FAQ-Taxability & Valuation

Q 1.
What is the taxable event in GST – will it be manufacturing as is presently in case of

excise or sale as is in case of Sale tax?
Ans. Unlike Excise where the taxable event is manufacturing or sales in case of Sale Tax, the
taxable event in case of GST will be “Supply” of Goods & Services.
Q 2. What is the meaning of the term Supply?

Ans.GST law defines supply as-
Supply includes—
 All forms of supply of goods and/or services made or agreed to be made for a
consideration by a person in the course or furtherance of business
 Importation of services, for a consideration whether or not in the course or
furtherance of business
 Activities specified in schedule I made or agreed to be made without a consideration.
Q 3. Whether self consumption of goods & services will be subject to GST?

Ans. Under GST, taxable event is supply of goods from one taxable person to another
taxable person. Accordingly self consumption of goods & services by same taxable person is
not chargeable to tax.
Q 4. Whether stock transfer of goods within the organisation will also be taxable?
Ans. Stock transfer of goods between the locations/place of business within the State
registered under one registration won’t be taxable. However, Interstate stock transfer of
products, consumables & other materials will be taxable.
Further in case organisation holds more than one registration in a single state, then stock
transfer between locations under these registrations will be taxable.
Q 5. How will exports be taxed under GST?

Ans. No tax will be payable on export of goods & services under GST. They will be treated as
zero rated supply.
As per IGST Law, Zero rated supply means any of the taxable supply of Goods & or services,
namely-
 Export of goods and/or services
 Supply of goods and/or services to a SEZ developer or an SEZ unit.
Q 6. What is the impact on tax credit if supply is considered as Zero Rated supply?
Ans. Subject to provisions of Sec 17(2) of CGST Act, Credit of input tax can be availed for
making zero rated supplies.
Q 7. How will imports be taxed under GST?
Ans. Imports will be treated as interstate transactions. Accordingly, IGST will be levied on
import of goods & services.
Q 8. How the tax liability shall be determined in case of a composite supply?

Ans. Composite supply comprising two or more supplies, one of which is a principal supply,
shall be treated as a supply of such principal supply and the tax applicable to principal
supply will be applicable on total contract value.
Q 9. How the tax liability shall be determined in case of a mixed supply?

Ans. In case of mixed supply comprising two or more supplies, the particular supply which
attracts highest rate of tax will be applicable to entire contract value.
Q 10. Whether works contract will be treated as supply of goods or supply of service?
Ans. Works contract will be treated as supply of service as the same is provided in Schedule
II of GST law.
Q 11. Whether works contract will be considered as composite supply or mixed supply or
none of them?
Ans. Since works contract will be considered as supply of services and should be subject to a
single rate of tax, it will neither be composite supply or mixed supply.
Q 12. Whether transfer of right to use goods will be treated as supply of goods or supply
of service? Why?
Ans. As per schedule II of CGST Act, transfer of right to use goods will be considered as
supply of services as there is no transfer of title in such supply.
Q 13. Whether goods supplied on hire purchase basis will be treated as supply of goods or
supply of services? Why?
Ans. Supply of goods on hire purchase shall be treated as supply of goods as there is transfer
of title, albeit at a future date.
Q 14. An individual buys a motor vehicle for personal use and after a year sells it to a
dealer. Will the transaction be a supply under GST law?
Ans. No, because supply is not made by the individual in the course or furtherance of
business. Further, no input tax credit was admissible on such car at the time of its
acquisition as it was meant for non-business use.
Q 15. When does the liability to charge GST arise in respect of supply of goods and
services?
Ans.
S.no. In case of Goods earlier of following In case of Services earlier of following
1 Date of issue of invoice by the supplier Date of issue of invoice by the supplier
OR last date of issue of invoice. Last date OR Last date of issue of invoice i.e. within
of issue of invoice means- 30 days from provision of service.
i. Removal of goods for supply to the
recipient where supply involves
movement
ii. Delivery of goods in other cases.
2 Date on which the supplier receives the Date on which the supplier receives the
payment with respect to the supply payment with respect to the supply
Q 16. Whether there will be any reverse charge mechanism like in case of service tax?
Ans. GST law contains provision for reverse charge mechanism (RCM). Further in case of
GST, RCM will not be limited only to services & will be applicable for Goods also.
Government may on recommendation of council specify categories of supply of goods &/or
services on which RCM will be applicable.
Q 17. When does the liability to charge GST arise in respect of supply of goods and
services?
Ans.
S.no. In case of Goods earlier of following In case of Services earlier of following
1 Date of Receipt of Goods Date on which payment is made

2 Date on which payment is made Date immediately following 60 days from
invoice date by supplier
3 Date immediately following 30 days from Entry date in recipients books where
invoice date by supplier above 2 cannot be applied.
4 Entry date in recipients books where
above 3 cannot be applied.
Q 18. What is the value on which GST will be levied?

Ans. GST will be charged on transaction value i.e. price actually paid or payable for supply of
goods & services where supplier & recipient are not related and price is sole consideration
for supply. There are specific inclusions & exclusions which are to be considered to compute
the transaction value on which GST will be levied.
Q 19. Are there separate valuation provisions for CGST, SGST and IGST on Goods and
Services?
Ans. There are no separate valuation provisions for CGST, SGST & IGST. These taxes will be
levied on same transaction value.
Q 20. Whether interest charged for any delayed payment will also form part of
Transaction Value?
Ans. Unlike present taxation regime, Interest on delayed payment will form part of
transaction value & will be subject to GST levy.
Q 21. Whether discount given to customer are to be excluded from transaction value?
Ans. Discount offered to customer will be excluded from transaction value for levy of GST if
discount is given before or at time of supply & recorded on invoice.
Further after supply discounts will be excluded provided following conditions are met-
i. Such discount is established as per an agreement entered into at or before the time of
such supply and specifically linked to relevant invoices.
ii. Input tax credit has been reversed by the recipient attributable to the discount on the
basis of document issued by the supplier.
Q 22. Whether any TDS will be deducted under GST?

Ans. GST law contains provision for TDS also. Government may notify persons or category of
persons who will be required to deduct TDS. TDS to be deducted at the rate of 2% in cases
where total value of supply under a contract exceeds two lakh and fifty thousand rupees.

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Q 1.

What is the taxable event in GST – will it be manufacturing as is presently in case of

Q 2. What is the meaning of the term Supply?

Q 3. Whether self consumption of goods & services will be subject to GST?

Q 5. How will exports be taxed under GST?

Q 8. How the tax liability shall be determined in case of a composite supply?

Q 9. How the tax liability shall be determined in case of a mixed supply?

1 Date of Receipt of Goods Date on which payment is made

Q 18. What is the value on which GST will be levied?

Q 22. Whether any TDS will be deducted under GST?

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