtain registration, the proper officer may, without prejudice 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 person in the manner as is prescribed in the Registration rules.

Q 13. Whether the proper officer can reject an Application for Registration.

Yes. In terms of sub-section 10 of section 25 of the CGST/SGST Act, the proper officer can reject an application for registration after due verification.

Q 14. Whether the Registration granted to any person is permanent.

Yes, the registration Certificate once granted is permanent unless surrendered, cancelled, suspended or revoked.

Q 15. Is it necessary for the Govt. Organization to get registration.

A unique identification number (ID) would be given by the respective state tax authorities through GST portal to Government authorities / PSUs not making outwards supplies of GST goods (and thus not liable to obtain GST registration) but are making inter-state purchases.

Q 16. Who is a Casual Taxable Person.

Casual Taxable Person has been defined in Section 2 (20) of the CGST/SGST Act meaning a person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business, whether as principal, or agent or in any other capacity, in a State or a Union territory where he has no fixed place of business.

Q 17. Who is a Non-resident Taxable Person.

In terms of Section 2(77) of the CGST/SGST Act, a nonresident taxable person means any person who occasionally undertakes transactions involving supply of goods and/or services whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India.

Q 18. What is the validity period of the Registration certificate issued to a Casual Taxable Person and non- Resident Taxable person.

In terms of Section 27(1) read with proviso thereto, the certificate of registration issued to a "casual taxable person" or a "non-resident taxable person" shall be valid for a period specified in the application for registration or ninety days from the effective date of registration, whichever is earlier. However, the proper officer, at the request of the said taxable person, may extend the validity of the aforesaid period of ninety days by a further period not exceeding ninety days.

Q 19. Is there any Advance tax to be paid by a Casual Taxable Person and Non-resident Taxable Person at the time of obtaining registration under this Special Category.

Yes. While a normal taxable person does not have to make any advance deposit of tax to obtain registration, a casual taxable person or a non-resident taxable person shall, at the time of submission of application for registration is required, in terms of Section 27(2) read with proviso thereto, make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought. If registration is to be extended beyond the initial period of ninety days, an advance additional amount of tax equivalent to the estimated tax liability is to be deposited for the period for which the extension beyond ninety days is being sought.

Q 20. Whether Amendments to the Registration Certificate is permissible.

Yes. In terms of Section 28, the proper officer may, on the basis of such information furnished either by the registrant or as ascertained by him, approve or reject amendments in the registration particulars within a period of 15 common working days from the date of receipt of application for amendment. It is to be noted that permission of the proper officer for making amendments will be required for only certain core fields of information, whereas for the other fields, the certificate of registration shall stand amended upon submission of application in the GST common portal.

Q 21. Whether Cancellation of Registration Certificate is permissible.

Yes. Any Registration granted under this Act may be cancelled by the Proper Officer, in circumstances mentioned in Section 29 of the CGST/SGST Act. The proper officer may, either on his own motion or on an application filed, in the prescribed manner, by the registered taxable person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed. As per the Registration Rules, an order for cancellation is to be issued within 30 days from the date of receipt of reply to SCN (in cases where the cancellation is proposed to be carried out suo moto by the proper officer) or from the date of receipt of application for cancellation (in case where the taxable person/legal heir applies for such cancellation)

Q 22. Whether cancellation of Registration under CGST Act means cancellation under SGST Act also.

Yes, the cancellation of registration under one Act (say CGST Act) shall be deemed to be a cancellation of registration under the other Act (i.e. SGST Act). (Section 29 (4))

Q 23. Is there an option to take centralized registration for services under GST Law.

No, the tax paper has to take separate registration in every state from where he makes taxable supplies.

Q 24. If the taxpayer has different business verticals in one state, will he have to obtain separate registration for each such vertical in the state.

No, however the taxpayer has the option to register such separate business verticals independently in terms of the proviso to Section 25(2) of the CGTST Act, 2017.

Q 25. Who is an ISD.

ISD stands for Input Service Distributor and has been defined under Section 2(61) of the CGST/SGST Act. It is basically an office meant to receive tax invoices towards receipt of input services and further distribute the credit to supplier units (having the same PAN) proportionately.

Q 26. Will ISD be required to be separately registered other than the existing tax payer registration.

Yes, the ISD registration is for one office of the taxpayer which will be different from the normal registration.

Q 27. Can a tax payer have multiple ISDs.

Yes. Different offices of a tax payer can apply for ISD registration.

Q 28. What could be the liabilities (in so far as registration is concerned) on transfer of a business.

The transferee or the successor shall be liable to be registered with effect from such transfer or succession and he will have to obtain a fresh registration with effect from the date of such transfer or succession. (Section 22(3)).

Q 29. Whether all assesses / dealers who are already registered under existing central excise/service tax/ vat laws will have to obtain fresh registration.

No, GSTN shall migrate all such assessees/dealers to the GSTN network and shall issue a provisional registration certificate with GSTIN number on the appointed day, which after due verification by the departmental officers within six months, will be converted into final registration certificate. For converting the provisional registration to final registration the registrants will be asked to submit all requisite documents and information required for registration in a prescribed period of time. Failure to do so will result in cancellation of the provisional GSTIN number. The service tax assesses having centralized registration will have to apply afresh in the respective states wherever they have their businesses.

Q 30. Whether the job worker will have to be compulsorily registered.

No, a Job worker is a supplier of services and will be obliged to take registration only when his turnover crosses the prescribed threshold of 20/10 Lakhs.

Q 31. At the time of registration will the assessee have to declare all his places of business.

Yes. The principal place of business and place of business have been separately defined under section 2(89) & 2(85) of the CGST/SGST Act respectively. The taxpayer will have to declare the principal place of business as well as the details of additional places of business in the registration form.

Q 32. Is there any system to facilitate smaller dealers or dealers having no IT infrastructure.

In order to cater to the needs of tax payers who are not IT savvy, following facilities shall be made available: - Tax Return Preparer(TRP): A taxable person may prepare his registration application /returns himself or can approach the TRP for assistance. TRP will prepare the said registration document / return in prescribed format on the basis of the information furnished to him by the taxable person. The legal responsibility of the correctness of information contained in the forms prepared by the TRP will rest with the taxable person only and the TRP shall not be liable for any errors or incorrect information. Facilitation Centre (FC): shall be responsible for the digitization and/or uploading of the forms and documents including summary sheet duly signed by the Authorized Signatory and given to it by the taxable person. After uploading the data on common portal using the ID and Password of FC, a print-out of acknowledgement will be taken and signed by the FC and handed over to the taxable person for his records. The FC will scan and upload the summary sheet duly signed by the Authorized Signatory.

Q 33. Is there any facility for digital signature in the GSTN registration.

Tax payers would have the option to sign the submitted application using valid digital signatures. There will be two options for electronically signing the application or other submissions- by e-signing through Aadhar number, or through DSC i.e. by registering the tax payer's digital signature certificate with GST portal. However, companies or limited liability partnership entities will have to sign mandatorily through DSC only. Only level 2 and level 3 DSC certificates will be acceptable for signature purpose.

Q 34. What will be the time limit for the decision on the on line registration application.

If the information and the uploaded documents are found in order, the State and the Central authorities shall have to respond to the application within three common working days. If they communicate any deficiency or discrepancy in the application within such time, then the applicant will have to remove the discrepancy / deficiency within 7 days of such communication. Thereafter, for either approving the application or rejecting it, the State and the Central authorities will have 7 days from the date when the taxable person communicates removal of deficiencies. In case no response is given by the departmental authorities within the said time line, the portal shall automatically generate the registration.

Q 35. What is the process of refusal of registration.

In case registration is refused, the applicant will be informed about the reasons for such refusal through a speaking order. The applicant shall have the right to appeal against the decision of the Authority. As per sub-section (2) of section 26 of the CGST Act, any rejection of application for registration by one authority (i.e. under the CGST Act / SGST Act) shall be deemed to be a rejection of application for registration by the other tax authority (i.e. under the SGST Act / UTGST Act/ CGST Act).

Q 36. Will there be any communication related to the application disposal.

The applicant shall be informed of the fact of grant or rejection of his registration application through an e-mail and SMS by the GST common portal. Jurisdictional details would be intimated to the applicant at this stage.

Q 37. Can the registration certificate be downloaded from the GSTN portal.

In case registration is granted; applicant can download the Registration Certificate from the GST common portal

Q 38. Can cancellation of registration order be revoked.

Yes, but only in cases where the initial cancellation has been done by the proper officer suo moto, and not on the request of the taxable person or his legal heirs. A person whose registration has been cancelled suo moto can apply to the proper officer for revocation of cancellation of registration within 30 days from the date of communication of the cancellation order. The proper officer may within a period of 30 days from the date of receipt of application for revocation of cancellation or receipt of information/clarification, either revoke the cancellation or reject the application for revocation of cancellation of registration.

Q 39. Does cancellation of registration impose any tax obligations on the person whose registration is so cancelled.

Yes, as per Section 29(5) of the CGST/SGST Act, every registered taxable person whose registration is cancelled shall pay an amount, by way of debit in the electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher.

Composition Scheme


Q1. What is the rate of tax applicable to a taxable person opting to pay tax under composition scheme.

  • The rate of tax applicable to a taxable person opting to pay tax under composition scheme is not yet notified . However, Section 10(1) of the CGST Act, 2017 prescribes, subject to such conditions and restrictions as may be prescribed, that the rate of tax shall not exceed:
  • one per cent of the turnover in State or turnover in Union territory in case of a manufacturer;
  • two and a half per cent, of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II; and
  • half per cent, of the turnover in State or turnover in Union territory in case of other suppliers

Q2. Can every taxable person opt to pay tax under composition scheme.

  • No. The registered taxable person whose aggregate turnover in the preceding financial year does not exceed fifty lakhs rupees may opt to pay tax subject to satisfaction of the following conditions:
  • he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II
  • he is not engaged in making any supply of goods which are not leviable to tax under this Act;
  • he is not engaged in making any inter-State outward supplies of goods;
  • he is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52;
  • he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council:

Q3. Whether a supplier of services is eligible to pay tax under composition scheme.

No. A supplier of services is not eligible to opt for composition scheme. However, a supplier supplying composite supply involving supply of service or goods being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption) is eligible to opt for payment of taxes under composition scheme.

Q4. A taxable person having same PAN can opt to pay tax under composition scheme by seeking separate registration for branches.

No. A registered person shall not be eligible to opt for the composition scheme unless all such registered persons (branches having separate registration under a single PAN) opt to pay tax under composition scheme.

Q5. Whether a taxable person under composition Scheme eligible to claim input tax credit.

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

Q6. Can a customer who buys from a taxable person who is under composition scheme claim composition tax as input credit.

No. The recipient is not eligible to take input tax credit of composition tax paid. Moreover, a taxable person paying taxes under composition scheme is not entitled to collect taxes from the recipient in terms of Section 10(4) of the CGST Act, 2017. Accordingly, there does not arise a question for the recipient to claim input tax credit.

Q7. What is aggregate turnover.

In terms of Section 2(6) of the CGST Act, 2017, "aggregate turnover" means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or 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;

Q8. A taxable person can still pay tax under composition scheme even after the turnover in the current financial year exceeds fifty lakh rupees.

In terms of Section 10(3), the option availed for paying tax under composition scheme Levy and Collection of Tax 7 Indirect Taxes Committee shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds fifty lakh rupees.

Q9. What are the penal consequences if a taxable person violates the conditions prescribed for composition scheme.

Following are the consequence for non-compliance with the conditions specified therein:

  • shall be liable to pay additional taxes at the rates applicable to regular taxable person;
  • shall be liable to penalty
  • the amount of tax and penalty shall be recovered in terms of Section 73 & 74 of CGST Act, 2017. Power to grant exemption from tax (Section 11)

Q10. Whether Council has powers to grant exemption from payment of taxes.

No. The power to grant exemption is vested with the Government. In other words, the Government by notification on the recommendations of the council may grant exemption from tax subject to such conditions as may be notified..

GST Migration


Q1. I am an existing PAN-based Service Tax (Centralized registration) assessee, and wish to enroll in GST. I have multiple registered business premises in different States (i.e., 5 different States on the same PAN) from where services are provided. I have not received the Provisional IDs and passwords for all the different States (i.e., I have received the Provisional IDs and passwords for two States only).

On ACES portal, the Centralized Registration (CR) captures the address details (including State) of the assessee's registered business premises in a State, as well as, branches or many registered addresses in different States across the country from where services are provided.

As a policy, these assessees are issued only one Provisional ID and password for each State (across the CR premises and all branches). For example, an assessee having CR number ABCDE1234FSD002 is having business premises in Delhi, and branches in Haryana, Karnataka, Maharashtra and Tamil Nadu. In this case, the assessee is issued five Provisional IDs and passwords, one for each State.

The CR assessee may also have a factory (under Central Excise or CE registration) or a Service Tax (ST) single premises registration (independent of CR) in the State of Tamil Nadu (registration number ABCDE1234FXM001 or ABCDE1234FSD001). Then a Provisional ID and password for the State of Tamil Nadu will be issued against either the CE or ST registration number mentioned earlier. In this case, the CR assessee will get four Provisional IDs and passwords for the remaining States i.e. Delhi, Haryana, Maharashtra and Karnataka.

Q2. I am an existing PAN-based Service Tax (ST), Central Excise (CE) and State VAT assessee. I received the Provisional ID and password from the State VAT. While migrating to GST through VAT on the GST Common Portal, I did not add my ST and CE details in the Enrolment Application.

The facility to add existing registrations in the Enrolment Application is available on the GST Common Portal. You can add the remaining registrations at the time of enrolment under GST.

if you have submitted the Enrolment Application with DSC or E-sign without adding the remaining registrations, and have already received the Application Reference Number (ARN), you will not be able to add the remaining registrations now. You will be able to add or remove the other registrations in the Enrolment Application only after the appointed date (i.e., date of implementation of GST) through the process of amendment (non-core).

Q3. I am an existing PAN-based Service Tax (ST), Central Excise (CE) and State VAT assessee. For migrating to GST, I received the Provisional ID and password from the State VAT department. Do I also need to add my ST and CE registration details in the Enrolment Application also?

Yes, you must add your Service Tax (ST) and Central Excise (CE) registration details in GST FORM-20 on the GST Common Portal.

Note: Since GST registration is based on PAN and State, only one Provisional ID and password will be issued to a given PAN for a given State, irrespective of the number of registrations on that PAN within the State. In case the assessee wishes to enroll in GST for the other registrations as well, the details of these registrations (addresses of premises) may be included as 'Additional Place of Business'.

Q4. I am an existing PAN-based Service Tax (ST) and Central Excise (CE) assessee. After logging into the ACES portal, under SERVICE TAX, the Provisional ID is showing "Awaited".

If you are already registered as a Central Excise (CE) or Service Tax (ST) assessee on the ACES portal, after 31.01.2017, then your Provisional ID and password for migrating to GST has not yet been generated. You are advised to wait for the same. Any updates on issuance of Provisional IDs and passwords, to such assessees, will be published on both the CBEC and ACES websites.

Q5. I am an existing taxpayer and wish to enroll in GST. My previous registration number was ST001 and after cancellation (or surrender), my current registration number is ST002. However, a Provisional ID and password has been issued against my previous registration number ST001. I logged into the ACES portal (using my existing ACES username and password), and received the Provisional ID and password for my previous registration number ST001, but not for the current registration number ST002.

As a policy, if the assessee has multiple registrations within a State on the same PAN, only one Provisional ID and password will be issued, as per the following order: Only one Provisional ID and password will be issued to a given PAN within a State, irrespective of the number of registrations on that PAN within that State.

Q6. I am an existing taxpayer and wish to enroll in GST. I have received the Provisional ID and password. On the GST Common Portal, I entered the Provisional ID and password in the respective fields. After clicking the LOGIN button, I received the message: "Provisional ID is invalid".

Firstly, clear your web browser's caches i.e., delete your browsing history, and then sign into the GST Common Portal again. You will receive a 10-digit access token (or password) along with the Provisional ID. In case you have received an access token of less than 10 digits, please insert a "0" or zero as prefix to the token i.e., if you received an access token of"12345678", then the corrected token number is "0012345678".

Q7. I am an existing taxpayer and wish to enroll in GST. For enrolment under GST, I want to create a new username and password. However, I have not received the one-timepassword (OTP) on my registered mobile number. The problem continued even after I clicked the "RESEND OTP" button on the GST Common Portal.

Your mobile number may be registered for Do Not Disturb (DND) services, due to which the OTP cannot not be delivered. You are advised to de-activate DND services from your mobile network. Once de-registered, you must redo the entire process of registration on the GST Common Portal.

Q8. I am an existing taxpayer and wish to enroll in GST. For enrolment under GST, I wanted to create a new username and password. However, I have not received the onetime- password (OTP) on my registered email. The problem continued even after I clicked the "RESEND OTP" button on the GST Common Portal.

The one-time-password (OTP) may have been delivered to the spam folder of your registered email ID. Please check the spam folder of your email account. If you find the OTP in the spam folder, please change the spam-filter policy settings of your email account to allow legitimate emails sent by GSTN. This will ensure that a future OTP sent by GSTN is not marked or filtered as spam.