Custom Duty and Import Duty in India

Custom Duty in India

Custom Duty is levied when goods are transported across borders between countries. It is the tax that governments impose on export and import of goods. The tax imposed on the import of goods is known as the import duty. Whereas, the tax imposed on the export of goods is known as the export duty. Customs Duty is beneficial for many reasons. For instance, it ensures a country’s economic stability, jobs, environment, among others. It regulates the movement of goods in and out of the country. It keeps a check on restricted items.

In the past few months, the government of India brought a major change in the tax systems of the nation. They introduced GST (Goods and Services Tax), a new tax collection system, which is a destination-based tax, which implies that the consumers are liable to pay tax when they use any goods and services.

GST has three categories –

  1. CGST (Central Goods and Services Tax),
  2. SGST (States Goods and Services Tax) and
  3. IGST (Integrated Goods and Services Tax).

Both CGST and SGST are applicable on the intra-state transactions whereas the IGST is applicable on the inter-state transactions. If the business is in the union territory, then UTGST will apply in place of SGST. The custom duty is now replaced by IGST, which means that instead of the custom duty, IGST tax is applicable (along with other applicable customs duties) on every import and export of goods and services. Let us understand IGST tax better.

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IGST: GST for Importers

Earlier, the tax system was complex and custom duty was levied to export and import goods and services. Multiple taxes such as countervailing duty (CVD), basic custom duty, anti-dumping duty, and safeguard duty were imposed on every import of goods and services. Under GST, these multiple taxes have been replaced by just one tax known as IGST (Integrated Goods and Services Tax). Only the integrated tax and the basic customs duty will be chargeable on the import of goods.

Import of goods refers to bringing merchandise into India from anywhere outside of India as per the IGST Act 2017. All the imports will be regarded as inter-state supplies and integrated tax will be imposed on them along with other applicable customs duties.

Calculation of IGST

GST can be calculated simply by multiplying the Taxable amount by GST rate. One must know that the tax on goods is imposed as per the size, mass, and extent of the imported and exported goods. The IGST tax for imports will be received by the State where the goods or services are consumed and not by the state where they are manufactured. Mentioned below is an example of the calculation of IGST on the import of goods:

For example,

The assessable value of an imported item is INR 10000/-
Basic Customs Duty = 10%
Integrated Tax Rate = 18%
The taxes will be calculated as follows:
Assessable Value = INR 10000/-
Basic Customs Duty = INR 1000/-
The value to impose integrated tax = INR 11000/- (10000 + 1000 = 11000)
Integrated tax = 18% of INR 11000 = INR 1980/-
Sum of Taxes = INR 1000 + INR 1980 = INR 2980/-

In addition to the above IGST, cess as per the GST Cess Act, 2017 may also be applicable on the goods. In such a case, the cess will be collected on the value taken for imposing the integrated tax. According to the example given above, the cess will be calculated on INR 11000.

Importers will not be liable to pay integrated taxes at the time of moving of commodities from a custom station to warehouse.

Input Tax Credit

Input Tax Credit under GST means the credit of input tax paid on import/purchases. A registered importer can claim the credit of the IGST imposed on him as the input tax credit under the GST system. The importer can offset the same input tax credit against the tax on the outward supply of goods. However, the Basic Customs Duty (BCD) paid will not be allowed to be claimed as the input tax credit. Along with the input tax credit, the importer can also benefit from the GST Compensation Cess before transmitting it to the ones in the supply chain. It is compulsory for the importers to mention the GSTIN (GST Registration Number) in the Bill of Entry in order to get the input tax credit of GST Compensation Cess and IGST.

Calculate Input Tax Credit online: ITC calculator
Input Tax Credit under GST means the credit of input tax paid on purchases. ITC can be used to set of against the CGST, SGST and IGST outward tax liabiliy.
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Calculate Input Tax Credit online: ITC calculator
Input Tax Credit under GST means the credit of input tax paid on purchases. ITC can be used to set of against the CGST, SGST and IGST outward tax liabiliy.
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What is the Import of Service under GST?

Import Of Service

Import of services as per the IGST Act 2017 means the supply of any service where:

  1. The supplier of service is located outside India
  2. The recipient of service is located in India, and
  3. The place of supply of service is in India

As per the provisions of Section 7(1) (b) of the CGST Act, 2017, import of services with consideration whether or not in the course or furtherance of business, will be considered as supply. In simple terms, the services that are imported without consideration will not be considered as a supply. However, the business test is not obligatory for the imported services to be deemed as a supply.

Import of services by a taxable person between related entities in the course or furtherance of business will be treated as supply, even if it is made without any consideration. Thus, import of some services by an Indian branch or foreign subsidiary from their parent company, in the course or furtherance of business, even without consideration, will be a supply and shall be subject to GST.

OIDAR Services

OIDAR services or Online Information and Database Access or Retrieval Services attract GST. Persons providing OIDAR services should mandatorily acquire GST registration. Also, a person who is importing services will be liable to pay tax on a reverse charge basis. However, in respect of the import of online information and database access or retrieval services (OIDAR) by unregistered, non-taxable recipients, the supplier located outside India will be responsible for the payment of taxes. The supplier will either have to take registration or assign a person in India for paying the taxes.

Supply to SEZ

Supply of goods or services or both to a Special Economic Zone Developer or an SEZ unit shall apply as inter-state supply and will be subject to levy of IGST.

GST Number Search: Verify GST Number or GSTIN online
Enter GST number or GSTIN (GST Identification Number) and verify GST details online. GST Number or GSTIN is a unqiue 15 digit number allotted after GST Registration.
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GST Number Search: Verify GST Number or GSTIN online
Enter GST number or GSTIN (GST Identification Number) and verify GST details online. GST Number or GSTIN is a unqiue 15 digit number allotted after GST Registration.
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GST for Exporters

Before GST was introduced, duties were imposed even on the export of goods and services. However, as per the new tax system, the export of goods and services from India to any other place outside the country are to be treated as ‘zero-rated supplies’. This means that no GST is applicable for the exporters. The registered taxable individuals that are exporting goods or services to places outside the country can claim refund.

FAQ

How IGST credit can be used?

According to the tax offsetting rules under GST, IGST credit needs to be used first to offset IGST tax liability. Whatever IGST credit is left can be used against CGST liability, then against SGST liability (in that order).

What is zero rated supply under GST?

Under GST, exports and supplies to SEZ are zero rated as per Section 16 of the IGST Act, 2017. By zero rating, it is meant that the entire supply chain of a particular supply is tax free, i.e., there is no burden of tax either on the input side or output side.

Excise Duty in India

Excise Duty is a tax levied on the goods manufactured in the country. It is a form of Indirect Tax that is collected by the seller or the intermediary from their consumers and is then paid to the government. The Central Board of Indirect Taxes and Customs (CBIC), functioning under the leadership of the Finance Minister, is the national authority responsible for collecting it.

After the introduction of Goods and Service Tax (GST) in India, almost all the indirect taxes have been subsumed into one tax, that is, GST. Hence, excise duty technically does not exist in India anymore except on few items like liquor and petroleum.

Acts and Rules

Majorly, there are two acts governing the legal framework of Excise Duty:

  • Central Excise Act, 1944: This Act provides all the definitions related to Excise.
  • Central Excise Tariff Act, 1985: The Act defines the rate of the Central Excise Duty and the elaborate schedule of excisable goods.

Types of Excise Duty

The following are the three types of Excise Duty in India:

  1. Basic Excise Duty: The duty imposed on goods classified under the first schedule of the Central Excise Tariff Act, 1985 and under Section 3(1)(a) of the Central Excise Act, 1944. It is levied on all excisable goods in India except Salt.
  2. Additional Excise Duty: This tax levied on few specific goods as a substitute for the sales tax and is charged by the central and state government. Furthermore, it is imposed under Schedule 1 of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978.
  3. Special Excise Duty: This is imposed on special goods under the 2nd Schedule of the Central Excise Tariff Act, 1985.

When is Excise Duty paid?

Rule 4 of the Central Excise (Amendment) Act, 2002 implies that this tax should be levied on manufactured goods and must be paid when the goods in reference are ‘removed’. Moreover, it also says that the removal of goods for sale is not a taxable event but the production of such goods is.

Additionally, rule 8 of the Central Excise (Amendment) Act, 2002 says that the tax must be paid on the 5th of the following month after the goods are removed from the factory or warehouse for sale. Although, if this payment is made through Netbanking, then the deadline is the 6th of the following month. If the payment is for the month of March, it can be made by the 31st.

Who is liable to pay Excise Duty?

As we have already established, excise duty is levied on manufactured goods in the country therefore, the producer of such goods is liable to pay the tax to the government. The following three parties are responsible to pay:

  • The establishment that produced the goods
  • The party that got the goods manufactured by hiring labor
  • The entity that got the goods manufactured by other parties

How to pay Excise Duty?

The payment of the tax can be made through Netbanking by using the official CBIC payment gateway called Electronic Accounting System in Excise and Service Tax (EASIEST).

You can follow the following steps to make the payment through EASIEST:

  1. Visit the NSDL-EASIEST website

    Select option “E-payment (Excise and Service Tax)

  2. Enter the 15 digit Assessee Code allotted by jurisdictional Commissionerate

    Then, validate the Assessee code

  3. Verify the Assessee details as present in the Assessee Code Master

    The type of tax will be automatically selected on the basis of the Assessee Code.

  4. Select the type of duty/ tax to be paid

    Click on the button “Select Accounting Codes for Excise

  5. Select Accounting Codes

    At a time, the assessee can select up to six Accounting codes.

  6. Select appropriate Bank

    Once the data is validated in the NSDL central system, select the assessee’s choice of Bank from the drop-down button.

  7. Confirm the Data entered

    After that, you will be redirected to the Net banking site of the chosen Bank.

  8. Login to Net banking

    Next, make the payment at the Bank site and download the Challan as proof of payment.

  9. Confirm Payment status

    At last, Confirm the e-payment status of EASIEST (NSDL) website by clicking on “Challan Status Enquiry

Difference between Excise and Custom Duty

Excise Duty Custom Duty
  • It is levied on goods produced in India
  • Whereas custom duty is imposed on goods sold in India but were produced in a different country
  •  This is paid by the manufacturer and not the consumer
  • On the other hand, custom duty is paid by the importer of goods

FAQs

What are the consequences of evading Excise Duty?

According to the law, non-payment of duty can lead to a penalty of 25% to 50% of the tax evaded. This would be a substantial amount as the duty itself is a big amount.

Is duty levied by the state government?

No, it is imposed by the Central government except on goods such as narcotics and alcohol.

What are the types of Excise Duties in India?

There are mainly three types: Basic, Special and Additional.

GST Council Meet- Highlights

GST council meeting key highlights, important updates, deadlines and extensions, and major announcements.

Jump To:
42nd Meet
41st Meet
40th Meet
39th Meet

42nd GST Council Meeting Highlights:

Date held: October 6, 2020

Chaired by: Union Finance Minister Nirmala Sitharaman

The 42nd Meet was supposed to be focused around the compensation to states and if the Centre and State will reach a consensus. Although there was no consensus, there are a few very important decisions and amendments that have taken place. These include relief to small taxpayers and enhancement of features of return filing.

Key Highlights

  • On the issue of releasing compensation to states:
    • No consensus: Instead, the centre will disburse a sum of INR 20k to states. It is this year’s total collection. By next week, a sum of about INR 25k crore will be disbursed towards IGST of 2017-18.
    • States may borrow more: COVID effected gap will now be calculated at INR 1.10 lakh crore instead of the previously determined INR 97k crore.
    • Extension of compensation cess levy: The GST was introduced in July 2017. States were promised a 14% incremental revenue over the last tax receipts in the first 5 years of GST rollout. This was to be done through a levy of cess or surcharge on luxury and sin goods. The collections have fallen short owing to the slowdown in the economy since the last Financial Year. To make up for this, the Centre will now borrow against future compensation receipts. The Council will extend the compensation cess levy beyond 5 years i.e. beyond 2022.
    • Surcharge on luxury goods like cars and tobacco products varies from 12% to 200% on top of the highest GST rate of 28%. It is now due to expire in 2022.
    • The cess collected beyond 5 years will pay the amount beyond INR 1.10 lakh crore.
    • The cess that will be collected beyond 5 years will have a first charge on interest. The next charge will be 50% towards the principal amount and the remaining 50% will be given to states (COVID affected compensation).
  • HSN Code mandatory from 1st April: Taxpayers with annual turnover more than 5 cr will have to provide HSN code up to 6 digits and small taxpayers will have to provide HSN code up to 4 digits from April 1.
  • Relief to small taxpayers: Taxpayers with an annual turnover of less than 5cr will not be required to file returns (GSTR-3B and GSTR-1). They will only file quarterly returns. Also, this will come into effect from 1st January 2021.
    • It was emphasized that the number of returns of small taxpayers will be reduced from 24 to 8.
    • Small taxpayers can pay about 35 percent taxes of the previous quarter and make the final payment in the last month of the quarter.
    • PAN/Aadhar mandatory: Refunds will be transferred only in those bank accounts which are pan, Aadhar verified.
  • To encourage the domestic launching of satellites particularly by young start-ups, satellite launch services by ISRO and Antrix at 18% GST will be exempt.
  • Enhancement of features of return filing: In its 39th Meeting held in March 2020, the Council had recommended an incremental approach to incorporate features of the new return system in the present familiar GSTR-1/3B scheme. Various enhancements have since been made available on the GST Common Portal. To further enhance Ease of Doing Business and improve the compliance experience, the Council has approved the future roadmap for return filing under GST. The approved framework aims to simplify return filing and further reduce the taxpayer’s compliance burden in this regard significantly, such that the timely furnishing of details of outward supplies (GSTR-1) by a taxpayer and his suppliers would –(i) allow him to view the ITC available in his electronic credit ledger from all sources i.e. domestic supplies, imports, and payments on reverse charge, etc. before the due date for payment of tax, and (ii) enable the system to auto-populate return (GSTR-3B)through the data filed by the taxpayer and all his suppliers. In other words, the timely filing of the GSTR-1 statement alone would be sufficient as the return in FORM GSTR-3B would get auto prepared on the common portal. To this end the Council recommended/decided the following:
    • Due date of furnishing quarterly GSTR-1 by quarterly taxpayers to be revised to 13th of the month succeeding the quarterw.e.f. 01.1.2021.
    • Roadmap for auto-generation of GSTR-3B from GSTR-1s
      • Auto-population of liability from own GSTR-1 w.e.f. 01.01.2021; and
      • Auto-population of the input tax credit from suppliers’ GSTR-1s through the newly developed facility in FORM GSTR-2B for monthly filers w.e.f. 01.01.2021 and for quarterly filers w.e.f. 01.04.2021
      • To ensure the auto-population of ITC and liability in GSTR 3B as detailed above, FORM GSTR 1would be mandatorily required to be filed before FORM GSTR3B w.e.f. 01.04.2021.
      • The present GSTR-1/3B return filing system to be extended till 31.03.2021 and the GST laws to be amended to make the GSTR-1/3B return filing system as the default return filing system.
  • Amendment to CGST rule: Various amendments in the CGST Rules and FORMS have been recommended (including the furnishing of Nil FORM CMP-08 through SMS)

41st GST Council Meeting Highlights:

Date held: August 27, 2020

Chaired by: Union Finance Minister Nirmala Sitharaman

The Key Highlight:

The 41st Council Meet was all about providing compensation to states to bridge the revenue-expenditure gap due to the GST shortfall. The states were guaranteed payment for any loss of revenue in the first five years of GST implementation from 1st July 2017. The shortfall is calculated assuming a 14% annual growth in GST collections by states. The base year taken is 2015-16.

The Revenue Secretary mentioned that the GST shortfall in FY 21 stands at INR 2.35 lakh crore – out of which only INR 97k crore is due to GST implementation and the rest is due to the pandemic. The center is now bound to compensate. Attorney-General said that GST Compensation has to be paid for a transition period – from July 2017 to June 2022. And states with an annual growth rate of less than 14% will be compensated for the shortfall until 2022. The states have been given 2 options:

Option 1:  The center will facilitate states through RBI in getting loans – which is INR 97K crore. This amount can be repaid after 5 years on the collection of cess. The states will have to pay a reasonable rate of interest. This boils down to borrow less and get cess later. 

Option 2: The states can borrow The entire INR 2.35 lakh crore directly from the RBI. This, in turn, boils down to borrow more and pay for it using the cess collected in the transition period.

Along with this, the center will provide relaxation of 0.5% in states’ borrowings under the FRBM Act. This will be eligible for a sum of INR 2.03 lakh crore. The above arrangements remain valid only for the current Financial Year 2020-21. A new Council meet will reevaluate the situation in April 2021. 

The states have asked for a 7-day window to think about the options.

40th GST Council Meeting Highlights:

Date held: June 12, 2020

Chaired by: Union Finance Minister Nirmala Sitharaman

The 40th GST Council meet was the first to be held after the COVID-19 breakout in India. A lot of discussions like GST compensation, inverted tax structure and rate rationalization were postponed to the next council meeting.

Key highlights:

1. Reduction in late fee for past returns:

  • The late fees on pending GST returns from July 2017 to January 2020 has been waived off for taxpayers with nil tax liability.
  • A maximum late fee of INR 500 for taxpayers who will file their pending GSTR-3B  returns between July 1, 2020 and September 30, 2020.

2. Small taxpayers / MSME filers:

  • For Feb to April 2020 tax periods – In case of business with an aggregate turnover of up to INR 5 crore. If the tax is paid on or before 6th July 2020 (as per staggered dates), no interest would be charged. If the tax is paid after 6th July 2020 (as per staggered dates), the rate of interest for late furnishing of returns has been reduced from 18% to 9% p.a. The only condition is that the returns for such tax periods should be filed on or before 30th September 2020.
  • For May to July 2020 tax periods- The late fee and interest will be waived off if the returns are filed before September 30, 2020. (staggered dates are yet to be announced)

3. One-time extension for revoking cancellations of GST registration-

The period for seeking revocation has been extended till September 30, 2020. This is applicable for all registrations which were cancelled till June 12, 2020. This will come as a relief for taxpayers who could not get their GST registrations restored on time. The original time limit is only 30 days from the date of issue of cancellation order

4. A special one-agenda meeting

The council members have set a special one-agenda meeting in July 2020. The purpose is to discuss the GST compensation to states and Union Territories and its subsequent funding. The GST collections have been 45% of the usual levels in the past 2 months.

39th GST Council Meeting Highlights:

Date held: March 14, 2020

Chaired by: Union Finance Minister Nirmala Sitharaman

Infosys Chairman, Mr. Nandan Nilekani to present progress updates about GST It systems at the next three GST Council Meetings. The 39th GST Council meet took an array of decisions. Let’s take a look at it.

Key highlights:

1. Deferment of the new GST return system and e-invoicing

  • March 31, 2021- the time limit to finalize the e-wallet system (for exporters) 
  • October 1, 2020- the time limit for implementing e-invoicing and the QR code

The present return system of filing GSTR-3B and GSTR-1 will be continued until September 2020.

2. Important changes to GST rates:

The following changes will take effect from April 1, 2020.

  • Mobile phones and specified parts- GST rate was increased from 12% to 18% to correct inverted duty structure on mobile phones.
  • Matches- GST rate has been rationalized at 12%. Prior to this, the handmade ones were taxed at 5% and the rest at 18%.
  • Maintenance, Repair and Overhaul (MRO) services in respect of aircraft- GST rate has been slashed from 18% to 5% with full ITC (Input Tax Credit). 

3. Interest on delayed payment:

The interest for delayed GST payment shall be calculated on the net tax liability. This will be given retrospective effect from July 1, 2017.

4. GSTR-9 and GSTR-9C:

  • The deadline has been pushed to June 30, 2020 for F.Y. 2018-19. Also, the turnover. 
  • MSME taxpayers having turnover less than INR 5 crore- It is optional for them to file Form GSTR-9C for F.Y. 2018-19.
  • Taxpayers with an aggregate annual turnover of less than INR 2 crore in F.Y. 2017-18 and F.Y. 2018-19 will not pay any late fee for delayed filing of GSTR-9.

5. Waiver and extension of due dates:

  • GSTR-1 for 2019-20- will be waived for taxpayers who could not opt for the special composition scheme by filing Form CMP-02. (notification No. 2/2019-Central Tax (Rate) dated 7th March 2019)
  • GSTR-3B for July 2019 to January 2020- The due date to file the return has been extended till March 24, 2020 for taxpayers with principal place of business in the Union Territory of Ladakh. Also, a similar extension is recommended for Form GSTR-1 and Form GSTR-7.

6. Know Your Supplier:

A new facility called “Know Your Supplier” was introduced. This will enable the registered taxpayer to have necessary information about the suppliers with whom they conduct or intend to do business.

7. Revocation of cancellation:

The period for seeking revocation has been extended till June 30, 2020. This is applicable for all registrations which were cancelled till March 14, 2020. The extension is a one-time measurement that will come as a relief for taxpayers who could not get their GST registrations restored on time.

8. Other highlights:

  • A transition plan has been laid down till May 31, 2020 for the taxpayers belonging to Dadra and Nagar Haveli & Daman and Diu. This is due to the merger in January 2020. 
  • Refund claims to be processed in bulk for exporters.
  • Present IGST and cess exemptions on the imports made under the AA/EPCG/EOU schemes will continue up to 31st March 2021.

Composite Supply and Mixed Supply under GST

Under GST, Supply means the sale of goods or services. Supply also includes sale, transfer, disposal, barter, exchange, license, etc of goods or services. GST is applicable when there is a supply. To determine the GST Rate, it is important to classify the good or service. In normal cases, the good or service is clearly identifiable and thus it is simple to determine the GST rate on the same. However, sometimes the supply would include a combination of more than one type of good or service or both. In that case, it would become difficult to determine the applicable GST rate. Therefore, it is important to understand the concept of Mixed Supply and Composite Supply.

What is Composite Supply under GST?

Composite Supply means a supply of two or more taxable goods or taxable services or both, naturally bundled together and supplied as a combination in the normal course of business. The good or service which describes the essential character of the supply is the Principal Supply. The individual goods or services in a Composite Supply cannot be supplied separately.

What is GST Rate for Composite Supply?

As explained, one of the items from Composite Supply is the Principal Supply. The GST rate applicable to the principal supply would be the rate applicable to the entire supply.

Note: Works Contracts and Restaurant Services are also composite supplies. To avoid any confusion, the GST Act mentions that these would be considered as a supply of service and a specific tax rate for that service would apply.

Example

  1. Hotel Services – accommodation services and breakfast. These services are generally provided as a combination and thus is considered a Composite Supply. Accommodation service is the principal supply.
  2. Booking a train ticket – transport services including meals. These services are generally provided as a combination and thus is considered a Composite Supply. Transport service is the principal supply.
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What is Mixed Supply under GST?

Mixed Supply is the supply of two or more goods or services or both for a single price. Each of these are not naturally bundled in the normal course of business and can be separately supplied.

What is GST Rate for Mixed Supply?

Mixed supply is taxable at the rate of the item which attracts the highest tax rate.

Example

  1. Gift Package comprises chocolates, fruit juice, fruits, sweets, dry fruits, aerated drink, etc sold at a single price. Since the items are not naturally bundled together and can be sold separately, this is a mixed supply. The aerated drinks attract the highest GST rate of 28% and thus the tax rate for the entire gift package would be 28%.
  2. Buy 1 Get 1 Free Sale – On buying one item, the other item is free. Since the items are not naturally bundled together and can be sold separately, this is a mixed supply. The GST rate applicable to this sale is the higher GST rate.

Composite Supply v/s Mixed Supply

  Composite Supply Mixed Supply
Nature of items Items are naturally bundled together and cannot be sold separately Items are not naturally bundled together and can be sold separately
Tax Rate GST Rate of principal supply GST Rate of the item with the highest tax rate
Example Hotel services, restaurant services, works contract service, booking a train ticket, etc Beauty parlour services, coffee mug free with coffee, Cadbury celebrations gift pack, etc

FAQs

What is Time of supply in case of composite supply?

If the principal supply is of service then the supply of services will be applicable to the composite supply. However, in the case of purchasing and transporting the goods, then the supply of goods will be applicable to the composite supply.

What is Time of supply in case of Mixed supply?

If the highest tax rate is of service then principal of service will be applicable. And, if the highest rate is of goods then principal of supply of goods will be applicable.

What is GST Compensation Cess?

GST Compensation Cess is the cess levied on certain notified goods. It is charged in addition to IGST, CGST and SGST. Further, the provisions for charging GST Cess are listed in the Goods and Services Tax (Compensation to States) Act, 2017.

The purpose of levying GST Cess is to compensate the states that incurred a loss in revenues due to the implementation of the GST Act. Since GST is a consumption-based tax, the state in which the goods or services are consumed would be eligible for the revenue from GST.

Thus, the manufacturing states i.e. Gujarat, Haryana, Karnataka, Maharashtra and Tamil Nadu would lose their revenue. As a result, GST Compensation Cess was introduced to distribute its revenue amongst the manufacturing states.

Features of GST Compensation Cess

  • Applicability – 5 years
    It would be levied for a period of five years (up to 01/07/2022) from the date of implementation of GST i.e. 01/07/2017. The GST Council can extend this time period
  • Notified Goods & Services
    Taxable persons selling notified goods are liable to collect and pay GST Cess. You can view the list of notified goods and services here
  • Tax Calculation
    Calculate GST Cess on the transaction value of goods or services. Cess is levied in addition to CGST + SGST/UTGST in case of intra-state sales and IGST in case of inter-state sales
  • Not charged on Exports
    Taxpayer cannot charge Cess on goods exported out of India. The exporter can claim a refund of the input tax credit of cess paid on purchases
  • Not charged to Composite Dealers
    Taxpayer cannot charge Cess to dealers registered under the Composition Scheme
  • Input Tax Credit
    Taxpayer can use Input Tax Credit of Cess for payment of Cess liability on sales. You cannot use Input Tax Credit of Cess for payment of output CGST, SGST or IGST

FAQs

Can I claim credit of GST Compensation Cess paid on purchases?

Yes, taxpayer can claim Input Tax Credit of the GST Compensation Cess paid on inward supplies or purchases. However, the taxpayer can adjust Input Tax Credit of Cess against Output tax liability of Cess only. Taxpayer cannot adjust ITC of Cess with output tax liability of IGST, CGST, SGST or UTGST.

Which goods will attract GST Compensation Cess?

* Sin Goods such as Cigarattes and Pan Masala
* Other Goods such as Aerated Drinks, Coal, motor vehicles with specified engine capacity
You can refer the entire list on cbic.gov.in

How to register or update DSC on GST Portal?

DSC i.e. Digital Signature Certificate is an electronic signature of a taxpayer that is used for authentication to submit applications and file returns under GST. To digitally sign any document under GST, the DSC must be registered on the GST Portal.

To register a DSC on the GST Portal, the following criteria must be met:

  1. DSC should be PAN based and the type should be Class 2 or Class 3
  2. DSC must be issued by an authorised certifying authority
  3. Taxpayer must have a registered login account on the GST Portal
  4. Download and install emSigner (DSC signer utility) from the GST Portal
  5. Download and install the software of DSC
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Steps to register or update DSC on GST Portal

  1. Insert DSC

    Insert the USB token containing the DSC into the computer system

  2. Run emSigner GSTN

    Run the emSigner GSTN to use DSC for signing on the GST Portal (Read more: Instructions to install emSigner)

  3. Login to GST Portal

    Login to your account on the GST Portal with valid username and password

  4. Navigate to Register / Update DSC

    Click on your business name on top right corner, select Register / Update DSC from dropdown

  5. Select PAN of Authorised Signatory

    The list of Authorised Signatory is available in the dropdown. Select the PAN of the Authorised Signatory whose DSC you want to register or update on the GST Portal. Click on Proceed

  6. Select DSC Certificate and Sign

    A pop-up box would appear on the screen. Select the DSC and click on Sign. Enter the password to authorize the DSC

  7. Success Message

    A success message will be displayed on successful registration of DSC

FAQs

Is it mandatory for me to use DSC or can I opt for EVC?

To digitally sign documents on the GST Portal, it is compulsory for companies and LLPs to use DSC (Digital Signature Certificate). Other taxpayers like individual, HUF, partnership firms etc can either use DSC or EVC (OTP authentication)

What are the system requirements for usage of Digital Signature Certificate?

* Desktop Browser: Internet Explorer 10+/ Chrome 49+ or Firefox 45+
* Valid class 2 or class 3 Digital Signature Certificate (DSC) obtained from a DSC provider
Note:
* GST Common Portal supports only Crypto Tokens installed in Hard Tokens for DSC Registration
* Signing using DSC is not supported on mobile devices and browsers

What are the system requirements to install the emSigner application?

The pre-requisites for installing the emSigner are provided as below:
– Windows 32 / 64 bit OS
– Java 1.6 JRE 1.6.0_38+, Java 1.7, Java 1.8
– Windows: Admin access to install the emSigner component
– Anyone of the following ports should be free- 1585, 2095, 2568, 2868, 4587

List of Port Code in India under GST

Under GST when an exporter files his sales return i.e. GSTR-1, he must mention the six-digit Port Code under GST of the port through which the goods are exported. Along with this, the unique Shipping Bill Number and the Shipping Bill Date also needs to be mentioned.

List of Shipping Port Code under GST in India

Port Code Location Name Country Code State
INCNB1 Car ‐ Nicobar IN Andaman and Nicobar
INCRN1 Cornwallis IN Andaman and Nicobar
INMYB1 Mayabandar IN Andaman and Nicobar
INESH1 Elphinstone Harbour IN Andaman and Nicobar
INRGT1 Ranghat Bay IN Andaman and Nicobar
INMDW1 Meadows IN Andaman and Nicobar
INNAN1 Nancowrie IN Andaman and Nicobar
INIXZ1 Port Blair IN Andaman and Nicobar
INIXZ4 Port Blair IN Andaman and Nicobar
INHYD4 Hyderabad Air Cargo IN Andhra Pradesh
INBNP1 Bheemunipatnam IN Andhra Pradesh
INNVP1 Navaspur IN Andhra Pradesh
INVTZ1 Vizac Sea IN Andhra Pradesh
INSRV1 Surasani ‐ Yanam IN Andhra Pradesh
INVTZ6 Visakhapatnam (EPZ / SEZ) IN Andhra Pradesh
INVRU1 Vadarevu IN Andhra Pradesh
INKAK1 Kakinada IN Andhra Pradesh
INRPL6 Raddipalem IN Andhra Pradesh
INKDD6 Karedu IN Andhra Pradesh
INVTZ4 Vishakapatnam IN Andhra Pradesh
INAPT6 Anaparthi IN Andhra Pradesh
INCLX6 Chirala IN Andhra Pradesh
INSNF6 Hyderabad IN Andhra Pradesh
INCOI6 Kakinada IN Andhra Pradesh
INMAP1 Masulipatnam IN Andhra Pradesh
INKRI1 Krishnapatnam IN Andhra Pradesh
INAKP6 APIICL SEZ / Visakhapatnam IN Andhra Pradesh
INTNI6 HIPL SEZ / Visakhapatnam IN Andhra Pradesh
INAKR6 RPCIPL SEZ / Visakhapatnam IN Andhra Pradesh
INVZM6 DLL SEZ / Visakhapatnam IN Andhra Pradesh
INAKB6 BIACPL SEZ / Visakhapatnam IN Andhra Pradesh
INNRP6 AAL‐SEZ /Visakhapatnam IN Andhra Pradesh
INMOV6 VBTL‐SEZ / Medak IN Andhra Pradesh
INKVR6 WFPML‐SEZ / KOVVUR IN Andhra Pradesh
INFMA6 APIICL / Medak District IN Andhra Pradesh
INFMH6 hgsezl / Ranga Reddy IN Andhra Pradesh
INCOA6 KSPL‐SEZ / KAKINADA IN Andhra Pradesh
INGLY6 APIICL‐SEZ / MAHABOOBNAGAR IN Andhra Pradesh
INSPE6 ASDIPL‐SEZ / NELLORE IN Andhra Pradesh
INCOP6 PICPL‐SEZ / KAKINADA IN Andhra Pradesh
INMDE6 APIICL SEZ / MEDAK IN Andhra Pradesh
INKOH6 RLL‐SEZ / Medak IN Andhra Pradesh
INURF 6 FAB CITY SPV ‐ SEZ / Srinagar & Raviryal
Distt. Ranga Reddy
IN Andhra Pradesh
INMEA 6 APIIC‐SEZ / Vill ‐ Lalgadi Distt.‐Ranga IN Andhra Pradesh
IN DBS 6 SANTA‐SEZ / Vill ‐ Muppireddipally IN Andhra Pradesh
IN URG 6 GMR HYDRABAD AVIATION ‐ SEZ / Vill. IN Andhra Pradesh
IN TAS 6 SRI CITY PVT. LTD ‐ SEZ / Satyavedu & IN Andhra Pradesh

FAQs

What is invalid Port Code under GST?

Invalid Port Code means that the code entered is incorrect. Thus, taxpayer should always select the correct code from the list of Port Codes in India defined by the GST Department. GST Portal does not accept codes other than specified list of Port Codes.

GST State Codes

State Code is a numerical code assigned to each state and union territory for easier identification. The GST Portal accepts the codes from the defined list of State Codes only. Thus, you must identify the correct GST State Code.

When is State Code used under GST?

Under GST, each State and Union Territory is identified by a unique Code called State Code. It is used in the following cases:

  1. GSTIN– The first two digits of the GST Identification Number denotes the State Code of the state in which the taxpayer has obtained registration.
  2. CGST, SGST, IGST – If the state code of seller is the same as state code of place of supply, CGST and SGST are charged. If the state code of seller is different than state code of place of supply, IGST is charged.

List of GST State Codes

State Name State Code
Andhra Pradesh 37
Andaman and Nicobar Islands 35
Arunachal Pradesh 12
Assam 18
Bihar 10
Chandigarh 04
Chhattisgarh 22
Dadar and Nagar Haveli 26
Daman and Diu 25
Delhi 07
Goa 30
Gujarat 24
Haryana 06
Himachal Pradesh 02
Jammu and Kashmir 01
Jharkhand 20
Karnataka 29
Kerala 32
Lakshadweep 31
Madhya Pradesh 23
Maharashtra 27
Manipur 14
Meghalaya 17
Mizoram 15
Nagaland 13
Odisha 21
Pondicherry 34
Punjab 03
Rajasthan 08
Sikkim 11
Tamil Nadu 33
Telangana 36
Tripura 16
Uttar Pradesh 09
Uttarakhand 05
West Bengal 19
Other Territory 97

FAQs

I am an Exporter. Which State Code should I enter in GST Return?

An exporter supplies goods or services outside India. The Place of Supply would be the location of the buyer. Since the buyer is located outside India, the exporter should select GST State Code 97 – Other Territory to enter details in GST Return.

Unit Quantity Code (UQC) under GST

UQC i.e. Unit Quantity Code under GST is a unique code for the measurement unit of a product. Eg: 50 Meters of cloth would be denoted by 50 MTR. The GST Portal accepts the codes from the UQC List only. Thus, you must identify the correct UQC for the goods or services supplied in your business.

When is Unit Quantity Code (UQC) used under GST?

1. HSN Summary – When GSTR-1 is filed, HSN Summary must be reported with the details of goods and services supplied during the return period. The UQC under GST must be declared in the HSN Summary.

2. Documents – The seller can use UQC while issuing a tax invoice, export invoice, credit note or debit note. Using the code from the UQC list would keep the records clear and consistent. However, businesses may use their own variations.

List of UQC (Unit Quantity Code) under GST

Quantity UQC
Bags BAG
Bale BAL
Bundles BDL
Buckles BKL
Billions of Units BOU
Box BOX
Bottles BTL
Bunches BUN
Cans CAN
Cubic Meter CBM
Cubic Centimeter CCM
Centimeter CMS
Cartons CTN
Dozen DOZ
Drum DRM
Great Gross GGR
Grams GMS
Gross GRS
Gross Yards GYD
Kilograms KGS
Kiloliter KLR
Kilometre KME
Millilitre MLT
Meters MTR
Numbers NOS
Packs PAC
Pieces PCS
Pairs PRS
Quintal QTL
Rolls ROL
Sets SET
Square Feet SQF
Square Meters SQM
Square Yards SQY
Tablets TBS
Ten Gross TGM
Thousands THD
Tonnes TON
Tubes TUB
US Gallons UGS
Units UNT
Yards YDS
Others OTH

FAQs

What is invalid UQC Code?

Invalid UQC Code means that the Unit Quantity Code entered is incorrect. Thus, taxpayer should always select the correct code from the list of Unit Quantity Codes under GST defined by the GST Department. GST Portal does not accept codes other than UQC.

Is UQC (Unit Quantity Code) same as SQC (Standard Unit Quantity Code)?

SQC i.e. Standard Unit Quantity Code is the unique code used to identify each good under Customs Act. While SQC is the defined list of codes under Customs GST, UQC is the defined list of codes under GST. For GST Compliances, taxpayer should use UQC from the list defined by the GST Department only.

Compliances under Reverse Charge Mechanism of GST

Reverse Charge Mechanism (RCM) under GST is the mechanism under which the buyer of goods or services is liable to pay GST to the government instead of the seller. It is applicable on the sale of notified goods and services or specified situations. Read about the compliances when Reverse Charge Mechanism under GST is applicable.

Compliances under Reverse Charge Mechanism of GST

  1. Compulsory Registration
    The person liable to pay tax under RCM should compulsorily register under GST irrespective of the turnover. The threshold exemption of Rs.20 lacs is not applicable
  2. Input Tax Credit
    The buyer can claim the Input Tax Credit for which he has paid tax under RCM if all the conditions to claim ITC have been fulfilled. In this case, the buyer can claim ITC but not the seller
  3. Payment of Tax
    To pay the tax under RCM, the taxpayer can use balance from E-Cash Ledger only. They cannot use balance in the E-Credit Ledger. Both these ledgers can be viewed on GST Portal.
  4. Tax Invoice
    The Tax Invoice issued by the seller to the buyer must specifically mention that the tax has been paid by the buyer under the reverse charge mechanism.
  5. Maintenance of Accounts
    Each registered dealer must maintain accounts of all the sales on which he has paid tax under RCM. He must maintain all the proofs and records too.

FAQs

What is Self-Invoicing?

When a person buys goods or services from an unregistered dealer, he is liable to pay tax under RCM. He is also required to generate a self-invoice since the unregistered seller would not issue a GST compliant invoice.

I am registered under GST in Tamil Nadu. I am buying goods from unregistered dealer of Karnataka, should I take registration in Karnataka to discharge GST under Reverse Charge Mechanism?

Any person who makes inter-state sale of taxable goods must take compulsory registration under GST. Therefore, the dealer in Karnataka should opt for GST Registration since he/she is selling taxable goods outside his/her state.