Actionable Claims under GST: Meaning, Examples, and Taxability
Actionable Claims are one of the important terms defined under Section 2 of the CGST Act, 2017. Understanding the concept of actionable claims is essential because, although they are treated as goods, only certain specified actionable claims are subject to GST, while others are outside the scope of taxation.
What is an Actionable Claim?
An Actionable Claim is basically a contingent
asset, meaning an asset whose receipt is uncertain and depends upon the
happening or non-happening of certain events.
In simple words, it represents a claim to a debt or a
beneficial interest in movable property that may or may not be realized in the
future.
Example
Suppose Mr. A has lent ₹1 lakh to
Mr. B without any security. Mr. A has a legal right to recover the money, but
the actual receipt depends on Mr. B's ability and willingness to repay.
Therefore, this right is an actionable claim.
Examples of Actionable Claims
Actionable claims can be divided into two categories:
1. Specified Actionable Claims
These are actionable claims that are specifically made
taxable under GST.
Examples
- Betting
- Gambling
- Lottery
- Online
Money Gaming
- Casino
- Horse
Racing
Example
Suppose a person purchases a lottery ticket worth ₹1,000.
The lottery ticket represents a chance of winning money in
the future. Since the outcome is uncertain, it is an actionable claim. However,
lottery is a specified actionable claim and is liable to GST.
Similarly, bets placed in horse racing or online gaming are
also subject to GST.
2. Other Actionable Claims
These are ordinary actionable claims which are not liable to
GST.
Examples
(a) Unsecured Debts
Suppose Mr. X lends ₹50,000 to Mr. Y without taking any
security.
Mr. X possesses a right to recover the amount, but this
right is uncertain and therefore constitutes an actionable claim.
GST Applicability: Not taxable.
(b) Pending Litigation
Suppose a company has filed a suit against another company
claiming compensation of ₹20 lakh.
Whether the company receives compensation depends upon the
court's judgment. Hence, the claim is contingent and qualifies as an actionable
claim.
GST Applicability: Not taxable.
Taxability of Actionable Claims under GST
Although actionable claims are considered goods, GST
is imposed only on specified actionable claims.
Taxability Table
|
Particulars |
Whether Actionable Claim? |
GST Applicable? |
|
Lottery |
Yes |
Yes |
|
Betting |
Yes |
Yes |
|
Gambling |
Yes |
Yes |
|
Online Money
Gaming |
Yes |
Yes |
|
Casino |
Yes |
Yes |
|
Horse Racing |
Yes |
Yes |
|
Unsecured
Debt |
Yes |
No |
|
Pending Court
Cases |
Yes |
No |
Practical Illustration
Example 1: Lottery Ticket
Rahul buys a lottery ticket worth ₹500.
- Right
to receive prize money is uncertain.
- Therefore,
it is an actionable claim.
- Since
lottery is a specified actionable claim, GST is applicable.
Example 2: Unsecured Loan
Mr. A lends ₹1 lakh to Mr. B without security.
- Recovery
of money is uncertain.
- Therefore,
it is an actionable claim.
- Since
unsecured debt is not a specified actionable claim, GST is not applicable.
Example 3: Compensation Suit
ABC Ltd. files a court case seeking damages of ₹50 lakh.
- Compensation
depends on the court's decision.
- Hence,
it is an actionable claim.
- Since
pending litigation is not a specified actionable claim, GST is not
applicable.
- Actionable claims are contingent assets.
- They are treated as goods under GST.
- Only specified actionable claims are taxable.
- Specified actionable claims include:
- Lottery
- Betting
- Gambling
- Online Money Gaming
- Casino
- Horse Racing
- Other actionable claims such as unsecured debts and pending litigations are not liable to GST.
Agent – Section 2 (CGST Act)
An Agent means a person who works on behalf of
another person (Principal). He
supplies or receives goods/services for the principal and acts under the
authority of the principal.
Agent may be known by different names such as:
- Factor
- Broker
- Commission
Agent
- Arhatia
- Del-Credere
Agent
- Any
other Agent
Examples:
- A
commission agent selling agricultural produce on behalf of farmers.
- A
broker arranging deals for clients.
- A
Del-Credere Agent who guarantees payment from customers.
An Agent acts for another person (Principal) and not in his own capacity. The relationship between Principal and Agent is governed by an agreement, express or implied. Under GST, certain transactions between a principal and an agent are treated as supplies, even if made without consideration.
A Principal means a person on whose behalf an
agent works. The agent carries on
the business of supply or receipt of goods and/or services for the principal.
Example:
- Mr.
A appoints Mr. B as a commission agent to sell his goods.
- Mr.
A = Principal
- Mr.
B = Agent
The principal is the actual owner or person responsible
for the business transactions. The
agent acts on behalf of the principal and represents him in dealing with
customers or suppliers. Under GST, transactions between a principal and an
agent may be treated as supplies, even if made without consideration
(subject to Schedule I provisions).
Principal means a person on whose behalf an agent carries on the business of supply or receipt of goods or services or both.
Aggregate Turnover – Section 2(6) of CGST Act
Meaning
Aggregate Turnover means the aggregate value of all
outward supplies made by a person having the same PAN, computed on an all-India
basis, excluding GST and Compensation Cess.
1. All Outward Supplies are Included
·
Intra-State Supplies
·
Inter-State Supplies
·
Exports
·
Supplies covered under Forward Charge (Normal
Charge Mechanism – NCM)
·
Exempt Supplies
·
Non-taxable Supplies
·
Taxable Supplies
Not Included
·
Anything which is not an outward supply.
Example: Transfer of goods to a job worker is not a
supply; therefore, it is not included in Aggregate Turnover.
2. Inward Supplies are Not Included
Inward supplies are not part of Aggregate Turnover.
Whether received under:
- Normal
Charge Mechanism (NCM)
- Reverse
Charge Mechanism (RCM)
both are excluded.
3. Treatment of Taxes
Excluded from Aggregate Turnover
GST (CGST, SGST, IGST)
Compensation Cess
Included in Aggregate Turnover
Old taxes collected before GST such as:
- Excise
Duty
- VAT
- CST
4. Clubbing of Turnover
- Aggregate
Turnover is calculated on an all-India basis.
- Turnover
of all business premises having the same PAN is clubbed together.
Example
Suppose Mr. A has:
|
Place of Business |
Turnover |
|
Jharkhand |
₹15 lakh |
|
West Bengal |
₹10 lakh |
|
Odisha |
₹8 lakh |
Aggregate Turnover = ₹33 lakh
(All establishments under the same PAN are clubbed.)
Aggregate Turnover includes all outward supplies (taxable, exempt, exports, inter-state, etc.). Inward supplies are excluded. GST and Compensation Cess are excluded from value. Turnover of all registrations having the same PAN throughout India is aggregated.
Aggregate Turnover = Value of all outward supplies (taxable + exempt + exports + inter-state) of all persons having the same PAN on an all-India basis, excluding GST and Compensation Cess.
Exempt Supply – Section 2(47) of CGST Act
Exempt Supply means supply of any goods or services
or both which attracts Nil rate of tax, or which may be wholly exempt
from tax by notification, and includes non-taxable supply.
Exempt Supply consists of three types:
1. Wholly Exempted Supply
- Supplies
exempted through an Exemption Notification.
- Tax
rate = 0% (by notification).
Example: Certain healthcare and educational services.
2. Nil-Rated Supply
- Supplies
having a tax rate of Nil (0%) as specified in the GST rate
schedule.
Example: Salt, fresh milk, etc.
3. Non-Taxable Supply
- Supplies
which are not leviable to GST.
Examples:
- Five
petroleum products:
- Crude
Oil
- High
Speed Diesel (HSD)
- Motor
Spirit (Petrol)
- Natural
Gas
- Aviation
Turbine Fuel (ATF)
- Alcoholic
liquor for human consumption.
ITC on Exempt Supplies
Input Tax Credit (ITC) is not available in respect of
exempt supplies.
Zero-Rated Supply is not an Exempt Supply
·
Exports and supplies to SEZ are Zero-Rated
Supplies.
·
They are not exempt supplies.
· ITC is available in case of Zero-Rated Supplies.
Difference between Exempt Supply and Zero-Rated Supply
|
Basis |
Exempt Supply |
Zero-Rated Supply |
|
Tax Rate |
Nil/Wholly
Exempt |
0% |
|
Included in |
Nil-rated,
wholly exempt and non-taxable supplies |
Exports and
SEZ supplies |
|
ITC
Availability |
Not Available |
Available |
|
Refund of ITC |
Not Allowed |
Allowed |
Agriculturist – Section 2(7) of CGST Act
An Agriculturist means an Individual or Hindu
Undivided Family (HUF) who is engaged in the cultivation of land either
personally or through others under his supervision.
Types of Engagement
1. Active Engagement in Cultivation
- Cultivates
the land by:
- His
own labour; or
- The
labour of family members.
2. Passive Engagement in Cultivation
- Cultivates
the land through:
- Servants
on wages; or
- Hired
labour,
provided that such cultivation is carried out under the personal
supervision of the agriculturist or any member of his family.
Examples
Agriculturist
- Mr.
A cultivates his land himself.
- Mr.
B's family members cultivate the land.
- Mr.
C employs labourers and supervises the farming activities personally.
Not an
Agriculturist
- Mr.
D leases out his land and does not supervise cultivation.
- A
company engaged in farming activities (since the definition covers only an
Individual or HUF).
Only Individual or HUF can qualify as an Agriculturist. Personal cultivation or cultivation under personal supervision is essential. An agriculturist, to the extent of supply of produce out of cultivation of land, is generally not liable for GST registration.
Agriculturist means an Individual or HUF who is engaged in cultivation of land either by his own labour, family labour, or through hired labour under his or his family's personal supervision.
Family – Section 2(49) of CGST Act
Family includes certain persons who are related to an
individual. It consists of two categories:
1. Unconditional Members
The following are always considered part of the family:
- Spouse
(Husband/Wife)
- Children
No condition of
dependency is required.
2. Conditional Members
The following persons are included only if they are
wholly or mainly dependent on the said person:
- Parents
- Grandparents
- Brothers
- Sisters
Dependency is the essential condition.
Examples
Included in Family
- Wife
and children of Mr. A.
- Parents
of Mr. A who are financially dependent on him.
- Sister
of Mr. A who is mainly dependent on him.
Not Included
- Brother
who is financially independent.
- Grandparents who are not dependent on the person.
Spouse and children are always members of the family. Parents, grandparents, brothers, and sisters are included only when they are wholly or mainly dependent on the person.
Family includes spouse and children unconditionally, and parents, grandparents, brothers, and sisters conditionally, provided they are wholly or mainly dependent on the person.
Authorised Bank – Section 2(9) of CGST Act
An Authorised Bank means a bank or branch of a
bank which is authorised by the Government to collect:
- GST
(Tax), or
- Any
other amount payable under the GST Act.
Functions of an Authorised Bank
·
Collection of GST payments (CGST, IGST, SGST,
UTGST)
·
Collection of interest, penalty, late fee, and
other dues under the Act
·
Crediting the collected amount to the Government
account
Example - Suppose the Government authorises a branch of a bank to accept GST payments from taxpayers. Such branch becomes an Authorised Bank for the purpose of the CGST Act.
Every bank is not automatically an Authorised Bank. Only those banks or branches specifically authorised
by the Government are treated as Authorised Banks under GST.
Authorised Bank means a bank or branch of a bank authorised by the Government to collect tax or any other amount payable under the CGST Act.
Board – Section 2(16) of CGST Act
Board means the Central Board of Indirect Taxes
and Customs (CBIC), constituted under the Central Boards of Revenue Act,
1963.
Note: Earlier, it was known as the Central Board
of Excise and Customs (CBEC). It was renamed as CBIC in 2018.
Functions of the Board
·
Administration of GST laws
·
Issuance of notifications, circulars, and
clarifications
·
Supervision and control over GST and Customs
authorities
· Formulation and implementation of indirect tax policies
Wherever the term "Board"
appears in the CGST Act, it refers to the Central Board of Indirect Taxes
and Customs (CBIC). CBIC is the apex
body responsible for administering GST and Customs in India.
Business – Section 2(17) of CGST Act
Business includes any trade, commerce, manufacture,
profession, vocation, adventure, wager, or any other similar activity, whether
or not it is carried on for a pecuniary benefit.
Business includes:
- Trade,
Commerce, Manufacture, Profession, Vocation, Adventure, Wager, etc.
- Profit
motive is not necessary.
- Any
incidental or ancillary activity
- Activities
connected with or supporting the main business are also covered.
- Activities
undertaken regularly or occasionally
- Frequency
or continuity is not essential.
- Supply
or acquisition of goods, including capital goods and services
- In
connection with commencement or closure of business.
- Provision
by clubs, associations, societies, etc.
- Facilities
or benefits to members for a subscription or consideration.
- Admission
to any premises
- For
consideration (e.g., cinema halls, amusement parks).
- Services
supplied by a person as a holder of an office
- Which
has been accepted in the course or furtherance of trade, profession, or
vocation.
- Services
provided by a race club
- By
way of totalisator or licence to bookmaker.
- Activities
of Government or local authorities
- In
which they are engaged as public authorities.
Profit motive is not essential
for an activity to qualify as business. Even a single transaction,
adventure, or wager may constitute business. Activities incidental or ancillary to the main
activity are also treated as business.
Examples
·
Sale of goods by a trader.
·
Professional services by a Chartered Accountant.
·
Activities of a club providing facilities to
members.
·
Organising a lottery or betting activity.
Capital Goods – Section 2(19) of CGST Act
Capital Goods means goods:
- Used
or intended to be used in the course or furtherance of business; and
- The
value of which is capitalised in the books of account of the recipient.
Examples
·
Plant and Machinery
·
Furniture and Fixtures
·
Computers and Laptops
·
Vehicles (subject to ITC restrictions)
Inputs – Section 2(59) of CGST Act
Inputs means any goods:
- Used
or intended to be used in the course or furtherance of business; and
- Which
are not capital goods, i.e., their cost is treated as revenue
expenditure.
Examples
·
Raw Materials
·
Packing Materials
·
Stationery Items
·
Consumables
Input Services – Section 2(60) of CGST Act
Input Services means any service:
- Used
or intended to be used in the course or furtherance of business.
Examples
·
Rent of Office
·
Telephone and Internet Services
·
Professional Fees (CA, Lawyer, Consultant)
·
Advertising Expenses
·
Security Services
GST paid on Capital Goods, Inputs, and Input
Services is generally available as Input Tax Credit (ITC) to the
recipient, subject to conditions and restrictions under Sections 16 and 17 of
the CGST Act.
Difference between Capital Goods, Inputs and Input Services
|
Basis |
Capital Goods |
Inputs |
Input Services |
|
Nature |
Goods |
Goods |
Services |
|
Treatment in
Books |
Capitalised |
Revenue
Expenditure |
Expense |
|
Used for
Business |
Yes |
Yes |
Yes |
|
Examples |
Machinery,
Computer |
Raw Material,
Packing Material |
Rent,
Advertisement |
|
ITC
Availability |
Available* |
Available* |
Available* |
* Subject to conditions and blocked credit provisions.
- Capital Goods = Goods used in business and capitalised in books.
- Inputs = Goods used in business but not capitalised.
- Input Services = Services used in the course or furtherance of business.
Casual Taxable Person (CTP) – Section 2(20) of CGST Act
A Casual Taxable Person (CTP) means a person who:
- Occasionally
undertakes transactions involving supply of goods or services or both;
- In
the course or furtherance of business; and
- In a
State or Union Territory where he has no fixed place of business.
Examples
·
A trader from Jharkhand participating in an
exhibition in Delhi and selling goods there temporarily.
·
A businessman from West Bengal supplying goods
at a trade fair in Karnataka without having a permanent office there.
Function of Casual Taxable
Person
1. Registration
- A
Casual Taxable Person must obtain GST registration at least 5 days
before commencing business in that State/UT.
2. Advance Payment of Tax
- He
is required to deposit the estimated net GST liability in advance,
generally 5 days before the commencement of business.
3. Validity of Registration
- Initial
validity of registration: 90 days
- Extension
allowed: Further 90 days
Thus, the maximum validity of registration is 180 days
(90 + 90 days).
Features of a Casual Taxable Person
|
Particulars |
CTP |
|
Fixed Place
of Business in State/UT |
No |
|
Supply of
Goods/Services |
Yes |
|
Nature of
Transactions |
Occasional |
|
Registration
Required |
Mandatory |
|
Advance Tax
Deposit |
Required |
|
Initial
Validity |
90 Days |
|
Extension
Available |
Further 90
Days |
Non-Resident Taxable Person (NRTP) – Section 2(77) of CGST Act
A Non-Resident Taxable Person (NRTP) means a person
who:
- Occasionally
undertakes transactions involving supply of goods or services or both;
- In
the course or furtherance of business in India; and
- Has
no fixed place of business or residence in India.
Examples
·
A company based in the USA participating in a
trade fair in India and supplying goods.
·
A foreign consultant providing services in India
without having any office or residence in India.
Function of Non-Resident Taxable Person (NRTP)
1. Registration
- An
NRTP is required to obtain GST registration at least 5 days before
commencing business in India.
2. Advance Payment of Tax
- The
estimated net GST liability must be deposited in advance, generally
5 days before the commencement of business.
3. Validity of Registration
- Initial
validity: 90 days
- Extension
permitted: Further 90 days
Maximum validity = 180 days (90 + 90 days).
Difference between CTP and NRTP
|
Basis |
Casual Taxable Person (CTP) |
Non-Resident Taxable Person
(NRTP) |
|
Residence in
India |
Resident |
Non-Resident |
|
Fixed Place
of Business in State of Supply |
No |
No |
|
Fixed Place
of Business in India |
May have
elsewhere in India |
No |
|
Nature of
Transactions |
Occasional |
Occasional |
|
Registration
Required |
Mandatory |
Mandatory |
|
Advance Tax
Deposit |
Required |
Required |
|
Initial
Validity |
90 Days |
90 Days |
|
Extension |
Further 90
Days |
Further 90
Days |
·
Both CTP and NRTP are required to obtain
registration and deposit estimated tax in advance.
·
The key difference is that a CTP is resident
in India but has no fixed place of business in the State/UT concerned,
whereas an NRTP has neither a fixed place of business nor residence in India.
Common Portal – Section 2(26) of CGST Act
Common Portal means the GST electronic portal
maintained by the Goods and Services Tax Network (GSTN) for providing
various GST-related services to taxpayers and the Government.
Features of Common Portal
1. Owned and Managed by GSTN
- The GST
Common Portal is owned and maintained by GSTN (Goods and Services
Tax Network).
2. GSTN is a Section 8 Company
- GSTN
is a company registered under Section 8 of the Companies Act, 2013.
- It
is a Not-for-Profit Company.
3. Government Funding
- Both
the Central Government and the State Governments provide
funds to GSTN.
4. Services Provided by GSTN
GSTN provides the Common Portal to both the Government and
taxpayers for:
·
GST Registration
·
Filing of Returns
·
Payment of GST
·
Input Tax Credit Matching
·
Distribution and Settlement of IGST
·
Refund Applications
·
Generation of E-Way Bills and other GST
compliances
The Common Portal acts as the single
electronic platform for all GST-related activities. It facilitates interaction between taxpayers
and tax authorities through an online system.
- G – GST Registration
- S – Settlement of IGST
- T – Tax Payment
- N – Network for Return Filing and Compliance.
Consideration – Section 2(31) of CGST Act
Consideration means something received or
receivable in return, whether in money or otherwise, for the supply
of goods or services or both.
It may be:
- Monetary
(Cash, Cheque, Bank Transfer, etc.), or
- Non-Monetary
(Barter, Exchange, etc.).
The payment may be made by:
- The
recipient (Active consideration), or
- Any
other person on behalf of the recipient (Passive consideration).
Essential Conditions
·
There should be a supply of goods or services
or both.
·
There should be something received or receivable
in return.
·
Consideration may be in money or non-monetary
form.
Exclusions from Consideration
1. Government Subsidy
Subsidies given by the Central Government or State
Government are not included in consideration.
2. Security Deposit
A security deposit received for the performance of a
contract is not consideration.
However, if the security deposit is subsequently adjusted
against rent, charges, or any payment for supply, it becomes consideration
to that extent.
Examples
Consideration
- ₹50,000
received for sale of goods.
- Exchange
of an old machine for a new machine plus cash.
- Payment
made by a third party on behalf of the recipient.
Not Consideration
- Government
subsidy.
- Refundable
security deposit.
Becomes Consideration
- Security
deposit adjusted against rent or service charges.
Consideration may be paid or payable. It may be monetary or non-monetary. Government subsidies are excluded. Security deposits are excluded unless appropriated towards payment for supply.
- C – Cash or Kind
- M – Monetary or Non-monetary
- S – Subsidy by Government excluded
- G – Guarantee/Security deposit excluded (unless adjusted)
Recipient – Section 2(93) of CGST Act
Recipient means the person who receives goods or
services or both and includes his agent.
1. In Case of Paid Supplies
The person who is liable to pay the consideration for
the supply of goods or services or both is the Recipient.
Example:
- Mr.
A purchases goods from Mr. B and is liable to pay ₹10,000.
- Mr.
A is the Recipient.
2. In Case of Free Supplies (No Consideration)
The person to whom:
- Goods
are delivered; or
- Services
are rendered,
is the Recipient.
Example:
- A
company distributes free samples to customers.
- The
customers receiving the goods are the Recipients.
3. Recipient Includes Agent
The term Recipient also includes an agent acting
on behalf of the recipient.
In paid supplies, the
person liable to pay consideration is the recipient. In supplies without consideration, the
person receiving the goods or services is the recipient. The definition of recipient is wide enough to
include his agent.
Examples
|
Situation |
Recipient |
|
Goods sold
for ₹50,000 |
Person liable
to pay ₹50,000 |
|
Free samples
distributed |
Person
receiving the samples |
|
Service
rendered without consideration |
Person
receiving the service |
|
Agent
receives goods on behalf of principal |
Agent also
treated as recipient |
- Payer (for paid supplies)
- Receiver (for free supplies)
- Agent (included in the definition)
Debit Note / Supplementary Invoice – Section 2(38) of CGST Act
A Debit Note (also called a Supplementary Invoice) is
a document issued by the supplier when the original invoice has been under-invoiced,
due to:
- Charging
a lower value of supply; or
- Charging
a lower rate of tax; or
- Short
recovery of amount from the recipient.
Effect of Debit Note
·
Increases the value of the original invoice.
·
Increases the tax liability of the supplier when
reported in GSTR-1.
·
Increases the Input Tax Credit (ITC) available
to the recipient through GSTR-2B.
Example
Invoice issued for ₹1,00,000 + 18% GST, but actual value
should have been ₹1,20,000.
Difference = ₹20,000
Supplier will issue a Debit Note for ₹20,000 plus
applicable GST.
Credit Note – Section 2(37) of CGST Act
A Credit Note is a document issued by the supplier
when the original invoice has been over-invoiced, due to:
- Charging
a higher value of supply; or
- Charging
a higher rate of tax; or
- Supplying
lesser quantity of goods or services; or
- Sales
return by the recipient.
A Credit Note fills this gap by reducing the excess amount
charged.
Effect of Credit Note
·
Decreases the value of the original invoice.
·
Decreases the tax liability of the supplier when
reported in GSTR-1.
·
Decreases the ITC available to the recipient
through GSTR-2B.
Only the Credit
Note issued by the supplier is relevant under GST. A document issued by the recipient may be
called a commercial credit note, but it does not automatically affect GST
liability.
- Debit Note increases tax liability and recipient's
ITC.
- Credit Note decreases tax liability and recipient's
ITC.
Difference between Debit Note and Credit Note
|
Basis |
Debit Note |
Credit Note |
|
Reason |
Under-invoicing |
Over-invoicing |
|
Value of
Original Invoice |
Increased |
Decreased |
|
Supplier's
GST Liability |
Increased |
Decreased |
|
Recipient's
ITC |
Increased |
Decreased |
|
Examples |
Lower value
or tax charged |
Sales return,
excess value or tax charged |
E-Liability Register / E-Credit Ledger / E-Cash Ledger
When a person obtains GST Registration, the GST
Portal automatically opens three electronic ledgers for the registered
person:
- Electronic
Liability Register
- Electronic
Credit Ledger
- Electronic
Cash Ledger
(A) Electronic Liability Register
Meaning
- It
shows the GST liability and other dues payable by the registered
person.
- It
is updated when outward supplies are furnished through GSTR-1 and
when returns are filed.
Includes
·
Output Tax Liability
·
Interest
·
Penalty
·
Late Fee
·
Other amounts payable under GST
It acts as a tax payable
account.
(B) Electronic Credit Ledger
Meaning
- It
shows the Input Tax Credit (ITC) available to the registered
person.
- It
is updated when eligible ITC reflects through suppliers' returns and
becomes available in GSTR-2B.
ITC balance can be utilized only for payment of output tax
liability, subject to GST provisions. Interest, penalty, and late fees cannot
be paid through the Electronic Credit Ledger.
(C) Electronic Cash Ledger
Meaning
- It
shows the cash deposited by the registered person on the GST
Portal.
- It
is updated whenever cash is deposited through challan.
The balance in the Cash Ledger can be used for payment of:
·
Tax
·
Interest
·
Penalty
·
Late Fee
·
Any other amount payable under GST
Difference among the Three Ledgers
|
Particulars |
E-Liability Register |
E-Credit Ledger |
E-Cash Ledger |
|
Nature |
Liability
Account |
ITC Account |
Cash Account |
|
Shows |
Tax payable
and other dues |
Input Tax
Credit available |
Cash
deposited |
|
Updated by |
GSTR-1/Returns |
ITC reflected
in GSTR-2B |
Cash deposit
through challan |
|
Utilization |
Amount
payable |
Output tax
only |
Tax,
interest, penalty, late fee, etc. |
Note: In your notes, the statement "E-Cash
Ledger shows the ITC available" is incorrect.
Correct position:
- E-Credit
Ledger → Shows ITC available.
- E-Cash
Ledger → Shows cash balance deposited by the taxpayer.
GST Portal maintains three electronic ledgers for every registered person:
- Electronic Liability Register – Shows tax and other liabilities.
- Electronic Credit Ledger – Shows Input Tax Credit available.
- Electronic Cash Ledger – Shows cash deposited and available for payment.
India – Section 2(56) of CGST Act
Meaning
India includes:
1. Land Mass of India
Entire geographical territory of India.
2. Territorial Waters
Territorial waters extending up to 12 nautical miles from
the baseline, including:
- The
seabed (bottom)
- Subsoil
- Airspace
above such waters
3. Maritime Zones and Deemed India
Installations, structures and vessels such as oil rigs
located in the:
- Exclusive
Economic Zone (EEZ), or
- Continental
Shelf of India,
are treated as Deemed India.
Areas comprising oil rigs and
offshore installations situated in the EEZ or Continental Shelf are
regarded as "Other Territory" under GST. Other Territory
is treated as a Union Territory for GST purposes.
Components of India under GST
|
Component |
Included |
|
Land Mass of
India |
Yes |
|
Territorial
Waters (12 Nautical Miles) |
Yes |
|
Seabed,
Subsoil and Airspace |
Yes |
|
Oil Rigs in
EEZ/Continental Shelf |
Deemed India |
|
Other
Territory |
Treated as
Union Territory |
- L – Land Mass
- T – Territorial Waters (12 Nautical Miles)
- O – Offshore Oil Rigs (Deemed India = Other Territory = UT)
Inward Supply – Section 2(67) of CGST Act
Inward Supply means the receipt of any goods or
services or both by a person, whether by:
- Purchase,
- Acquisition,
or
- Any
other mode,
and whether the supply is made with consideration (paid)
or without consideration (free).
Essential Conditions
1. Supply may be Paid or Free
·
Supply received against consideration.
·
Supply received without consideration.
2. Supply is received by the Recipient
·
The person receiving the goods or services is
the recipient.
3. Mode of Receipt
The supply may be received through:
- Purchase
- Acquisition
- Exchange
- Transfer
- Any
other mode
Examples
Inward Supply
- Purchase
of raw materials.
- Receipt
of professional services from a consultant.
- Receipt
of free samples from a supplier.
- Acquisition
of machinery for business.
Inward Supply refers to the receipt side of a
transaction. It is the opposite of Outward
Supply. It includes both goods
and services, whether received for consideration or free of cost.
Difference between Inward Supply and Outward Supply
|
Basis |
Inward Supply |
Outward Supply |
|
Perspective |
Recipient |
Supplier |
|
Nature |
Receipt of
goods/services |
Supply of
goods/services |
|
Includes |
Purchases,
acquisitions |
Sales,
transfers, etc. |
|
Consideration |
Paid or Free |
Paid or Free
(where deemed supply applies) |
Input Tax – Section 2(62) of CGST Act
Input Tax means the GST charged on any inward
supply of goods or services or both to a registered person.
It includes tax payable under:
- Forward
Charge Mechanism (FCM); and
- Reverse
Charge Mechanism (RCM).
Input Tax Includes
1. GST charged on Inward Supplies
·
CGST
·
SGST / UTGST
·
IGST
2. Tax payable under Reverse Charge
·
GST payable under RCM is also treated as Input
Tax.
3. IGST on Import of Goods
·
IGST levied and collected by the Customs
Department on import of goods is also treated as Input Tax.
Input Tax Does Not Include
Tax paid under the Composition Scheme by a
Composition Taxable Person.
Thus, composition tax paid at:
- 1%
- 5%
- 6%
is not Input Tax.
Examples
Input Tax
- GST
paid on purchase of raw materials.
- GST
paid on professional services.
- GST
payable under reverse charge on legal services.
- IGST
paid on import of machinery.
Not Input Tax
- Tax
paid by a composition dealer under Composition Scheme.
Input Tax is the tax paid on inward
supplies. It may arise under Forward Charge or Reverse Charge.
Input Tax forms the basis for claiming Input
Tax Credit (ITC), subject to conditions and restrictions under Sections 16
and 17.
Difference between Input Tax and Input Tax Credit
|
Basis |
Input Tax |
Input Tax Credit (ITC) |
|
Meaning |
GST
charged/payable on inward supplies |
Credit
available out of eligible input tax |
|
Includes RCM
Tax |
Yes |
Yes (after
payment) |
|
Import IGST |
Included |
Credit
available |
|
Composition
Tax |
Not Included |
Not Available |
- F – Forward Charge
- R – Reverse Charge
- I – Import IGST Composition Tax is excluded.
Input Tax Credit (ITC) – Section 2(63) of CGST Act
Input Tax Credit (ITC)
means the credit of Input Tax available to a registered person. In
simple words, Input Tax Credit = Credit of Input Tax paid or payable on
inward supplies of goods or services or both.
Input Tax Credit Includes
·
Credit of CGST
·
Credit of SGST / UTGST
·
Credit of IGST
·
Credit of tax paid under Reverse Charge
Mechanism (RCM) (after payment)
·
IGST paid on import of goods
Conditions for Availing ITC
ITC is available subject to the conditions prescribed under
Sections 16 and 17 of the CGST Act, such as:
- Possession
of tax invoice/debit note.
- Receipt
of goods or services.
- Tax
paid to Government by supplier.
- Filing
of return by recipient.
- Credit
should not be blocked under Section 17(5).
Examples
ITC Available
- GST
paid on purchase of raw materials.
- GST
paid on office rent.
- GST
paid on machinery (capital goods).
- IGST
paid on import of goods.
ITC Not Available
- Personal
expenses.
- Motor
vehicles (subject to exceptions).
- Food
and beverages (subject to exceptions).
- Membership
of clubs and health services.
- Composition
tax.
Input Tax means tax
charged on inward supplies. Input Tax
Credit (ITC) means the credit of such Input Tax available to the
recipient. ITC helps avoid the cascading
effect of taxes.
Difference between Input Tax and Input Tax Credit
|
Basis |
Input Tax |
Input Tax Credit |
|
Meaning |
Tax charged
on inward supplies |
Credit of
such tax |
|
Nature |
Tax
paid/payable |
Benefit
available |
|
Availability |
Automatic |
Subject to
conditions |
|
Purpose |
Represents
tax incidence |
Used to pay
output tax liability |
- Input Tax → Tax Paid
- Input Tax Credit → Credit of Tax Paid.
Outward Supply – Section 2(83) of CGST Act
Outward Supply means the supply of goods or services
or both made by a person in the course or furtherance of business.
It includes supplies made by way of:
- Sale
- Transfer
- Barter
- Exchange
- License
- Rental
- Lease
- Disposal
- Any
other mode
Whether made:
- With
consideration, or
- Without
consideration (where treated as supply under Schedule I).
Essential Conditions
1. Supply by Supplier
·
The supply should be made by the supplier.
2. In Course or Furtherance of Business
·
The transaction should be connected with
business.
3. Mode of Supply
·
Sale
·
Transfer
·
Barter
·
Exchange
·
License
·
Rental
·
Lease
·
Disposal
4. Consideration
·
With consideration; or
·
Without consideration, if deemed as supply under
GST.
Examples
Outward Supply
- Sale
of goods by a trader.
- Rendering
consultancy services.
- Renting
of machinery.
- Export
of goods.
- Transfer
of goods to a distinct person without consideration (covered under
Schedule I).
Outward Supply refers to
the supply side from the perspective of the supplier. It includes both goods and services. Supplies made without consideration may also
qualify as outward supplies if specifically covered under Schedule I.
Difference between Inward Supply and Outward Supply
|
Basis |
Inward Supply |
Outward Supply |
|
Perspective |
Recipient |
Supplier |
|
Nature |
Receipt of
goods/services |
Supply of
goods/services |
|
Examples |
Purchase,
Acquisition |
Sale,
Transfer, Barter |
|
Business
Connection |
Yes |
Yes |
|
Consideration |
With or
without consideration |
With or
without consideration |
- Sale
- Transfer
- Barter
- Exchange
- Lease / Rental
- Disposal
Output Tax – Section 2(82) of CGST Act
Output Tax means the tax chargeable on the outward
supply of goods or services or both made by a registered person under the
CGST Act.
It includes:
- CGST
- SGST
/ UTGST
- IGST
on outward supplies made by the supplier.
Essential Conditions
·
There should be an outward supply.
·
Tax should be chargeable under the GST Act.
·
The liability should arise on supplies made by
the registered person.
Examples
Output Tax
- GST
collected on sale of goods.
- GST
charged on consultancy services.
- IGST
charged on inter-State supplies.
Not Output Tax
- GST
payable under Reverse Charge Mechanism (RCM) by the recipient.
Tax payable under Reverse
Charge by the recipient is NOT Output Tax. Such tax is treated as Input Tax in the
hands of the recipient and ITC thereof can be availed subject to conditions.
Difference between Output Tax and Input Tax
|
Basis |
Output Tax |
Input Tax |
|
Nature |
Tax on
outward supplies |
Tax on inward
supplies |
|
Paid by |
Supplier |
Recipient |
|
Arises on |
Sale/Supply |
Purchase/Receipt |
|
RCM Liability |
Excluded |
Included |
|
ITC Available |
Not
applicable |
Subject to
conditions |
- Output Tax = Tax on Sales
- Input Tax = Tax on Purchases
- RCM Tax paid by Recipient = Input Tax, not Output Tax.
Job Work – Section 2(68) of CGST Act
Job Work means any treatment or process
undertaken by a person (Job Worker) on goods belonging to another
registered person (Principal).
Thus:
- Person
performing the process = Job Worker
- Owner
of goods = Principal
Essential Conditions
·
There must be a treatment or process.
·
The goods should belong to another person
(Principal).
·
The person performing the process is called the Job
Worker.
Examples
Job Work
- Dyeing
of fabrics.
- Electroplating
of machine parts.
- Cutting
and polishing of diamonds.
- Packaging
and labeling of goods.
Features of Job Work
(a) Movement of Goods to and from Job Worker is Not a
Supply
·
Sending goods by the Principal to the Job Worker
is not a supply.
·
Returning goods by the Job Worker to the
Principal is also not a supply.
Hence, GST is not payable merely on such movement of goods.
(b) Supply from Job Worker's Premises
·
After completion of job work, goods may be
supplied directly from the premises of the Job Worker.
·
Such supply is treated as a supply by the
Principal (Owner of Goods).
·
GST liability arises in the hands of the
Principal.
(c) Activity of Job Worker is a Supply of Service
·
The processing or treatment undertaken by the
Job Worker is treated as a supply of service.
·
GST is payable by the Job Worker on the job work
charges.
Exception: Services relating to agriculture may be
exempt.
Flow of Job Work
Principal → Sends Goods → Job Worker → Processes Goods →
Returns Goods / Goods Sold from Job Worker's Premises
- Movement
of goods = Not a supply
- Processing
charges = Supply of Service by Job Worker
- Sale
of processed goods = Supply by Principal
- T = Treatment
- P = Process
- G = Goods belonging to another person
Money – Section 2(75) of CGST Act
Money means the Indian legal tender or any foreign
currency, cheque, promissory note, bill of exchange, draft, pay order,
traveller's cheque, money order, postal or electronic remittance, or any other
instrument recognized by the RBI, where the face value is equal to its
market value.
Money Includes
·
Indian Legal Tender (Currency Notes and Coins)
·
Foreign Currency
·
Cheque
·
Promissory Note
·
Bill of Exchange
·
Bank Draft
·
Pay Order
·
Traveller's Cheque
·
Money Order
·
Postal Remittance
·
Electronic Remittance (NEFT, RTGS, IMPS, etc.)
Essential Condition
Market Value = Face Value
If the market value differs from the face value, such item
is not treated as money under GST.
Examples
Money
- ₹500
currency note used as ₹500.
- A
cheque of ₹10,000.
- USD
100 used as currency.
Not Money
- Rare
or antique coins sold for collection purposes.
- Demonetized
or outdated currency notes.
- Old
currency notes whose market value differs from their face value.
Outdated or demonetized
currency is not money for GST purposes. Transactions in money are neither supply of
goods nor supply of services. However,
services relating to money (such as banking, money changing, etc.) are taxable
services.
Difference between Money and Goods
|
Basis |
Money |
Goods |
|
Market Value
vs Face Value |
Equal |
Not Relevant |
|
Subject to
GST |
No |
Yes |
|
Example |
Currency,
Cheque |
Machinery,
Furniture |
|
Demonetized
Currency |
Not Money |
Not
Applicable |
Taxable Supply – Section 2(108) of CGST Act
Taxable Supply means a supply of goods or services or
both which is leviable to tax under the CGST Act.
Essential Conditions
For a supply to be called a Taxable Supply, the
following three conditions must be satisfied:
1. There must be Goods or Services or Both
·
Supply should involve goods, services, or both.
2. There must be a Supply
·
There should be a supply as defined under
Section 7 of the CGST Act.
3. Supply should be Leviable to GST
·
The supply should be chargeable to GST.
Examples
Taxable Supply
- Sale
of machinery.
- Consultancy
services.
- Restaurant
services.
- Inter-State
supply of goods.
Not Taxable Supply
- Alcoholic
liquor for human consumption.
- Petroleum
crude, HSD, petrol, natural gas, and ATF (until notified for GST levy).
- Transactions
which are not supplies under Section 7.
A supply may be taxable, exempt, or non-taxable.
Exempt supplies are leviable to tax but
are wholly exempted or subject to nil rate. Non-taxable supplies are not leviable to GST
at all.
Difference between Taxable Supply, Exempt Supply and Non-Taxable Supply
|
Basis |
Taxable Supply |
Exempt Supply |
Non-Taxable Supply |
|
GST Levy |
Yes |
Leviable but exempt/Nil rated |
No |
|
Tax Payable |
Yes |
No |
No |
|
ITC
Availability |
Available
(subject to conditions) |
Not Available |
Not Available |
|
Example |
Sale of goods |
Education
services, fresh milk |
Alcoholic
liquor, petroleum products |
- G = Goods/Services
- S = Supply
- T = Tax leviable under GST.
Non-Taxable Supply – Section 2(78) of CGST Act
Non-Taxable Supply means a supply of goods or
services or both which is not leviable to tax under the CGST Act or the IGST
Act.
Essential Conditions
For a supply to be called a Non-Taxable Supply, the
following three conditions must be satisfied:
1. There must be Goods or Services or Both
·
The transaction should involve goods, services,
or both.
2. There must be a Supply
·
There should be a supply under Section 7 of the
CGST Act.
3. The Supply should not be Leviable to GST
·
No GST is chargeable on such supply.
Examples
Non-Taxable Supplies
- Alcoholic
liquor for human consumption.
- Five
petroleum products (until brought under GST):
- Petroleum
Crude
- High
Speed Diesel (HSD)
- Motor
Spirit (Petrol)
- Natural
Gas
- Aviation
Turbine Fuel (ATF)
Non-Taxable Supply is one
of the components of Exempt Supply. Since such supplies are not leviable to GST, Input
Tax Credit (ITC) attributable to them is not available. Although there is a supply, the GST law itself
does not impose tax on such supplies.
Difference between Taxable Supply and Non-Taxable Supply
|
Basis |
Taxable Supply |
Non-Taxable Supply |
|
Goods/Services |
Present |
Present |
|
Supply Exists |
Yes |
Yes |
|
GST Leviable |
Yes |
No |
|
Tax Payable |
Yes |
No |
|
ITC
Availability |
Available
(subject to conditions) |
Not Available |
|
Example |
Sale of
Machinery |
Alcoholic
Liquor, Petroleum Products |
- G = Goods/Services
- S = Supply
- No T = No GST Levy.
Taxable Territory – Section 2(109) of CGST Act
Taxable Territory means the territory to which the
provisions of the GST Act apply.
In other words, it is the geographical area where GST law is
in force and GST can be levied.
Example
Under the CGST Act
The whole of India is the taxable territory.
This includes:
- Land
mass of India
- Territorial
waters (12 nautical miles)
- Airspace
and seabed
- Deemed
India (offshore installations, oil rigs, etc.)
GST is leviable only on supplies
made within the Taxable Territory. Since the CGST Act extends to the whole of
India, the entire country constitutes the Taxable Territory for CGST
purposes.
Difference between Taxable Territory and Non-Taxable Territory
|
Basis |
Taxable Territory |
Non-Taxable Territory |
|
Applicability
of GST Act |
Applicable |
Not Applicable |
|
GST Levy |
Possible |
Not Possible |
|
Example |
Whole of
India (CGST Act) |
Foreign
countries |
Taxable Territory means the territory to which the provisions of the CGST Act apply.
Memory Trick:
- Taxable Territory = Territory + GST Law Applies
- For CGST Act ⇒ Whole of India = Taxable Territory.
Non-Taxable Territory – Section 2(79) of CGST Act
Non-Taxable Territory means the territory which is
outside the Taxable Territory.
In other words, it is the geographical area where the
provisions of the GST Act do not apply.
Example
Under the CGST Act
·
India = Taxable Territory
·
Any place outside India = Non-Taxable
Territory
Examples:
- USA
- UK
- Singapore
- Dubai
are all Non-Taxable Territories for the purposes of
the CGST Act.
Supplies originating from or
received from a Non-Taxable Territory may have special GST implications, such
as import of goods or services. A person
located in a Non-Taxable Territory and supplying services in India may be
treated as a Non-Resident Taxable Person (NRTP), subject to conditions.
Difference between Taxable Territory and Non-Taxable Territory
|
Basis |
Taxable Territory |
Non-Taxable Territory |
|
GST Act
Applicable |
Yes |
No |
|
GST Levy
Possible |
Yes |
No |
|
Example |
India |
Foreign
Countries |
|
Location |
Within India |
Outside India |
- India = Taxable Territory
- Outside India = Non-Taxable Territory
State – Section 2(103) of CGST Act
State means a State as specified in the First
Schedule to the Constitution of India.
Examples
·
Jharkhand
·
West Bengal
·
Maharashtra
·
Tamil Nadu
The detailed definition and list of States have already been
discussed in the Introduction Chapter. A State is one of the components for
determining the place of supply and levy of CGST/SGST or IGST.
Union Territory – Section 2(114) of CGST Act
Union Territory means any of the following:
- Andaman
and Nicobar Islands
- Lakshadweep
- Dadra
and Nagar Haveli and Daman and Diu
- Ladakh
- Chandigarh
- Puducherry
(Delhi and Jammu & Kashmir have special provisions and are generally treated separately under GST.)
The detailed discussion on Union Territories has already
been covered in the Introduction Chapter. Supplies within a Union
Territory attract CGST + UTGST.
Other Territory
Other Territory means a place which is not covered
in the definition of a State or Union Territory.
Example
Offshore installations and Oil Rigs located in the Exclusive Economic Zone (EEZ) or Continental Shelf of India. Such areas are treated as Deemed India. For GST purposes, Other Territory is treated as a Union Territory. Supplies made to or from such territories are governed accordingly.
Difference among State, Union Territory and Other Territory
|
Basis |
State |
Union Territory |
Other Territory |
|
Constitutional
Status |
State |
UT |
Neither State
nor UT |
|
GST
Applicable |
Yes |
Yes |
Yes |
|
Examples |
Jharkhand,
Odisha |
Chandigarh,
Ladakh |
Oil Rigs in
EEZ |
|
Treated as UT
for GST |
Not
Applicable |
Already UT |
Yes |
- O.T. = Offshore Territory = Oil Rigs = Treated as UT.
Person – Section 2(84) of CGST Act
Person includes any of the following entities:
1. Individual
·
A natural person.
2. Hindu Undivided Family (HUF)
·
A family governed by Hindu law.
3. Company
·
Private Company, Public Company, One Person
Company, etc.
4. Firm
·
Partnership Firm.
5. Limited Liability Partnership (LLP)
·
Registered under the LLP Act, 2008.
6. Association of Persons (AOP) or Body of Individuals
(BOI)
·
Whether incorporated or not.
·
Whether formed in India or outside India.
7. Corporation
·
Established by or under any law. Example:
Life Insurance Corporation of India
8. Body Corporate Incorporated Outside India
·
Foreign companies and corporations.
9. Government
·
Central Government or State Government.
10. Local Authority
·
Municipality, Panchayat, etc.
11. Society
·
Registered societies.
12. Trust
·
Public or Private Trust.
13. Artificial Juridical Person
·
Any other legal entity not covered above.
The term "Person" has a very wide scope
under GST. Both natural persons
and artificial persons are covered. A person may be incorporated or
unincorporated, Indian or foreign.
Examples
·
Mr. A (Individual)
·
ABC HUF
·
XYZ Pvt. Ltd.
·
M/s PQR & Co. (Firm)
·
DEF LLP
·
Residents Welfare Association (AOP)
·
Society and Trust
·
Government Department
- I – Individual
- H – HUF
- C – Company
- F – Firm
- L – LLP
- A – AOP / BOI
- C – Corporation
- G – Government
- S – Society
- T – Trust
- A – Artificial Juridical Person.
Principal Place of Business – Section 2(89) of CGST Act
Principal Place of Business means the place of
business specified as such in the GST Registration Certificate.
It is generally the place from where the business is mainly
carried on.
Examples
·
Head Office
·
Corporate Office
·
Main Factory
·
Main Branch from where books of accounts are
maintained and management decisions are taken
A registered person may have more
than one place of business, but only one place is declared as the Principal
Place of Business in the GST registration. Additional places of business are separately
mentioned in the registration certificate.
The Principal Place of Business
is normally the place where:
- Books
of accounts are maintained.
- Main
business activities are carried out.
- Management
and control are exercised.
Examples
|
Place |
Status |
|
Corporate
Office in Mumbai |
Principal
Place of Business |
|
Factory in
Pune |
Additional
Place of Business |
|
Warehouse in
Nashik |
Additional
Place of Business |
Difference between Principal Place and Additional Place of Business
|
Basis |
Principal Place of Business |
Additional Place of Business |
|
Number |
One |
One or More |
|
Mentioned in
GST Registration |
Yes |
Yes |
|
Main Business
Activities |
Yes |
Usually No |
|
Examples |
Head Office,
Corporate Office |
Branch,
Warehouse, Factory |
- Head Office
- Corporate Office
- Main Business Location
Principal Supply – Section 2(90) of CGST Act
Principal Supply means the supply of goods or
services which constitutes the predominant element of a Composite
Supply and to which any other supply forming part of that composite supply
is ancillary.
In simple words: The main supply in a Composite Supply is
called the Principal Supply.
Essential Conditions
·
There should be a Composite Supply.
·
One supply should be the predominant (main)
element. Other supplies should be ancillary or incidental to the
principal supply.
Examples
Example 1: Air Transport with Food
- Air
transportation service
- Food
served during flight
Principal Supply: Air transportation service
Food is ancillary to transportation.
Example 2: Sale of AC with Installation
- Air
Conditioner
- Installation
service
Principal Supply: Air Conditioner (Goods)
Installation service is ancillary.
Example 3: Hotel Accommodation with Complimentary
Breakfast
- Accommodation
service
- Breakfast
service
Principal Supply: Accommodation service
Breakfast is incidental.
The classification and GST rate of a Composite Supply are determined according to the Principal Supply. Tax treatment of ancillary supplies follows the Principal Supply.
Difference between Principal Supply and Composite Supply
|
Basis |
Principal Supply |
Composite Supply |
|
Meaning |
Main supply |
Combination
of naturally bundled supplies |
|
Nature |
Predominant
element |
Entire bundle
of supplies |
|
GST Rate |
Determines
tax rate |
Taxed as
Principal Supply |
|
Example |
Air transport |
Air transport
+ meals |
- Principal Supply = Main Supply = Determines GST Rate
- Classification of Composite Supply goes to the Principal Supply.
Quarter – Section 2(92) of
CGST Act
A Quarter means a period consisting of three
consecutive months.
The four quarters in a financial/calendar year are:
- January
+ February + March
- April
+ May + June
- July
+ August + September
- October
+ November + December
Table of Quarters
|
Quarter |
Months Covered |
|
Q1 |
January –
March |
|
Q2 |
April – June |
|
Q3 |
July –
September |
|
Q4 |
October –
December |
- A
quarter always consists of three consecutive months.
- Quarterly
return filing schemes under GST (such as QRMP) are based on these
quarters.
- Jan-Mar
- Apr-Jun
- Jul-Sep
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Registered Person – Section 2(94) of CGST Act
A Registered Person means a person who is registered
under Section 25 of the CGST Act.
In simple words:
Any person having a valid GST Registration (GSTIN) is
called a Registered Person.
Examples
·
Proprietorship having GSTIN
·
Partnership Firm registered under GST
·
Company registered under GST
·
LLP registered under GST
Exception – UIN Holders are not Registered Persons. A
person having a Unique Identification Number (UIN) is not treated as
a Registered Person.
Examples of UIN Holders
- Foreign
Embassies
- UN
Organizations
- Multilateral
Financial Institutions
- Consulates
These entities obtain UIN only for claiming refund of GST
paid on inward supplies, and not for making taxable supplies.
- GSTIN
holders are Registered Persons.
- UIN
holders are not Registered Persons, though they are recognized under
GST for refund purposes.
- A
Registered Person is entitled to collect GST and claim Input Tax Credit,
subject to conditions.
Difference between GSTIN Holder and UIN Holder
|
Basis |
Registered Person (GSTIN) |
UIN Holder |
|
Registration
under GST |
Yes |
No |
|
GSTIN Issued |
Yes |
No |
|
UIN Issued |
No |
Yes |
|
Can Collect
GST |
Yes |
No |
|
Can Claim
Refund |
Yes (subject
to law) |
Yes |
|
Example |
Company, Firm |
Embassy, UN
Body |
- GSTIN = Registered Person
- UIN = Refund Person (Not a Registered Person)
Removal – Section 2(96) of CGST Act
Removal, in relation to goods, means:
- Dispatch
of goods by the supplier for delivery to the recipient; or
- Collection
of goods by the recipient or any person acting on his behalf.
In simple words: Removal = Movement of goods either by
dispatch by the supplier or collection by the recipient.
Modes of Removal
1. Dispatch by Supplier
Goods are sent by the supplier to the recipient.
Example:
- ABC
Ltd. dispatches machinery to XYZ Ltd.
- The
goods are considered to have been removed when dispatched.
2. Collection by Recipient
The recipient himself or his representative collects the
goods from the supplier's premises.
Example:
- XYZ
Ltd. sends its vehicle to pick up goods from ABC Ltd.
- Removal
takes place when the goods are collected.
Removal is relevant for determining the time of supply,
place of supply, and issuance of tax invoice. In case of goods,
the invoice is generally issued before or at the time of removal.
Examples
|
Situation |
Removal? |
|
Supplier
dispatches goods |
Yes |
|
Recipient
collects goods |
Yes |
|
Goods lying
in warehouse without movement |
No |
- Dispatch by Supplier
- Collection by Recipient
Return – Section 2(97) of CGST Act
A Return means any return prescribed or otherwise
required to be furnished by or under the CGST Act or the rules made thereunder.
In simple words: A Return is a statement containing
details of supplies, tax liability, ITC, and other particulars, which is
required to be filed periodically or otherwise under GST.
Types of Returns
1. Periodic Returns
These are filed regularly (monthly or quarterly).
Examples:
- GSTR-1
– Details of outward supplies.
- GSTR-3B
– Summary return with tax payment.
- CMP-08
– Statement-cum-challan for composition taxpayers.
2. Annual Return
Filed once for a financial year.
Examples:
- GSTR-9
– Annual Return.
- GSTR-9A
– Annual Return for Composition Taxpayers (applicable for earlier
periods).
3. Final Return
Filed when GST registration is cancelled.
Example:
- GSTR-10
Features of Returns
- Returns
are filed electronically on the GST Portal.
- They
help in reporting:
- Outward
supplies
- Inward
supplies
- Tax
liability
- Input
Tax Credit
- Tax
payment
Examples
|
Type of Return |
Form |
|
Periodic
Return |
GSTR-1,
GSTR-3B |
|
Annual Return |
GSTR-9,
GSTR-9A |
|
Final Return |
GSTR-10 |
- P – Periodic Return (GSTR-1, GSTR-3B)
- A – Annual Return (GSTR-9, 9A)
- F – Final Return (GSTR-10)
Reverse Charge Mechanism (RCM) – Section 2(98) of CGST Act
Reverse Charge Mechanism (RCM) means a mechanism
under which the recipient of goods or services is liable to pay GST
directly to the Government instead of the supplier.
In simple words: Under RCM, liability to pay tax shifts
from the Supplier to the Recipient.
Normal Charge vs Reverse Charge
|
Basis |
Normal Charge (Forward Charge) |
Reverse Charge |
|
Person liable
to pay GST |
Supplier |
Recipient |
|
Tax collected
by |
Supplier |
Recipient |
|
Payment to
Government |
By Supplier |
By Recipient |
Examples of RCM
·
Legal services provided by an Advocate to a
Company.
·
Goods Transport Agency (GTA) services (subject
to conditions).
·
Import of services.
Features of RCM
- Tax
paid under RCM is treated as Input Tax in the hands of the
recipient.
- ITC
of such tax can be availed subject to conditions under Sections 16 and 17.
Exam Point
Reverse Charge Mechanism means the liability to pay tax
by the recipient of goods or services instead of the supplier.
Supplier – Section 2(105) of CGST Act
1. Person Supplying Goods or Services
The person who supplies goods or services or both is called
the Supplier.
2. Agent of Supplier
An agent acting on behalf of the supplier is also
treated as a Supplier.
3. Organiser of Specified Actionable Claims
The organiser of specified actionable claims such as:
- Lottery
- Betting
- Gambling
- Online
Money Gaming
- Casino
- Horse
Racing
is also regarded as the Supplier.
Examples
Supplier
- Manufacturer
selling goods.
- Consultant
rendering services.
- Agent
selling goods on behalf of principal.
- Lottery
organiser.
Features of Suppliers
- The
term "Supplier" includes both the actual supplier and his agent.
- In
case of specified actionable claims, the organiser is deemed to be the
supplier under GST.
Difference between Supplier and Recipient
|
Basis |
Supplier |
Recipient |
|
Role |
Provides
goods/services |
Receives
goods/services |
|
Consideration |
Receives
consideration |
Pays
consideration |
|
Agent
Included |
Yes |
Yes |
|
Under RCM |
Not liable to
pay tax |
Liable to pay
tax |
- Provider of Goods/Services
- Agent of Supplier
- Organiser of Lottery/Betting/Gambling
Tax Period – Section 2(106) of CGST Act
A Tax Period means the period for which a return
is required to be furnished under the CGST Act.
In simple words: Tax Period = Return Filing Period
Examples
Monthly Tax Period
- For
regular taxpayers filing monthly returns:
- April
2026
- May
2026
- June
2026
Each month is a separate Tax Period.
Quarterly Tax Period
- For
taxpayers under the QRMP Scheme:
- April
– June
- July
– September
- October
– December
- January
– March
Each quarter constitutes a separate Tax Period.
Final Return
In case of cancellation of registration, the period for
which GSTR-10 is required to be filed is also a Tax Period.
- The
Tax Period may be monthly, quarterly, or any other period
prescribed under the GST law.
- Tax
liability, Input Tax Credit (ITC), and return filing are determined with
reference to the Tax Period.
Examples of Tax Period and Return
|
Tax Period |
Return |
|
Monthly |
GSTR-3B |
|
Quarterly |
GSTR-3B
(QRMP) |
|
Financial
Year |
GSTR-9
(Annual Return) |
|
Upon
Cancellation |
GSTR-10
(Final Return) |
- Monthly
- Quarterly
- Annual
- Final Return Period
Turnover in a State – Section 2(112) of CGST Act
Turnover in a State means the aggregate value of all
outward supplies made from a particular State or Union Territory,
excluding GST and Compensation Cess.
It is computed in the same manner as Aggregate Turnover,
but the geographical area is restricted to a particular State/UT.
Includes
·
Taxable Supplies
·
Exempt Supplies
·
Exports
·
Inter-State Supplies originating from that State
·
Supplies under forward charge and reverse charge
Excludes
·
Inward Supplies
·
GST and Compensation Cess
Example
Mr. A has business premises in UP and MP.
Sale from UP Premises
|
Supply |
Amount |
|
UP → UP |
₹5 Lakhs |
|
UP → Haryana |
₹6 Lakhs |
|
Turnover
in UP |
₹11 Lakhs |
Sale from MP Premises
|
Supply |
Amount |
|
MP → MP |
₹7 Lakhs |
|
MP →
Rajasthan |
₹8 Lakhs |
|
Turnover
in MP |
₹15 Lakhs |
Aggregate Turnover (All India)
= ₹11 Lakhs + ₹15 Lakhs
= ₹26 Lakhs
Turnover in a State is
calculated separately for each State or UT. It is used for determining certain thresholds
and State-wise GST compliance. Unlike
Aggregate Turnover, it is not computed on an all-India basis.
Difference between Aggregate Turnover and Turnover in a State
|
Basis |
Aggregate Turnover |
Turnover in a State |
|
Geographical
Area |
Entire India |
One State/UT |
|
PAN Basis |
All
registrations under same PAN |
Specific
State/UT |
|
Includes |
All outward
supplies |
Outward
supplies from that State |
|
GST &
Compensation Cess |
Excluded |
Excluded |
- Aggregate Turnover = All India
- Turnover in a State = One State Only
Valid Return – Section 2(117) of CGST Act
A Valid Return means a
return furnished under Section 39 (such as GSTR-3B) on which
self-assessed tax has been paid in full.
In simple words: A return is
treated as a Valid Return only when it is filed along with full payment of
self-assessed tax.
Essential Conditions
1. Return should be furnished
·
Example: GSTR-3B
2. Full payment of self-assessed tax
·
The entire tax liability declared in the return
should be discharged.
Only then will the return be regarded as a Valid Return.
Examples
Valid Return
- Tax
liability as per GSTR-3B = ₹1,50,000
- Entire
₹1,50,000 is paid
- Return
filed successfully
GSTR-3B is a Valid Return.
Not a Valid Return
- Tax
liability = ₹1,50,000
- Only
₹1,00,000 paid
- Return
furnished without paying the balance
Return is not a Valid Return.
Availability of Input Tax Credit
to recipients is linked to the supplier furnishing a valid return. Mere filing of return is not sufficient; full
payment of self-assessed tax is essential.
Difference between Return and Valid Return
|
Basis |
Return |
Valid Return |
|
Filing of
Return |
Yes |
Yes |
|
Full Payment
of Self-Assessed Tax |
Not Necessary |
Mandatory |
|
Recognized
under GST |
General
Return |
Return with
full tax payment |
|
Example |
GSTR-3B filed
without tax payment |
GSTR-3B filed
with complete tax payment |
- Valid Return = Return + Full Tax Payment
- No Full Tax Payment = No Valid Return.
Online Gaming – Section 2 of CGST Act
Online Gaming includes:
- Online
Money Gaming, and
- Any
other kind of game played over the Internet.
Types of Online Gaming
1. Online Money Gaming
- Involves
money or money's worth.
- It
is treated as a Specified Actionable Claim.
- Therefore,
it is classified as Goods under GST.
Examples:
·
Online Rummy for stakes
·
Fantasy Sports involving money
·
Online Poker with entry fees
2. Other Online Games
- Games
played on the internet without involving money or actionable claims.
- Such
activities are treated as Services under GST.
Examples:
·
Online Chess
·
Video Games
·
Mobile Gaming Apps
Online Money Gaming is a Specified
Actionable Claim and hence classified as Goods. Other online gaming activities are treated as Services.
GST treatment depends on whether the
game involves money or stakes.
Difference between Online Money Gaming and Other Online Gaming
|
Basis |
Online Money Gaming |
Other Online Gaming |
|
Nature |
Specified
Actionable Claim |
Service |
|
Classification |
Goods |
Services |
|
Involves
Money |
Yes |
May or may
not |
|
Examples |
Poker,
Fantasy Sports |
Chess, Video
Games |
- Money Game = Goods
- Fun Game = Services
Online Money Gaming – Section 2(80B) of CGST Act
Online Money Gaming means an online game in which
players pay or deposit money or money's worth (such as cryptocurrency,
virtual digital assets, chips, tokens, etc.) in the expectation of winning
money or money's worth, whether such game is permissible by law or not.
Essential Conditions
1. It should be an Online Game
·
Played over the internet or electronic network.
2. Players Pay or Deposit Money or Money's Worth
·
Cash
·
Cryptocurrency
·
Virtual Digital Assets
·
Tokens or chips having monetary value
3. Expectation of Winning
·
Players participate with the expectation of
winning money or money's worth.
4. Legality is Irrelevant
·
Whether the game is legal or illegal, it will
still be treated as Online Money Gaming under GST.
Examples
·
Online Poker involving stakes.
·
Fantasy Sports with entry fees.
·
Online Rummy played for money.
·
Games involving cryptocurrency deposits.
Online Money Gaming is a Specified
Actionable Claim. Therefore, it is
classified as Goods under GST. The
organiser/platform is treated as the Supplier. The legality of the game does not affect its
taxability.
Difference between Online Money Gaming and Other Online Games
|
Basis |
Online Money Gaming |
Other Online Games |
|
Money
Involved |
Yes |
Not necessary |
|
Expectation
of Winning |
Yes |
Not essential |
|
Classification |
Goods
(Specified Actionable Claim) |
Services |
|
GST Treatment |
Taxable as
Goods |
Taxable as
Services |
|
Legality
Relevant |
No |
Not Relevant |
- Money In
- Win Expected
- Legal or Illegal – Doesn't Matter
- Classified as Goods (Specified Actionable Claim)
Specified Actionable Claims – Section 2(102A) of CGST Act
Specified Actionable Claims are those actionable
claims which are specifically notified and treated as Goods under GST.
They include:
1. Betting, Gambling and Lottery
·
Betting
·
Gambling
·
Lottery
2. Online Money Gaming
·
Games involving money or money's worth played
over the internet.
3. Casino and Horse Racing
·
Casino activities
·
Horse Racing
Classification under GST
Specified Actionable Claims are treated as Goods.
Normally, actionable claims are neither goods nor services.
However, the following are exceptions and are taxable as goods:
- Lottery
- Betting
- Gambling
- Online
Money Gaming
- Casino
- Horse
Racing
Examples
·
Lottery Tickets
·
Online Rummy involving stakes
·
Fantasy Sports involving money
·
Casino Games
·
Horse Race Betting
Specified Actionable Claims are
exceptions to the general rule regarding actionable claims. The organiser of such activities is regarded
as the Supplier under GST. These
activities are treated as supply of goods and are taxable accordingly.
Difference between Actionable Claims and Specified Actionable Claims
|
Basis |
General Actionable Claims |
Specified Actionable Claims |
|
GST
Classification |
Neither Goods
nor Services |
Goods |
|
GST
Applicable |
No |
Yes |
|
Examples |
Unsecured
Debts, Pending Litigation |
Lottery,
Betting, Gambling |
|
Online Money
Gaming |
No |
Included |
- B – Betting
- G – Gambling
- L – Lottery
- O – Online Money Gaming
- C – Casino
- H – Horse Racing All are Specified Actionable Claims and treated as Goods.
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