NAME – Ayan Akhtar

ROLL NO. - 103

COURSE - TYBMS
DIVISION - A
SUBJECT – Indirect taxes
TOPIC – Retail
MODULE 1: Introduction to Indirect Taxation and GST
Taxes are mandatory financial charges or levies imposed by a government on
individuals, organizations, or businesses to fund government activities and
public services. Taxes are typically collected to finance public expenditures such
as infrastructure, education, healthcare, defense, and welfare programs.
There are various types of taxes, each with different purposes and methods of
collection. They can be broadly categorized into two groups:
1. Direct Taxes
2. Indirect Taxes
Taxes are levied as they serve as the primary source of revenue for the
Government. This revenue is utilized for essential public services, including
defense, education, healthcare, and infrastructure development such as roads
and dams.
Taxes play a crucial role in the economy as they provide governments with the
revenue needed to maintain public services and fulfill other financial
obligations. The amount of tax levied often depends on various factors such as
income levels, consumption, and property ownership.
Types of Taxes:
1. Direct Tax A direct tax is imposed on individuals' income or profits. For
example, income tax, personal property tax, and fringe benefit tax (FBT).
The tax burden falls on the individual who pays the tax, and it cannot be
transferred to someone else. Direct taxes are administered by the
Central Board of Direct Taxes (CBDT).
2. Indirect Tax In contrast, an indirect tax is applied to goods and services,
and its burden can be passed from one individual to another. For
example, wholesalers may pass the tax onto retailers, and retailers in
turn pass it onto customers. Thus, the consumers bear the burden of
indirect taxes. The Central Board of Indirect Taxes and Customs (CBIC)
manages indirect taxes.
Historically, indirect taxes meant paying more than the actual price of a product
or service due to additional taxes imposed by the government.
The main difference between direct and indirect taxes lies in who bears the
burden of the tax and how it is paid.
 • Direct Taxes are taxes that are paid directly by the individual or entity on
whom they are levied. The burden of the tax cannot be shifted to anyone
else. These taxes are typically related to income or wealth. For example,
Income Tax, Wealth Tax, and Corporate Tax are direct taxes. The
individual or business paying the tax is responsible for it, and they
cannot pass it on to someone else.
• Indirect Taxes, on the other hand, are taxes that are levied on goods and
services. While the tax is paid by one person, such as a business, the
burden of the tax can be passed on to the consumer or another person.
For instance, the Goods and Services Tax (GST), Excise Duty, and VAT are
indirect taxes. Businesses collect these taxes from consumers when they
sell products or services, and the consumers end up bearing the cost of
the tax.
In summary:
• Direct Taxes: Paid directly by the individual or entity to the government
(e.g., Income Tax).
• Indirect Taxes: Paid by one individual or entity but the burden is passed
on to others, typically consumers (e.g., GST).
Determining Whether a Tax is Direct or Indirect:
• Direct Tax: The burden cannot be transferred. For example, income tax is
a direct tax because both the incidence and the impact fall on the same
individual.
• Indirect Tax: The burden can be shifted. For example, GST is an indirect
tax, as the burden is passed on from one individual to another.
Advantages of Direct Taxes:
Direct taxes have distinct advantages:
• Equitable: The burden of direct taxes cannot be shifted, allowing for fair
distribution. Lower-income individuals can be exempted from such taxes,
unlike commodity taxes that affect both rich and poor equally.
• Economical: The cost of collecting direct taxes is lower. These taxes are
often collected "at source" (e.g., income tax deducted from salary).
 • Certain: Both the taxpayer and the authorities are aware of the amount
due and when it is due, reducing the chances of corruption.
• Elastic: In emergencies, direct taxes like income tax or inheritance taxes
can be increased to generate more revenue.
Disadvantages of Direct Taxes:
Direct taxes also have certain drawbacks:
• Inconvenient: The lump sum nature of direct taxes can cause discomfort
to the taxpayer.
• Evadable: People can evade direct taxes by submitting false returns,
leading to tax evasion.
• Arbitrary: Tax rates are often set arbitrarily, which may result in unfair
burdens.
• Disincentive: High taxes may discourage savings and investment,
affecting the economy negatively.
Advantages of Indirect Taxes:
Indirect taxes have the following merits:
• Accessibility to the Poor: Indirect taxes can reach individuals who are
exempt from direct taxes. Even the poor contribute, albeit minimally.
• Convenience: Indirect taxes are paid in small amounts and are often
hidden in the price of goods, making them less noticeable to taxpayers.
• Broad-based: Indirect taxes can be applied across a wide range of goods
and services, ensuring broader coverage.
• Easy Collection: They are automatically collected when goods are bought
and sold.
• Non-evadable: As these taxes are included in the price, they are harder
to avoid unless the product is not purchased.
Disadvantages of Indirect Taxes:
However, indirect taxes come with certain disadvantages:
 • Regressive: They tend to disproportionately affect lower-income
individuals since the tax is the same for all consumers, regardless of their
income.
• Uncertain Revenue: The revenue from indirect taxes may fluctuate,
particularly with goods that have elastic demand.
• Price Inflation: Indirect taxes can cause prices to rise beyond the actual
tax rate, as middlemen may add their own margins.
• Uneconomical: The administration and collection of indirect taxes can be
costly and require extensive staff.
• Lack of Civic Consciousness: Taxpayers may not always be aware they
are paying indirect taxes, as they are hidden in the price.
Sources and Authority of Taxes in India (Art 246 of the Indian Constitution):
The Indian Constitution supports centralization within a federal framework,
empowering the central government to maintain national unity and integrity. It
divides legislative powers into three categories:
• Exclusive Powers for the Centre: These include areas where only the
central government can legislate, such as national taxation laws.
• Exclusive Powers for the States: The states have exclusive legislative
power over areas designated in the State List (List II in the Seventh
Schedule).
• Concurrent Powers: Both the Centre and States can legislate on items in
the Concurrent List (List III), though taxation is not included in this list.
Introduction to GST:
GST (Goods and Services Tax) is an indirect tax that replaced various other
indirect taxes in India, such as excise duty, VAT, and service tax. The Goods and
Services Tax Act was passed by Parliament on 29th March 2017 and came into
effect on 1st July 2017. GST aims to simplify the taxation process by creating a
unified tax system across the country, helping businesses operate more
efficiently.
GST (Goods and Services Tax) is a comprehensive, multi-stage, destination-
based tax levied on the supply of goods and services in India. It was introduced
on July 1, 2017, as a way to simplify and streamline the indirect tax structure,
replacing several previous taxes such as VAT, service tax, excise duty, and
others.
Under GST, businesses and individuals pay tax on the value added at each stage
of the supply chain, and the tax is collected at the point of consumption (i.e.,
the final sale). It operates under a single tax structure, where taxes are levied
by both the central and state governments.
GST is categorized into three main components:
1. CGST (Central Goods and Services Tax) – Levied by the Central
Government on intra-state supplies (within the same state).
2. SGST (State Goods and Services Tax) – Levied by the State Government
on intra-state supplies.
3. IGST (Integrated Goods and Services Tax) – Levied by the Central
Government on inter-state supplies (between different states or Union
Territories).
The main objectives of GST are:
• To create a unified tax structure across India.
• To eliminate the cascading effect of taxes (tax on tax).
• To improve compliance and reduce tax evasion.
• To ensure ease of doing business by providing a transparent tax system.
GST also includes provisions for claiming input tax credit (ITC), which allows
businesses to offset the tax paid on inputs (raw materials, services) against
their output tax liability, reducing the overall tax burden.
Concept and Benefits of GST
GST (Goods and Services Tax) is a value-added tax levied on the supply of goods
and services, including the manufacture, sale, and provision of services. Unlike
traditional tax systems, GST eliminates the issue of tax-on-tax or cascading
taxes. Under the GST system, only the value added at each stage of production
or service delivery is taxed, and there is no taxation of tax. This contributes to
the creation of a unified national market, which boosts the Make in India
initiative, fosters increased investment and employment, facilitates ease of
doing business, and ensures certainty in tax administration.
Power to Tax under GST
Article 246A of the Indian Constitution, introduced by the 101st Constitutional
Amendment Act, 2016, grants concurrent powers to both the central and state
governments to legislate on matters related to GST. This allows both
governments to make laws regarding GST, but there are some limitations:
• The central government holds exclusive power to legislate on inter-state
trade or commerce.
• State governments have the power to legislate on intra-state trade or
commerce.
This division ensures that both the central and state governments have the
authority to regulate GST efficiently.
Legislative Powers of the Central Government
The central government has the exclusive authority to legislate on inter-state
trade or commerce under Article 246A. This includes the levy and collection of
GST on goods and services exchanged across state borders. The central
government also administers GST for inter-state transactions and has the
power to levy Integrated Goods and Services Tax (IGST), a combination of CGST
and SGST, on such transactions. The central government determines the place
of supply and prescribes how IGST will be shared between the central and state
governments.
Legislative Powers of the State Governments
State governments, under Article 246A, can legislate on intra-state trade or
commerce. They are responsible for levying and collecting SGST on transactions
occurring within their state boundaries. State governments can also set the
threshold for GST registration, subject to central government regulations,
which allows them to tailor GST compliance to their local conditions.
Harmonious Coexistence of Central and State Laws
Article 246A ensures a balanced coexistence of central and state laws
concerning GST. It allows for the concurrent exercise of legislative powers while
maintaining distinct roles for both levels of government.
Benefits of GST
GST is a single tax on the supply of goods and services, which streamlines India
into one unified national market. Here are some key benefits of GST:
1. Ease of Compliance: With a robust IT infrastructure, GST enables online
services such as registrations, returns, and payments, simplifying
compliance for taxpayers and enhancing transparency.
2. Uniformity of Tax Rates and Structures: GST ensures a uniform tax
structure across India, making business operations tax-neutral,
regardless of location.
3. Elimination of Cascading Taxes: The seamless tax credit system across
the value chain reduces the cascading effect of taxes, minimizing hidden
business costs.
4. Enhanced Competitiveness: By reducing transaction costs, GST makes
Indian businesses more competitive. The World Bank identifies GST and
the dismantling of inter-state check-posts as key reforms that will
improve India's manufacturing sector.
5. Benefits to Manufacturers and Exporters: GST, by subsuming various
central and state taxes and providing input credit, lowers the cost of
goods and services, boosting competitiveness in global markets and
increasing exports.
6. Simplicity in Administration: GST replaces multiple taxes with a
streamlined system, making it easier for businesses to manage
compliance and for authorities to administer.
Conceptual Framework - CGST, IGST, SGST, UTGST
GST in India includes multiple components, each serving a specific purpose in
the taxation system:
• CGST (Central Goods and Services Tax): Levied by the central
government on intra-state supplies of goods and services.
• IGST (Integrated Goods and Services Tax): Levied by the central
government on inter-state supplies of goods and services. IGST combines
CGST and SGST/UTGST and is designed to standardize taxation across
states for inter-state transactions.
• SGST (State Goods and Services Tax): Levied by the state governments
on intra-state supplies. The rate of SGST is equal to the CGST rate.
 • UTGST (Union Territory Goods and Services Tax): Levied by the Union
Territory governments on intra-Union Territory supplies of goods and
services. UTGST applies in Union Territories that do not have their own
legislature (e.g., Andaman and Nicobar Islands, Chandigarh, Dadra and
Nagar Haveli, Lakshadweep).
Detailed Breakdown of Taxes
• CGST: Levied by the central government on transactions within a state. It
replaces various central taxes like excise duty, service tax, customs
duties, etc.
• IGST: Levied on inter-state transactions and imports/exports. It simplifies
tax collection for goods and services traded across state borders.
• SGST: Levied by state governments on intra-state transactions, applying
at the same rates as CGST.
• UTGST: Similar to SGST, but levied by Union Territories without their own
legislative assembly. It applies to intra-Union Territory transactions and
works in conjunction with CGST.
This framework ensures that GST is effectively applied, with a clear distinction
of responsibilities and taxes between central and state authorities.
Imports of Goods or Services: Overview
The import of goods or services involves the acquisition and entry of goods or
services from foreign suppliers into a country for consumption, use, or resale.
1. Definition and Scope
o Goods: Tangible items transported into a country through trade
channels.
o Services: Intangible activities provided by non-residents to
residents (e.g., consultancy, software development, maintenance
services).
2. Regulatory Framework
o Governed by international trade laws, customs regulations, and
taxation systems of the importing country.
 o Compliance with import laws, licensing requirements, and
restrictions on prohibited or restricted goods is mandatory.
3. Taxation and Duties
o Customs Duties: Tariffs on imported goods designed to protect
domestic industries or generate revenue.
o GST/VAT: Applied to the value of imported goods/services in many
regions.
o Other Charges: Anti-dumping duties, safeguard duties, or
additional levies may apply based on trade policies.
4. Documentation Requirements
o Goods: Bill of Entry, Commercial Invoice, Packing List, Bill of
Lading/Airway Bill, Certificate of Origin (if applicable).
o Services: Agreement/Contract, Invoice or Payment Advice, Proof
of Service Rendered.
5. Economic Implications
o Positive Impacts: Access to advanced technology, competitive
pricing, and broader product availability.
o Challenges: Trade deficits, reliance on foreign suppliers, and
potential harm to local industries.
6. Trade Agreements and Policies
o Importers may benefit from Free Trade Agreements (FTAs),
reducing or eliminating tariffs on specific goods or services.
o Sanctions or trade restrictions on certain countries can affect
import practices.
7. Compliance and Penalties
o Failure to comply with import regulations may result in penalties,
confiscation of goods, or legal actions.
8. Recent Trends
o Digital services and technology imports are on the rise.
 o Green trade policies influence the importation of sustainable
goods and services.

Exports of Goods or Services and GST

1. Exports of Goods or Services:
o Exports involve selling goods or providing services to foreign
buyers outside the domestic territory.
o Goods: Tangible products shipped internationally.
o Services: Intangible services delivered to foreign clients (e.g., IT
services, consultancy, financial services).
2. Key Features of Exports under GST:
o Zero-Rated Supply: Exports are classified as zero-rated under GST,
meaning:
▪ No GST is applied to export transactions.
▪ Input Tax Credit (ITC) can be claimed for inputs used in the
production of exported goods or services.
o Exporters can:
1. Export without paying IGST and claim a refund of ITC.
2. Pay IGST on exports and claim a refund of the IGST paid.
3. Taxation and Compliance:
o Export transactions must comply with:
▪ Proper documentation: Shipping bill, bill of export, invoice,
and export agreement.
▪ Adherence to the Foreign Trade Policy (FTP).
▪ Filing GST returns and refund claims, if applicable.

Taxes Subsumed Under GST

GST consolidated various indirect taxes into a single structure. Below is a
breakdown:
Taxes Subsumed Under GST:
• Central Taxes:
o Central Excise Duty
o Service Tax
o Additional Excise Duties
o Countervailing Duty (CVD)
o Special Additional Duty (SAD)
• State Taxes:
o Value Added Tax (VAT)/Sales Tax
o Central Sales Tax (CST)
o Entry Tax
o Luxury Tax
o Entertainment Tax (except levied by local bodies)
o Purchase Tax
o Taxes on advertisements
Taxes Not Subsumed Under GST:
• Customs Duty: Imposed on the import/export of goods.
• Export Duty: Specific to certain goods for export (not covered by GST).
• Stamp Duty: Levied on legal documents.
• Road and Passenger Taxes: Imposed by states.
• Taxes on Petroleum Products: Excise and VAT on crude oil, petrol, diesel,
ATF, and natural gas.
• Taxes on Alcohol for Human Consumption: Excluded from GST.

Economic Implications of Export Zero-Rating

 • Encourages global competitiveness by lowering costs for exporters.
• Boosts foreign exchange earnings and fosters domestic industry growth.

Definitions under the CGST Act and SCRA Act:

1. Goods (Section 2(52) of the CGST Act):
o "Goods" means any kind of movable property, excluding money
and securities, but including actionable claims, growing crops,
grass, and items attached to or forming part of the land, which can
be severed.
2. Services (Section 2(102) of the CGST Act):
o "Services" refer to anything other than goods, money, or
securities. It includes activities related to the use or conversion of
money for a consideration.
3. Money (Section 2(75) of the CGST Act):
o "Money" includes legal tender (Indian currency), foreign currency,
cheques, promissory notes, and similar instruments.
o Excludes: Virtual currencies and cryptocurrencies.
4. Securities (Section 2(101) of the Securities Contracts (Regulation) Act,
1956):
o "Securities" include shares, bonds, debentures, derivatives, and
other marketable securities of a like nature.
5. India (Section 2(56) of the CGST Act):
o "India" refers to the territory of India as per Article 1 of the
Constitution, including territorial waters, seabed, subsoil,
continental shelf, Exclusive Economic Zone (EEZ), and airspace.
6. Persons (Section 2(84) of the CGST Act):
o "Person" includes individuals, Hindu Undivided Families (HUFs),
companies, firms, LLPs, trusts, associations, or government bodies,
as well as artificial juridical persons.
7. Taxable Person (Section 2(107) of the CGST Act):
 o A "Taxable Person" is anyone registered or liable to be registered
under GST, engaging in business in India (with exceptions for
agriculturists and persons below the registration threshold).
8. Business (Section 2(17) of the CGST Act):
o "Business" includes trade, commerce, manufacture, and similar
activities, whether for profit or not, and activities incidental to
such trade.
9. Consideration (Section 2(31) of the CGST Act):
o "Consideration" includes payment in cash, kind, or any act in
response to the supply of goods or services (excluding government
subsidies).
10. E-Commerce Operator (Section 2(45) of the CGST Act):
• An "E-Commerce Operator" is anyone who owns, operates, or manages a
platform facilitating the supply of goods or services.
11. Supplier (Section 2(105) of the CGST Act):
• A "Supplier" means any person supplying goods, services, or both,
including agents acting on behalf of such persons.
12. Recipient (Section 2(93) of the CGST Act):
• A "Recipient" is the person receiving goods, services, or both. If no
payment is made, it refers to the person to whom goods are delivered or
services are rendered.

Levy and Collection of GST

1. Overview of GST Levy and Collection: GST is an indirect, destination-
based tax applicable to the supply of goods and services across India. It is
categorized into four components: CGST, SGST, IGST, and UTGST.
1.1 Levy and Collection of CGST (Section 9 of the CGST Act):
• Applicability: CGST is imposed on intra-state supplies of goods and
services.
• Rate: Determined by the GST Council.
 • Liability: Typically paid by the supplier, except in cases of reverse charge
or certain e-commerce transactions.
1.2 Levy and Collection of IGST (Section 5 of the IGST Act):
• Applicability: Applies to inter-state supplies, including imports.
• Rate: Combined CGST and SGST/UTGST rates.
• Special Provision: Exports are zero-rated.
1.3 Levy and Collection of SGST (Section 9 of State GST Acts):
• Applicability: SGST is levied alongside CGST on intra-state supplies.
• Rate: Shared equally with CGST.
1.4 Levy and Collection of UTGST (Section 7 of the UTGST Act):
• Applicability: Applies to intra-Union Territory supplies (excluding Delhi
and Puducherry).
• Rate: Shared equally with CGST.
2. Composition Scheme (Section 10 of the CGST Act):
o Objective: Simplifies tax compliance for small businesses.
o Eligibility: Businesses with annual turnover up to ₹1.5 crore (₹75
lakh for specific states).
o Tax Rates:
▪ Manufacturers: 1% of turnover.
▪ Restaurants: 5% of turnover.
▪ Special service providers: 6%.
o Features: Simplified quarterly returns, no Input Tax Credit (ITC).
3. Power to Grant Exemptions (Section 11 of the CGST Act):
o Authority: The government may grant exemptions upon
recommendations from the GST Council.
4. GST Rate Schedule:
o 0% (Exempt): Essential items (e.g., unprocessed food, education,
healthcare).
 o 5%: Packaged food, small restaurants, affordable housing.
o 12%: Processed food, household goods, transportation.
o 18%: Standard goods and services (e.g., IT, furniture).
o 28%: Luxury items (e.g., cars, sin goods).

SUMS
1. Goods and Services Tax (GST) Levy
GST is levied on the supply of goods and services. Let's calculate GST on a sale.
Formula:
GST = GST Rate x Value of Supply
Example:
Consider a sale of goods worth $50,000, and the GST rate is 18%. The tax would
be 18%
GST = 100 × 50, 000 = 79, 000
Thus, the total invoice would be $50,000 + 79,000 = 759,000.
2. Collection of Sales Tax (VAT)
Sales tax or VAT (Value Added Tax) is charged on the sale of goods. The tax rate
is based on the type of goods being sold.
Formula:
Sales Tax = Sale Price x Sales Tax Rate
Example:
Let's say a retailer sells an item worth $10,000, and the sales tax rate is 12%.
The sales tax collected would be :
Sales Tax = 100 × 10, 000 = 21, 200
Thus, the total price paid by the consumer will be 10,000 + 71,200 = 711,200.
MODULE 2: Concept of Supply
In the context of Goods and Services Tax (GST), the concept of supply refers to
the exchange of goods or services for a consideration, whether monetary or
otherwise. It forms the basis for tax liability under GST. A supply could include
the sale of goods, the provision of services, or the transfer of property. It also
includes the transfer or exchange of goods or services without consideration,
such as in cases of barter or gifts.
Supply is the event that triggers the GST liability, and it is considered to have
occurred when goods or services are transferred, made available, or agreed to
be transferred. The determination of whether a transaction qualifies as a
supply is essential because GST is levied only on supplies that meet specific
criteria, such as taxable supplies. It includes both interstate and intrastate
transactions, exports, and services provided in exchange for consideration.
The concept of supply in GST also includes deemed supplies, where certain
transactions are treated as supplies even though they may not involve an
actual transfer of goods or services. For instance, the movement of goods
between different branches of the same business is considered a supply under
certain conditions.
In essence, supply encompasses all forms of transactions involving goods or
services, whether or not a payment is made at the time of the transaction. It is
the foundation on which GST is levied and the starting point for determining
tax obligations.
Key Concepts under GST
1. Taxable Event: Supply
Meaning and Scope of Supply (Section 7 of the CGST Act):
o Section 7(1): Defines supply to include:
▪ All forms of supply (sale, transfer, barter, exchange, license,
rental, lease, disposal) made for consideration in the course
or furtherance of business.
▪ Import of services for consideration, whether for business
or personal use.
▪ Specified activities listed in Schedule I, even if made without
consideration.
 o Section 7(2): Excludes activities or transactions specified in
Schedule III (not considered as supply).
o Section 7(3): Allows the government to notify specific transactions
as supply of goods, services, or neither.
Schedules Defining Supply:
4. Schedule I: Activities treated as supply even without consideration, such
as:
▪ Permanent transfer of business assets.
▪ Supply between related parties or distinct persons.
▪ Principal-agent supplies.
5. Schedule II: Classification of supplies as goods or services, for example:
▪ Renting of immovable property: Service.
▪ Transfer of goods ownership: Goods.
6. Schedule III: Activities not considered as supply, such as:
▪ Services by an employee to the employer.
▪ Transactions in money or securities.
Composite and Mixed Supplies (Section 8 of CGST Act):
o Composite Supply: Two or more supplies that are naturally
bundled and supplied together (e.g., hotel accommodation with
breakfast). Taxed at the rate applicable to the principal supply.
o Mixed Supply: Two or more independent supplies combined but
not naturally bundled (e.g., a gift box of items). Taxed at the
highest rate among the supplied items.
2. Place of Supply of Goods
1. Domestic Transactions (Section 10 of the IGST Act):
▪ Movement of Goods: Place of supply is where the goods
are delivered to the recipient.
▪ No Movement of Goods: Place of supply is where the goods
are at the time of delivery.
 ▪ Goods Assembled/Installed: Place of supply is where the
installation or assembly occurs.
▪ Goods Supplied on Board a Conveyance: Place of supply is
the location where goods are taken on board.
2. Imports and Exports (Section 11 of the IGST Act):
▪ Imports: Place of supply is the location of the importer.
▪ Exports: Place of supply is outside India.
3. Place of Supply for Services
Domestic Transactions (Section 12 of the IGST Act):
o General Rule: Place of supply is the location of the service
recipient. If the recipient's location is unknown, the supplier's
location applies.
o Specific Cases:
▪ Immovable Property Services: Place of supply is where the
property is located.
▪ Restaurant and Catering Services: Place of supply is where
the service is performed.
▪ Training Services: Place of supply depends on whether the
recipient is a registered person (recipient's location) or not
(service location).
▪ Event-Related Services: Place of supply is where the event
occurs.
▪ Transportation of Goods: Place of supply is the recipient's
location if registered, otherwise where goods are handed
over.
Cross-Border Services (Section 13 of the IGST Act):
o General Rule: Place of supply is the recipient's location.
o Specific Cases:
▪ Performance-Based Services: Place of supply is where the
service is performed.
 ▪ Telecommunication Services: Depends on the service type
(e.g., billing address for postpaid, location of equipment for
prepaid).
▪ Online Information Database Access and Retrieval
(OIDAR): Place of supply is the recipient's location.
4. Special Provisions for OIDAR Services:
o Applicability: Covers digital services provided online without
human intervention, such as e-books or streaming.
o Tax Liability: Tax is paid by the supplier if the recipient is
unregistered in India.
5. Time of Supply
Normal Cases (Section 31 of the CGST Act):
o The time of supply is the earliest of the following:
▪ Date of issuance of the invoice (or the last date it should
have been issued).
▪ Date of receipt of payment (to the extent of payment
received).
▪ Date of completion of the supply (if no invoice is issued).
Reverse Charge Mechanism (RCM):
o The time of supply is the earlier of:
▪ Date of payment to the supplier.
▪ 31st day from the date of receipt of goods or invoice.
Continuous Supply of Goods:
o The time of supply is the earliest of:
▪ Date of issuance of successive invoices.
▪ Date of receipt of payment.
Goods Sent on Approval (Section 31(7)):
o The time of supply is the earlier of:
 ▪ Date of invoice issuance.
▪ Six months from the date of removal of goods.
Time of Supply for Services (Section 31):
o The time of supply is the earliest of:
▪ Date of issuance of the invoice (if issued within the
prescribed period).
▪ Date of receipt of payment.
▪ Date of provision of service (if no invoice is issued).
Reverse Charge Mechanism (RCM):
o The time of supply is the earlier of:
▪ Date of payment.
▪ 61st day from the date of the issue of the invoice.
Continuous Supply of Services:
o The time of supply is:
▪ Due date of payment as per the contract.
▪ Date of issuance of the invoice.
▪ Date of payment receipt (whichever is earlier).
6. Key Provisions for Issuance of Invoice
Goods (Section 31(1)):
o Normal Supply: Invoice should be issued before or at the time of
removal/delivery of goods.
o Continuous Supply: Invoice should be issued at agreed intervals.
Services (Section 31(2)):
o Invoice must be issued within 30 days (or 45 days for financial
institutions) from the date of supply completion.
7. Value of Supply
The provisions under GST (Section 15 of the CGST Act) determine the amount
on which tax is calculated. The value is generally based on the transaction
value, but specific rules and adjustments may apply.
1. Determination of Value of Supply (Section 15 of the CGST Act):
▪ Transaction Value: The value of supply is the price actually
paid or payable for the supply of goods or services when the
supplier and recipient are unrelated, and the price is the
sole consideration.
Inclusions in Value:
o Taxes, duties, and charges (except GST).
o Incidental expenses (e.g., packing, commission).
o Interest, late fees, or penalties for delayed payment.
o Subsidies directly linked to the price (excluding government
subsidies).
Exclusions from Value:
o Discounts:
▪ Pre-supply discounts are excluded if mentioned in the
invoice.
▪ Post-supply discounts are excluded if agreed upon before
the supply and credited to the recipient.
2. Special Valuation Rules:
▪ If the transaction value cannot be determined (e.g., related
parties, barter, exchange), the following rules apply:
1. Comparable Value: Value based on similar supplies.
2. Computed Value: Cost of production, profit, and
other expenses.
3. Residual Method: Reasonable means consistent with
GST principles.
3. Specific Cases:
 ▪ Free Supplies: Value includes free items if provided as part
of the consideration.
▪ Agent Transactions: Value includes supplies made through
an agent.
▪ Foreign Exchange Services: Special rules apply for
determining the value.
4. Valuation of Imports:
▪ For imported goods, the value includes the customs value
(CIF), along with applicable duties and charges.
SUMS
1. Place of Supply for Goods (Section 10 of the IGST Act)
Scenario 1: Inter-State Supply of Goods (Movement of Goods)
For inter-state supply, the place of supply is where the goods are delivered.
Example 1:
• Goods worth ₹1,00,000 are sold by a seller in Maharashtra to a buyer in
Gujarat. The goods are transported from Maharashtra to Gujarat.
• Place of Supply: Gujarat (where the goods are delivered).
Tax Levied:
• Since this is an inter-state supply, IGST will be charged.
GST Calculation:
• IGST = ₹1,00,000 × 18% = ₹18,000

Example 2: Time of Supply for Services

A consultancy firm provides services to a client for ₹50,000. The service was
provided on 10th June. The invoice was issued on 12th June, and the payment
was received on 20th June.
To determine the time of supply, compare the following:
• Date of completion of service: 10th June
• Date of invoice: 12th June
 • Date of payment: 20th June
Time of Supply: The earliest of these dates is 10th June (date of completion of
service). Therefore, the GST on this service is to be paid on 10th June
MODULE 3: Registration and Computation of GST
GST Registration.
GST registration is the process through which a person or business entity is
recognized as a taxable entity under the Goods and Services Tax (GST) law. The
purpose of registration is to establish the entity’s liability to collect and remit
GST to the government. Once registered, the entity is granted a GST
Identification Number (GSTIN), which is used for all dealings under the GST
system, including filing returns and claiming input tax credits.
A business is required to obtain GST registration if its turnover exceeds a
specified threshold limit, which can vary depending on the type of supply
(goods or services) and the state in which the business operates. Even if a
business's turnover is below the threshold limit, registration may still be
required in cases of inter-state supplies, e-commerce operators, casual taxable
persons, non-resident taxable persons, and agents acting on behalf of another
person.
The registration process generally involves submitting an application online
through the GST portal along with necessary documents such as proof of
identity, address, PAN, and business details. If the application is complete and
in compliance with the regulations, the authorities will issue a GSTIN.
Once registered, businesses are obligated to file regular returns, maintain
proper records, and comply with other GST provisions. Additionally, businesses
with GST registration can claim input tax credit on their purchases, thereby
reducing their overall tax liability.

1. Persons Liable for Registration (Section 22 of the CGST Act)

o Mandatory Registration: A person must obtain GST registration if
their aggregate turnover exceeds the prescribed threshold limit in
a financial year. These limits vary by state and type of supply,
typically around ₹20 lakhs for goods (₹10 lakhs for special category
states) and ₹20 lakhs for services.
o Other Cases: Registration is also required even if the turnover is
below the threshold in the following cases:
▪ Inter-state supplies.
 ▪ Casual taxable persons and non-resident taxable persons.
▪ E-commerce operators and suppliers.
▪ Persons making taxable supplies on behalf of others (e.g.,
agents).
2. Persons Not Liable for Registration
A person is not required to register if:
o Their aggregate turnover is below the prescribed threshold limit.
o They are involved in exempt supplies of goods and services.
o They belong to a specific category of persons exempt from
registration (e.g., agriculturalists).
o The GST Council may revise these limits and categories
periodically.
3. Procedure for Registration (Section 25 of the CGST Act)
o Application: Persons liable for registration must apply online
through the GST portal.
o Documents Required: PAN, Aadhaar (for individuals), business
proof (address proof, bank account details, etc.), and other
relevant documents.
o Time Limit: Registration must be completed within 30 days of
becoming liable to register.
o Grant of Registration: After verification, the authorities will grant
the applicant a GSTIN (GST Identification Number).
4. Deemed Registration (Section 26 of the CGST Act)
o If the GST authorities fail to process the registration application
within the prescribed 30-day period, the application is deemed to
be approved by default, and the applicant will be granted GST
registration automatically.
5. Special Provisions for Certain Categories (Section 27 of the CGST Act)
o Casual Taxable Person: Individuals occasionally engaging in
taxable supplies in a state where they do not have a fixed place of
 business must obtain GST registration, even if their turnover is
below the threshold.
o Non-Resident Taxable Person: Non-resident persons supplying
goods or services in India are required to register, regardless of
their turnover.
6. Amendment, Cancellation, and Revocation of Registration (Sections 28,
29, 31 of the CGST Act)
o Amendment of Registration (Section 28): A registered person
must notify the authorities within 15 days of any changes to their
business details, such as a change in business address or legal
name.
o Cancellation of Registration (Section 29):
▪ Mandatory Cancellation: Registration may be canceled if
the registered person no longer meets the conditions for
registration, such as non-filing of returns for a continuous
period or voluntary cessation of business.
▪ Voluntary Cancellation: A registered person may apply for
cancellation if they stop making taxable supplies or if their
turnover falls below the threshold.
o Revocation of Cancellation (Section 31): If a person’s registration
is canceled, they may apply for revocation within 30 days from the
cancellation date, provided the conditions for cancellation no
longer apply.
Here’s a summary of key aspects of GST registration:
1. Who Needs to Register:
o Businesses whose aggregate turnover exceeds the prescribed
threshold limit (e.g., ₹20 lakhs for goods and ₹20 lakhs for
services, with variations for special category states).
o Businesses making inter-state supplies, even if the turnover is
below the threshold.
o Casual taxable persons, non-resident taxable persons, e-commerce
operators, and agents must also register.
 o Certain exempt categories, like agriculturalists, do not need to
register if their turnover is below the threshold.
2. Procedure:
o Application for GST registration is done online via the GST portal.
o Necessary documents such as PAN, Aadhaar, business address
proof, and bank details are required for registration.
o GST registration should be completed within 30 days from the
date of becoming liable to register.
3. Deemed Registration:
o If the authorities fail to process the registration application within
the prescribed time, it is deemed to be approved, and the GSTIN is
granted.
4. Special Categories:
o Casual taxable persons and non-resident taxable persons must
register, irrespective of turnover.
5. Amendment, Cancellation, and Revocation:
o If business details change, the registered person must inform the
authorities within 15 days.
o GST registration can be cancelled if the business ceases operations
or fails to meet compliance requirements.
o Cancellation can be revoked within 30 days if the reasons for
cancellation no longer apply.
In conclusion, GST registration is essential for businesses exceeding the
prescribed turnover limits and those involved in inter-state trade or certain
specific activities. It ensures businesses comply with GST requirements and
claim input tax credits for taxes paid on inputs.

Computation of GST - Inter-State & Intra-State Supplies

The computation of GST varies based on whether the supply is inter-state
(between different states or union territories) or intra-state (within the same
state or union territory). The tax structure and GST liabilities differ according to
the type of supply.
1. Computation of GST for Intra-State Supplies
o Intra-State Supply refers to the supply of goods or services within
the same state or union territory.
o GST Components: For intra-state supplies, two types of GST are
applied:
▪ Central GST (CGST): Levied by the Central Government.
▪ State GST (SGST): Levied by the State Government (or Union
Territory GST – UTGST for Union Territories).
o GST Calculation:
▪ CGST = (GST Rate * Value of Supply) / 2
▪ SGST = (GST Rate * Value of Supply) / 2
o Rate: The GST rate for intra-state supplies is set by the GST
Council, typically 5%, 12%, 18%, or 28% based on the product or
service.
Example:
o For a supply of ₹1,000 with an 18% GST rate:
▪ CGST = ₹90
▪ SGST = ₹90
▪ Total GST = ₹180
2. Computation of GST for Inter-State Supplies
o Inter-State Supply refers to the supply of goods or services
between different states or union territories.
o GST Components: For inter-state supplies, Integrated GST (IGST) is
levied, which combines both CGST and SGST into one tax.
▪ IGST = GST Rate * Value of Supply
o Rate: The applicable GST rate for inter-state supplies is the same
as the intra-state rate (5%, 12%, 18%, or 28%).
Example:
o For a supply of ₹1,000 with an 18% GST rate:
▪ IGST = ₹180
▪ Total GST = ₹180
3. Computation of GST
o Input Tax Credit (ITC): Businesses can claim ITC to offset their
output tax liability, reducing the effective GST payable.
▪ For Intra-State Supplies, ITC for both CGST and SGST can be
claimed.
▪ For Inter-State Supplies, ITC for IGST can be claimed.
o Reverse Charge Mechanism (RCM): In certain cases, the recipient
of goods or services is liable to pay the GST directly (reverse
charge), which affects the tax computation.
4. Differences in Computation
o Intra-State Supplies: The tax is split between CGST and
SGST/UTGST.
o Inter-State Supplies: A single IGST is levied, which can be used to
offset both CGST and SGST liabilities.

Payment of Tax
The provisions under GST regulate the payment of tax liabilities, interest, and
other amounts by registered taxpayers, as well as the provisions related to TDS
(Tax Deducted at Source) and TCS (Tax Collected at Source).
1. Payment of Tax, Interest, and Other Amounts (Section 49 of the CGST
Act)
o Tax Payment:
▪ The taxpayer must pay GST in cash via the GST electronic
cash ledger.
▪ The payment order is CGST, SGST/UTGST, and IGST in that
sequence.
 ▪ ITC can be used to pay tax liabilities, but it must be used
within the same category (e.g., CGST ITC can only pay CGST).
o Payment Process:
▪ Electronic Ledger: Tax payments must be deposited via the
GST portal.
▪ Due Date: Timely filing of GST returns is required to avoid
penalties and interest.
o Other Amounts:
▪ Late fees apply for delayed returns.
▪ Penalties may be imposed for errors or misstatements in tax
filings.
2. Interest on Delayed Payment (Section 50 of the CGST Act)
o Interest for Late Payment: If tax is not paid by the due date,
interest is charged on the outstanding amount.
▪ Interest Rate: 18% per annum (subject to amendments).
▪ Period of Interest: Interest is charged from the day after the
due date until payment is made.
▪ Non-Refundable: Interest is still due even if the taxpayer
pays the tax before an assessment order is issued.
o Interest Calculation: Simple interest is calculated on the tax
amount due.
3. TDS (Tax Deducted at Source) (Section 51 of the CGST Act)
o TDS Applicability:
▪ Certain persons (e.g., government departments, local
authorities) must deduct tax at source while making
payments for supplies.
▪ The rate of deduction is 2% of the supply value (1% each for
CGST and SGST/UTGST, or 2% for IGST).
 o TDS Credit: The deducted amount is credited to the supplier’s
electronic cash ledger and can be used for paying their tax
liabilities.
o Who Needs to Deduct TDS: Specified persons, such as
government departments and local authorities, must deduct TDS
on payments made for goods or services.
4. TCS (Tax Collected at Source) (Section 52 of the CGST Act)
o TCS Applicability:
▪ E-commerce operators must collect tax at source (TCS) on
goods and services sold through their platform.
▪ The TCS rate is 1% of the transaction value (0.5% each for
CGST and SGST/UTGST or 1% for IGST).
o TCS Credit: The TCS collected is credited to the supplier's
electronic cash ledger and can be claimed during GST return filing.
o Who Needs to Collect TCS: E-commerce operators facilitating
transactions between suppliers and customers must collect TCS on
each transaction made through their platform.
MODULE 4
Filing of Returns
The documentation requirements under GST ensure transparency and enable
proper tracking of transactions. Key documents include tax invoices, credit and
debit notes, and electronic way bills.

1. Tax Invoices (Sections 31 and 32 of the CGST Act)

Issuance of Tax Invoice (Section 31)
• Purpose: A tax invoice is a legal document issued by the supplier to the
recipient, detailing the sale of goods or services.
• Time of Issuance:
o Goods: The invoice must be issued before or at the time of
removal of goods.
o Services: The invoice must be issued within 30 days from the date
of provision of service (45 days for financial institutions).
• Details Required:
o Name, address, and GSTIN of both the supplier and recipient
o Date of issue
o HSN/SAC code for goods/services
o Description, quantity, and value of goods/services
o Taxable value and GST amount
Bill of Supply (Section 31(3))
• If no tax is charged (for exempt supplies or under the composition
scheme), a bill of supply must be issued instead of a tax invoice.
Receipt Voucher/Payment Voucher (Section 31(3))
• For advance payments (before the supply is made), a receipt voucher
must be issued.
Special Conditions for Invoice (Section 32)
 • Export Supplies: There are special provisions for exports, including zero-
rated supply and exemptions from taxes.

2. Credit and Debit Notes (Section 34)

Credit Note (Section 34)
• Purpose: A credit note is issued by the supplier to the recipient to reduce
the taxable value and tax amount after the supply has been made. It is
typically issued in cases of:
o Return of goods
o Overcharging of GST
o Goods/services not received in full
• Details Required:
o Original invoice details
o Amount credited and reason for issuing the note
• Time Limit: The credit note must be issued within 1 year from the date
of the original supply.
Debit Note (Section 34)
• Purpose: A debit note is issued by the supplier when there is a need to
increase the taxable value or tax amount (e.g., undercharging or
additional goods/services supplied).
• Time Limit: Similar to a credit note, it must be issued within 1 year from
the relevant date.
• Effect on Returns: Both credit and debit notes impact the recipient’s
input tax credit (ITC) and must be reflected in their returns.

3. Electronic Way Bill (E-Way Bill)

Purpose:
An electronic way bill is a document that must accompany goods during transit.
It ensures that the goods are being transported legally and helps authorities
track their movement.
When is an E-Way Bill Required?
• Threshold Limit: An E-Way bill is required for goods worth ₹50,000 or
more being transported (both inter-state and intra-state).
• Applicable Transactions:
o Goods transported by road, rail, air, or sea
o Goods movement for reasons such as supply, sale, return, or
transfer
Issuance of E-Way Bill:
• It can be generated online through the GST portal. Details such as the
goods being transported, sender, recipient, and vehicle number must be
provided.
Validity and Duration:
• The E-Way bill is valid for a specific period based on the distance to be
covered during transit:
o Up to 100 km: Valid for 1 day
o For every additional 100 km: The validity period increases by 1 day
E-Way Bill for Inter-State and Intra-State Supply:
• Inter-State: Required for goods moving across state borders.
• Intra-State: Required for certain intra-state transactions if the value
exceeds ₹50,000.

Summary:
• Tax Invoices: Must be issued for all taxable supplies of goods or services,
detailing the tax amounts and other required information.
• Credit/Debit Notes: Used to adjust the taxable value and tax after the
supply, with a time limit of 1 year from the date of the original supply.
• Electronic Way Bill: Required for goods transportation valued over
₹50,000, to track the movement and ensure compliance.
Returns
1. Types of Returns
GSTR-1 (Details of Outward Supply):
• Purpose: Provides details of all outward supplies (sales of goods and
services) made by the taxpayer.
• Due Date: Typically due by the 10th of the following month.
• Contents:
o Sales transactions, tax liabilities, and recipient details
o Information on credit/debit notes, exports, and zero-rated
supplies
GSTR-2 (Details of Inward Supply):
• Purpose: Reports details of inward supplies (purchases).
• Due Date: Generally filed after GSTR-1 (no longer applicable post the
new return system).
• Contents:
o Information on purchases, Input Tax Credit (ITC), and other inward
supplies
GSTR-3 (Monthly Return for GST):
• Purpose: Comprehensive return to report both outward and inward
supplies.
• Due Date: Filed after GSTR-1 and GSTR-2 (now replaced by GSTR-3B).
GSTR-3B (Self-Assessment Return):
• Purpose: Simplified monthly return to self-assess GST liability and claim
input tax credit.
• Due Date: Typically due by the 20th of the following month.
• Contents:
o Summary of outward and inward supplies, tax liability, and input
credit claimed
GSTR-4 (Quarterly Return for Composition Scheme):
• Purpose: For taxpayers opting for the Composition Scheme under GST.
• Due Date: Filed quarterly.
• Contents: Reports supplies, tax payable, and tax paid under the
composition scheme
GSTR-5 (Return for Non-Resident Taxable Persons):
• Purpose: For non-resident taxable persons providing taxable goods or
services temporarily in India.
• Due Date: Filed monthly.
• Contents: Details of outward supplies, tax payable, and ITC
GSTR-6 (Return for Input Service Distributors):
• Purpose: For Input Service Distributors (ISDs) distributing ITC to their
branches or units.
• Due Date: Monthly.
• Contents: Details of ITC received, distributed, and carried forward
GSTR-7 (Return for TDS):
• Purpose: For persons liable to deduct TDS under GST (e.g., government
bodies).
• Due Date: Monthly.
• Contents: Details of TDS deductions, payments, and remittances
GSTR-8 (Return for E-commerce Operators - TCS):
• Purpose: For e-commerce operators collecting Tax Collected at Source
(TCS) from sellers.
• Due Date: Monthly.
• Contents: Details of TCS collected, GST payable, and remitted
GSTR-9 (Annual Return):
• Purpose: Filed annually by all regular taxpayers.
• Due Date: Due by 31st December following the end of the financial year.
 • Contents: Summarized details of outward and inward supplies, tax paid,
ITC availed, and discrepancies between monthly and annual returns
GSTR-10 (Final Return):
• Purpose: Filed by taxpayers ceasing to be registered under GST (e.g.,
business closure).
• Due Date: Within 3 months from the date of cancellation of registration.
• Contents: Final statement of tax liability, refunds, and ITC
GSTR-11 (Return for UIN):
• Purpose: Filed by persons with UIN (e.g., foreign diplomats, UN bodies).
• Due Date: Monthly.
• Contents: Details of inward supplies and claims for a refund of tax paid

2. Provisions Relating to Filing of Returns (Sections 37 to 48)

Section 37 (Furnishing of Details of Outward Supply):
• Taxpayers must file details of outward supplies via GSTR-1, including
sales value and tax details.
Section 38 (Furnishing of Details of Inward Supply):
• Inward supplies details must be filed via GSTR-2 (not applicable under
the new return system).
Section 39 (Filing of Returns):
• Mandates that taxpayers file monthly returns (GSTR-3B or GSTR-4, based
on taxpayer type). Returns must be filed online via the GST portal.
Section 40 (Tax to Be Paid):
• Ensures that tax is paid based on filed returns.
Section 41 (Interest and Penalties for Late Filing):
• Imposes interest and penalties for delayed filing.
Section 42 (Assessment of Returns):
• Allows authorities to verify returns to ensure tax compliance.
Section 43 (Audit of Returns):
• Provides for auditing of returns filed by businesses for accuracy and
compliance.
Section 44 (Annual Return):
• Specifies the requirement for annual returns (GSTR-9), summarizing
monthly returns for the financial year.
SUMS
Example 1: GSTR-1 Filing
A company, XYZ Pvt. Ltd., has made the following sales in a month:
• Sale of Goods to Mr. A (₹50,000) with GST of 18%.
• Sale of Services to Mr. B (₹30,000) with GST of 18%.
• Sale of Goods to Mr. C (₹70,000) with GST of 12%.
Determine the total value of outward supplies and the GST liability for XYZ Pvt.
Ltd.
Solution:
1. Sale to Mr. A:
o Sale Value: ₹50,000
o GST (18%): ₹50,000 × 18% = ₹9,000
o Total: ₹59,000
2. Sale to Mr. B:
o Sale Value: ₹30,000
o GST (18%): ₹30,000 × 18% = ₹5,400
o Total: ₹35,400
3. Sale to Mr. C:
o Sale Value: ₹70,000
o GST (12%): ₹70,000 × 12% = ₹8,400
o Total: ₹78,400
Total Outward Supplies:
• Total value of outward supplies = ₹59,000 + ₹35,400 + ₹78,400 =
₹1,72,800
GST Liability (Total):
• GST @ 18%: ₹9,000 + ₹5,400 = ₹14,400
• GST @ 12%: ₹8,400
Total GST Liability:
• ₹14,400 + ₹8,400 = ₹22,800
Thus, the total outward supply value is ₹1,72,800, and the total GST liability is
₹22,800.

Example 2: GSTR-9 Filing

XYZ Ltd. has the following data for the financial year:
• Total outward supply (sales) in the year: ₹15,00,000
• Total inward supply (purchases) in the year: ₹9,00,000
• Total GST paid on outward supply: ₹2,70,000
• Total GST paid on inward supply: ₹1,62,000
• ITC claimed on inward supply: ₹1,50,000
Determine the excess GST paid or refundable under GSTR-9.

Solution:
1. Total GST Paid on Outward Supply:
o ₹2,70,000
2. ITC Claimed on Inward Supply:
o ₹1,50,000
3. Total GST Paid on Inward Supply:
 o ₹1,62,000

Excess GST Paid/Refundable:

1. GST Liability (Net) = Total GST Paid on Outward Supply - ITC Claimed
o GST Liability (Net) = ₹2,70,000 - ₹1,50,000 = ₹1,20,000
2. Refundable/Excess Paid:
o Total GST Paid on Inward Supply - ITC Claimed = ₹1,62,000 -
₹1,50,000 = ₹12,000
Thus, ₹12,000 is refundable as excess GST paid on inward supply.
Automobile Industry.
Retail
 1. Introduction to Toyota in Retail

Overview of Toyota’s Retail Operations:

Toyota operates dealerships across India, offering passenger vehicles, spare parts,
and services.

Retail operations include vehicle sales, after-sales services, and accessory sales.

Importance of GST in Retail:

GST affects the final price of vehicles for consumers.

Uniform tax rates simplify interstate sales and dealership operations.

2. GST Rates Applicable in Toyota’s Retail Sector

Vehicles:

GST on passenger vehicles:

Small cars (<1500cc engine): 28% + 1% cess (petrol) or 3% cess (diesel).

SUVs/Luxury cars: 28% + 15% cess.

Electric Vehicles: 5% (promotional rate).

Spare Parts and Accessories:

Spare parts attract 28% GST.

Accessories and optional upgrades (like infotainment systems): 18-28%.

Services:

After-sales services, extended warranties, and repairs: 18% GST.

Vehicle insurance provided at retail outlets: GST on premium (18%).

 3. GST Compliance for Toyota’s Retail Operations

Key Compliance Areas:

Tax Invoice Management:

Dealers must issue GST-compliant invoices for all retail sales.

Return Filing:

Timely filing of GST returns (GSTR-1, GSTR-3B) to avoid penalties.

Input Tax Credit (ITC):

Claiming ITC on purchases like display vehicles, showroom maintenance, and IT

services.

Challenges:
Managing multiple locations with state-specific requirements.

Reconciling ITC for bundled services like free maintenance or roadside assistance.

4. Input Tax Credit (ITC) in Retail Operations

Eligible ITC:

ITC on spare parts, consumables, and accessories used in retail services.

ITC on showroom maintenance (rent, utilities).

Ineligible ITC:

ITC on promotional items given to customers for free.

ITC on personal use vehicles (e.g., demo vehicles used by staff).

 5. GST Impact on Toyota’s Retail Pricing

Positive Effects:

Standard GST rates simplify pricing across states.

Lower GST on EVs makes them more attractive for retail customers.

Negative Effects:

High GST + cess on luxury vehicles impacts affordability.

Cascading taxes (on insurance, extended warranty) increase total cost of

ownership.

6. GST Challenges and Recommendations in Retail

Challenges:
Cash Flow Issues: Delay in refunds for ITC, especially for unsold stock.

Classification Disputes: Accessories and bundled services sometimes attract higher

GST.

High Cess Impact: SUVs and luxury car retail pricing significantly increase.

Recommendations:

System Automation: Use advanced software for GST compliance and ITC tracking.

Training: Educate dealership staff on GST regulations.

Bundling Strategies: Separate high-GST components from bundled offers to

reduce costs.

Conclusion
For Toyota’s retail operations, GST has streamlined taxation but brought
challenges like higher compliance costs and classification disputes. Leveraging
technology and aligning dealership operations with GST norms can help Toyota
optimize costs and enhance customers experience.