Railway Accounts Department Examinations

Showing posts with label Goods & Service Tax. Show all posts
Showing posts with label Goods & Service Tax. Show all posts

Tuesday, December 25, 2018

Composition Scheme in GST

Composition Scheme

ü  Opted by any Taxpayer whose turnover is less than Rs. 1.5 Crores  (Rs.75 Lakhs in case of North Eastern States).

ü  A simple and easy scheme under GST for taxpayers.

ü  Taxpayers who opted Composition scheme can get rid of tedious GST formalities

ü  Pay GST at a fixed rate of turnover.

ü  Service Providers are not eligible for Composition Scheme.  But Restaurants are eligible.

ü  GST rates under Composition scheme are as follows.

Type of Business
Manufacturer and Trader
0.5 %
1 %
5 %

Who cannot opt for Composition Scheme

ü  Supplier of services
ü  Manufacturer of ice cream, pan masala, or tobacco
ü  Businesses which supply goods through an e-commerce operator
ü  A dealer, who carrying out Inter-State transactions.


ü  Lesser compliance i.e., returns, maintaining books of record, Issuance of invoices.
ü  Limited tax liability.
ü  High liquidity as taxes are at a lower rate i.e., 5% or 1%.


ü  A limited territory of business. The dealer is barred from carrying out inter-state transactions
ü  No Input Tax Credit available to composition dealers
ü  The taxpayer will not be eligible to supply exempt goods or  goods through an e-commerce portal.

ITC - Input Tax Credit

Input Tax Credit
·         What is Input Tax Credit ? 

Ans:  Input Tax Credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs and pay the balance amount.

Example: A is a manufacturer.  Tax payable on the manufactured product is Rs. 200 /-.  However he already paid tax Rs. 75/- at the time of purchase of Raw materials.  So he can pay balance tax Rs. 125/- (i.e., Rs. 200 - Rs.75/-). duly availing the Input Tax Credit to the extent of Rs. 75/-.  Otherwise, he would be liable to pay the tax two times i.e., at the time of purchasing Raw Materials and Selling of manufactured product.

On manufacture of goods
Tax liability
On purchase of Raw materials
Rs. 75 /-
Already paid.
Balance Tax to be paid
Rs. 125/-
To be paid (duly availing Rs.75/- as ITC)

·         ITC is one of the fundamental features of GST

·         Seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country.

·         A person registered under composition scheme in GST cannot claim ITC.

ü  ITC can be claimed only for business purposes. ITC will not be available for goods or services exclusively used for: a. Personal use b. Exempt supplies c. Supplies for which ITC is specifically not available

Tuesday, December 18, 2018

GST - Goods & Service Tax

GST - Goods & Service Tax
·         W.e.f  01.07.2017

·         Biggest reform in the Indirect tax regime.

·         One Nation  - One Tax  - One Market

·         Formulae is IGST(5%) = CGST (2.5%) + SGST/UTGST (2.5%)

·         Single Tax - Right from the Manufacturer to consumer.

·         Transaction based tax.

·         Five tax slabs  - 0%, 5%, 12%, 18% and 28%

·         GST - governed by GST council which consists of Finance Ministers of Union Government and All states.

·         Changed  from Origin based tax to Destination based Tax.

Levied by the Central Govt

Levied by the State Govt

Levied by the UT Govt

Levied by the Central Govt on interstate supplies and on Imports of Goods

·         The following Central and State taxes are subsumed/included/merged into GST:
a)      Central Excise Duty (including additional duties of Excise)
b)      Service tax
c)      CVD (Levied on imports in lieu of Excise Duty)
d)      SACD (Levied on imports in lieu of VAT)
e)      Central Sales Tax(CST)
f)       Surcharges and Cesses.
g)      Octroi/Entry tax
h)      Purchase tax
i)        VAT
j)        Entertainment tax
k)      Luxury tax
l)        Tax on lottery, betting and gambling

·         The following taxes are not subsumed/ not included into GST
1.      Income Tax
2.      Customs duty
3.      Export duty
4.      Property tax
5.      Stamp duty
6.      Seniorage charges
GST is not applicable  on Petroleum products, Electricity and Alcohol.

·         The list of exempted Goods and Services are kept to a minimum and harmonised for Centre and States as far as possible.
·         The credit permitted to be utilised in the following manner:
a)      ITC of CGST allowed for payment of CGST & IGST in that Order.
b)      ITC of SGST allowed for payment of SGST & IGST in that Order.
c)      ITC of IGST allowed for payment of IGST, CGST & SGST.
ü  Full form : Goods & Service Tax Identification Number

ü  Assigned to every GST dealer.

ü  15 digit GSTIN based on State wise PAN (Permanent Account Number)

State Code
PAN number of the Tax payer
No of registration within the state
Check Code

·         Create unified common national market for India.
·         Giving a boost to Foreign Investment and “Make in India Campaign”
·         Boost export and Manufacturing activity and leading to substantive economic growth.
·         Help in poverty eradication by generating more employment.
·         Uniform SGST and IGST rates reduce the incentive for tax evasion.
·         Simple tax based system online
·         Uniform prices followed throughout the country.
·         Transparency prevails in taxation system.
·         Higher threshold achieved for registration.
·         Composition scheme for small business
·         The number of compliance is lesser.
·         Defined treatment for E-commerce operations
·         Improved efficiency of logistics
·         Unorganised sector is regulated under GST