GST THEORY AND PRACTICE

PRACTICAL RECORD FOR

B.Com., VI SEMISTER
OSMANIA UNIVERSITY

1. Draw a chart showing tax structure in India.

NOTE: UNDER
2. Draw a chart and write a note on Pre-GST Indirect tax structure in India.

Tax structure in India is a three tier federal structure. The central government, state
governments, and local municipal bodies make up this structure. Article 256 of the
constitution states that “No tax shall be levied or collected except by the authority of law”.
Hence, each and every tax that is collected needs to backed by an accompanying law.

Tax System in India:

The tax system in India allows for two types of taxes—Direct and Indirect Tax.

The tax system in India for long was a complex one considering the length and breadth of India.
Post GST implementation, which is one of the biggest tax reforms in India, the process has become
smoother. It serves as an all-inclusive indirect tax which has helped in eradicating the cascading
effect of tax as a whole. It is simpler in nature and has led to upgraded the productivity of logistics.

Direct Tax:
Direct Tax is levied directly on individuals and corporate entities. This tax cannot be transferred or
borne by anybody else. Examples of direct tax include income tax, wealth tax, gift tax, capital gains
tax.

Income tax is the most popular tax within this section. Levied on individuals on the income earned
with different tax slabs for income levels. The term ‘individuals’ includes individuals, Hindu Undivided
Family (HUF), Company, firm, Co-operative Societies, Trusts.

Indirect Tax:
Indirect taxes are taxes which are indirectly levied on the public through goods and services. The
sellers of the goods and services collect the tax which is then collected by the government bodies.

• Value Added Tax (VAT)– A sales tax levied on goods sold in the state. The rate depends on the
government.
• Octroi Tax– Levied on goods which move from one state to another. The rates depend on the state
governments.
• Service Tax– Government levies the tax on service providers.
• Customs Duty– It is a tax levied on anything which is imported into India from a foreign nation.

3. Write any five limitations of Pre-GST Indirect taxes.

Shortcomings in the current indirect tax laws which would be mitigated and addressed
by the introduction of GST

a. Cascading Effect Presently, the various indirect taxes being levied are not necessarily
mutually exclusive. To illustrate, when the goods are manufactured and sold both excise duty
and state level VAT are levied. The tax credit of one levy is not available for set-off with another
as excise is a central tax and VAT is State level tax. GST will overcome this issue.
b. Complexity in determining the nature of transaction – Goods vs.
Service Double taxation of a particular transaction where both Goods and services are
provided to the consumer will be mitigated . For eg- in case of Restaurant , where food in
form of goods and services are provided to customers, both VAT and Service TAX is levied.
Under GST both the components will be integrated and charged to TAX only once.
c. Exemptions & Concessions Under the current system, businesses enjoy many kinds of
exemptions & concessions under different levies which break the chain of VAT and thus
create distortion. Also these kinds of benefits do not create a level playing field especially
when the same commodity is taxed at different rates in different state jurisdictions.
d. Narrow TAX Base Due to different thresholds under different laws as well as numerous
exemptions and concessions, the current tax base under indirect tax is very narrow and its
covers only a small percentage of population. GST will seek to broaden the TAX base and
engulf more and more business unit.
e. Multiple administrations Under the current system, businessmen are required to visit
different tax offices, file returns, keep records according to the applicable laws to his
business. These increases the compliance cost of businesses and breeds unnecessary
complexity. GST will lower down the cost of compliance for the business units.
Above are the main points of distinction between current Indirect Tax Structure and
GST .

4. What was the significance of Introduction of VAT in Indirect Taxes priorto

implementation of GST . Write a short note.

Value added tax (VAT) is a type of tax that is applied to the goods or services produced. It is a form of an
informal tax that is also known as a multi-stage tax. The government implements this tax for the
betterment of services that are provided to the residents. With this additional source of finance, the
government will be able to provide better services to the people. The VAT is applied on all the goods that
are produced in the companies that are registered with VAT. It is the tax that is applied on every step of
production and the total amount is calculated after the completion of the production process.

The difference between VAT and general sales tax:

A sales tax and VAT are both a type of consumption tax. For a layman, there is no difference between the
sales tax and the VAT. Some may also think that there is no difference between the working of both taxes.
However, there is some key difference between both taxes. The sales tax is the one that is imposed on the
customers only at the final stage. VAT, on the other hand, is imposed on each and every step of
production. Moreover, VAT is also applied on the imports of services and goods to ensure and maintain a
proper working of tax.
The preference is given to VAT instead of other sales taxes because, in VAT, the business owners or the
companies act as the tax collector for the government. It is a more sophisticated form of tax.

5. Need for GST in India.

There are various taxes that have to pay at every stage and differently collected by State and
Central Government and rates differ from one state to another. If we talk about GST, it will unified
whole nation and taxes will be divided among Central and State Government, which will make
easier to provide services and goods across country, as no more additional state taxes will be
imposed.

Why in India, there is a need for GST?

Imposing several taxes on goods and services can lead to high cost and inefficient tax structure
which can subject to shirking and revenue disclosures. The need for GST in Indian Taxation System
will add value at each stage and will set off the rates both at state and at central level. Introducing
GST, will increase the efficiency of taxation, improves the economic growth and it will bring whole
nation to one national market.

What happen in present scenario? Our present taxation system is very complex and very confusing,
corruption chance is there, which leads to distrust of government, there are hidden tax for
exports, whereas no charge applicable on Importing of Goods/Services from one state to another.

Just to overcome these issues, Rajya Sabha introduced GST bill, which will bring transparency to
taxation and consumer will get to know how much tax amount they are paying to government for
sale/ purchase/ manufacturing.

Following are some of the points that can easily explain the need for GST:-

Tax Structure will be Simple: – At present, there are huge number of taxes that has to pay by
consumers, with GST it will single tax to pay, which is much easier to understand. For businesses,
accounting complexities will reduce and results less paperwork, which will save both time and
money. GST will increase economic GDP by 2%-2.5%.

Tax revenue will increase: Simple tax structure will bring more tax payers and in return it will be
revenue for government.

Competitive pricing: What GST will do? Well, it will eliminate all other taxes of indirect taxes and
this will effectively mean that tax amount paid by end users (consumers) will reduce. As in
Economics, lower will the prices, more will be demand for that product, results in more
consumption of goods, which will be benefited to companies.

Boost to exports: If Indian market will be competitive in pricing, then more and more foreign
players will try to enter the market, which results in more numbers of exporters and benefits to
Indian Market. As far there is no tax rate is finalized, but yes GST is much needed in the countries
where, it lacks transparency and complex taxation system.
There is a question in everyone’s mind……”Do we have to pay tax at different different rates and at
different different levels? Is there no solution to this? Yes, the solution to this is implementation of
GST. GST will take away cascading effect of various taxes that are charged on sale/ production/
purchase and so. Products reaches to customers at very high rate as compared to manufacturing, so
with GST there will be only one tax and it will reduce burden to pay off.

6. What are the important stages in implementation of GST.

Here are the top 9 steps for GST implementation that every business should follow:-

Step-1 Registration :-

Every business carrying out a taxable supply of goods or services under GST regime and whose turnover
exceeds the threshold limit which can be known in GST guidelines, if you are applicable you will be
required to register as a normal taxable person. This process is of registration is referred as GST
registration.

Now that we know who needs to register, the question arises that are there any benefits for registration?
GST registration is critical because it will enable you to avail various benefits that are available under the
GST regime. One such benefit is to avail seamless input tax credit. Multiple taxes are being clubbed under
GST and thus the cascading of taxes that is prevailing currently will no longer be the case. Also, timely
registration will help you avoid any kind of interface with tax authorities.

Step-2 Organization realignment:–

GST is going to affect each business in one way or other, so a proper information should be found out
about the supply chain of the organization i.e. which area will be most affected by GST and which area will
be least affected and according to this proper organization realignment should be done.

Step-3 Alignment of invoicing :–

We know how important invoices are , there importance will increase after the implementation of GST , A
tax invoice is an essential evidence to:

• support a registered person’s claim for the ITC of GST (input tax) incurred;
• trigger the time of supply as the invoice date will determine when GST is to be accounted for by a
registered person on the supply of goods and services (accounting on invoice basis);
now there are certain guidelines that needs to be followed when making this invoices. To know format of
tax invoice please refer article “GST tax invoice”

other invoices like debit, credit notes and other accounting formats should also be aligned according to
GST requirements.

Step- 4 IT systems:

with GST comes a large number of challenges for various organization like detail record keeping has
become necessary, input credit rules are complicated, large number of compliances ,the cost of compliance
is too high for the whole supply chain , a good IT infrastructure can help the organizations in tackling this
challenges hence an updated IT system should be put into place before GST. To know various ways in
which IT can help during GST implementations please read the article”Do you need IT system for
GST? ”
Step-5 Update GSTIN to your trade network :-

GST registration is required to be obtained for each state from where taxable supplies are being made.
Each taxpayer will be allotted a State wise PAN-based 15-digit Goods and Services Taxpayer Identification
Number (GSTIN). This number will serves as an identification prove for businesses and have to used while
making invoices, hence GSTIN of both vendors and customers have should be found out to make invoices
therefore it is necessary for businesses to update GSTIN to Vendors and customers which will be different
in different states.

Step-6 Input tax credit arrangement:–

A taxable person can accumulate credits of taxes paid and carry them forward in a return. With the
introduction of the GST, the last set of credits will have to be transferred. To do this, you must furnish
proof of his/her last return filed under the old regime. You will, therefore, need to make sure that all input
taxes paid are included in it; by doing so, you will be claiming the credit of the same under the new regime.

For example, let’s consider July 1, 2017 as the appointed day for the GST rollout. The taxpayer must make
sure that he/she has taken into account all the stock lying on June 30, 2017 and claim input credit during
the filing of returns for the period ending June 30, 2017. The taxpayer, thus, must ensure that all such
goods and services are eligible for such a credit under the new GST law.

Step-7 Understanding various GST tools and its working :-

When GST rolls out, each registered taxpayer will get a profile created on the government’s GST website.
The taxpayer using the login credentials will be able to access all features along with a dashboard. All the
taxpayers will also get three electronic ledgers namely E-cash Ledger, E-credit Ledger & E-liability Ledger.
These ledgers will reflect the amount of tax payable, input credit balance, and on adding money to the cash
ledger the taxpayer will also be able to settle the tax liability online.

Step-8 Monitor progress and keep your employees informed:-

Getting ready for GST compliance is a huge challenge. Companies need to keep on monitoring their
progress from time to time so as not to fall back. For this proper flow of information is required as fast
information about status can make you make right decisions at right time.

As companies take steps to get ready for GST compliance, they may encounter disruption of internal
processes. They need to take their employees into confidence and explain that this is just a transition
phase and soon they will get used to this, and things will fall into place.

Step-9 Review and validate results:-

GST is much more stringent than our old taxation system hence even when it seems that your organization
is completely prepared for GST reviewing the rules and your preparedness for GST posses no harm. Keep
reviewing may result in detection of some error which can cause the company to dodge many difficulties in
the future. Hence reviewing and validating the results will be an important step for GST implementation.

Know the best ERP for manufacturing which is GST ready and can save you a lot of trouble.

7. What were the taxes subsumed in GST.

GST is commonly described as indirect, comprehensive, broad based consumption Tax. The Dual
GST which would be implemented in India will subsume many consumption taxes. The objective is
to remove the multiplicity of tax levies thereby reducing the complexity and remove the effect of
Tax Cascading. The objective is to subsume all those taxes that are currently levied on the sale of
goods or provision of services by either Central or State Government. Subsumation of large number
of taxes and other levies will allow free flow of larger pool of tax credits at both Central and State
level.

1. PRINCIPLES OF TAX SUBSUMATION

The various Central, State and Local levies were examined to identify their possibility of being
subsumed under GST. While identifying, the following principles were kept in mind:

• Taxes or levies to be subsumed should be primarily in the nature of indirect taxes, either on the
supply of goods or on the supply of services.

• Taxes or levies to be subsumed should be part of the transaction chain which commences with
import/ manufacture/ production of goods or provision of services at one end and the
consumption of goods and services at the other.

• The subsumation should result in free flow of tax credit in intra and inter-State levels.

• The taxes, levies and fees that are not specifically related to supply of goods & services should
not be subsumed under GST.

• Revenue fairness for both the Union and the States individually would need to be attempted.

2. CENTRAL TAXES TO BE SUBSUMED IN GST

On application of the above principles and various papers which have been released in this
regard, it is deduced that the following Central Taxes should be, to begin with, subsumed under
the Goods and Services Tax:

• Central Excise Duty (CENVAT)

• Additional Excise Duties

• The Excise Duty levied under the Medicinal and Toiletries Preparations (Excise Duties) Act
1955

• Service Tax

• Additional Customs Duty, commonly known as Countervailing Duty (CVD)

• Special Additional Duty of Customs – 4% (SAD)

• Surcharges and Cesses levied by Centre are also likely to be subsumed wherever they are in the
nature of taxes on goods or services. This may include cess on rubber, tea, coffee, national
calamity contingent duty etc.

• Central Sales Tax to be phased out.

3. STATE TAXES TO BE SUBSUMED IN GST

Following State taxes and levies would be, to begin with, subsumed under GST:

• VAT / Sales tax

• Entertainment tax (unless it is levied by the local bodies)

 • Luxury tax

• Taxes on lottery, betting and gambling

• State Cesses and Surcharges in so far as they relate to supply of goods and services

• Octroi and Entry Tax

• Purchase Tax

4. Taxes subsumed under IGST CVD and SAD

8. See in outputs folder.

9. What is the major difference in incidence of tax during pre and post GST
implementation with respect to inter-state transfer. Explain with example.
The GST is about to bring the Indian marketplace into the foray of a single unified tax system – the
largest tax reform that the nation has witnessed since independence. The aim of the GST is to
subsume all the existing taxes into a single tax for bringing about ease of credit flow across the nation
(interstate), and across the supply chain – right from the manufacturer to the consumer. Additionally,
with the advent of the GST, concepts such as manufacture, trade and service provisions become
irrelevant as supply becomes the taxable event.

What does Supply mean under the GST?

Under the GST regime, supply has been defined to include transfers. Since certain specific supplies
made without consideration are taxable, this amounts to stock transfers under the GST also being
taxable. Businesses are required to understand the implications that a stock transfer can have –
something we have provided an overview of here.

Taxability of stock transfers

• A registered manufacturer is required to pay 100% excise duty + 10% of the production cost
under the central excise laws for making a stock transfer of excisable goods.
• A registered manufacturer is required to furnish Form F which makes stock transfers non-taxable
under the VAT. It is however pertinent to note that different states have different percentages
under the VAT on the basis of which the input on purchase of goods can be reversed.
Tax is levied on supply (inclusive of transfers). When coupled with the definition of a distinct person, it
must be understood that a branch has the meaning of a different entity. Therefore, stock transfers
become taxable in the following manner –

• Intrastate – when a business entity is registered in one state with more than one registration
• Interstate – when there occurs a transfer between two business entities in different states (which
is a taxable event)
The cash flow of a business is greatly impacted under the GST due to the taxability of stock transfers
as tax is paid against a stock transfer on the date of such transfer and the input tax credit is utilized
only when such transfer has been liquidated by the branch receiving the transfer. Therefore,
businesses should keep in mind requirements of additional working capital that may arise due to
taxability of stock transfers, especially businesses operating in the fast-moving consumer goods and
pharmaceutical sectors. SMEs may find this aspect as an obstacle if they don’t pay attention to their
working capital needs.

It may also be noted that funds for seasonal businesses are blocked for long periods of time as the
sales mostly take place only during a particular period in a year – additionally,GST is paid during the
month when the transfers are made from the branch however, the credit shall only be utilized during
the month when the actual sale takes place.

ITC Impact
• Reduction in rate of availability of input VAT for goods or inputs that are used for manufacturing
of finished goods, which are then transferred, with the reversal rate differing from one state to the
other.
• Input VAT credit is mostly available at a rate of 4% excess of the tax paid on the purchase of the
goods. In case VAT is paid at 12.5 % for the purchase of a textile bundle, then an excess of 4 %
amounting to 8.5% shall be permitted as input VAT credit. This 4% will further be reversed. When
such input tax credit is reversed, it is added to the main product cost and leads to a cascading
effect.
Let us consider the following example, under the current tax regime –

VAT
Value of purchase of 10 textile bundles 10,000

14.5% VAT 1,450

Total Value 11,450

Stock transfer NIL

Exemption from VAT NIL

Eligibility in terms of Input Tax Credit

14.5% VAT 1,450

Excess of 4% Input tax credit – 10.5% (14.5%

Minus 4%) 1,050

Reversal Rate at 4% 4,00

Therefore, INR 400 is added to the total product cost.

Under the GST regime, input tax credit is available basis the tax paid on the transferred stock.
Assuming GST is levied at 18% –
GST
Value of purchase of 10 textile bundles 10,000

CGST 9% 900

SGST 9% 900

Total Value 11,800

Stock Transfer NIL

CGST 9% 900

SGST 9% 900

Eligibility in terms of Input Tax Credit

CGST 9% 900

SGST 9% 900

Therefore, INR 1,800 is available as input tax credit.

The lack of requirement of declaration forms under the GST makes the processing of stock transfers
a much faster process. Under the current regime (VAT), the hassle of furnishing Form F for being
eligible to get an exemption on the stock transfer is cumbersome. The assessing authority needs to
be notified of sending the goods to a different branch where the sale takes place on a different date.

Under the GST regime, there are no declaration forms required to be filed for stock transfers, making
the process extremely smooth and doing away with extra effort and costs that dealers had to earlier
incur.

Ascertaining tax basis the stock transfers

Stock transfers are usually done when goods are moved from one branch or unit to another without
involving a consideration. However, it is difficult to ascertain how much tax liability arises on such
transactions. Under the central excise laws, as mentioned above, the cost is taken as follows –

• 100% – for payment of excise duty

• 10% – for the cost of production
Under the VAT laws, levy of tax is exempt on stock transfers.

Under the GST regime, the value of a transaction is based on the value of the GST levied on the
goods. Where a stock transfer is in question, the value of the transaction cannot be used to determine
the tax levy as such transfer is made in the absence of a consideration. The determination of tax still
remains a complicated matter under the GST as the tax to be imposed is expected to be valued on
the basis of goods grouped together on the basis of factors such as their qualities, likenes etc. shall
enable the business to decide the cost of production and the profit on the product.

Finalizing of the GST laws and rules are awaited in order to shed light and clarity on these aspects.

The need for having units and branches

Most businesses today have units and branches in order to feed their statutory needs and gain tax
advantages. Having operations in several states enables a business to gain benefits from the local
VAT, in turn allowing the buyer to avail of credit. Further, branch transfers are voluminous as stock
transfers are not taxable.

Since interstate transactions under the GST allow for seamless flow of input tax credit, businesses
are not required to open branches in all the states in which they operate, for statutory reasons.
Branches or units under the GST are now only required if it is viable for the business in terms of its
commercial operations. This helps a business to cut down costs incurred on opening branches,
enables better planning and preparation, and more importantly, reduces the high volume of branch
transfers.

Impact of cross branch transfer under the GST

Businesses having branches are bound to engage in transfers across branches based on demand
and availability of inventory in one branch as opposed to the other. For example, a head office branch
may transfer goods to a unit based in a different state. The goods received by the unit are then
transferred to another unit of the same business – this entire transaction is very costly under the GST
regime. Under the GST regime, every time a transfer takes place, GST is payable, resulting in an
impact on the cash flow of the branch / unit. This process is required to be avoided in order to make
transfers more cost effective and beneficial and enable transfers directly from a warehouse to a
branch or unit.

Businesses can avoid working capital pressure by transferring all stock to a branch that has high
demand – this will ensure that liquidation of stock happens faster.

In conclusion, stock transfers are allowed as credit under the GST despite being fully taxable –
leading to an elimination of the cascading effect of tax as under the current tax system. This will
enable products to be more cost effective at their final value. Finally, working capital pressure is
expected to reduce to a great extent as branch transfers are likely to be more effective under the GST
regime.

10. What are the exclusive products not included in the purview of GST. Why?
There are certain activities which are items not covered under GST. They are beyond the scope of
GST, i.e., GST will not apply on them. These are classified under Schedule III of the GST Act as
“Neither goods nor services”.
1.Services by an employee to the employer in relation to his employment
Related parties include employer-employee which raised many concerns whether employment now
attracted GST. This clarification has been brought in to clarify whether GST is not applicable on
employment. An employee will still pay income tax on salary earned.
2. Court/Tribunal Services including District Court, High Court and Supreme Court
Courts will not charge GST to pass judgement.
3. Duties performed by:

• The Members of Parliament, State Legislature, Panchayats, Municipalities and other local
authorities
• Any person who holds a post under the provisions of the Constitution
• Chairperson/Member/Director in a body established by the government or a local body and
who is not an employee of the same

4. Services of a funeral, burial, crematorium or mortuary including transportation of the

deceased
There are no taxes on funeral services for any religion.
5. Sale of land and sale of building
Construction of a new building is subject to GST (being works contract).
6. Actionable claims (other than lottery, betting and gambling)
Actionable Claims’ means claims which can be enforced only by a legal action or a suit, example a
book debt, bill of exchange, promissory note. A book debt (debtor) is not goods because it can be
transferred as per Transfer of Property Act but cannot be sold. Bill of exchange, promissory note can
be transferred under Negotiable Instruments Act by delivery or endorsement but cannot be sold.
Actionable claims are neither products nor services. They can be considered as something in lieu of
money. So GST will not apply on these.
Lottery, betting and gambling attract 28% GST.
7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable
territory without such goods entering into India*.
8. Supply in Customs port before Home consumption*:
(a) Supply of warehoused goods to any person before clearance for home consumption;
(b) Supply of goods by the consignee to any other person, by an endorsement of documents of title to
the goods, after the goods have been dispatched from the port of origin located outside India but
before clearance for home consumption.
*Newly inserted items to be applicable from 1st February 2019

Apart from Schedule III, GST is also not applicable on the following,i.e., they are beyond the
scope of GST:

1. Petroleum products

2. Alcohol

PART II
11. When GST council was notified and what is its composition.
As provided for in Article 279A of the Constitution, the Goods and Services Tax Council
(the Council) was notified with effect from 12th September, 2016. The Council is comprised
of the Union Finance Minister (who will be the Chairman of the Council), the Minister of
State (Revenue) and the State Finance/Taxation Ministers as members. It shall make
recommendations to the Union and the States on the following issues:
a) the taxes, cesses and surcharges levied by the Centre, the States and the local bodies
which may be subsumed under GST;

b) the goods and services that may be subjected to or exempted from the GST;

c) model GST laws, principles of levy, apportionment of IGST and the principles that
govern the place of supply;

d) the threshold limit of turnover below which the goods and services may be exempted
from GST;

e) the rates including floor rates with bands of GST;

f) any special rate or rates for a specified period to raise additional resources during any
natural calamity or disaster;

g) special provision with respect to the North- East States, J&K, Himachal Pradesh and
Uttarakhand; and

h) any other matter relating to the GST, as the Council may decide.

COMPOSITION OF GST COUNCIL:

One half of the total number of Members of the Goods and Services Tax Council shall
constitute the quorum at its meetings. The Goods and Services Tax Council shall determine the
procedure in the performance of its functions. Every decision of the Goods and Services Tax
Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted
votes of the members present and voting, in accordance with the following principles, namely:
—
a) the vote of the Central Government shall have a weightage of one-third of the total votes cast,
and

b) the votes of all the State Governments taken together shall have a weightage of two-thirds of
the total votes cast, in that meeting.

12. What are different types of taxes levied under GST.

Concurrent dual model of GST: India has adopted dual GST model because of its unique
federal nature. Under this model, tax is levied concurrently by the Centre as well as the States
on a common base, i.e. supply of goods or services or both. GST to be levied by the Centre
would be called Central GST (Central tax / CGST) and that to be levied by the States would be
called State GST (State Tax / SGST). State GST (State Tax / SGST) would be called UTGST
(Union territory tax) in Union Territories without legislature. CGST & SGST / UTGST shall be
levied on all taxable intra-State supplies.

The IGST Model: Inter-State supply of goods or services shall be subjected to integrated
GST (Integrated tax / IGST). The IGST model is a unique contribution of India in the field of
VAT. The IGST Model envisages that Centre would levy IGST (Integrated Goods and Service
Tax) which would be CGST plus SGST on all inter-State supply of goods or services or both.
The inter-State supplier will pay IGST on value addition after adjusting available credit of
IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the
credit of SGST used in payment of IGST. The person based in the destination State will claim
credit of IGST while discharging his output tax liability in his own State. The Centre will
transfer to the importing State the credit of IGST used in payment of SGST. The relevant
information will also be submitted to the Central Agency which will act as a clearing house
mechanism, verify the claims and inform the respective governments to transfer the funds. The
major advantages of IGST Model are:

a) Maintenance of uninterrupted ITC chain on inter-State transactions.

b) No upfront payment of tax or substantial blockage of funds for the inter-State supplier or
recipient.

c) No refund claim in exporting State, as ITC is used up while paying the tax.

d) Self-monitoring model.

e) Model takes ‘Business to Business’ as well as ‘Business to Consumer’ transactions into

account. levied on all taxable intra-State supplies.

Tax Rates: Owing to unique Indian socio-economic milieu, four rates namely 5%, 12%, 18%
and 28% have been adopted. Besides, some goods and services are exempt also. Rate for
precious metals is an exception to ‘four-tax slab-rule’ and the same has been fixed at 3%.

13. What are the laws supporting the levy of GST. Explain with examples or
rules.
The One Hundred and Twenty Second Amendment Bill of the Constitution of India, officially known as The
Constitution (One Hundred and First Amendment) Act, 2016, introduced a national Goods and Services
Tax in India from 1 July 2017.[1]
The GST is a Value added Tax (VAT) proposed to be a comprehensive indirect tax levy on manufacture, sale and
consumption of goods as well as services at the national level. It replaces all indirect taxes levied on goods and
services by the Indian Central and state governments. It is aimed at being comprehensive for most goods and
services.
The Union Government in third week of December, 2014 (19 December, 2014) introduced Constitution (122nd
Amendment) Bill, 2014 in Parliament which when passed shall pave the way for introduction of proposed Goods and
Service Tax (GST) in India. This is an improvised version of lapsed 115th Amendment Bill of 2011.

Contrary to the general perception amongst many quarters that this Bill itself is a GST Bill, let it be very clearly
understood that this is not a GST Bill. In fact, GST Bill is not in sight at all at this point in time. What has been
introduced is only the Constitutional Amendment Bill enabling or empowering the union Government to levy a tax to
be called GST which it cannot levy under the present Constitution. The Bill on passage would enable the Central
Government and the State Governments to levy GST. This tax (GST) shall be levied concurrently by various states
as well as Union Government. Once this is passed by two-third majority in the Parliament, atleast 50 per cent of the
states will have to pass it. Once this amendment is through, the road will be clear for GST Bill (and then Act), given
the political will. Eventually, we will then have the following taxes –

• National level GST [Central GST (CGST) and Inter-state GST (IGST)]
• State Level GST (SGST)
Salient Features of Constitution (One Hundred And Twenty-Second Amendment) Bill, 2014
The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014 was introduced in the Lok Sabha on
December 19, 2014. The following is the gist of amendments proposed by this Bill:

1. The Bill seeks to amend the Constitution to introduce the goods and services tax (GST). Consequently, the GST
subsumes various central indirect taxes including the Central Excise Duty, Additional Excise Duties, Service Tax,
Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. It also subsumes state Value
Added Tax (VAT)/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury
Tax, etc.
2. Concurrent powers for GST: The Bill inserts a new Article 246A in the Constitution to give the central and state
governments the concurrent power to make laws on the taxation of goods and services
3. Integrated GST (IGST): However, only the centre may levy and collect GST on supplies in the course of inter-state
trade or commerce. The tax collected would be divided between the centre and the states in a manner to be
provided by Parliament, by law, on the recommendations of the GST Council.
4. GST Council: The President must constitute a Goods and Services Tax Council within sixty days of this Act coming
into force. The GST Council aim to develop a harmonized national market of goods and services.
5. GST council examines issues relating to goods, services tax and make recommendations to the Union, and the States
on parameters like rates, exemption list and threshold limits. The Council shall function under the Chairmanship of
the Union Finance Minister and will have the Union Minister of State in charge of Revenue or Finance as member,
along with the Minister in-charge of Finance or Taxation or any other Minister nominated by each State Government.
6. Composition of the GST Council: The GST Council is to comprise of the following three members / class of members:
1. the Union Finance Minister (as Chairman),
2. the Union Minister of State in charge of Revenue or Finance, and
3. the Minister in charge of Finance or Taxation or any other, nominated by each state government.
7. Functions of the GST Council: These include making recommendations on:
• taxes, cess and surcharges levied by the centre, states and local bodies which may be subsumed in the GST;
• goods and services which may be subjected to or exempted from GST;
• model GST laws, principles of levy, apportionment of IGST and principles that govern the place of supply;
• the threshold limit of turnover below which goods and services may be exempted from GST;
• rates including floor rates with bands of GST;
• special rates to raise additional resources during any natural calamity;
• special provision with respect to Arunachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
• Any other matters relating to the goods and services tax, as the Council may decide.
8. The Goods and Service Tax Council shall recommend the date from which the goods and service tax be levied on
petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.
9. Resolution of disputes: The GST Council may decide upon the modalities for the resolution of disputes arising out of
its recommendations.
10. Restrictions on imposition of tax: The Constitution imposes certain restrictions on states on the imposition of tax on
the sale or purchase of goods. The Bill amends this provision to restrict the imposition of tax on the supply of goods
and services and not on its sale.

14. What is RNR?

Focus under GST is to arrive at such rates which would not decrease the current revenue generation
by Central & State government. Revenue Neutral Rate(RNR) is a structure of different rates
established in order to match the current revenue generation with revenue under GST. RNR
calculation has to include the cascading effect on certain goods having no excise or sales tax
implications.
For example-: Wheat would get costlier due to RNR fixed for diesel being higher than current tax rate
even though wheat does not have any excise or sales tax implications.
The government of India had appointed a committee which is headed by Dr. Arvind Subramanian.
Committee had released a detailed report on the calculation of RNR and the tax structure. RNR is
calculated by the committee with three different approaches-:

• Macro approach-:

RNR is calculated on basis of total data for domestic output/net imports and consumption of
capital inputs. GST has a positive rate and zero rates on exports are two assumptions under this
approach. RNR found to be 11.6% after factoring compliance of GST at 80%.

• Indirect tax turnover approach-:

This Approach was shared by NIPFP(National Institute of Public Finance Policy). There are
three steps under this approach-:

1. Estimate goods revenue base at the state level.

2. Estimate the services revenue base at the national level.
3. Adjustments for certain goods & services not to be taxed under GST.

This approach puts the RNR at 18.86%.

• Direct tax turnover approach

The approach was shared by the Thirteenth Finance Commission. RNR is calculated on the basis of
input tax data of all the registered entities. This approach puts the RNR at 11.98 %.
RNR is likely to be selected around 18% after making few changes to the indirect tax turnover
approach.

Ratio for Distribution of RNR

One of the biggest hurdle in deciding the RNR is the distribution ratio among the central and state
government. The ratio has to include the effects of the loss to be borne by different state
governments. Two different ratios were selected for assessment. Central to state ratio of 60:40 or the
reverse ratio of 40:60.
“Coming up with an RNR is as much soft judgment as hard science” as quoted by the subramanian
committee on the report shared by them with CBEC on RNR and GST rates. The drawback of setting
a RNR low would lead to decrease in growth rate of the economy in long term.

15.What are the categories of Goods and Services for levying GST.
According to Government of India, nearly 50% of regularly using items including food items are included in
exempted categories which do not attract GST at present. The GST council and other GST authorities notifies list of
exempted goods time to time. Such goods are not fallen under payment of GST tax.

GST rate for Essential Goods and Services in India (Common Goods and
services)
Essential category of goods and services (common goods and services) are charged lower GST rate of 5%.
Essential goods and services (Commonly used) are the goods and services for necessary items and items under
basic importance.

GST rate for Standard Goods and Services for GST in India
A major share of GST tax payers falls under this category of Standard Goods and Services. There are two slabs of
GST under standard goods and services. Standard Goods and services fall under one slab attract 12% GST and the
items under 2nd slab attract 18% GST.
GST rate for Special category of Goods and Services in India.
A GST rate of 28% is levied at present against Goods and Services of special category of Goods and Services. The
luxury items also fall under this special category of goods and services

GST rates categories at a glance:

Tax Rates Products

Household necessities such as edible oil, sugar, spices, tea, and coffee (except instant) are included. Coal ,
5%
Mishti/Mithai (Indian Sweets) and Life-saving drugs are also covered under this GST slab

12% This includes computers and processed food

Hair oil, toothpaste and soaps, capital goods and industrial

18%
intermediaries are covered in this slab

Luxury items such as small cars , consumer durables like AC and Refrigerators, premium cars, cigarettes and
28%
aerated drinks , High-end motorcycles are included here.

Though edible items like sugar, tea and coffee are included in the 5% slab, milk does not attract any tax
under the new GST regime. The idea behind this is to ensure that basic food items are available for
everyone but instant food is kept out of this category.

No Tax
Apart from other items that enjoy zero GST tax rate, these are the commodities added to the list after 11th
June rate revision –
 • Hulled cereal grains like barley, wheat, oat, rye, etc.
• Bones and horn-cores unworked and waste of these products.
• Palmyra jaggery
• All types of salt
• Dicalcium Phosphate (DCP) of animal feed grade conforming to IS specification No. 5470 :2002
• Kajal [other than kajal pencil sticks]
• Picture books, colouring books or drawing books for children
• Human hair – dressed, thinned, bleached or otherwise worked
• Sanitary Napkins
• Unit container-packed frozen branded vegetables (uncooked/steamed)
• Vegetables preserved using various techniques including brine and other preservatives that are
unsuitable for immediate human consumption.
• Music Books/manuscripts

GST stands for Goods and Services Tax. It is classified into three types:

• CGST –Central GST

• SGST –State GST
• IGST –Integrated GST

Finance Minister Arun Jaitley said that the government wanted to keep the GST rates close to the original
rates. But there were differences in case of some items because of the changes in the economy as well
as customer preferences. Some commodities were kept in the high tax bracket (18-28%) but on
scrutinizing the list, they found that these commodities should be considered as necessities and not
luxuries. This is why the GST rates were revised for commodities such as notebooks, exercise books,
spectacles and lenses and some other items.

16. Briefly explain the important components of Supply.

Definition of ‘supply’ Under section 2(92) read with section 3 ‘supply’ includes all forms of supply of goods
and/or services such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to
be made for a consideration by a person in the course or furtherance of business. Schedule I specified the
supply.
Analysis: Supply is the term replaced for the term sale; no scope has been left for any confusion and the definition
includes every term which shall be coined as sale. Even the supply which is made or agreed to be made without a
consideration will also amount to sale.
Any transfer of title to goods is a supply of goods, transfer of right to use goods [section 4(8) of APVAT Act, 2005],
Hire purchase transactions, transfer of business assets are also brought under the ambit of term ‘supply’ as per
Schedule II.
1.Supply includes
(a)all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or
disposal made or agreed to be made for a consideration by a person in the course or furtherance of business,
(b)importation of service, whether or not for a consideration and whether or not
in the course or furtherance of business, and
(c) a supply specified in Schedule I, made or agreed to be made without a
consideration
2.Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a
supply of goods or a supply of services.

Activities which are not Supply

 Activities and transactions specified in Schedule III –
• Services by an employee to the employer in the course of or in relation to his employment;
• Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
• Actionable claims, other than lottery, betting and gambling
• Sale of land / Sale of building after occupation or completion will not attract GST. Thus, sale of building
before completion or before occupancy will attract GST

Such activities or transactions undertaken by the Central Government, a State Government or any local authority in
which they are engaged as public authorities, as may be notified by the Government on the recommendations of the
Council.

Deemed Supply of Goods & Services

Following matters will be treated as deemed supply of goods and services and will attract GST :

1.In case of Transfer of title in goods, OR, Right in goods, OR of undivided share in goods without the transfer of
title, OR, transfer under an agreement which stipulates that property will pass at a future date upon payment of full
consideration

2.In case of Land & Building, – Any lease, tenancy, easement, license to occupy land or building ( both for
commercial or residential purpose, fully or partly)

3.Treatment or Process , which is being applied to another person’s goods is a supply

4.Transfer of Business Assets – Where goods forming part of the assets of a business are transferred or disposed
of, and are no longer forming part of business OR Where goods held for business are put to use for any private
use, in such a way, as not for business OR Where any person ceases to be a taxable person, any goods earlier
forming part of business, unless (a) the business is transferred as a going concern to another person, or (b) the
business is carried on by a personal representative who is deemed to be a taxable person With or Without for a
Consideration

5.Supply of Services – Following shall be treated as deemed “supply of Services” :

• renting of immovable property;

• construction of a complex, building, civil structure or a part thereof, including a complex or building
intended for a sale to a buyer, wholly or partly, except where the entire consideration has been received
after issuance of completion certificate;

• Temporary transfer or permitting the use or enjoyment of any intellectual property right;

1. Composite Supply – Following shall be treated as deemed “supply of Services” :

o works contract as defined in section 2 (119) of CGST Act

o Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food
or any other article for human consumption or any drink ( other than alcoholic liquor for human
consumption), where such supply or service is for cash, deferred payment or other valuable
consideration.
 7.Supply of goods – supply of goods by any unincorporated association or body of persons to a member thereof
for cash, deferred payment or other valuable consideration.

17. What activities are included in supply?

1.Supply includes

(a)all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or
disposal made or agreed to be made for a consideration by a person in the course or furtherance of business,

(b)importation of service, whether or not for a consideration and whether or not

in the course or furtherance of business, and

(c) a supply specified in Schedule I, made or agreed to be made without a

consideration

2.Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a
supply of goods or a supply of services.

Activities which are not Supply

Activities and transactions specified in Schedule III –

• Services by an employee to the employer in the course of or in relation to his employment;

• Services of funeral, burial, crematorium or mortuary including transportation of the deceased.

• Actionable claims, other than lottery, betting and gambling

• Sale of land / Sale of building after occupation or completion will not attract GST. Thus, sale of building
before completion or before occupancy will attract GST.

Such activities or transactions undertaken by the Central Government, a State Government or any local authority
in which they are engaged as public authorities, as may be notified by the Government on the recommendations
of the Council.

18. Brief registration process of GST.

The structure of GST stands on the foundation of the registration system, for it is a
registered
person who is liable to pay tax and who is eligible to avail the benefits of the input tax
credit mechanism. A registered person can also collect GST from his recipients.

The GST law gives a limited option to certain categories of persons to avoid registration
and thus avoid the tax liability lawfully. However, if one falls within the reach of an
extensive
list of statutorily prescribed criteria requiring compulsory registration, the supplier must
get registered.
Persons Liable for GST Registration - Section 22 of the CGST Act :
a) State or UTs :
Every supplier of the goods or services or both needs to register in a State or a Union
Territory, if his turnover exceeds _ 20 lakhs.
b) Special Category States :
In case of special category states namely AP, J & K, Assam, Nagaland, Mizoram, Sikkim,
Uttarakhand, etc., the person shall be liable to be registered if his turnover exceeds _ 10
lakhs.
c) Aggregate Turnover :
Means aggregate value of all taxable supplies, exempt supplies, Exports and inter-State
supplies of persons having the same PAN but excludes taxes.
Persons Not Liable to be Registered – Section 23 of the CGST Act :
Following persons are not liable for registration.
a) Exempted Goods or Services :
Any person who is engaged exclusively in supply of those goods or services which are
wholly exempted from tax or not liable to pay tax under CGST or under IGST Act.
b) An Agriculturist :
For those supply only which is produced out of cultivation of land.
c) Notified Person :
Furthermore, the government on the recommendation of the GST council may issue
notification & specify special category of persons who are not liable for registration.
Procedure for GST Registration :
a) Details to be furnished :
Before applying for registration process, person has to declare the following :
✧PAN
✧Mobile number
✧E-mail address
✧State or UT
In Part A of FORM GST REG-01 on the Common Portal, either directly or through a
Facilitation Centre notified by Commissioner.
b) Reference Number :
On successful verification of the PAN, mobile number and e-mail, a temporary reference
number shall be generated and communicated to the applicant.
c) Application :
Using the reference number, the applicant shall electronically submit an application in
Part B of FORM GST REG-01, duly signed or verified through electronic verification code
(EVC), along with documents specified in the form.

d) Specified Documents :
The following specified documents are required to be submitted along with the
application :
A. Documents required for Private Limited Company, Public Company (limited
company)/
One Person Company (OPC) :
i) Company documents :
✧PAN card of the company
✧Registration Certificate of the company
✧Memorandum of Association (MOA)/Articles of Association (AOA)
✧Copy of Bank Statement
✧Declaration to comply with the provisions
✧Copy of Board resolution.
ii) Director related documents :
✧PAN and ID proof of directors.
iii) Registered Office documents :
✧Copy of electricity bill/landline bill, water bill
✧No objection certificate of the owner
✧Rent agreement. (in case premises are rented)
B. Documents required for Normal Partnerships :
i) Partnership documents :
✧PAN card of the Partnership
✧Partnership Deed
✧Copy of Bank Statement
✧Declaration to comply with the provisions.
ii) Partner related documents :
✧PAN and ID proof of designated partners.
iii) Registered Office documents :
✧Copy of electricity bill/landline bill, water bill
✧No objection certificate of the owner
✧Rent agreement (in case premises are rented)
✧Documents required for Sole proprietorship/Individual.
iv) Individual documents :
✧PAN card and ID proof of the individual
✧Copy of Cancelled cheque or bank statement
✧Declaration to comply with the provisions.
v) Registered Office documents :
✧Copy of electricity bill/landline bill, water bill
✧No objection certificate of the owner
✧Rent agreement. (in case premises are rented)

19. Ram Enterprises purchased goods from Shyam Enterprises. The goods were supplied
on 15/01/2018. Ram Enterprises paid an advance of Rs. 1,00,000 for purchases on
10/01/2018. The invoice was raised on 30/01/2018. Explain with respect to supply
Ans: Time of supply of services is earliest of :
1. Date of issue of invoice.
2. Date of receipt of advance/ payment.
3. Date of provision of services (if invoice is not issued within prescribed period).
In the above example, on Jan 10 the Advance was paid
On Jan 15, goods were supplied
On Jan 30, Invoice was issued.
Earliest of the above was, 10 th January, hence that was the Time of Supply.
20.Mr. Y was travelling from Hyderabad to Bengaluru on flight. During his journey he
purchased some books. Determine the incidence of tax. Identify place of supply.
Ans. In the case of transport, origin place will be treated as place of supply. Hence place of
supply would be Hyderabad. And incidence of tax would be CGST and SGST.
21. What is Composite supply and Mixed Supply. What is the rate of tax applied?
Composite supply means a supply made by a taxable person to a recipient and :
✧Comprises two or more taxable supplies of goods or services or both, or any
combination
there of.
✧Are naturally bundled and supplied in conjunction with each other, in the ordinary
course of business.
This means that in a composite supply, goods or services or both are bundled owing to
natural necessities. The elements in a composite supply are dependent on the principal
supply.
A composite supply comprising of two or more supplies, one of which is a principal
supply,
shall be treated as a supply of such principal supply.
Example : when a consumer buys a refrigerator and he also gets warranty and a
maintenance contract with the manufacturer. This is a composite supply. In this example
supply of Refrigerator is the principal supply, warranty and maintenance services are
ancillary.
In the same manor, in a hotel you booked a Room for stay, and they offered
complimentary
breakfast, here Room is principal supply and breakfast is ancillary.
Principal Supply :
“Principal Supply” is 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.
The concept of principal supply emerges only for the determination of composite supply.
Tax liability will be the tax on the principal supply i.e., GST rate on the goods.
Mixed supply means:
✧Two or more individual supplies of goods or services, or combinations thereof, made
in conjunction with each other by a taxable person.
✧For a single price where such supply does not constitute a composite supply.
The individual supplies are independent of each other and are not naturally bundled. A
mixed supply comprising of two or more supplies shall be treated as supply of that
particular
supply that attracts highest rate of tax.

For example :
A Diwali gift box consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated
drink and fruit juices supplied for a single price is a mixed supply. All are also sold
separately. Since aerated drinks have the highest GST rate of 28%, aerated drinks will be
treated as principal supply and 28% will apply on the entire gift box.

22. Write a short note on the process of GST.

Goods and Service Tax (GST) is structured for efficient tax collection, reduction in corruption, easy
inter-state movement of goods and a lot more.
The GST Law provides for self-assessment to facilitate easy compliance and payment of taxes. It
also explains the notices, the demand and recovery provisions when the taxes are unpaid, short paid
and/or returns are not filed.

1. Audits
Audit under GST is the examination of records maintained by a registered dealer. The aim is to verify
the correctness of information declared, taxes paid and to assess the compliance with GST.
2. Assessment
Assessment under GST means the determination of tax liability under GST. Assessment under GST
has been divided into 5 types:

a. Self Assessment
Under GST, every registered taxable person shall assess the taxes payable by them on their own,
and furnish a return for each tax period. This is called self-assessment.

b. Provisional Assessment
A registered dealer can request the officer for provisional assessment if he is unable to determine the
value of goods or rate of tax. The proper officer can allow the assessee to pay tax on a provisional
basis at a rate or a value specified by him.
c. Scrutiny Assessment
A GST officer can scrutinize the return to verify its correctness. The officer will ask for explanations on
any discrepancies noticed in the returns.

d. Summary Assessment
Summary Assessment is done when the assessing officer comes across sufficient grounds to believe
any delay in showing a tax liability can harm the interest of the revenue. To protect the interest of the
revenue, he can pass the summary assessment with the prior permission of the additional/joint
commissioner.

e. Best Judgement Assessment

1. Assessment of non-filers of returns
If a registered taxable person does not file his return even after getting a notice, the proper officer will
assess the tax liability to the best of his judgment using the available relevant material.
2. Assessment of unregistered persons
This assessment is done when a taxable person fails to obtain registration even though he is liable to
do so.
The officer will assess the tax liability of such persons to the best of his judgement. The taxable
person will receive a show cause notice and an opportunity of being heard.

3. Demand and Recovery

Demand and recovery provisions are applicable when a registered dealer has paid tax incorrectly or
not paid tax at all. It is also applicable when an incorrect refund or ITC is claimed by the dealer.
The proper officer will issue a show cause notice along with a demand for payment of tax and penalty
in case of fraud.
Demands can arise in the following cases:
1. Unpaid or short paid tax or wrong refund
2. Tax collected but not deposited with the Central or a State Government
3. CGST/SGST paid when IGST was payable and vice versa.
If demand is not paid, the GST authority starts recovery proceedings

4. Advance Ruling
Advance Ruling under GST means seeking clarifications from GST authority on certain tax matters
before starting the proposed activity. This helps to reduce costly litigation.
An advance ruling is a written decision given by the tax authority to an applicant on queries related to
the supply of goods/services.
23. What are the types a dealer can opt at registration?
GST Department has introduced numerous types of GST return and GST registration
forms. In order to clear any kind of misconception or confusion regarding GST return
and registration form. We have enlisted in various procedures to get the required forms
applicable to individual dealers.
We have provided a small flow chart depicting the methods and directions to be used for
the fulfilment of the GST compliances:

• Regular Dealer
• Composition Dealer
• Tax Deductor
• Input Service Distributor
• UN Bodies / Embassies
• Non-Resident Assessee
• Temporary Registration
• E-Commerce Dealer
24.What is the threshold limit for composite dealers & Registered dealers.

Composition Scheme:

Small businesses having an annual turnover less than Rs. 1 crore* ( Rs. 75 Lakhs for NE
States) can opt for Composition scheme.
*GST Council decided to increase the limit to Rs. 1.5 crores but notification was issued. And
new threshold limit is 1.5 Crore p.a...
Composition dealers will pay nominal tax rates based on the type of business:

• Composition dealers are required to file only one quarterly return (instead of three
monthly returns filed by normal taxpayers).
• They cannot issue taxable invoices, i.e., collect tax from customers and are required to
pay the tax out of their own pocket.
• Businesses that have opted for Composition Scheme cannot claim any input tax credit.

Composition scheme is not applicable to :

• Service providers
• Inter-state sellers
• E-commerce sellers
• Supplier of non-taxable goods
• Manufacturer of Notified goods.

NORMAL/REGULAR REGISTRATION:

In the normal case registration is required once threshold limit of Rs 20 L (Rs 10 L in case of Special
Category States) crosses as per Sec 22 of CGST Act.

25. List out five examples of B2C transactions.

The terms B2C and B2B are used very frequently these days, these are stand for ‘Business to Consumers’ and
‘Business to Business’, these two are totally different kind of transactions because the intention of transaction
are altogether different.

The overall transaction volume of B2B is much higher than that of B2C transactions. The primary reason for
this is that in a typical supply chain there will be many B2B transactions involving subcomponents or raw
materials, and only one B2C transaction, specifically sale of the finished product to the end customer. For
example, an automobile manufacturer makes several B2B transactions such as buying tires, glass for
windscreens, and rubber hoses for its vehicles. The final transaction, a finished vehicle sold to the consumer, is
a single (B2C) transaction.

It might be possible that the subjects of transactions are same for example selling of a Car to a person who is re-
designing or modifying it and then selling it to ultimate consumers on the other hand a Car sold to the ultimate
consumer directly from show room. Even though the subjects in the transaction are same, but in the first
example it is a B2B transaction and in the other it is a B2C transaction.

For the following differences, the B2C and B2B transactions are taxed under GST in a different manner:

• Nature of Supply:
There is several B2B transition in one supply chain of a product until it reached to ultimate consumer where a
B2C transaction occurs.

The credit of GSTs (CGST/SGST/IGST) paid in B2B moved through entire supply chain where the supply
receiver is paying GSTs and Supplier gets credit of input tax paid at the time of acquisition. In B2C transaction
the supply receiver is the ultimate consumer who shall ultimately bear the all GSTs paid on the final supply and
not entitled to get any credit of GSTs paid by him.

• Place of Supply
In B2C in general the transactions happened immediately on the spot, the determination of place of supply is
easier than B2B transactions. In B2C transactions are generally followed after a long process like, quotation,
negotiation, supply, payment, return/reimbursement on deficiencies etc.

The B2B supplies are completes in several trances of supply, they may be running in nature also.

• Time of Supply
In B2C the time of supply are immediate after purchase and payment which are generally on spot. In B2B the
time of supply may be at the time of supply actually made, date of Payment or the date of periodical returns or
date of payment of GSTs depends upon the facts and documentation of transactions.

• Place of taxation
Place of taxation is generally the place of destination of supply, in B2C the place of destination are generally the
place of delivery, but in B2B, the place of taxation may be different or may be more than one, it may be
registered office of the company or may be the place where actually goods delivered or the services rendered.

• Business Agreement and Invoicing (general correspondence, purchase orders,

invoices, payment instruments and receipts.
In B2C generally the invoice (or simplified invoice) construed as an agreement and the sale and purchase are
genially governed by the terms and conditions are mentioned in the invoice itself. In B2C generally a detailed
commercial agreement entered and thereafter Purchase Order issued and payment may be made prior, after or at
the time supply made. The place, time, taxable value of supply will be determined on the basis of the abovesaid
documents. Therefore these documents must be referred to determining the GST liabilities in a B2B transaction.

• Settlement of transaction and payment process:

In B2C, the payments for consideration are paid at the time of purchase and supply. However in B2B the
payments are being made in installments over a period after delivery of supply. It is often the supplies are made
throughout year and the supplies are considered to be a continuous supply and the time of supply is deduced
differently in comparison of one time supply.
26. Draw a specimen of Invoice, Tax Invoice and Bill of Supply
27. What is Supplementary invoice?
If a circumstance occurs when additional Invoice to an Invoice already issued, a
supplementary Invoice is issued with additional amount to original Invoice. So, if any such
supplementary Invoice is issued, the liability to pay GST on such supplementary Invoice
also arises for a taxable person if liable to pay such tax. Contents of a Supplementary Tax
Invoice under GST Law :
As per GST Law, a supplementary tax invoice under section 23 and a credit or debit note
under section 24 shall contain the following details.
a) Name, address and GSTIN of the supplier.
b) Nature of the document.
c) A consecutive serial number containing only alphabets and/or numerals, unique for a
financial year.
d) Date of issue of the document.
e) Name, address and GSTIN/Unique ID Number, if registered, of the recipient.
f) Name and address of the recipient and the address of delivery, along with the name of
State and its code, if such recipient is unregistered.
g) Serial number and date of the corresponding tax invoice or, as the case may be, bill of
supply.
h) Taxable value of goods or services, rate of tax and the amount of the tax credited or, as
the case may be, debited to the recipient, and
i) Signature or digital signature of the supplier or his authorized representative. The
above information is about GST Law on preparation of additional GST Tax Invoice after
uploading with GST returns and GST payment.

28. What is the eligibility for availing Input Tax Credit?

Input Tax in relation to a taxable person, means the Goods and Services Tax charged on
any supply of goods and/or services to him which are used or intended to be used, during
furtherance of his business. Fulfilment of Input Tax Credit under GST - Conditions ToClaim
is one of the most critical activity for every business to settle its tax liability. ITC being the
backbone of GST and a major matter of concern for the registered persons, conditions for
eligibility to ITC and eligible ITC have been prescribed which is more or less
in line with pre - GST regime. These rules are also quite particular and stringent in its
approach.

Eligibility to claim Input Tax Credit (ITC):

The following conditions have to be met to be entitled to Input Tax Credit under the GST
scheme :
1. One must be a registered taxable person.
2. One can claim Input Tax Credit only if the goods and services received is used for
business purposes.
3. Input Tax Credit can be claimed on exports/zero-rated supplies and are taxable.
4. For a registered taxable person, if the constitution changes due to merger, sale or
transferof business, then the Input Tax Credit which is unused shall be transferred to the
merged,sold or transferred business.
5. One can credit the Input Tax Credit in his Electronic Credit Ledger in a provisional
manner on the common portal as prescribed in model GST law.
6. Supporting documents - debit note, tax invoice, supplementary invoice, are needed to
claim the Input Tax Credit.
7. If there is an actual receipt of goods and services, an Input Tax Credit can be claimed.
8. The Input Tax should be paid through Electronic Credit/Cash ledger.
9. All GST returns such as GST-1, 2, 3, 6 and 7 needs to be filed.
29. With the help of diagram show Input Credit Mechanism.

30. List out masters to be created to effect GST in tally.

Before creating GST accounting entries in Tally, we need to create certain ledgers. GST
includes majorly three types
●CGST – Central Goods and Services Tax
●SGST – State Goods and Services Tax
●IGST – Integrated Goods and Services Tax
●UTGST – Union Territory Goods and Services Tax
We need to create the following GST ledgers in Tally, They are
●Output CGST Ledger – When you sell goods or services intrastate
(inside your State )
●Output SGST Ledger – When you sell goods or services intrastate
(inside your state)
●Output IGST Ledger – When you sell goods or services interstate
(outside your state )
●Input CGST Ledger – When you buy goods or services intrastate
(inside your state)
●Input SGST Ledger – When you buy goods or services intrastate
(inside your state)
●Input IGST Ledger – When you buy goods or services interstate
(outside of your state)
These ledger are to be created under Duties and Taxes.

31. Draw a table giving details of GSTR-1,GSTR-2,GSTR-3.

HOW TO FILE GSTR - 1.

Form GSTR-1 contains 13 tables in which the outward supplies details needs to be
captured) Based on the nature of business and the nature of supplies effected during the
month, only the relevant tables are applicable, not all. The GSTR- 1 format is as follows:
●Table 1, 2 & 3: Details of GSTIN and aggregate turnover in preceding year.
●Table 4: Taxable outward supplies made to registered persons (including UIN holders)
other than zero rated supplies and Deemed Exports.
●Table 5 :Taxable outward inter-state supplies to un-registered persons where the
invoice value is more than INR 2.5 Lakh.
●Table 6 :Details of zero rate supplies and Deemed Exports.
●Table 7 :Details of Taxable supplies (Net of debit notes and credit notes) to
Unregistered persons other than the supplies covered in Table 5.
●Table 8: Details of Nil rated, exempted and non GST outward supplies.
●Table 9 :Details of debit notes, credit notes, refund vouchers issued during current
period and any amendments to taxable outward supply details furnished in the GSTR1
returns for earlier tax periods in Table 4, 5 & 6.
●Table 10 :Details of debit note and credit note issued to unregistered person.
●Table 11 :Details of Advances Received/Advance adjusted in the current tax period or
Amendments of information furnished in earlier tax period)
●Table 12 :HSN-wise summary of outward supplies.
●Table 13 :Documents issued during the tax period)

Form GSTR - 2 filing contains 13 tables in which the following details need to be captured:
●Table 1 :Details of GSTIN.
●Table 2 :Traders' details.
●Table 3 :Details of inward supplies received from a registered person other than the
supplies attracting reverse charge.
●Table 4 :Details of inward supplies on which tax has to be paid on reverse charge.
●Table 5 :Details Inputs/Capital goods received from Overseas or from SEZ units on a Bill
of Entry.
●Table 6 :Amendments to details of inward supplies furnished in returns for earlier tax
periods and details of debit notes/credit notes issued)
●Table 7 :Details of supplies received from composition taxable person and other
exempt/Nil rated/Non GST supplies received.
●Table 8 :Details of Credit received from ISD)
●Table 9 :Details of TDS and TCS credit received)
●Table 10 :Details of advances paid/advance adjusted on account of receipt of supply
●Table 11 :Details of Input Tax Credit Reversal/ Reclaim.
●Table 12 :Details of addition and reduction of amount in output tax for mismatch
and other reasons.
●Table 13 :HSN Summary of inward supplies.

GSTR 3/GSTR 3 B:
GSTR - 3 has a total of 15 tables - however the taxable person need not worry as most of
these will be pre-filled) Tables 3 to 11 are included within Part A, which will be
completely auto-populated Tables 12 to 15 are included within Part B, which will need to
be populated by the taxpayer.
The GSTR 3 format is as follows :
●Table 1 :GSTIN – It is state-wise PAN-based 15-digit Goods and Services Taxpayer
Identification Number (GSTIN) for each taxpayer. This column will
be auto-filled.
●Table 2 :Name of the Registered Person – Name of the taxpayer will be auto-filled at the
time of logging into the common GST Portal. Trade Name, if any, should be separately
provided.
●Table 3 :Turnover - Turnover of all types of supplies are consolidated under this
heading. Gross turnover needs to be bifurcated between:

1. Taxable Turnover
2. Export Turnover
3. Nil rated and Exempted Turnover
4. Non-GST Turnover.
5. Total Turnover (sum of above all).
●Table - 4 :Outward Supplies - All the details filed in GSTR - 1 will automatically come
under this heading. GSTR - 1 requires anassessee to furnish details of outward supplies.
All such information gets auto-populated under their respective subheadings which are as
follows :
1. Inter-State Supplies to Registered Taxable Person.
2. Intra-State Supplies to Registered Taxable Person.
3. Inter-State Supplies to Consumers.
4. Intra-State Supplies to Consumers.
5. Exports (including deemed exports).
6. Revision of Supply Invoices / Credit Notes / Debit Notes
7. Total Tax Liability on Outward Supplies
●Table 5 :Inward supplies attracting reverse charge including import of services (Net of
advance adjustments).
●Table 6 : Input Tax Credit - ITC received during the month – Total amount of eligible
input tax credit available on taxable inward supplies filed in GSTR - 2 relatingto inputs,
input services, and capital goods (including imports and ISD) will get auto-populated here.
●Table 7 :Addition and reduction of amount in output tax for mismatch and other
reasons.
●Table 8 :Total Tax Liability - Total Tax Liability for the month - All the outward supplies
and inward supplies declared above will be used to automatically calculate the tax liability
under this heading. Taxpayer will determine his tax liability from dealing in goods and
provision of services both. Also, a separate value will be shown for CGST, SGST, and IGST
respectively.
●Table 9 :Credit of TDS and TCS :
1. TDS credit – Any tax credit available by way of tax deducted at source will be auto
populated here from taxpayer’s GSTR 2.
2. TCS credit – Similar to TDS above, in the case of E-commerce market place sellers, any
amount of TCS collected by the E-commerce operator will be available here. This
information will again be flowing from the GSTR - 2 filed for the same period)
●Table 10 :Interest Liability - Interest Liability on late filing will be calculated here.
●Table 11 : Late Fee - This will include the details of the Late Fees that is being paid and
payable to the Central and the State Government.
●Table 12 :Tax payable and paid - This will include the details of the tax that is being paid
and payable to the Central and the State Government.
●Table 13: Interest, Late Fee and any other amount payable and paid - This will include
the details of the Interest and Late Fees that is being paid and payable to the Central and
the State Government.
●Table 14 :Refund claimed from Electronic cash ledger.
●Table 15 :Debit entries in electronic cash/Credit ledger for tax/interest payment - It
includes the details of the debit entries in cash ledger for tax/interest payment and it is to
be populated after payment of tax and submissions of return.

32. Write the steps for filing GSTR 1, GSTR -2, GSTR-3.

Same as question no 31.

33. Who files GSTR-6A.

GSTR 6 is a monthly return that has to be filed by an Input Service Distributor.

It contains details of ITC received by an Input Service Distributor and distribution of ITC.
There are a total of 11 sections in this return.
GSTR 6-A

GSTR 6A is an automatically generated form based on the details provided by the suppliers of an
Input Service Distributor in their GSTR 1.
GSTR-6A is a read-only form. Any changes to be made in GSTR-6A have to be done while filing
GSTR-6.
Note: You do not have to file GSTR-6A. It is a read-only document.
You can view GSTR-6A by going to the Return Dashboard on the GST Portal and clicking on
‘PREPARE ONLINE’ on GSTR6A tile.
34. What type of GST Returns, e-commerce operators need to file.
Form GSTR-8

It is mandatory for an e-commerce operator to obtain a GST registration and a TCS registration as well.
The e-commerce operators file GSTR-8. The responsibility for collection and remittance of the TCS to the
government is wholly on the e-commerce operator.
Prerequisites

A few prerequisites to filing GSTR 8 must be kept in mind:

▪ The person filing GSTR-8 must be an e-commerce operator
▪ E-commerce operator must be a registered taxpayer under the GST regime i.e he must have a 15digit
PAN based GST Identification Number (GSTIN)
▪ e-Commerce operators need to get themselves registered irrespective of the threshold limit. So, this
statement is not in accordance with the provisions of the law.
▪ Not opted for Composition scheme nor have a Unique Identification Number (UIN)
▪ Not a non-resident tax payer

35. What is Reverse Charge Mechanism?

Reverse Charge under GST is a very important topic. There are certain goods & services
which attract reverse charge. However, this is not all.
As per Sec 9(4) of CGST Act, if a registered person purchases goods/services from an
unregistered dealer (URD) then the registered taxpayer is liable to pay GST on reverse
charge basis. All the provisions of the Act will apply to such recipient as if he were the
person liable for paying the tax in relation to the supply of goods or services.
This provision will apply if the below conditions are met:
●There should be a supply of goods or services.
●The supply should be in respect of taxable goods/services.
●Supply must be by an unregistered person.
●Supply must be to a registered person.
●Supply must be an intra-state supply as compulsory registration is required for
interstate sales.

36. What are the activities specified as Negative List according to Schedule -III.
The law lists down matters which shall not be considered as ‘supply’ for GST by way of Schedule III.
Since these are transactions that are not regarded as ‘supply’ under the GST Laws, there is no
requirement to report the inward / outward supply of such activities in the returns.

1. Services by an employee to the employer in the course of or in relation to his employment.

2. Services by any court or Tribunal established under any law for the time being in force.
3. (a) the functions performed by the Members of Parliament, Members of State Legislature,
Members of Panchayats, Members of Municipalities and Members of other local authorities;

(b) The duties performed by any person who holds any post in pursuance of the provisions of
the Constitution in that capacity; or

(c) the duties performed by any person as a Chairperson or a Member or a Director in a

body established by the Central Government or a State Government or local authority and who
is not deemed as an employee before the commencement of this clause.

4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.

5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
6. Actionable claims, other than lottery, betting and gambling.
37.Mr. Ankur purchased goods for Rs. 8,00,000 and paid tax @ 5% from a dealer in same
locality. He sold Rs. 4,00,000 worth goods to Raj and collected tax from him. Record the
following transaction with the help of accounting Software.

In the given problem there is no inventory so we have to configure the tax rate at ledger
creation

Step 1. Create company in the name of Ankur

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name: Ankur Financial Year : 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana

Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : GST - Purchase

Under : Purchase Account
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : Goods
HSN / SAC : 1234
Nature of Transaction : Purchase Taxable
Integrated Tax : 5%
Central Tax : 2.5%
State Tax : 2.5%
Cess : 0%
Type of Supply : Goods

Ctrl +A to save
Name : GST- Sales
Under : Sales Account
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : Goods
HSN / SAC : 1234
Nature of Transaction : Sales Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods

Ctrl +A to save

Name : Supplier
Under : Sundry Creditor
State: Telangana
Registration type : Regular
GSTIN/UIN : 36AADCR6508A1ZQ
Ctrl + A to save

Name : Raj
Under : Sundry Debtor
State: Telangana
Registration type : Regular
GSTIN/UIN :36AABFJ9848C2Z8
Ctrl + A to save

Name : CGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Central Tax
Ctrl + A to save

Name : SGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : State Tax
Ctrl + A to save

Step 4 Voucher Entry

Gate of Tally > Accounting Voucher >

Click on F9 Purchase on right side button bar or press F9

Press Alt + I to convert into Accounting Invoice. And give the below particulars
Supplier Invoice No:25 Date:1-4-18
Party Name: Supplier

Particulars Amount
 GST- Purchase 800000
CGST 20000
SGST 20000
Total 840000
Ctrl + A

Click on F8 Sales on right side button bar or press F8

Press Alt + I to convert into Accounting Invoice. And give the below particulars

Reference No:1
Party Name: Raj

Particulars Amount
GST- Sales
400000
CGST
10000
SGST
10000
Total
420000
Ctrl + A

Step 5 Reports Gateway of Tally > Display > Statutory Reports > GST > GSTR3B

38. Mahesh Enterprises of Hyderabad purchased goods from Ashish Enterprises of Chennai,
he paid GST @ 28%. Record the transaction in accounting software

In the given problem there is no inventory so we have to configure the tax rate at ledger
creation
Step 1. Create company in the name of Mahesh Enterprises

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name: Mahesh Enterprises Financial Year: 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana
Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : IGST - Purchase

Under : Purchase Account
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : Goods
HSN / SAC : 1234
Nature of Transaction : Interstate Purchase Taxable
Integrated Tax : 28%
Central Tax : 14%
State Tax : 14%
Cess : 0%
Type of Supply : Goods

Ctrl +A to save

Name : Ashish Enterprises

Under : Sundry Creditor
State: Tamilnadu
Registration type : Regular
GSTIN/UIN :33AAACC6106G5Z4
Ctrl + A to save

Name : IGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type :Integrated Tax
Ctrl + A to save

Step 4 Voucher Entry

Gate of Tally > Accounting Voucher >

Click on F9 Purchase on right side button bar or press F9

Press Alt + I to convert into Accounting Invoice. And give the below particulars
Supplier Invoice No:50 Date:1-4-18
Party Name: Ashish Enterprises

Particulars
Amount
IGST- Purchase
100000
IGST
28000
Total
128000
Ctrl + A

Step 5 Reports Gateway of Tally > Display > Statutory Reports> GST > GSTR2> Select B2B
invoices -3, 4A

39.Create 3 stock items named milk, bread and Ice creams. Opening balances of these 3 stock items
would be milk – 10 litres, Bread– 20 Pkts and Ice creams – 25 numbers.Create 1 sundry debtor and 1
sundry creditorwithin state. Record a purchase entry of 5 liters of milk at 5% GST rate for 80 per litre,
10 Pkts of Bread for Rs.25 per pktat 5% GST rate and 30 numbers of Ice creams for 30 per Ice
creamat 18% GST rate. A sale entry 10liters of milk Rs.90 per liter, 15Pkts of Bread for Rs.40 per
pktand 35 numbers of Ice creams for 50 per Ice cream.

Step 1. Create company in the name of Mahesh Enterprises

Gateway of Tally >Press Alt+F3 > Create Company > fill the below particulars

Name: Kiran Dairy Products Financial Year: 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana
Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars
Enable Goods and Services Tax (GST) ? YES
Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3. Creation of Units of Measures (UOM)

Gateway of Tally > Inventory info > Units of Measures > Create
Type : Simple
Symbol :Nos
Formal name : Numbers
Unit Quantity Code (UQC) : No-Numbers
Number of decimal places : 0

Type : Simple
Symbol :Pkt
Formal name : Packet
Unit Quantity Code (UQC) : PAC- Packs
Number of decimal places : 0

Type : Simple
Symbol :Ltr
Formal name :Liters
Unit Quantity Code (UQC) : OTH _Others
Number of decimal places : 2

Step 4.Gateway of Tally > Inventory info > Stock Items > Create

Name: Milk
Under : Primary
Units :Ltr
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description : Milk
HSN Code: 2524
Calculation type : On Value
Taxability : Taxable
Integrated Tax : 5%
Central Tax : 2.5%
State Tax : 2.5%
Cess : 0%
Type of Supply : Goods

Ctrl +A to save

Name: Milk
Under : Primary
Units :Ltr
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description : Milk
HSN Code: 2524
Calculation type : On Value
Taxability : Taxable
Integrated Tax : 5%
Central Tax : 2.5%
State Tax : 2.5%
Cess : 0%
Type of Supply : Goods
Opening Balance Qty : 10 Ltr Rate 80 Per Ltr Value : 800

Ctrl +A to save

Name: Bread
Under : Primary
Units :Pkt
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description : Bread
HSN Code: 4141
Calculation type : On Value
Taxability : Taxable
Integrated Tax : 5%
Central Tax : 2.5%
State Tax : 2.5%
Cess : 0%
Type of Supply : Goods
Opening Balance Qty : 20 Pkt Rate 25 Per Pkt Value : 500
Ctrl +A to save

Name: Ice Cream

Under : Primary
Units :Nos
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description : Ice Cream
HSN Code: 5252
Calculation type : On Value
Taxability : Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods
Opening Balance Qty : 25Nos Rate 30 Per Nos Value : 750
Ctrl +A to save

Step 5 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : GST - Purchase

Under : Purchase Account
Is GST Applicable ? Applicable
Set / alter GST details ? NO
Type of Supply : Goods
Ctrl +A to save

Name : GST- Sales

Under : Sales Account
Is GST Applicable ? Applicable
Set / alter GST details ? NO
Type of Supply : Goods
Ctrl +A to save

Name : Supplier
Under : Sundry Creditor
State: Telangana
Registration type : Regular
GSTIN/UIN : 36AADCR6508A1ZQ
Ctrl + A to save

Name : Customer
Under : Sundry Debtor
State: Telangana
Registration type : Regular
GSTIN/UIN :36AABFJ9848C2Z8
Ctrl + A to save

Name : CGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Central Tax
Ctrl + A to save

Name : SGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : State Tax
Ctrl + A to save

Step 6
Gateway of Tally > Accounting Voucher > Press F9 for Purchase and Press Alt + I to convert into
Item invoice give the below particulars

Supplier Invoice No .50 Date: 1-4-18

Purchase ledger: GST- Purchase

Name of Item Quantity Rate per Amount

Milk 5 ltr 80.00 Ltr 400.00
Bread 10 Pkt 25.00 Pkt 250.00
Ice Cream 30 Nos 30.00 Nos 900.00
1550.00
CGST 97.25
SGST 97.25
1744.50

Ctrl + A to save
Press F8 for Sale and Press Alt + I to convert into Item invoice give the below particulars

Reference No .1 Date: 1-4-18

Purchase ledger: GST-Sales

Name of Item Quantity Rate per Amount

Milk 10 ltr 90.00 Ltr 900.00
Bread 15 Pkt 40.00 Pkt 600.00
Ice Cream 35 Nos 50.00 Nos 1750.00
3250.00
CGST 195.00
SGST 195.00
3640.00

Press Alt+ A for Tax Analysis and press Alt F1 for detail information

Ctrl + A to Save

Step 7 Report

Gateway of Tally > Display > Statutory Report > GST > GSTR3B
40. What is the value in GST invoices when Rs. 10000 worth of goods are purchased, GST tax rate @
5%. In second invoice two purchases of Rs 5000 worth goods GST rate @ 5% and another Rs 5000
GST @ 18%. Both the transactions are intra state and show the GST Tax ledgers.

Step 1. Create company in the name of Reeha Enterprises

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name: Reeha Enterprises Financial Year : 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana

Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : GST – Purchase @ 5%

Under : Purchase Account
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : Goods
HSN / SAC : 1234
Nature of Transaction : Purchase Taxable
Integrated Tax : 5%
Central Tax : 2.5%
State Tax : 2.5%
Cess : 0%
Type of Supply : Goods

Ctrl +A to save
Name : GST – Purchase @ 18%
Under : Purchase Account
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : Goods
HSN / SAC : 3214
Nature of Transaction : Purchase Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods

Ctrl +A to save

Name : Supplier
Under : Sundry Creditor
State: Telangana
Registration type : Regular
GSTIN/UIN : 36AADCR6508A1ZQ
Ctrl + A to save

Name : CGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Central Tax
Ctrl + A to save

Name : SGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : State Tax
Ctrl + A to save

Step 4 Voucher Entry

Gate of Tally > Accounting Voucher >

Click on F9 Purchase on right side button bar or press F9

Press Alt + I to convert into Accounting Invoice. And give the below particulars
Supplier Invoice No:65 Date:1-4-18
Party Name: Supplier

Particulars
Amount
GST- Purchase @ 5%10000
CGST
250
SGST
250
Total
10500
Ctrl + A

Click on F9 Purchase on right side button bar or press F9

Press Alt + I to convert into Accounting Invoice. And give the below particulars
Supplier Invoice No:85 Date:1-4-18
Party Name: Supplier

Particulars
Amount
GST- Purchase @ 5% 5000
GST – Purchase @ 18% 5000
CGST 575
SGST 575
Total
11150

Press Ctrl + A for Tax Analysis you will get the below screen

Press Esc and Save by press Ctrl + A

41. Mr. A sold goods to Mr. B for Rs. 20,000. Mr. A is charging packing charges of Rs. 800 and also
paying freight of Rs. 2800 from Mr. A’s premises to Mr. B’s premises. Mr. A also charged interest of
Rs. 750 for delay in payment. Determine the taxable value for levy of GST.Whether packing charges
or freight, Interstate required including in the invoice to determine taxable value? Show Tax Invoice
GST@ 12% (intra state supply).

Solution: As per GST law any additional expenses are charged in the invoice along with the stock
items the additional expenses are included in calculation of taxable value.

Step 1. Create company in the name of Mr. A Kumar

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name: Mr. A Kumar Financial Year : 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana

Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : GST – Sales @ 12%

Under : Sales Account
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : Goods
HSN / SAC : 1234
Nature of Transaction : Sales Taxable
Integrated Tax : 12%
Central Tax : 6%
State Tax : 6%
Cess : 0%
Type of Supply : Goods

Ctrl +A to save
Name : Packing charges
Under : Indirect Expenses
Is GST Applicable ? Not Applicable
Include in assessable value calculation for : GST
Appropriate to : Both
Method of calculation : Based on Value
Ctrl + A to save

Name : Freight Charges

Under : Indirect Expenses
Is GST Applicable ? Not Applicable
Include in assessable value calculation for : GST
Appropriate to : Both
Method of calculation : Based on Value
Ctrl + A to save

Name : Interest for delay payment

Under : Indirect Income
Is GST Applicable ? Not Applicable
Include in assessable value calculation for : GST
Appropriate to : Both
Method of calculation : Based on Value
Ctrl + A to save

Name : Customer
Under : Sundry Debtor
State: Telangana
Registration type : Regular
GSTIN/UIN :36AABFJ9848C2Z8
Ctrl + A to save

Name : CGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Central Tax
Ctrl + A to save

Name : SGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : State Tax
Ctrl + A to save

Step 4 Voucher Entry

Gate of Tally > Accounting Voucher >

Click on F8 Sales on right side button bar or press F

Press Alt + I to convert into Accounting Invoice. And give the below particulars
Reference No:65 Date:1-4-18
Party Name: Customer

Particulars
Amount
 GST- Sales @ 12%
20000
Packing Charges 800
Freight Charges
2800
Interest on delay payment
750
CGST
1461
SGST
1461
Total
27272

Press Alt + A for tax analysis and press Alt + F1 for detail you will get the following screen

Press Ctrl + A

42.Mr. X sold 1000 units of goods to Mr. Y for Rs. 20,000 and total unit sold during the year
to Mr. Y after including these units is 2500 unit. As per terms of the agreement if Mr. Y is
purchasing more than 2000 unit of goods in a year then Mr. X is allowing 10% discount in all
the supplies. Assuming IGST rate is 18%. How discount will be recorded?

Here in the given problem it is understand that there are some terms and conditions between
Mr X and Mr Y. as per terms if Mr Y is purchasing more than 2000 No’s in the financial year
then he will be getting the 10% discount on all the purchases made in the whole financial
year.

The calculation of discount is below

Total discount = number of units purchase in financial year * Rate per No’s *10%
Number of units purchased = 2500
Rate per unit = 20000/1000 = 20
Total discount = 2500*20*10%
Total discount = 5000

GST is levied on Discounts also. In tally discount should be posted in Debit Note

Let we see how to post the transactions in tally

Step 1. Create company in the name of Mr A & co

Gateway of Tally > Press Alt+F3 > Create Company > fill the below particulars

Name: Mr A & co Financial Year : 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana

Press Ctrl + A to Save the company

Gateway of Tally > Accounting info > Single Ledger > Create
Name : Turnover Discount
Under : Indirect Expenses
Is GST Applicable ? Applicable
Set / alter GST details ? Yes press F12 and make Yes to All columns
Description : Discount
HSN / SAC : 1234
Nature of Transaction : Inter State Purchase Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods
Ctrl + A Save

Name : IGST
Under : Duties & Taxes
Type of duty/tax : GST
Tax type : Integrated Tax
Ctrl + A Save

Name : Mr B
Under : Sundry Creditors
Country : India
State : Delhi
Registration type : Regular
GSTIN /UIN : 07AAJPK8851A1ZR
Ctrl + A Save

Step 3. Activation of Debit Note

Gateway of Tally > F11 > Inventory features >

Use debit and credit notes : Yes
Record credit notes in invoice mode : Yes
Record debit notes in invoice mode : Yes
Step 4 Accounting voucher
Gateway of Tally > Accounting Vouchers > press ctrl +F9 for Debit Note and enter the below
particulars

Original Invoice No. 1 Date : 1-4-18

Party Name : Mr B

Particulars Amount
Turnover Discount 5000
IGST 900

Total 5900

Ctrl + A Save

43. Create 5 stock items with GST @ zero tax rates, @ 5%, @12%, and @18%, record interstate
purchase and sale transactions. Show the details of input tax credit.

Goods purchased form Adish Enterprises GST No.07AAJPK8851A1ZR Delhi

Stock Item Qty Rate Gst Rate Rate Tax Total Amt
Jute 100 Kg 125 0% 12500 0 12500
Tea Powder 50 Kg 180 5% 9000 450 9450
Books 100 Nos 125 12% 12500 1500 14000
Biscuits 50 Pkt 20 18% 1000 180 1180
Paint 100 Ltr 225 28% 22500 6300 28800
57500 8430 65930

Goods purchased form Aditya Enterprises GST No.37AHLPK3851D1ZC Andhra pradesh

Stock Item Qty Rate Gst Rate Rate Tax Total Amt
Jute 75 Kg 150 0% 11250 0 11250
Tea Powder 45 Kg 250 5% 11250 562.5 11812.5
Books 90 Nos 150 12% 13500 1620 15120
Biscuits 45 Pkt 25 18% 1125 202.5 1327.5
Paint 85 Ltr 300 28% 25500 7140 32640
62625 9525 72150

Step 1. Create company in the name of Amar Enterprises

Gateway of Tally >Press Alt+F3 > Create Company > fill the below particulars

Name: Amar Enterprises Financial Year: 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana
Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3. Creation of Units of Measures (UOM)

Gateway of Tally > Inventory info > Units of Measures > Create
Type : Simple
Symbol :Nos
Formal name : Numbers
Unit Quantity Code (UQC) : No-Numbers
Number of decimal places : 0

Type : Simple
Symbol :Pkt
Formal name : Packet
Unit Quantity Code (UQC) : PAC- Packs
Number of decimal places : 0

Type : Simple
Symbol :Ltr
Formal name :Liters
Unit Quantity Code (UQC) : OTH _Others
Number of decimal places : 2

Type : Simple
Symbol : Kg
Formal name : Kilograms
Unit Quantity Code (UQC) :KGS-Kilograms
Number of decimal places : 2

Step 4. Gateway of Tally > Inventory info > Stock Items > Create

Name: Jute
Under : Primary
Units : Kg
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description : Jute
HSN Code: 2524
Calculation type : On Value
Taxability :Nil Rated
Type of Supply : Goods

Name: Tea Powder

Under : Primary
Units :Kgs
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description :Tea Powder
HSN Code: 4152
Calculation type : On Value
Taxability : Taxable
Integrated Tax : 5%
Central Tax : 2.5%
State Tax : 2.5%
Cess : 0%
Type of Supply : Goods

Name: Books
Under : Primary
Units :Nos
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description :Colour Books
HSN Code: 4178
Calculation type : On Value
Taxability : Taxable
Integrated Tax : 12%
Central Tax : 6%
State Tax : 6%
Cess : 0%
Type of Supply : Goods

Name: Biscuits
Under : Primary
Units :Pkt
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description :Biscuits
HSN Code: 1010
Calculation type : On Value
Taxability : Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods

Name: Paint
Under : Primary
Units :Ltr
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description :Paint
HSN Code: 4530
Calculation type : On Value
Taxability : Taxable
Integrated Tax : 28%
Central Tax : 14%
State Tax : 14%
Cess : 0%
Type of Supply : Goods

Step 5 Creation of Ledgers accounts

Gateway of Tally >Accounting info > Single Ledger > Create

Name : GST - Purchase

Under : Purchase Account
Is GST Applicable ? Applicable
Set / alter GST details ? NO
Type of Supply : Goods
Ctrl +A to save

Name : GST- Sales

Under : Sales Account
Is GST Applicable ? Applicable
Set / alter GST details ? NO
Type of Supply : Goods
Ctrl +A to save

Name : Adish Enterprises

Under : Sundry Creditor
State: Delhi
Registration type : Regular
GSTIN/UIN : 07AAJPK8851A1ZR
Ctrl + A to save

Name : Aditya Enterprises

Under : Sundry Debtor
State: Andhra Pradesh
Registration type : Regular
GSTIN/UIN :37AHLPK3851D1ZC
Ctrl + A to save

Name : IGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type :Integrated Tax
Ctrl + A to save

Step6 Voucher Entry

Gateway of Tally > Accounting Voucher > press F9 for purchases and press alt+I to convert into Item
invoice mode. And give the below particulars

Supplier invoice no. 254 Date: 1-4-18

Party Name: Adish Enterprises
Purchase ledger : GST – Purchase

Stock Item Quantity Rate Amount

 Jute 100 Kg 125 12500
Tea Powder 50 Kg 180 9450
Books 100 Nos 125 14000
Biscuits 50 Pkt 20 1180
Paint 100 Ltr 225 28800
57500
IGST 8430
Total 65930

Ctrl + A to save

Gateway of Tally> Accounting Voucher > press F for sales and press Alt+I to convert into Item
invoice mode. And give the below particulars

Ref No . 254 Date: 1-4-18

Party Name: Adish Enterprises
Purchase ledger : GST – Purchase

Stock Item Qty Rate Amount

Jute 75 Kg 150 11250
Tea Powder 45 Kg 250 11250
Books 90 Nos 150 13500
Biscuits 45 Pkt 25 1125
Paint 85 Ltr 300 25500
62625
IGST 9525
Total 72150

Ctrl + A to Save
Step 7 Report

Gateway of Tally > Display > Statutory Report > GST > GSTR3B
45. Mr. Ajay (Hyderabad) provides consultancy services to Mr. Vijay (unregistered, address on record
shows Tamil Nadu) and charged Rs.10000, levied GST @18%. Even provided consultancy services to
Mr. Anand (unregistered and address is not available) Rs.15000, GST @ 12%. Show the transactions
in Tally.

According to GST Law if there is any sale of services to unregistered persons in such case we have to
see the address of the service receiver if address is provided or available in the records then the place
of supply of services will be the place of residence of unregistered dealer. If the address is not
available in records the place of supply will be location of supply of service.

In the given problem services rendered to Mr. Vijay will be the interstate sale transaction because the
place of supply and receiver of service are different states and to Mr. Anand will be intrastate sale
because place of supply and receiver of suppler are same because the address is not in the record

Step 1. Create company in the name of Ajay Enterprises

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name: Ajay Enterprises Financial Year : 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana

Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : Consultancy services

Under : Sales
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : consultancy service
HSN / SAC : 1234
Nature of Transaction : Not applicable
Taxability : Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Services

Ctrl +A to save

Name : Mr. Vijay

Under : Sundry Debtor
State: Tamilnadu
Registration type : Unregistered
Ctrl + A to save

Name : Mr. Anand

Under : Sundry Debtor
Registration type : Unregistered
Ctrl + A to save

Name : CGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Central Tax
Ctrl + A to save

Name : SGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : State Tax
Ctrl + A to save

Name : IGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Integrated Tax
Ctrl + A to save

Step 4 Voucher Entry

Gate of Tally > Accounting Voucher >

Click on F8 Sales on right side button bar or press F8

Press Alt + I to convert into Accounting Invoice. And give the below particulars
reference No:01 Date:1-4-18
Party Name: Mr. Vijay

Particulars Amount
Consultancy services 10000
IGST 1800

Total 11800

Ctrl+A to save

In the same sales voucher post another entry of Mr. Anand

Reference No:02 Date:1-4-18
Party Name: Mr. Anand

Particulars Amount
Consultancy services 15000
CGST 900
SGST 900

Total 16800

Ctrl +A to save

46. Mrs Rani, resident of Hyderabad has a Bank account and with draws money from ATM in
Hyderabad. She went on tour and withdrawn Rs50000 from ATM in Kerala. Identify place of service,
type of taxes levied in both the cases.

In the situation 1 Mrs Rani has with draws money from ATM in Hyderabad the place of service is
Hyderabad as the place of service is in Hyderabad and location of service is also Hyderabad in the
same state so the charge of tax will be CGST and SGST

In the situation 2 Mrs Rani has withdrawn Rs. 50000 from ATM in Kerala. The place of service is
Kerala. Because the service is done in Kerala and location of service is also in Kerala in the same
state so the charge of tax will be CGST and SGST (the taxes will be charged by the Kerala)

47. M/s Pooja sold 250 laptops to M/s.Raj for Rs. 50,000 each.Tax Invoice was raised. They were
given discount of Rs.5000. M/s Raj returned 250 laptops .Assuming GST rate is 18%. Show discount
and GST ledger.

In the given problem it is assumed that discount will not have any effect of GST discount is assumed
as on account.

Step 1. Create company in the name of M/s Pooja

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name: M/s Pooja Financial Year : 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana

Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : GST – Sales

Under : Sales Account
Is GST Applicable ? Applicable
Set / alter GST details ? No
Type of Supply : Goods

Ctrl +A to save

Name : M/s Raj

Under : Sundry Debtor
State: Telangana
Registration type : Regular
GSTIN/UIN :36AABFJ9848C2Z8
Ctrl + A to save

Name: Discount
Under : Indirect Expenses
Type of ledger : Discount
Ctrl + A to save

Name : CGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Central Tax
Ctrl + A to save

Name: SGST
Under: Duties & Taxes
Type of Duty /Tax: GST
Tax Type: State Tax
Ctrl + A to save

Step 3 Creation of Stock Items

Gateway of tally >> Inventory Info >> Units of Measure >> Create
Symbol: Nos
Formal Name : Numbers
Unit quantity code (UQC) : Nos-Numbers

Gateway of tally >> Inventory Info >> stock items >> Create
Name: Laptop
Under : Primary
Units :Nos
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description :Laptop
HSN Code: 7510
Calculation type : On Value
Taxability : Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods

Step 4 Voucher Entry

Gate of Tally > Accounting Voucher >

Click on F8 Sales on right side button bar or press F8

Press Alt + I to convert into Item Invoice. And give the below particulars
Reference No:65 Date:1-4-18
Party Name: Raj

Activation of Debit Note / Credit Note

Gateway of Tally > F11 > Inventory features >

Use debit and credit notes : Yes
Record credit notes in invoice mode : Yes
Record debit notes in invoice mode : Yes
 Step 4 Accounting voucher
Gateway of Tally > Accounting Vouchers > press ctrl +F8 for Debit Note and enter the below
particulars

48. Assume five intra state purchase and sale transactions and show Input tax credit in Tally.

Purchase:
Party Name State GSTIN Item Qty Rate Amount GST Tot. Amt
Primodia Gujarat 24AAACC6106G2Z6 computer 10 25000 250000 45000 295000
Vijay Textiles Maharastra 27AAACC6106G4ZY computer 5 25000 125000 22500 147500
Deltra Global Karnataka 29AAACC6106G1ZX computer 12 25000 300000 54000 354000
Lallu Pvt Ltd Kerala 32AAACC6106G3Z8 computer 15 25000 375000 67500 442500
Bheema & Co Tamilnadu 33AAACC6106G5Z4 computer 20 25000 500000 90000 590000

Sales

Tot.
Party Name State GSTIN Item Qty Rate Amount GST Amt
Kiran Kumar Gujarat 24AAACC6106G2Z6 computer 5 30000 125000 22500 147500
Kishore Maharastra 27AAACC6106G4ZY computer 3 30000 75000 13500 88500
Reeha Enterprises Karnataka 29AAACC6106G1ZX computer 8 30000 200000 36000 236000
Anviksha & Co Kerala 32AAACC6106G3Z8 computer 10 30000 250000 45000 295000
Kumar & Co Tamilnadu 33AAACC6106G5Z4 computer 15 30000 375000 67500 442500

Step 1. Create company in the name of Villa Computers Solutions Pvt. Ltd.

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name: Villa Computers Solutions Pvt. Ltd. Financial Year : 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana

Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : GST – Sales

Under : Sales Account
Is GST Applicable ? Applicable
Set / alter GST details ? No
Type of Supply : Goods

Ctrl +A to save

Name : GST – Purchase

Under : Sales Account
Is GST Applicable ? Applicable
Set / alter GST details ? No
Type of Supply : Goods

Ctrl +A to save

Name : Primodia
Under : Sundry Creditor
State: Gujarat
Registration type : Regular
GSTIN/UIN :24AAACC6106G2Z6
Ctrl + A to save

Name : Vijay Textiles

Under : Sundry Creditor
State: Maharastra
Registration type : Regular
GSTIN/UIN :27AAACC6106G4ZY

Ctrl + A to save
Name : Deltra Global
Under : Sundry Creditor
State: Karnataka
Registration type : Regular
GSTIN/UIN :29AAACC6106G1ZX
Ctrl + A to save

Name : Lallu Pvt. Ltd

Under : Sundry Creditor
State: Kerala
Registration type : Regular
GSTIN/UIN :32AAACC6106G3Z8
Ctrl + A to save

Name : Bheema & Co

Under : Sundry Creditor
State: Tamil Nady
Registration type : Regular
GSTIN/UIN :33AAACC6106G5Z4
Ctrl + A to save

Name : Kiran Kumar

Under : Sundry Debtor
State: Gujarat
Registration type : Regular
GSTIN/UIN :24AAACC6106G2Z6
Ctrl + A to save

Name : Kishore
Under : Sundry Debtor
State: Maharastra
Registration type : Regular
GSTIN/UIN :27AAACC6106G4ZY

Ctrl + A to save

Name : Reeha Enterprises

Under : Sundry Debtor
State: Karnataka
Registration type : Regular
GSTIN/UIN :29AAACC6106G1ZX
Ctrl + A to save

Name : Anviksha & Co

Under : Sundry Debtor
State: Kerala
Registration type : Regular
GSTIN/UIN :32AAACC6106G3Z8
Ctrl + A to save
Name : Kumar & Co
Under : Sundry Debtor
State: Tamil Nady
Registration type : Regular
GSTIN/UIN :33AAACC6106G5Z4
Ctrl + A to save

Name : IGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Integrated Tax
Ctrl + A to save

Step 3 Creation of Stock Items

Gateway of tally >> Inventory Info >> Units of Measure >> Create
Symbol: Nos
Formal name : Numbers
Unit quantity code (UQC) : Nos-Numbers

Gateway of tally >> Inventory Info >> stock items >> Create

Name: Computer
Under : Primary
Units :Nos
GST Applicable : Applicable
Set/alter GST Details ? Yes
Description: Computer
HSN Code: 8471
Calculation type: On Value
Taxability: Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods

Step 4 Voucher Entry

Gate of Tally > Accounting Voucher >

Click on F9 Purchase on right side button bar or press F9

Press Alt + I to convert into Item Invoice. And give the particulars as below

Supplier Invoice No. : 252 Date: 1-4-18

Party name : Primodia
Purchase Ledger : GST – Purchase

Name of Item Qty Rate Amount

Computer 10 25000 250000

IGST 45000
 Total 295000

Ctrl + A Save

Supplier Invoice No. : 022 Date: 1-4-18

Party name : Vijay Textiles
Purchase Ledger : GST – Purchase

Name of Item Qty Rate Amount

Computer 05 25000 125000

IGST 22500

Total 147500
Ctrl + A Save

Supplier Invoice No. : 048 Date: 1-4-18

Party name : Deltra Global
Purchase Ledger : GST – Purchase

Name of Item Qty Rate Amount

Computer 12 25000 300000

IGST 54000

Total 354000

Ctrl + A Save

Supplier Invoice No. : 0488 Date: 1-4-18

Party name : Lallu Pvt Ltd
Purchase Ledger : GST – Purchase

Name of Item Qty Rate Amount

Computer 15 25000 375000

IGST 67500

Total 442500

Ctrl + A Save

Supplier Invoice No. : 018 Date: 1-4-18

Party name : Bheema & Co
Purchase Ledger : GST – Purchase

Name of Item Qty Rate Amount

Computer 20 25000 500000

IGST 90000

Total 590000

Ctrl + A Save
Click on F8 Sales on right side button bar or press F8
Press Alt + I to convert into Item Invoice. And give the particulars as below

Ref No. : 01 Date: 1-4-18

Party name : Kiran Kumar
Purchase Ledger : GST – Sales

Name of Item Qty Rate Amount

Computer 05 30000 150000

IGST 27000

Total 177000
Ctrl + A Save

Ref No. : 01 Date: 1-4-18

Party Name : Kiran Kumar
Purchase Ledger : GST – Sales

Name of Item Qty Rate Amount

Computer 05 30000 150000

IGST 27000

Total 177000

Ctrl + A Save

Ref No. : 03 Date: 1-4-18

Party Name : Reeha Enterprises
Purchase Ledger : GST – Sales

Name of Item Qty Rate Amount

Computer 08 30000 240000

IGST 43200

Total 283200

Ctrl + A Save

Ref No. : 04 Date: 1-4-18

Party Name : Anviksha & Co
Purchase Ledger : GST – Sales

Name of Item Qty Rate Amount

Computer 10 30000 300000

IGST 54000

Total 354000

Ctrl + A Save
Ref No. : 05 Date: 1-4-18
Party Name : Kumar & Co
Purchase Ledger : GST – Sales

Name of Item Qty Rate Amount

Computer 15 30000 450000

IGST 81000

Total 531000

Ctrl + A Save

Reports
Gateway of Tally >> Display >> Statutory Reports >> GST >> GSTR3B

49. Out ward supplies, B2B, Goods sold to R dealer Rs. 120000, Goods sold to Customer (B2C)
Rs.15000, Goods sold to Interstate dealer Y Rs. 150000. Assuming GST @ 18% show the effect of
outward supplies in GST Return.

Step 1. Create company in the name of P.U Solutions Pvt. Ltd.

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name: P.U Solutions Pvt. Ltd. Financial Year : 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana

Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : Y Dealer
Under : sundry debtor
State: Tamil Nadu
Registration type : Regular
GSTIN/UIN :33AAACC6106G5Z4
Ctrl + A to save

Name : R Dealer
Under : sundry debtor
State: Telangana
Registration type : Regular
GSTIN/UIN :36AJCPS0057SJ1Z5
Ctrl + A to save

Name : IGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Integrated Tax
Ctrl + A to save

Name : CGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Central Tax
Ctrl + A to save

Name: SGST
Under: Duties & Taxes
Type of Duty /Tax: GST
Tax Type: State Tax
Ctrl + A to save

Name : GST- Sales

Under : Sales Account
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : Goods
HSN / SAC : 1234
Nature of Transaction : Sales Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods

Ctrl + A Save
Name : IGST- Sales
Under : Sales Account
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : Goods
HSN / SAC : 1234
Nature of Transaction : Interstate Sales Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods
Ctrl + A save

Voucher Entry
Gateway of Tally >> Accounting Voucher

Click on F8 Sales on right side button bar or press F8

Press Alt + I to convert into Accounting Invoice. And give the particulars as below

Ref No. 1
Party Name : R Dealer
Particulars Amount
GST – Sales 120000
CGST 10800
SGST 10800

Total 141600

Ctrl + A Save

Ref No. 2
Party Name : Cash
Select GST registration type as consumer in dispatch detail
Particulars Amount
GST – Sales 15000
CGST 1350
SGST 1350

Total 1770

Ctrl + A Save

Ref No. 3
Party Name : Y Dealer
Particulars Amount
IGST – Sales 150000
IGST 27000

Total 177000

Ctrl + A Save

Reports
Gateway of Tally >> Display >> Statutory Report >> GST>> GSTR1

50. Purchased goods from registered dealer M/s Modern, Rs. 50000 and Rs. 5000 was paid as
advance, Purchased goods from unregistered dealer M/s. Ram Rs. 40000. Purchased goods
from interstate dealer M/s Jyothi. Rs. 75000. Goods returned to M/s Jyothi Rs.5000, after
raising tax invoice. Record Inward supplies in Tally.

Step 1. Create company in the name of Karunya Enterprises.

Gateway of Tally >Press Alt+F3>Create Company > fill the below particulars

Name: Karunya Enterprises. Financial Year : 1-4-2018

Address : Hyderabad Books Beginning from : 1-4-2018.
Country : India
State: Telangana

Press Ctrl + A to Save the company

Step 2. Configuration of GST in Tally

Gateway of Tally > Press F11-Company Features > Statutory &Taxation give the following
particulars

Enable Goods and Services Tax (GST) ? YES

Set / alter GST details ? Yes
State: :Telangana
Registration type : Regular
Assessee of Other Territory : No
GSTIN / UIN : 36AJCPS0057J1Z5
Applicable form : 1-4-2018.
Periodicity of GSTR-1 : Monthly

Press Ctrl+ A to Save

Step 3 Creation of Ledger Accounts.

Gateway of Tally >Accounting info > Single Ledger > Create

Name : M/s Modern

Under : Sundry Creditor
State: Telangana
Registration Type : Regular
GSTIN/UIN :36AJCPS0057J1Z5
Ctrl + A to save

Name : Ram
Under : Sundry Creditor
State: Telangana
Registration type : Unregistered
Ctrl + A to save

Name : M/s Jyoth

Under : Sundry Creditor
State: Maharastra
Registration type : Regular
GSTIN/UIN :27AAACC6106G4ZY

Name : IGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Integrated Tax
Ctrl + A to save

Name : CGST
Under : Duties & Taxes
Type of Duty /Tax : GST
Tax Type : Central Tax
Ctrl + A to save

Name: SGST
Under: Duties & Taxes
Type of Duty /Tax: GST
Tax Type: State Tax
Ctrl + A to save

Name : GST- Purchase

Under : Purchase Account
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : Goods
HSN / SAC : 1234
Nature of Transaction : Purchase Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods

Ctrl + A Save
Name : IGST- Purchase
Under : Purchase Account
Is GST Applicable ? Applicable
Set / alter GST details ? Yes and press F12 and make Yes to All columns
Description : Goods
HSN / SAC : 1234
Nature of Transaction : Interstate Purchase Taxable
Integrated Tax : 18%
Central Tax : 9%
State Tax : 9%
Cess : 0%
Type of Supply : Goods
Ctrl + A save

Voucher Entry
Gateway of Tally >> Accounting Voucher

Click on F9 Purchase on right side button bar or press F9

Press Alt + I to convert into Accounting Invoice. And give the particulars as below

Ref No. 52
Party Name : M/s Modern
Particulars Amount
GST – Purchase 50000
CGST 4500
SGST 4500

Total 59000

Ctrl + A Save

Select payment voucher or press F5

Account : Cash
Particulars Amount
M/s Modern 5000

Select the method of adjustment as Agst ref and select 52

Ctrl + A save

Click on F9 Purchase on right side button bar or press F9

Press Alt + I to convert into Accounting Invoice. And give the particulars as below
Press F12 configuration (Allow modification of tax details for GST – Yes)
Ref No. 25
Party Name : M/s Modern
Particulars Amount
GST – Purchase 40000

Select purchase from unregistered Dealer – Taxable from classification /Nature

Total 40000

Ctrl + A Save

Ref No. 255

Party Name : M/s Jyothi
Particulars Amount
IGST – Purchase 75000
IGST 13500

Total 88500

Ctrl + A Save

Activate Debit Note and Credit Note from Gateway of Tally F11 Company Feature >>
Inventory Features >> Use Debit Note Notes and Credit Notes – YES and Record Debit
Notes in invoice – YES

Click on Ctrl + F9 Debit Note

Press Alt + I to convert into Accounting Invoice. And give the particulars as below

Original invoice no . 255

Party Name : M/s Jyothi
Particulars Amount
IGST – Purchase 5000
IGST 900

Total 5900

Ctrl + A Save

Reports
Gateway of Tally >> Display >> Statutory Reports >> GST >> GSTR2