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hi hello my dear CMA final students appearing for June 24 and December 24 exams welcome to the rocket revision on CMA final indirect tax laws and practice paper 19 so this video we are going to see first so what is the question paper pattern and what are the chapters which you need to focus upon and what are the resources that you have in front of you so that you can make best use out of it so first of all this video is not for the previous syllabus students this for 2022 syllabus students as you all know from December 2023 onwards so the syllabus 2022 has started and in this so they have made this syllabus more or less equal to ca final so with few topics excluded and with few topics included but majorly like 80 to 90% of the portion is common for CA final and CMA final when it comes to indirect access firstly we will see the question paper pattern this question paper pattern is based on so various uh model question papers which I have seen published by icmi so that is for June 24 also they have given one model question paper and even for December 23 attempt so the exam paper itself is there and the model question paper is also there based on that what I have observed is that so there is a McQ for 30 marks and this McQ 15 questions two marks mcqs like ca final students CMA final students do not have case scenario mcqs it is like direct mcqs question with four options and you need to select and there are some computation based questions are also involved so total 30 marks you'll be getting put together both GST and Customs then next it is descriptive part in the descriptive part you have five questions out of seven questions so you have two questions as Choice each question carries 14 marks that's where you will be able to get 70 marks in this surprisingly what I have seen is that so that question number some six and seven so two questions were on Customs so and five questions on GST so if a student has left GST and know like customs and FTP and if he has focused only on GST also he will be able to attempt for 100 marks but the problem is with respect to mcqs so therefore customs and FTP so they are asking questions so two questions dedicatedly on that and five questions on GST but my advice to you is that so don't ignore any chapter you prepare all the chapters so that know you should be able to score the maximum marks that you can and the level of difficulty what I have seen when it comes to CMA final question papers so it is not you know that difficult so I can rate somewhere like 7.5 out of 10 so that is a level of difficulty that you have it's not 9 out of 10 or 10 out of 10 7.5 out of 10 is the level of difficulty that you have so therefore it is not a very very easy paper at the same time it's not a too difficult paper to handle and there are few areas from where repeatedly the question are being asked so because of which I have made a ABC analysis based on your CMA final question papers so this is based on December 23 exam plus model question papers when it comes to a category topics in GST value of Supply so lot of questions there are asked they are being asked on value of Supply then input tax credit value of Supply including the valuation rules that is cgst rules related to valuation input tax credit place of supply exemptions and RCM when it comes to customs two topics valuation under customs and FTP these six topics if you are learning on goinging so close to 70 marks will be from this only including mcqs including mcqs and descriptive close to 70 marks is from this a category topics only okay so close to 70 marks this this itself will give you this a category topics itself will give you close to 70 marks okay okay just these six chapters if you learn and go thoroughly also that will be sufficient and then this refunds under GST so from this you will be able to get some 15 marks minimum 15 to 20 marks and the remaining marks is from all other topics okay so remaining from all other topics in GST and customs and this category B if you see refunds under GST TDS and TCS returns composition scheme warehousing baggage and all other topics is the remaining topics so these six chapters if you focus mostly like 70 marks is from this itself this is what I have analyzed based on December 23 examp ASM model question papers okay now so therefore now you know the strategy as to which topics you need to focus more the next thing so what are the extra topics suppose if you have already prepared based on CA final exams so what are the topics which are there extra for CMA final first we will see that so if you look into the index contents as per the new syllabus contents as per syllabus so this is your study material in this they have given various modules up to module 27 so in this the extra topics if you see walk through of GST portal so what I'm going to give you is the extra topics that you have in CMA final compared to ca final okay so walk through of GST portal in this walk through of GST portal purely it is practical aspects like uh how to do the registration and how to file the returns Etc in the portal so not even one question they have asked based on this and next stepbystep approach to start Manufacturing in a bond in case of warehousing under Customs again no questions are asked on this then mainten of records and filing of monthly returns by a warehouse keeper so this also in extension to warehousing under Customs so not even one question on these three chapters but Duty drawback is an important area which was previously for CF final but they have removed it now so that is applicable for cmf final and then scz scheme with amended scz rules so these are the extra topics that you have in CMA final compared to ca final okay so this walk through GST portal step-by-step approach to start Manufacturing in bond maintenance of records and filing of monthly atts Duty drawback and sez scheme then what are the topics which are there in CA final but not there in CMA final that we will see so topics excluded okay topics excluded excluded from CA final from CA final 2 CMA final okay so what are the topics which are excluded if you see this introduction to GST is not there but you should be knowing it introduction to GST is not there but maybe somewhere in mcqs it may be tested so you should be knowing it and then registration chapter is not there because this registration chapter came at inter level itself now so due to that reason it is not there for you at final level then even tax invoice debit nodes credit nodes Etc so tax invoice then debit notes debit notes credit noes Etc that chapter is also not there and next even this ethics under GST so in CA final ethics in GST like that one chapter was uh is there so this is not there for CMA final and when it comes to customs so taxable event under cust Customs taxable event under customs and then types of customs duties types of customs duties so these are all the chapters okay so types of customs duties including the classification under Customs Etc so these are some chapters which are not applicable for CMA final exam based from CA final now what I have done is that as I already did one rocket revision for CA final those chapters which are equally applicable for CA final and CMA final I have Incorporated in this video and I will be also taking the extra topics which are there for CMA final mainly this Duty drawback and scz because these three areas are basic areas like not even as not even important at all so this Duty drawback and SE alone we will see so if you watch this video completely for CMA final exam that will be sufficient that will be comprehensive these topics and all I have excluded into my discussion I have not given in this video so only those topics which are there for cmf f exclusively that I have included plus these two extra topics I'm going to discuss in this video so with this so the portion for your cmf finally is cover and you can happily go for the exam okay that is one aspect then next thing what are the resources what are the resources that we need to have so that we can get very good Max or the maximum Maxs that we can so this study material I have seen your study material it is so comprehensive like uh my three volumes of resource book is there in the study material which you and more than that there are lot of clumsy things and all so some what see 1,17 1,200 pages and all is there you don't have to really read this study material now what you need to do first we will see for McQ for McQ what should we do for McQ what we should do for this McQ okay so you need to just go to my website once you go to my website you click on this learning portal my website is tun.com and click on this learning portal in this learning portal so do the login or sign up if you are not having any account you create account using your Gmail and the password you create account if you are already having an account do the login once you login you will be able to see inquest so inquest IDT actually this is for CA final I'll tell you how to make use of it inquest CA final book is there so you click on this book and you don't have case scenario mcqs okay what you have is only like uh chapterwise MC gqs here I have given introduction to GST taxable event under GST like that chapter wise I have given so you open on that for example place of Supply so in this place of Supply I have given lot of questions and at the end of this PDF you will be able to see the options along with the justification answers okay so on an average for place of Supply I have given some 40 questions like this 30 to 40 questions I have given for every chapter but there are few chapters which are not applicable for your exam now like registration don't read and then uh this what is this taxable event under Customs don't read classification and types of Customs don't read so whichever chapters that are applicable for you in that you just take the mcqs for example valuation under Customs so there also have given lot of mcqs so just solve these mcqs if you complete these mcqs and all that will be sufficient for the McQ part and remember these chapters which which are not there for cmf don't read from that book okay remaining chapters you practice and you can browse it through laptop or desktop or mobile from anywhere you will be able to see that PDF okay if you want to buy the book sir uh reading from the PDF will be difficult I want to buy that book you can also buy that book you go to my website you click on this books here there is inquest IDT so you can buy this book if required if you can practice from that ebook itself practice it's not a PDF for download and print it's a eBook if you want to practice from there you do that otherwise you can buy this book this is the first thing for what for the McQ then the descriptive part for descriptive part what you should do so I have given one that's it book so there is a that's it book this is the that's it book for CA final you can buy this that it book because the lectures are taken from this book only the videos are taken from this book only and you can use and again few chapters which is not there you don't have to read that okay remaining chapters you read and this extra topics so from where I can get these extra topics applicable for CMA final so you go to the downloads first thing inquest ebook free that's it that that's it book you need to buy then extra topics for C two chapters I said now Duty drawback and SC you can go to downloads in the downloads you can can see last CMA Final Extra topics is there now you click on this so these are the extra topics Duty drawback and scz Duty drawback and scz along with the illustrations question answers on duty drawback I have given in this okay so you can go through this and anyhow I'll be doing a discussion based on this so these are the resources you need to have what are the resources just three resources number one McQ book that inquest book ebook free number two that's it book you need to buy number three the CMA Final Extra topics PDF so this will take care of your descriptive part and then one Mighty 50 questions okay so that also I will be uploading in the same place downloads so I will share some mighty 50 questions for CMA final so you practice those Mighty 50 questions so before the exam that will be sufficient these four resources will help you for cracking the CMA final exam so therefore this will be sufficient for you I have given you AB analysis and what are the resources that are required okay so now we can move on to the discussion so which is related to you know the chapters chapter-wise discussion and as I already told you I have given I have taken the videos from the ca final rocket revision applicable videos and I have given and two extra chapters of CMA fin that I will be giving at the end that is Duty drawback and so see this basic concept this basic concept actually they removed from the syllabus itself they just gave it like a appendix to the first chapter in the new study material new study material chapter number one itself is Supply under GST in that somewhere Below in appendix they gave this so I don't think so any question will be tested on this even if it is tested it will be mostly McQ type only so quickly we will see this you all know all these things so when is GST implemented with effect from 1st July 2017 and how GST is formed a lot of indirect taxes which we had in the past that got subsumed into GST so whether all central government levies got subsumed into GST everything got subsumed into GST except you know customs duty so excise duty service Tax Central sales tax got subsumed into GST here related to Central sales tax you should know one point that Central sales tax is levied by central government but it will be collected and retained by the state government so that will not go to the center even though it is Le it was levied by central government okay then customs duties outside the Ambit of GST however additional customs duties so two additional customs duties called as cvd and sad counterveiling Duty and special additional duty these two so got subsumed into GST because basically this counter Val duty is to counterbalance excise duty excise duty got subsumed into GST due to that reason cvd also got subsumed into GST then special additional duty was to counterbalance sales tax as sales tax got subsumed into GST so this sad also got subsumed into GST so therefore these additional customs duties when it will come on import only these additional customs duties basically will come so this will not come on export additional customs duties will come only on import of goods on import of goods we should have paid additional customs duty but as we are not paying this additional customs duties now because it got subsumed into GST so on import of goods along with customs duty we are also required to pay I GST okay then indirect taxes levied by state government in the past only the specified indirect taxes got subsumed into GST total six indirect taxes that is value added tax advertisement tax luxury tax entertainment tax Lottery and bitting tax and Purchase Tax Purchase Tax also known as OCT only six apart from this other indirect taxes levied by state government or indirect taxes levied by local authorities not got subsumed into GST there is a possibility of asking this as a McQ which of the following got subsumed into GST a value added tax B Central sales tax C entertain M Tax levied by local Authority d none of this what will be the answer C entertainment tax levied by local Authority because entertainment tax levied by local Authority not only entertainment tax any taxes leved by local Authority not got subsumed into GST okay so that is this point then what about the professional tax which will be levied by the state government whether it got subsumed into GST or not got subsumed into GST not got subsumed because we don't have that in the list so value added tax advertisement tax luxury tax entertainment betting tax Purchase Tax but we don't have the professional tax so the professional tax not got subsumed into GST so this alone you please remember then entertainment tax there are two entertainment taxer One Entertainment tax which is lived by state government got subsumed into GST but another entertainment tax which is led by local Authority not got subsumed into GST then India has adopted the Dual GST model so what is dual GST model on the common tax base is both central government and state government can leavey tax that is known as dual GST model and this dual GST model so is adopted from Brazil and Canada where both cgsd has power to Levy tax on the common tax base and GST Council so basically GST council is the decision making body under GST so GST Council derives its power from one article so article 279a of the Constitution article 279a of Constitution and this is constituted by President of India but who is the head of this GST Council Union finance minister is its chairman and basically it will have 33 members who are those 33 members so one Union Finance Minister and 33 State ministers how are 33 we have 28 States and three union territories with State Legislature what are they Delhi puducheri then jamu and Kashmir these three are considered as union territories with State Legislature treated as state only under GST and for this 33 we have 33 Minister sorry that is the 31 States 31 State ministers plus one Union Finance Minister and remaining five union territories without State Legislature what are those five union territories without State Legislature ladak Andaman and nicobar lakad Dam du dadra nagar hav and chandigar so for these five union territories we'll have one Union MP in charge of the revenue so that person also will be there so total 33 members and what is the Quorum 50% so 50% should be present in the meeting then only it will be called as a valid meeting in that meeting central government is having how much weight one3 weight whereas state government is having 2/3 weights and what should be the majority a simple majority sufficient or weighted majority is required weighted majority and what is that weighted majority that's where for central government vote 1/3 and for state government what 2/3 and the two it should be like a special resolution majority what is that 34 34 majority is required then next aspect we need to know what are the types of gsts so how many gsts we have five cgst levied by central government on what Supply intrate Supply what is the int State Supply if location of supplier and place of Supply is in the same state or same Union territory then it is intra if location of supplier and place of Supply is in two different states or two different union territories or a state and a union territory then it will be known as interstate Supply so in case of intrastate supplies we will have cgst plus sgst if it is within the state example location of supp Tamil Nadu place of Supply also Tamil Nadu so Tamil Nadu is a state so cgst leved by central government plus sgst levied by state government suppose if the location of supplier is in uh say lak and place of Supply also lak then it will be inate only and what is the type of GST cgst plus UT GST Union territory GST but in Jammu and Kashmir it will not be UT GST it will be sgst only so these three basically cgst sgst and utgst levied in case of intrastate only okay and who will ly cgst central government sgst state government utgst utgst we don't have any separate government it will be under the control of central government so central government whereas igst when igst is Leed in case of what type of Supply igst L Interstate Supply Interstate means what I have given next page what is the meaning of inate and Interstate inate means location of supplier place of Supply in same state or same Union territory Interstate means location of supplier place of Supply in two different states or two different union territories or a state and a union territory so igst is L who will ly this igst central government will levy on Interstate Supply then there is something called as GST compensation s GST compensation say is levied only on notified Goods or what are those notified Goods that you don't have to remember so there is some list of notified Goods so if at all in question if there is GST compensations say given then only you consider otherwise don't consider and sir how GST compensations say will be computed just like how GST is computed the same way for example 10 lakhs is the value GST is 28% GST compensations is 12% now what you will do with 12% while adding the no while Computing the GST compensation don't add GST GST 28% also on 10 lakhs and compensation says 12% is also on 10 lakhs only but don't add this and show like 28 + 12 that will be 40% always you need to show the taxes separately so show GST at 28% compensation say at 12% like that but these two will be computed on the same value only you understood so GST compensations say is levied on notified Goods some examples of notified Goods what are the examples of notified Goods tobacco products pan Masala and then we have this arated Waters and then more Vehicles these are some examples on which there is GST compensations say mainly what is the purpose of this GST compensations say this is Livi on notified Goods which are sold across the country anywhere it may be sold and this GST compensations which is collected by the central government will be used to compensate the states on account of the laws incurred by them due to implementation of GST so to compensate the states on account of implementation of GST and shall be levied up to what is the date up to which the GST compensations can extend 31st March 2026 for McQ purpose it will be useful 31st March 2026 can it be extended even beyond that also yes as and when the GST Council decides they can extend it for a further period of time as well right now it is up to 31st March 2026 then igst is levied by central government we know that and out of this igst 50% will go to home 50% will go go to the consuming State based on place of Supply so in case of B Toc transactions I'm not talking about B2B transactions in case of b2c transactions or in case of you know like B2B transaction but recipient is not able to take ITC so in these two cases what are the two cases I'm referring to what is the type of Supply Interstate Supply the type of Supply is Interstate Supply and what is the transaction b2c okay okay or B2 B B to C means what recipient is unregistered B2 b means what recipient is registered B2B where recipient so cannot Avail ATZ why recipient cannot Avail ATZ there are many reasons so maybe he's using it for Exempted supplies or he is using it for non- bus purpose or he is you know like blocked credit or he may not be able to take it within the time limit so any reason so he's not able to take the it so in these two cases Interstate Supply b2c or B2B where recipient cannot Avail ITC what happens is that 50% of the igst 50% of igst given to which state given to consuming State given to consuming State now say for example it is like uh place of Supply is Karnataka location of suppl is Tamil Nadu then igst will be collected in that igst 50% will go to Karnataka so that's the logic behind it so what if it is B2B and recipient can take ITC if recipient can take ITC we need to see how he's going to use that ITC see it is very simple 50% of igst is given to the consuming State when if it is b2c transaction or B2B where recipient cannot Avail ITC now here what if location of supper and place of Supply location of supplier is Jammu and Kashmir place of Supply is ladak then nature of Supply if you see the nature of Supply is interstate and then what will happen to the revenue igst revenue or GST so here it is collected by who will be collecting this central government and 100% retained by central government only why 100% % retained by central government because L is under the control of central government suppose if it is reverse location of Supply is ladak and place of Supply is jamu and Kashmir the nature of Supply is again inter but jamu and Kashmir is Union territory with State Legislature means it is a separate government for that so therefore even though it is Interstate igst collected by central government 50% shared with 50% shared with jamu and Kashmir you understood so this is what you need to remember 50% igst given to consuming state or Union territory with State Legislature State Legislature now sir what if it is a Interstate Supply and if it is B2 B not B to C B2B and recipient and recipient can Avail ITC opposite of the above then in this case Interstate Supply B2B and recipient can Avail ITC what will happen simple that igst credit what we are going to do so we have a igst credit to the recipient that recipient is going to use igst credit against igst payable then we can't do anything still it is in the igst account only so then suppose if it is used for cgst payable so then what will happen entire amount entire amount will go to entire amount goes to central government correct or not suppose if the igst credit is used for sgst payable then also entire amount entire amount goes to state government okay suppose if this igst credit is used for utgst payable then what will happen everything is R here any this either this or this or this or this if it is to ug UT GST payable then what will happen entire amount goes to entire amount goes to central government okay now when igst credit is utilized for payment of igst payable so it will be still in susp expense account okay because we cannot distribute it still it is an igst account suppose if igst credit is utilized for payment of cgst liability what will happen so fully it was in suspense now it will go to central government treasury fully if it is IG credit utiliz for payment of sgst payable previously it was in suspense now it will completely go to state government IGS credit if it is used for payment of utgst utgst is under whose control central government so again completely it will go to central government so in this regard we need to know igst settlement as well so what is this igst settlement means igst settlement means it's like two situations igst settlement will happen and one situation what we have seen is above that is when IG credit is utilized for payment of sgst payable so then central government will because this igst credit means what this money is collected by whom central government so central government will give this money to state government whereas when SG credit is utilized for payment of igst liability then also this problem will happen that is state government has to pay that amount to central government so what are the two situations where igst settlement will happen number one igst credit igst credit for cgst payable igst credit for sorry sgst payable when igst credit is used for sgst payable what will happen CG shall transfer or shall pay to SG then second situation when sgst Credit sgst Credit utilized for igst payable even in this case there will be igst settlement who will make payment to whom state government shall pay to central government so these are some connecting topics related to this and that's what I have given here okay so don't worry parall if you are not able to copy also anyhow as I said by the end of the lecture I will share this PDF and even it is there in the YouTube also YouTube in the description I will be giving this PDF in case if you miss in telegram also you can check there okay don't worry about this so enjoy on learning the subject first okay so because it's purely a revision for that purpose then so that is what I have given if place of Supply cannot be assertain it shall be apportioned between the states based on turnover of the supplier during the financial year first what we need to do igst Le by central government 50% will be transferred to state government based on place of Supply so that's what we have seen and also we have seen when it will be if it is b2c or B2B where recipient cannot Avail ITC and Interstate Supply B2B and recipient can Avail ITC what will happen we have seen now what is a crucial Point here so 50% igst given to consuming state but how do I know consuming state so consuming state is known based on place of Supply so what if the place of Supply is not aable so then they have given one provision which says that it shall be a portioned between the states based on the supplier during the financial year for example my turnover during this financial Year from Tamil Nadu to Andhra Pradesh 20 lakhs Tamil Nadu to Karnataka 10 lakhs Tamil Nadu to Kerala 5 lakh so in 20 is to 10 is to 5 ratio this will be distributed between Andhra Pradesh Karnataka and Kerala accordingly you understood that is this so it shall be apportioned between the states based on turnover of the supplier during the financial year then state of Jamon Kashmir is divided into two union territories so that you should know Union territory of ladak Union territory of jamu and Kashmir ladak is a union territory with legislature or without State Legislature without State Legislature and Union territory of jamu and Kashmir is which State Legislature then Union territory of dadra and nagar hav and Union territory of Daman and the so this got merged into a single Union territory so therefore if any Supply takes place between dadra nagar hav to Dam and du don't write it as interstate it should be inate then last we have GST Network so GST Network provides shared infrastructure so between central government state government Banks and taxpayers for the purpose of implementation of GST basically they provide information technology infrastructure for implementation of GST and it can be referred to as common portal and provide services to taxpayers central government state government Banks and other stakeholders so basically what are the functions of the GST Network it facilitates registration so if you want to do registration or payment of taxes or filing of returns or settlement just know we saw settlement of igst so c sgst credit for IG GST liability igst credit for sgst liability that is known as settlement of igst eable Etc so these are the functions of GST Network and don't give much importance to this because basically this is not there in the regular syllabus it was just given as appendix because at intermediate level to final level student those who are coming for a refresh only this has been given so maybe maybe one or two mcqs may come otherwise it may not be then now we are moving on to one important chapter that is input tax credit and you might be knowing what is input tax credit Etc and all but I just wanted to give you a quick recap of that input tax credit basically is tax paid on invert supplies so you can see page number 79 so you have some information in page 79 related to this input tax credit so if you have book you can refer otherwise wherever you are referring you refer from there so in input tax credit is basically what I have some invit supplies invit supplies means what my purchases on my purchases whatever GST that I have paid is known as input tax credit so what is input tax credit GST paid on invite supplies what I can do with that input tax credit I can utilize it for payment of GST on my outright supplies okay this is basically what input tax credit is all about so they have some purchases on that purchase I paid some GST I will take it as credit and I will set off against the GST which I have to pay on my sales so this net GST payable is what gross GST payable that is tax on outw supplies minus input tax credit is called as a net GST payable in this we have some returns which you should be knowing first gstr1 is a return that contains the details of outward supplies so every registered person is required to file a gstr1 so gstr1 contains what details only outward Supply details it will not have anything else and these outward Supply details furnished by every registered person basically this will have invoice wise details or Consolidated details gstr 1 will have invoice wise details gstr 2 a and 2B both are invite supplies so this we will not file so based on our suppliers gstr1 the portal will make us available gstr 2A and gstr 2B so our supplier should have filed gstr1 and he should have mentioned our name as his recipient our GST should be mentioned so that it will come to us who are we recip by studying input tax credit chapter you keep yourself from the recipient point of view and see the provisions okay so your recipient basically and your supplier will be filing gstr1 and he will be reporting the details of outw supplies in his gstr1 by mentioning your GST so that it will come in your gstr 2A and 2B so both are containing invit Supply details but how is it different gstr 2A is basically you know a dynamic statement which will keep on changing keep on updating but 2B is a static document now for the purpose of availing ITC whether 2A is relevant or 2B is relevant which is the relevant document 2B is only relevant so 2A is not relevant 2A is just a reference document only for the time being so 2B is only the document on the basis of which ITC can be availed so 2B is a static month-wise autod drafted statement for regular tax payers and it is like 2A but remains static static means what so up to a particular date if your supplier has filed the gstr1 then it will be made available to you what is the due date of gstr1 11th of the month following every month and when the 2B will be generated 13th of the month following every month and gstr 1 there is a quarterly return also so but that comes under qrm if opted quarterly return monthly payment otherwise basically gstr one is a monthly document so what is the time limit of gstr1 11th of 11 11th of next month 11th of next month is the due date whereas 2B by when it will be made available 13th of next month 13th of next month means by 13th whatever are the details which are required to be furnished if it is furnished then only the data will be made available to us in 2B but 2 a is not like that it will keep on changing means even if the gstr1 is late it will be updated in 2A then 3B is a Consolidated document that contains all outward supplies in supplies details GST payable and GST paid now the difference between 2 a and 2B may not be important for exam but you should be knowing it so type of document if you see 2 a I told you Dynamic but 2B will be static TDS TCS details unfortunately it is not reflected in gstr 2B it will be reflected only in gstr 2 that is another difference next third difference is that details of invoices if gstr1 filed after due date what is the due date of gstr1 just now we have seen 11th of the next month if it is if the gstr one is not filed by your supplier by 11th of next month so it will not come in 2 B but it will come in 2 a so 2 a the details are reflected 2B not reflected however it will be reflected in 2B off next month so however it is reflected in subsequent month 2B and what is the purpose of this G or 2 a just for reference purpose only whereas 2B is for the purpose of availment of ITC what is availment of ITC taking ITC so remember three words availment of ITC taking ITC utilization of ITC set off of ITC with our liability reversal of itz reduction in itz so availment taking itz utilization set off with liability utilization set off so reversal reducing all these three will be done in gstr 3B okay availment of itz we can do in 3B reversal of itz we can do in 3B utilization of itz also we will be doing in 3B only and for availment of itz 2B is a document which means how much itz we can take only that itz which is reflected in 2B how this is reflected in 2B based on our suppliers gstr1 this is what rule 36 sub rule 4 says so section 41 red with rule 36 sub rule 4 only those itz which is reflected in gstr 2B can only be taken this is called as matched ITC so see that so this is the information we are trying to understand so where is this information given this information is given in section 41 red with Section 41 read with Rule 36 sub rule 4 section 41 of cgst act and Rule 36 sub rule 4 of cgst rules what does it says so only matched EAS can be taken what is that match rate easy supplier will file the details of outw supplies in gstr1 or if what is if invoice Furnishing facility a person who is under qrm they will be filing Returns on a quarterly basis we all know that only if the gstr1 is filed it will come in 2B means if our supplier is under qrm he will be filing gstr1 on a quarterly basis then this data will come in our 2B on a quarterly basis until that point of time we cannot take itz so that's why they have launched this if so your supplier even though he files the gstr1 on a quarterly basis but for the first month and second month he can file a invoice details in if invoice Furnishing facility so that the data will come in your monthly 2B itself even though he has not filed gstr1 so therefore in our 2B the data will come from gstr1 of the supplier as well as if of the supplier so gstr1 or if supplier reports outward Supply details and it should be filed by the due dat that is very very important because just now we have seen suppose if the supplier fil gstr1 after the due date it will come in our 2B but not this month 2B it will come in next month 2B so this is known as match dat eing so this much only can be taken but section 41 says this is the this is given in rule 36 of rule 4 but section 41 says we can do self assess ITC 36 appr 4 says only match can be taken section 41 says self assessed itz can be taken what is that self assessed itz matched itz plus the six adjustments is known as self assessed itz what are these six adjustment first three adjustment related to I'm supposed to take match EC it is reflected in 2B it is reflected in 2B but I should not take ITC why I should not take ITC because it is blocked credit or used for non bus purpose or used for Exempted supplies so these are the three things so these three things basically are what reflected in reflected in 2B reflected in gstr 2B but ineligible but ineligible you should not take even though it comes into B but you should not take block dat easy used for non- bus purpose used for Exempted then then there are three things which is not coming in 2B not reflected in 2B but you are eligible you can take not reflected in 2B not reflected in gstr 2B but eligible but eligible what are they GST under RCM so whatever RCM liability that I have paid so means what I have some invit supplies on which I'm paying some GST and RCM so my supplier may not report this details in his gstr1 if the supplier reports the details in gstr1 it will come in my 2B that the question of taking itz problem will not arise so what happened here my supplier did not report in gstr1 because it was outward Supply covered under RCM on which he is not having the liability I'm having the liability so he did not report in gstr1 but I have to pay the GST under RCM whatever GST I paid under RCM can I add it to my ITC yes same same month yes no need to wait for next month same month itself you can add it for itz and you can adjust it only against fcm liability because whatever GST that we have paid under RCM so we will take it as itz but ITC cannot be used for RCM liability itself itz can be adjusted only against fcm liability so keep that point in mind then next re availment of itz reversed earlier what is that initially we availed ITC that got reversed again we are re availing now it may not come in this month 2B why it will not come in this month 2B because this not pertaining to this month this was pertaining to some period before we availed we revers again we are reiling it would have been reflected in the 2B of some that month it will not come in this month even then we can take ITC then third one ITC pertaining to the earlier tax periods not availed in that period but we are availing now there is a time limit for availment of ITC what is the time limit for availment of ITC 30th November of succeeding Financial year or date of filing annual return whichever is earlier that's the time limit for availment of ITC by the time limit previously it was September like that so 30th November of succeeding Financial year or date of filing annual return due date of filing annual return or actual date of filing annual return actual date of filing annual return whichever is earlier is the time limit that is the time limit by which we should take the ATC so there is a time limit for availment of ITC but for utilization of ITC there is no time limit we can adjust it against our liability anytime in future now what happens is that somewhere in April I have made the purchases and I want to Avail the itz in the month of November this year only so now can I Avail the itz yes but it will not come in November month Tob it would have been reflected in April month Tob can I take the ATC now yes because you are within the time limit yes and you can take itz but it will not come in this month to be it's okay it was reflected in one month some month before so it's okay you can take the ATC these are the three things wherein even though it is not reflected in 2B but eligible and you can enjoy the ITC that is GST under RCM re availment of ITC reversed earlier ITC not availed in earlier period but reflected in 2B of that period now because we are taking this extra ATC what will happen so we will get a notice because of this we will get a notice in terms of rule 88d so that is also an amendment for this May 24 exam rule 88d so therefore read with rule 364 and Rule 88d what does this rule 88d says rule 88d says whenever you have availed ATZ in your 3B more than your 2B so when ATD will come whenever you have aail at in your 3B more than your 2B okay at the time you will get a notice sir can I take sir yes because 3B ITC is basically an editable so we can edit that we can enter the am amount whatever amount you want you can enter that but the problem is if you are entering some number which is your lucky number and all so we will get a notice for what reason boss in your 2B this much only was the it you have taken extra so show us the reason why you have taken xitz so one notice will be given to us okay so that notice will be form GS DRC 1C okay one notice we will be getting and based on that notice so we need to give a reply what is that reply we will be giving maybe it is genuine case these are the three genuine cases what are these ke cases sir I paid some GST under RCM so I will reply so this is RM liability so please refer to my 3B Table Three I have mentioned some RCM liability so this much only I'm taking as itz justifiable number two so re availment of itz reversed earlier so in one 3B I would have reversed the itz so I will refer refer 3B of so and so month where I have shown the reversal of itz whatever I reversed only I'm re availing now so justifiable number three it pertains to 2 be of one month but I have not taken itz in that month but now I am taking the itz so you just refer in which month 2B it was reflected so but you have not taken so you give the reference of 2B and 3B of that month and so that it is justifiable these are the three cases it is justifiable other cases it is not justifiable so accept and pay you understood so if you are not accepting and paying then there will be other consequences so what are those other consequences the recovery will be initiated okay so that is this information rule 88d we should refer along with this so that rule 88d is in returns chapter so you can give the reference of a page here refer page number 134 refer page number 134 see because you should learn it properly by interconnecting that's why rule 88d page 134 this rule 88 D information is in 134 so basically when 88d will come into picture when 88d will come into picture itz in gstr 3B greater than itz in GST 2B now along with 88d first we will refer 88d in page 134 along with that we should also see 88 C so looking to 88d what does it says trigger point when 88 c d will come because it's an amendment here that's why I'm going little slow it's a May 24 Amendment difference in it claimed that is Credit availed in 3B exceeds the credit as for autogenerated statement in 2B so we will get a notice what is the format of the notice GST you remember which chap which subject we are studying GST DRC demand and Recovery they should recover it from us now so demand and Recovery DRC one okay so remember the alphabet before D what is the alphabet before d c so Dr C1 C is the form okay make a effort remember this because it's an amendment by mistake if they ask by mistake we write they will think that we are intelligent of course not but we will get marks you understood or not so that's important because world is everywhere cheating only so then communication by so we get a department notice and either it will be uploaded in our portal plus you will also get the email intimation what is the reaction time 7 Days within that seven days what you should do you should give a reply that reply is in Part B part A they will give notice Part B of the same form part B of the same form you need to give the reply so what are the options available to you number one pay the difference if it is not the genuine credit pay the difference option two if it is genuine credit give the reply explain the difference or partly pay and partly explain the difference Okay then if no response or unsatisfactory response what will happen that's what I told you so you are not giving an explanation neither giving explanation nor accepting the difference and making the payment so then in that case they will give a notice under 73 or 74 mostly they will invoke 73 only mostly they will invoke 73 because it is clearly evident there is a mistake that do not involve fraud sir when 73 when 74 if there is non-payment of GST short payment of GST non-p payment of GST means GST are required to pay but you have not paid short payment of GST you have paid less wrong availment of ITC you are not supposed to take the credit but you took the credit and utilized it or wrong utilization of ITC you supposed to take the credit you took the credit but you have utilized it wrongly wrong utilization of ITC or eron as refund you are not supposed to get the refund but you got the refund in these five cases there is a payment of tax something you have to pay first case non-p payment you have to pay short payment you paid less you have to pay wrong availment utilization of ITC unnecessarily utilize the ITC because of which your liability will come down so there also so there is some payment of tax eron as refund you're not supposed to get the refund you got the refund so you have to pay that amount for recovering this amount they will invoke either 73 or 74 if it is on account of fraud if it is on account of fraud fraud means what intention to evade then it will be section 74 if it is nonf fraud there is no intention to aade by mistake only it has happened clearly evident when there will be intention to aade so I planned it in such a way that so no one can identify this that is called as intention to evid but evident clearly in 3B I have taken more ITC in 2B there is lesser ITC there is no intention to AIT so therefore in that case usually they will invoke 73 you got it so 73 will come in which case fraud or error error means no intention to evid 74 will come in case of of fraud that is intention to evit so what they are doing they are giving a notice I J already one notice we got now another notice second notice you understood but they will not do recovery because this they will be testing in exam recovery direct recovery can be made under Section 79 if there is a difference in itz in 3B and to be explained what will you explain see question itself you did not understand then where from you will explain you understood so direct recovery can be initiated under Section 79 in case of difference in itz that is itz availed in 3B more than itz as per 2B explain like that this question will come here definitely it will come here okay so when that question sees you will not understand what to write you will write about rule 88 D and all but it is like they are asking you one question but you are answering something else so what is the correct answer sir sir see there recovery cannot be made if there is any difference in 3B and 2B first a notice to be given and a 7 Days time limit to pay the difference or give the explanation if not the another notice will be given under 7374 and after 7374 notice one order should be passed under 737 24 thereafter only recovery can be made if you are not making payment within 3 months after order date because 7374 provision says first notice will be given after notice they will pass a order after passing order they will give a time limit for you of three months either to pay that or go for appeal if you are not going for appeal or neither making payment in that case only recovery will be initiated you understood so that is what you need to write so you should write that the given statement is incorrect recovery cannot be initiated under Section 79 on account of difference in ITC in 3B versus 2B as per rule 88d you got it as per rule 88d a notice to be given in DRC 1 C and within 7 Days the taxpayer has option to either make the payment of difference or explain the reason for difference if no action is done by the taxpayer within such s days a notice can be issued under Section 73 or 74 and after that notice so an order will be passed as per the time limit under 7374 after the order has been communic ated to the taxpayer within 3 months if the taxpayer neither preferred an appeal against that particular order nor he accepted the order and made the payment of tax interest and penalty then recovery will be initiated got it so that is how you need to write the answer you got it then next impact on filing of returns or access to GST portal okay until that point T time what will happen so because it is taking some time now 7 Days time is there and thereafter we have to pay so it takes some time till that time what will happen if you are not doing that what will happen one notice will be given under 73 74 okay in this 7 days what will happen in this 7 days what will happen you are not allowed to file the return in gstr one means till the time you make the payment of the difference or explain the difference to their satisfaction you cannot file gstr one so it will be blocked gstr1 will be blocked and once gstr1 is not filed gstr 3B also cannot be filed because now we have sequential filing of returns what is sequential filing of returns without filing gstr one of previous month we cannot file the 3B of the current month without filing gstr one of the previous month we cannot file 3B of the previous month and without filing gstr 1 and 3B of the previous month you cannot file the gstr one of the current month without filing gstr one of the current month you cannot file 3B of the current month like a sequential we have got it first gstr one of previous month then 3B of previous month then gstr one of current month and then 3B of current month like that only so if you are not able to file gstr1 consequently 3B also cannot be fil that is what it is so you are not supposed to file gstr1 is given in rule 88d but this point is not given in rule 88d it is a Connecting Point different place and another Connecting Point because you are not able to file gstr1 and gstr 3B so EV Bill also will be blocked if gstr1 not filed for two consecutive tax periods like two months continuously you are not able to file EV bill will be block BL eable facility gets blocked for your outward supplies also one more consequence is there as the itz availed in 3B is greater than ITC availed in 2B so your registration also will be suspended that is one of the reason for cancellation of registration there are many reasons for cancellation of registration one of the reason for cancellation of registration is what itz availed in 3B which is greater than 2B actually this 2 3 4 not given in this rule given in different places which I have just connected so because this also can be tested as a question like what are the consequences with respect to the taxpayer when the notice is served under drc1 C or notice is served under rule 88d anyway they can ask the question what are the consequences you need to write this Four Points okay following are the consequences if the taxpayer has neither paid the difference nor has given the explanation within 7 days from the date on which notice has been served in DRC 1C what is that first one first point gst1 cannot be filed and it gets blocked because of which gstr 3 also gets blocked if the gstr 1 and 3 be not filed for two consecutive tax periods will also gets blot and this is one of the reason for suspension of registration so these four points we need to write this is how 88d can be tested okay very very important this one big Amendment which definitely they will be testing when we read 88d along with that 88c also we should read what is this 88c 88c says that my liability in gstr1 is greater than liability in gstr 3B when this situation will happen I have poured in lot of invoices in my gstr1 but not all invoices I have paid the liability in my gstr 3B so when there is a difference in this for example as per my gstr1 liability is 18 lakhs but in 3B I have paid only 8 lakhs means 10 lakhs difference is there you understood means what I'm doing I'm putting the invoice in gstr1 but I'm not discharging the liability because at the time of filing gstr1 we don't have to pay tax at the time of filing 3B only we should pay the tax so I have suppressed my tax liability in that case so they will be giving a notice in DRC 1B remember the alphabet before the rule number this is which rule 88 C so C before is B so drc1 B so what is the trigger point for 88c liability declared in gstr1 exceeds the tax payable in 3B so we get a notice same same but notice form only will differ what is that notice form here 1 B here 1 C and communicated by uploading in the portal plus email and what is the response time 7 days and what is a response to be filed in Part B of DRC 1B same logic part A Part B part A Part B okay then options available ditto pay the difference explain the difference or partly pay and partly explain the difference same story and why there will be reasons to explain the difference so there could be some genuine reasons also like I have added a invoice but but I forgot to adjust the advance actually 10 lakhs 8 lakhs Advance already I paid GST but now I added invoice for 10 lakhs so now in 3B I will pay liability only for 2 lakhs because on 8 lakhs already I paid but this adjustment of advances I should have done in my gstr one I have not done because of that reason this difference may happen so there could be genuine reason also so pay the difference explain the difference or partial payment and explain the balance if no response or unsatisfied response what will happen this is the place where direct recovery will happen here no notice again no notice again why no notice again this is called as self assessed tax not paid self assessed tax not paid direct recovery can be initiated under 79 no waiting no waiting boss 7 days over immediately they will do recovery so this is called as direct recovery recovery of tax under section 79 plus liability posted in electronic liability ledger so this is known as recovery of self assessed tax recovery of self assess tax under Section 79 usually in 7374 we discuss one time limit first they will give a notice in case of 73 74 what they will do first they will give a notice after notice they will pass a order after order only they will do recovery correct so this recovery will be under Section 78 this recovery will be under Section 78 and what is the time limit we have for this order to recovery 3 months 3 months okay so within this 3 months if you are not making the payment or you are not going for appeal then only they will do this recovery so this information related to recovery and uh you know noes Etc is in demand and Recovery chapter I just connected it here so now going back to the input tax credit where we started so page 79 so I just discuss now rule 88d along with rule 88d we have also discussed 88 C on this Rule 88d and 88c also questions can be asked so lot of questions are possible in these areas then next one more rule is that section 41 read with rule 37a this also an amendment but this was an amendment for last attempt itself but for November 23 they have not tested much on this particular rule 37a so because of that reason definitely this time you can expect a question so what is it all about simple the supplier will report the details of invoice in gstr1 and the gstr1 is filed within the due date same no change we have seen already here supplier file gstr1 and it is filed by the due date so supplier file gstr1 it is filed by the due date based on this the data of invert Supply is made available to recipient in 2B correct itz reflected in gstr 2B of the recipient and whatever itz that is reflected in 2B of the recipient can be availed in gstr 3B so that is known as ITC availed in 3B self assessed ITC and of course after making these adjustments we can take the it here in 3B now what happened supplier has not filed 3B even then when can we take ITC yes that's what section 41 says your supplier just report the data in gstr1 you happily take the ATC the moment it comes in your 2B your supplier has not filed 3B it's okay but your supplier should fil the 3B by September 30th of the next financial year that's a time limit given 30th September of next financial year who your are supplier what 3B should be filed if your supplier has not filed 3B by 30th September of next financial year then whatever itz that is availed by the recipient so should be reversed by 30th November of the next financial year so there is a time limit of two months September 30th supplier not fil gstr 3B as a recipient what we should do already we took the ITC so that we need to reverse so why you need to reverse it is a mistake of the supplier now yes it is a mistake of the supplier only but you already Avail the ATZ now so that's why you reverse so then sir what if I have not availed the ATZ at all no problem so you just check whenever September 30th of next financial year you wait till that time and if your supplier has filed gstr 3B then you take the ITC because anyhow for taking ITC there is a time limit now 30th November of succeeding financially or a date of filing an whichever is earlier as you are taking the ITC before your supplier is filing gstr3b it's like a penality on you for the purpose of availing the ITC early itself okay so therefore you reverse the ITC interest no that's an amendment no if you are reversing by November 30th if you reversing by November 30th so we will not punish you you reverse the ATC but don't pay any interest however however if you are not reversing by November 30th of next financial year you need to pay interest who you are you are means recipient recipient should reverse the ITC by 30th November otherwise recipient should pay interest at what rate 18% paranam from when from the date of utilization not availment from the date of utilization till the date of reversal if not reversed by November 30th of next financial year interest at 18% shall be payable from the date of utilization till the actual date of reversal are payment now here suppose if the 3B is filed after September 30th of next financial year then what will happen then simple whatever ITC that has been reversed at earlier can be reail without any time limit so the time limit is not applicable just now I told you there is a time limit for availment of ITC that is 30th November of the succeeding Financial year or date of filing and return whichever is earlier but for re availment of ITC reversed earlier there is no time limit we can take any time but interest we cannot Avail gone that is gone that is the income to the government you understood so why they create these provisions and all mainly for the sake of interest income you understood or not so this interest income is there so interest gone sir suppose you don't want to pay interest ensure that you are reversing by November 30th and here interest from the date of utilization what is the meaning of date of utilization when is it called as itz utilize that month in which the balance in itz Falls below the availed ITC I have availed one lakh and I maintain the balance of one lak every month I have not utilized the itz in any one month if my balance in itz Falls below one lakh to that extent I have utilized itz in that month okay so that is the meaning of date of utilization till the date of reversal or payment this is about rule 37a section 41 this is also very very important so mainly on this interest computation can be tested here one interest computation is possible so this interest computation related question could be tested then next section 49 we are discussing 49 talks about the manner of utilization 49 subsection 5 so far we have been talking about availment of ITC we availed we took the credit now we need to use it use it for what purpose use it for payment of our liability and for that we have certain principles the first principles ISS that there is no restriction with respect to igst means what igst credit can be utilized for payment of any GST liability and any GST credit can be utilized for payment of igst liability there is no restriction with respect to igst and among the other taxes what are the other credits cgst sgst and utgst respective credits can be utilized for payment of respective liability and cross utilization is not possible so if I have cgst credit I cannot use for payment of sgst liability cgst gr cannot be used for utgst liability that is the meaning of this so what is the first principle igst no restriction between the other three credits respective credit for payment of respective liability and then second principle order or priority I have igst credit first I should use it for payment of igst liability thereafter whatever balance that I have I can use it for payment of cgst sgst or utgst in any manner and in any proportion then what about the other credits cgst Credit First for cgst sgst Credit First for sgst utgst Credit First for utgst then the balance if any for payment of I GST got it then third principle before utilizing you know cgst Credit sgst Credit ensure that the igst credit is exhausted the first credit that we need to spend is igst credit why sir because of this reason that is igst credit will be in a suspense account so we should spend it properly for either cgst sgst so they will dispose it off to the respective government so that's why they wanted us to spend igst credit first before touching cgst sgst credit and principle number four that is I have all the credits but only one liability that is igst liability first to use igst credit as usual for payment of igst liability then which credit we should spend cgst and thereafter sgst or utgst credit now while doing this set off so multiple answers are possible but you should be careful as to the manner of utilization so the minimum cash outflow should be the objective so what is that minimum cash overflow objective for example I have cgst sgst and igst igst so gross liability gross GST payable is somewhere like 5,000 5,000 and 5,000 and I have an itz of 2500 2,000 itz of 2,000 2,000 and 10,000 now in this case what is the answer see 10,000 rupees I can use first for payment of you know 5,000 first I should use it for payment of 5,000 still I have some 5,000 I should use it for payment of either sgst or cgst or both sgst and cgst suppose if I use entirely for you know C sgst let's see what happens so that the sgst will become zero and cgst 5,000 minus 2,000 3,000 will be there and this I sgst z igst z so there is this 2,000 carried forward because 2,000 sgst credit cannot be set off with cgst liability you got it because cross utilization not possible due to that reason so this answer 3,000 is not the correct answer why it's not the correct answer simple you see the total of the gross liability what is the total of the gross liability 15,000 what is the total of the it 10,000 so 15,000 minus 4 14,000 15 - 14,000 rupees should be the answer so first check that see total gross minus total ATC so the net should be th000 so this is only the correct answer you do anything but ensure that you are getting 1,000 rupees okay so what is it you need to do for this first gross GST payable so gross GST payable will be 5,000 5,000 and 5,000 so this total will will be 10,000 and now minus i g credit so first we need to utilize igst credit that's what the principle says first igst credit should be utilized so therefore 5,000 I will utilize for payment of igst liability then I'll not spend more than 3,000 for cgst why not more than 3,000 for cgst because already cgst credit we have so the better Al alternative is distribute it equally distribute it equally because the credit is also equal if you see the credit 2,000 2,000 and liability also 5,000 5,000 you distribute in the 2,500 2500 then minus cgst and is GST credit so that will be like 2,000 and 2,000 so now what will happen if you see 500 500 0 so so actually the answer should be th000 that should be the net GST payable so here the answer is th000 only alternative answers possible so we can have 0,000 0 or 1,000 0 0 also alternative answers possible but you do the total column you do the total column and keep it like this so that what will happen you know when you are doing the answers so 10,000 and 4 ,000 so this will be coming to 1,000 okay that is with respect to this igst credit after utilizing for payment of IGS liability can be used for payment of cgst sgst utgst liability in any proportion so multiple answers possible in the exam so depending upon cgst is GST liability you a portion it okay then sir can GST compensations say also be taken as credit yes it can be taken as credit but it should be utilized only for payment of GST compensations on outward supplies can it be used for payment of high GST Etc and all no GST compensations is only for payment of GST compensations then next one section 16 conditions for availment of ITC so what are the various conditions for availment of ITC total eight conditions we have condition number one only a registered person can Avail ATC of course unregistered person cannot Avail ITC so because you know he cannot adjust he don't have a liability now so what's the point in taking ITC number two invert Supply should be used or intended to be used used means used for the existing okay so used now present intended to be used purchase now which will be used in future so even though not put to use even though not ready to use we can enjoy the ITC because if you use know this words put to use is there in income tax correct put to use only if you put to use you can claim depreciation and in indas we have ready to use till the time it is ready to use all the cost you added to the asset correct but we don't have any use you know any use of this intended to be used also you enjoy the itz so to be used or intended to be used in the course in the course means for the existing business further ends for something which we are going to start in future we can take so only registered person can have ATC Inver Supply should be used or intended to be used in the course or furtherance of business third condition the person who is availing itz should be in possession of tax paid document so what is the meaning of a tax paid document either tax invoice or debit note or ISD invoice input service distributor invoice or Bill of Entry these are the four tax paid documents on the base of which itz can be availed possession you should be having it if the invoice is missing we cannot enjoy the ITC even if you have Avail you reverse it if you have not Avail don't Avail it if the invoice is missing so that is the meaning of possession then fourth condition recipient should have actually received the goods or services this is what I was referring to so invoice is pertaining to January but the goods are received in February when can we take ITC January or February only February because recipient should have actually received the goods or services supplier should have furnished the details of invoice in gstr1 because if he's not adding the details in gstr1 it will not come in 2B if it is not coming in 2B we cannot take ADC because only self ass ATC can be taken correct so therefore supplier should have furnished the details in gstr1 supplier should have paid tax with respect to such Supply by September 30th of the succeeding Financial year that's what we have seen section 41 read with rule 37a what is that supplier should have reported the details in gstr1 and should have filed the 3B by September 30th of next financial year recipient should have filed the returns because how we can take itz as a recipient without filing gstr 3B we cannot take because I have discussed this point availment of ITC reversal of ITC utilization of ITC these three things happens in which place only in gstr 3B without filing 3B we cannot Avail ITC and this is another Point GST paid on invert Supply should be reflected in 2B under itz available and should not be restricted why we have because there is one section section 38 what does that section 38 says even though your supplier reports the details in gstr one but it will come in to be under ITC not available if it comes in to be under itz not available column you cannot take itz there are many reasons which is given in section 38 as per section 38 in few cases itz shall be restricted in gstr 2B what are those few cases your supplier is a newly registered person you purchased from him so you should not purchase from him so whenever you are making purchase from A supplier you ask him are you fresh yes I will not buy from you because he's a newly registered person if you buy from him even though he reports the details in gstr1 it will come in your to be under itz not available where is it given section 38 why they gave because they were drinking something while drafting this provision see this refer page number refer page number 134 refer page number 134 related to the section 38 so I have given it here so what is that supplier is a newly registered business so then second your supplier has filed gstr 1 but not 3B for some previous periods your supplier for some previous periods he filed gstr1 but not filed 3B okay now that would have been coming in gstr1 so you have not done the reversal you have to do the reversal knife he is not filing 3B as per section 41 you need to do reversal recipient if you are not doing also don't worry they will put it under itz not available in the subsequent months then next your supplier liability in gstr1 is greater than 3B that idiot filed gstr 3B so section 41 read with rule 37a will not get attracted when section 37 uh the 30 rule 37 a will come section 41 with rule 37a when it will come if your supplier has not filed gstr 3B by September 30th of next financial year he filed you understood he filed so this section and Rule will not come but another problem is there what is that another problem there is a difference in liability when there is a difference in liability rule 88c will get triggered on whom on the supplier as rule 88c get triggered they will do the recovery from him okay now sir what is your problem but in our to be it will come as ITC not available that is this supplier liability in gstr1 greater than liability in gstr2 3B but remember all these cases the mistake is not done by the recipient you are not doing anything wrong here your supplier is only doing anything wrong okay for that only you are penalized so why sir next time onwards don't buy from this supplier is a bad boy okay that is a meaning here next supper itz in 3B greater than his 2B he has taken more ITC then your ITC is gone then supplier has received demand notices and default in payment of taxes and such default continues who your supplier he defaulted and uh he has got the notices How will I know sir you will not know all these things you will know only when you are 2B you will see it in it not available so this month you will be so happy I have 10 lakhs itz so 12 lakhs is my liability so two lakhs I have to pay like that we will be prepared the moment you see 2B you will get a mini heart stroke why 10 lakhs you thought of itz but in that there is only three lakhs what happened to 7 lakhs it is moved to itz not available then make a fund of 7 lakhs and make the payment you understood so why sir this because of these reasons any one reason he might have got one notice that and all you will not know but only when you see in ITC Tob you will know supplier has received demand notice and default in payment of tax and default continues supplier defaulted in payment of 1% of his liability as per rule 86b so I told you that there is one rule 86b which says that he has to pay 1% of his grass liability through cash Ledger even though he has sufficient balance in his electronic credit Ledger if he is not doing that who your supplier then you purchased from that bad boy so your itz is gone so these are the six cases where itz will be restricted in 2B as itz not available what are the six cases Market is important for short note six cases supplier is a newly registered business supplier filed gstr1 not filed 3B supplier liability in gstr1 greater than liability in gstr 3B supplier itz in gstr 3B greater than his 2B ah then supplier has defaulted in payment of tax and the default continues and supplier has to pay 1% of his liability through cash Ledger but he did not pay so in the six cases itz will come but it will come under itz not available so first challenge of coming into 2B is what he should have filed gstr one there are like multiple hurdles like you know while racing there will be hurdle match you know we have to jump and go like that multiple hurdles what is the first hurdle he is not reporting in gstr one but are he reported in GST one but he did not enter properly because of which it will not come in our 2B itself that's the first hurdle to be it came to be it came but we cannot take because of this Tob it came he reported in gst1 properly it came but we cannot take why again supplier is newly registered or he has got demand notice Etc because of this reason then then another twist is there it came in to be we availed it you understood it came mean 2B and we availed it but that did not file gstr 3B by September 30th so we need to reverse the ITC you got it here understood okay sir we reverse it where is it given section 41 read with rule 37 all these things we escaped finally it came in our electronic credit Ledger we availed the ITC again one rule is there rule 886a which says that whatever ITC that you have already availed in your electronic credit Ledger will be suspended for a period of you know like one year okay so why sir there are some reasons that they have given and 86b says even though you have Avail the ITC but fully you cannot use 99% only we can use okay connecting all these points so I will tell you later so what are the connections interconnections between this but try to keep in touch with this now this about section 38 so what are the eight conditions for availment of ITC the person availing itz should be a registered person the Inver Supply should be used or intended to be used in the course or furtherance of business and uh these are the two basic conditions then in the six conditions three conditions in the hands of recipient what are the three conditions as a recipient you should be in possession of tax paid document and you should have actually received the goods or services and you should have filed your 3B to take the ITC then three conditions not in your hands your supplier hands what is that your supplier should have reported in gstr1 and he should have paid the filed the gstr 3B by September 30th of next financial year and he should not have contravent anything as per section 38 because if he does any contravention as per section 38 it will come under itz not available to us then what is the meaning of input tax input tax refers to Central tax state tax Union territory tax charge non supply of goods or service are both made to a registered person okay everything we can take as input tax but it also includes tax paid on reverse charge basis so whatever GST that we pay under RCM can also be taken as itz even igst charged on import of goods that is also literally RCM only so importer will pay along with customs duty igst can basic customs duty be taken as credit no can social Fair searge be taken as credit no only igst on import of goods can be taken as credit it does not include tax paid under composition scheme properly like this uh this person opting for composition scheme should not first of all charge GST to us so there are two disadvantages for a person opting for composition scheme number one he cannot take ity on his invit supplies and he should not charge the composite tax to his recipent so now you are making purchase from a person opting for composition scheme he should not charge composite tax to you but he charge composite tax to you can you take ITC no because the meaning of input tax excludes so tax under composition Levy then what are the contents of invoice for availment of ITC so there should be some minimum little bit details that should be there in a document to be called as a invoice for availment of ITC what are those details so first it should be having GST of supplier and GST of recipient number two it should have the description number number three it should have value and number four tax and number five place of Supply if it is Interstate Supply these are the minimum details that should be present in a document to be called as a invoice for availing ITC then what is the meaning of Inver supplies invit supplies means inputs input service or capital goods inputs means those goods which are purchased and charged to pnl is known as inputs if it is capitalized then it will be called as capital goods and input service means any service received will be coming under input services then deemed delivery so that is like in this case one condition is there recipient should have actually received the goods or services what if the recipient has not received the goods or service on behalf of the recipient some other third person has received the goods or services that is Bill to ship to transaction there is a supplier I'm the billing address you are the shipping address now the goods are delivered to you but invoice is raised to me I cannot take ITC because I have not received the goods one of the condition says that I should have received the goods but there is a deeming fiction which says that the on which the shipping address has received the goods or services it is deemed that the billing address has received the goods or service and the billing address can take itz so it is not only for goods but also for services for service also this will be applicable when goods are delivered to any person or service are provided to any person on the instruction of the recipient that is billing address whomsoever is having the invoice okay the date on which such person has received the goods or Service Such person has received the goods or service means the shipping address the Third person has received the goods or services it is deemed that the recipient has received the goods or services and the recipient can take ITC so in case of Bill to ship to transaction billing address can take ITC the next point if the goods are received in Lots or installments so against the single invoice if the goods are received in three lots in three months when can we take ITC against that invoice proportionately or on receipt of last lot on receipt of last lot or last installment then reversal of itz for non-payment of consideration to the supplier so there is one provisor which says that as a recipient this is given in rule 37 not 37a rule 37a is related to this this is Rule 37a okay supplier not file gstr 3B by September 30th that is Rule 37a which I'm talking now is about rule 37 this is Rule 37 rule 37 so if the recipient has not made payment to supplier what is that payment both Value Plus tax is not paid to supplier within 180 days from the date of invoice so I'm the supplier you are my re you have not made payment to me within what time 180 days from the date of invoice now whatever ITC that you have already availed because payment to supplier is not a condition for availment of ITC in that eight conditions nowhere we have a condition that the recipient should make payment to the supplier even though recipient has not made payment to supplier recipient can Avail the ITC so as a recipient Avail the ITC but you have not made payment to me within 180 days now whatever ITC that you have already availed needs to be reversed along with interest at the rate of 18% from when from the date of utilization till the date of reversal this 180 days should be counted from when from the date of invoice from the date of invoice so now you need to reverse the ITC along with interest now what if you make payment to me after 180 days so much of the payment that you have made after 180 days you can Avail the ITC back first you have availed ATC as you have not made payment to me within one days you reverse the ATC again you make payment to me after one days you can Avail it back but the interest is loss okay there are two places where we have reversal and re availment one under rule 37a which we have seen section 41 red with rule 37a what is that supplier not filed gstr 3B by September 30th of the next financial year recipient will reverse the ITC and again it can be reail whereas another is section 16 read with rule 37 section 16 says that if the recipient is not making payment to supplier within 180 days from the r of invoice so much of the itz availed by the recipient needs to be reversed along with interest and again as in when the payment is made to supplyer recipient can reail the ITC in both these cases of re availment there is no time limit and in both these cases interest will be payable at the rate of 18% from when from the date of utilization till the date R of reversal and in both these cases interest cannot be re availed only ITC reversed can be re availed so that is this if recipient has not made payment to supplier within 9 days from the rate of invo so much of the ITC proportionate to the amount not paid to the supplier shall be reversed along with interest 18% perom from the first date after date of utilization till the date of reversal however interest not payable if availed ITC is not utilized correct so I have availed the ITC but I have not utilized at all then interest payment shall not arise but this 180 days condition has got exceptions so three cases this 180 days condition is not applicable number one supplies covered under RCM 9 subsection 3 so in case of 9 subsection 3 the liability to pay GST is on recipient so therefore 18 days condition not applicable there then 71 C Supply without consideration consideration itself is not there fair from recipient will make payment to supplier then payment to third party on behalf of supplier under 152b that is as per 152b a recipient instead of making payment to the supplier so any amount that the supplier is liable to pay to a third person recipient will make payment so any amount that the supply is liable to pay is incurred by the recipient on behalf of the supplier means indirectly the payment is received by the supplier now so due to that reason this 180 days condition is not applicable in this case so these are the three points and now what happens if the proportionate amount is paid for example so it's 60% paid within 180 days and 40% not paid now how much you need to reverse 40% related ITC you should reverse because you paid 60% within one days that component you don't have to reverse so you have not paid how much 40% that component only you need to reverse and again say 100% you did not pay so 100% you reverse thereafter after 180 days you paid 55% how much you can aail it back that 55% related ITC proportionate component only you can it back so itz proportionate to the amount not paid to the supplier proportionate to the amount not paid to the supplier ITC can be re availed as and when payment is made to supplier after 180 days but interest paid cannot be availed as ITC because there is no time limit for reail but interest gone ITC we can reail even if it is pertaining to some two years 3 years before also then in case of depreciation under Income Tax Act section 16 subsection 3 what does it says suppose if I follow the block of assets method and in that block of assets method if I add the asset value along with GST then I would have already claimed the depreciation under income tax act so which means I should not Avail the ITC here suppose if I added in the block of asset only the asset value excluding GST component then the GST component can be taken as ITC because you cannot have the double benefit so if you cannot like enjoy the depreciation also there and you cannot enjoy the itz here because depreciation leads to reduction in income tax due to that reason this cross provision has been created for example you purchase a capital goods for 10 lakhs and GST is 1 lak 120,000 if the depreciation is computed on 112,000 that is 10 lakhs plus 1 lak 120,000 then itz with respect to 1 lakh 120,000 is not available you got it then because we are Computing depreciation on 11 lakh 20,000 what if depreciation is computed on only 10 lakhs then ITC of 1 lakh 120,000 will be available and we are talking about depreciation under accounting or depreciation under Income Tax Act here they gave depreciation under Income Tax Act but as per India is also the logic is same there is no difference in that but here while discussing they gave only under Income Tax Act but the similar provision is there in India is also recoverable taxes should not be forming part of the asset so I think in days 10 PPE so this point is there so where they are telling that recoverable taxes should not form part of the asset value okay then time limit for availment of ITC so 30th November of next year or date of filing and return whichever is earlier but what is the exception to this re availment of itz reversed earlier and in case of debit note so whenever we have a debit note don't see its invoice date for determining the time limit you see the debit note date only for example debit note date is 28th January 2023 for which financial year the debit note is given 2223 So based on that only you determine the time limit for availment of ADC don't see the invoice pertaining to this debit note so we interpret the debit note independently in case of debit note availment of ITC depends on the debit note date but not the date of invoice related to such debit note so this about section 16 then section 17 talks about apportionment of credit and blocked credits so apportionment of credit says that if I have some Inver supplies which are used for taxable outward supplies I can enjoy the ITC no issue if I have some Inver supplies which are used for Exempted out supplies can I take ITC no again I'm repeating init Supply used for taxable outet Supply can I enjoy ITC yes Inver Supply used for Exempted outward Supply can I enjoy the ITC no invit Supply used partly for taxable and partly for Exempted can I take ITC yes proportionate ITC I can take same way init Supply used for business purpose can I take ITC yes invit Supply used for non- bus purpose can I take ITC no Inver Supply used partly for business and partly for non- bus can I take ITC yes proportionate ITC I can take that is this in Supply used exclusively in taxable or business purpose ITC available exclus used for Exempted or non- business ITC not available used for both taxable and Exempted or both business and non- business proportionate ITC available now where the zero rated Supply should be brought zero rated Supply should be treated as taxable so it should not be treated as Exempted because zero rated even though the rate of GST like the burden of GST will become zero what are considered as zero rated supplies export of goods or services supply of goods or services to S is considered as zero rated in case of zero rated I have two options what is the two options option number one I will pay igst and I will get that igst as refund which means the burden will become zero or I will not pay GST I will sell it under Bond or UT and whatever itz that I have that ITC will get as a refund so which means the burden will become zero but even then it should be treated as taxable means when outward Supply is zero rated can I enjoy the itz on in Supply yes in this regard one more point also remember basically when my outward Supply is Exempted I cannot take ITC on in Supply but the same product or service is exported or supplied to scz it will become zero rated when it becomes zero rated I can enjoy the itcn okay so see this there is a product X there is a product X and that product X is Exempted product X is Exempted and as the product X is Exempted can I take itz on invert Supply itz not available on Inver supplies correct not available on invert supplies okay now now this product X which is Exempted the product X which is Exempted is being exported exported are supplied to acz then it will become zero rated as it becomes zero rated whether it available on Inver supplies yes itz available on invert supplies reason being the character changes previously product X was Exempted so itz not available but the moment it is exported or supplied to the character of this product X is zero rated so therefore we can take the ITC on Inver supplies so be careful with respect to this so they will give a product is Exempted and the Inver Supply used for that Exempted product but the product is exported when the product is exported we will think that itz not available but actually itz is available because the character of the product is now not Exempted the character changed to zero rated so that is about this so zero rated supplies will be covered under taxable supply for the purpose of availment of ITC now what is the meaning of Exempted supplies so because if Inver Supply is used for Exempted we cannot take ITC now or invert Supply used for taxable and Exempted we can take proportionate at easy so what is the meaning of that Exempted supplies so supplies notified as Exempted so there are some Exempted supplies as per the definition for payment of GST what are the not as Exempted nil rated and non- taxable these three are Exempted even for itz also so notified as Exempted means what from time to time government will be giving certain exemptions by way of notification that is known as notified as Exempted mil rated means the rate of GST is n non- taxable means alcoholic liquor for human consumption and five petroleum products what are the five petroleum products crude oil petrol diesel Aviation turbine Fuel and natural gas these five petroleum products okay so these are the three Exempted supplies even for payment of GST as well as for availment of ITC then Supply covered under RCM so my outward Supply covered under RCM actually it is taxable for payment of GST I will not pay GST my reent will pay GST but for me it will be treated as Exempted for itz purpose if I have some init supplies used in this outward Supply I cannot take ITC for example I'm covered under RCM say I'm an advocate and my Supply is covered under RCM now as I not having the liability on my init supplies can I take itz no I should not take itz because for me it will be treated as Exempted for itz supplier of RCM supplies cannot take itz but recipien can take itz so now you are paying GST under RCM that RCM liability can you take as itz yes then sale of land sale of building sale of Securities now one more Point supply of where Goods under Customs so these four transactions are excluded from Supply they are not treated as Supply excluded from Supply what are the four activities excluded from Supply sale of land sale of building sale of Securities and supply of warehoused goods under customers what is this warehoused Goods under customers imported goods kept in the warehouse without payment of customs duty and the document of title called as Warehouse receip is transferred to some other person now this particular transaction is not a supply for me why it is not a supply for me because the subsequent buyer is going to file the bill of entry and pay the customer Duty so for me it is not a supply but for Exempted Supply under ITC definition it is added as Exempted Supply so four activities not read as Supply but tra as Exempted supply for ITC purpose sale of land sale of building which building sale of building where entire consideration is received after obtaining completion certificate or first occupation whichever is earlier sale of Securities and sale of warehoused goods under Customs now in case of sale of building sale of building and sale of land what should be taken as the value value should be stamp Duty value so why for land Building and securities only we are talking about value by why for not others because others are already Supply means it will have a valuation but these activities are basically not a supply so there won't be any value so we need to take the value so land and building you take the stamp Duty value but in case of Securities we need to take 1% of the sale value of that Securities so what about the supply of warehoused goods normal sale value normal sale value or transaction value at which the goods are sold that should be taken so this is about the eight points what are the eight Exempted supplies first notified as first three first three remember these are basically Exempted for payment of GST even for ITC purpose notified as Exempted nil rated non taxable then Supply covered under RCM then four points you remember which are not supply but treat as Exempted so sale off land sale of building where ENT our consideration received after obtaining completion certificate or first occupation whichever is earlier and sale of Securities supply of warehoused goods under Customs then you remember remember this even though interest on loans advances deposits is Exempted but it will not be treated as Exempted while Computing the Exempted turnover for ITC means it will be treated as taxable it will not be kept under Exempted it will be treated as taxable which one interest on loans advances deposits in so far as the consideration is represented by way of Interest or discount but this is except in case of Banking Company financial institution or nbfc it's like these four transactions are not a supply but read as Exempted Supply because of which what will happen our itz balance will come down how our itz balance will come down say this I have a common input tax credit so the common itz is 150,000 this is the common ITC and I have some Exempted supplies so our Exempted turnover Exempted turnover is somewhere like 10 lakhs and taxable turnover taxable turnover is 15 lakhs now how much is the net eligible ITC how much is net eligible ITC how to compute this net eligible itz first we need to take itz availed what is the itz Avail full itz we will Avail 1 lh50 we will Avail as itz in 3B thereafter proportionate to Exempted we need to reverse so first you take the ENT ITC then proportionate reversal proportionate reversal based on Exempted so what is that proportionate reversal if you see 150,000 into Exempted turnover divided by total turnover Exempted turnover is what 10 divided by total turnover 10 + 15 25 so this is the proportionate itz related to Exempted that I need to reverse first take the full itz and then reverse proportionate to Exempted so 1 lh50 into 10 by 25 is how much 60,000 I need to reverse so the balance is called as net eligible itz so the net eligible itz is 150 - 60,000 that is 90,000 is net eligible itz now here what happens is that there is some sale of land okay so continuation to above continue to above sale of land sale of land for 25 lakhs sale of land for 25 laks now what will happen to the net eligible ITC itz availed same no change so itz Avail in gstr 3B is 150,000 minus proportionate reversal so what is that proportionate reversal proportionate reversal if you see 150,000 into Exempted divided by total what is the Exempted turnover already 10 lakhs we have now now this 25 lakhs will also be treated as Exempted turnover correct sale of land sale of land even though sale of land here 25 lakhs is St Duty value this 25 lakhs will be S DV Stam Duty value so 25 L even though not a supply but treat it as Exempted turnover now what will happen to the numerator Exempted turnover already 10 + 25 it will become 35 divided by so now what is the total turnover so 35 already Exempted taxable no change 35 + 15 that will be 50 so 1 lakh 50,000 into 35 divided 50 please do the computation how much 1 lakh 1 lakh 5,000 then what is the net eligible itz net eligible itz net eligible itz is 40,000 just 45,000 okay just because there is some sale off line so our itz balance has fallen to 45,000 from 90,000 so so this is only because of what sale of land so because of bringing some not a supplies into Exempted supplies our ITC balance will come down same way actually interest is Exempted because of it ITC should come down but interest income is treated as taxable and they're asking us to enjoy the ITC got it enjoy interest is actually Exempted but we are keeping it under taxable enjoy the ites celebrate the happiness okay take dairy milk and celebrate the happiness but sir interest income will be this much only correct what they have taken from us is this much what they have given is this much to whom interest will be this much for them this is not applicable okay this provision is not applicable for them we will not when we give we know how much to give so to whom really they need to give have not given there service by accepting deposits extending loans or advances in so far as a consideration is represented by way of Interest or discount except in case of banking company or financial institution or nbfc then one more point also I just wanted to highlight here that is that I have given in a different place you can write here itself even sale of Duty credit scripts sale of Duty credit scripts also should should not be treated actually it is Exempted but it should be treated as taxable okay so this supplies notified as Exempted other than interest on loans interest on loans then other than interest on loans are sale of Duty credit scripts sale of Duty credit scripts Duty credit scripts means so we will get under foreign trade policy some Duty credit scripts which can be adjusted against our customs duty liability either you can adjust against the custom duty liability or you can transfer the duty credit scripts to some other person now when you sell the duty credit scripts so we have a concept of electronic Duty credit Ledger in customs as for that electronic Duty credit Ledger whatever incentives that we are getting from the government instead of giving to us in our bank account they will put it under electronic Duty credit Ledger this amount whatever is there in Duty credit Ledger will be given as a script amount so script number this much amount will be the duty credit so now what I can do with this Duty credit I can adjust with my customs duty liability what if I don't have the customs duty liability I will sell this Duty credit scripts to some other importer I can transfer it when I sell this Duty credit script to some other importer I will receive some money now for this I'm selling means someone is buying now I will get that money so this particular transaction of sale of Duty credit script is basically Exempted we don't have to pay any GST on that but while determining the ITC it will be Tre as what or over it will be trade as taxable turnover you understood so that is the meaning of the sale of Duty credit scripts it will not be treated as Exempted turnover you understood then that is the meaning of this so we'll take a break and there after we'll continue with this rule 42 and Rule 43 that's a very important discussion okay we'll start so there is one query like uh sales a duty free shop so just wanted to show you one Amendment so we have discussed about sale of wed Goods under Customs that sale of rosed goods under Customs Point only is this so they are telling for the purpose of rule 42 and 43 the value of activities or transactions mentioned in paragraph 8A of schedule 3 which is required to be included in the value of Exempted supplies so this rather than giving a sale of arosed Goods under Customs they gave it in a different way that is supply of goods from dutyfree shops at arrival Terminal in international airports to the incoming passengers basically basically what is that so this uh dutyfree shops dutyfree shops which is there in the international airports itself is like a warehouse so in international airports there will be something called as dutyfree shops those dutyfree shops should be treated like warehouses so any Goods which are imported and kept in that warehouse is actually not chargeable to any Duty okay that's what basically Duty free shops whenever they are selling it to you know any person over there they will not charge any Duty or tax Etc means in a way it is like not a supply not a supply because it will come under sale of warehoused goods under Customs but for the purpose of ITC it will be treated as Exempted so in this point sale of warehoused goods and Customs to any person before a clearance for home consumption it also includes it also includes sale of goods by a dutyfree shop by a dutyfree shop in International Airport in international airport so because this dutyfree shop itself will be coming under warehouse for the purpose of Customs okay that is one point next uh will questions be covered in this rocket revision why regular batch itself I will take in 4 days how can I how can I take care let me complete the revision first fully okay I don't know whether that I can do in four days then if any lawyer is getting service from any other RCM supplier does the RCM supplier need to pay GST on fcm basis no not like that for example I'm an advocate my outward Supply is covered under RCM okay now I have some inward supplies on which I need to pay GST under RCM it does not mean that you know I will not pay so it's like I'm Exempted from registration why am I Exempted from registration a person who is making exclusively Exempted supplies or exclusively RCM supplies is Exempted from registration as per section 23 of cgst act so in this case there is an advocate so that Advocate is providing outward supplies and these outward supplies of advocate is covered under RCM so when it is covered under RCM this Advocate is Exempted from registration he's not required to get registered so Exempted from registration Exempted from registration under section 23 now Advocate is making some import of services some invert supplies are there and on the invert supplies Advocate is required to pay GST under RCM now so every person who is liable to pay GST under RCM is compulsorily required to get registered so compulsory registration under section 24 then whether the advocate is required to register and pay GST no so why Advocate is not required to get registered so because not required to get registered what is the reason behind this section 23 overwrite section 24 so when section 23 override section 24 so he is not required to get registered consequently he will not be paying any GST but don't change the character of the service the character of the service is taxable only it will be taxable under RCM but only thing GST will not be payable okay now for Advocate first of all he is not required to get registered so the question of itz will not arise suppose if Advocate is registered if Advocate is registered then will he pay GST under RCM yes he will pay GST under RCM if he is registered actually is not required to register if he is registered will he pay GST and RCM yes but can he take ITC on his in supplies no why he cannot take itz on his in supplies because the outward suppli is covered under RCM when the outward Supply is covered under RCM it will be treated as Exempted so ITC cannot be availed so that is the clarity here okay then and uh some students are asking me to upload the Amendments m amendments video also this revision itself covers amendments as well wherever it is amendments I'm highlighting that as Amendment and I'm discussing in detail so separately I'm not uploading because if I need to upload amendments video 50% of this revision video itself I have to upload okay that I will try if required but not required this itself is sufficient so please attend the Amendments video not separately this revision itself sufficient okay so I think these are your queries now moving on to rule 4 2 what does rule 42 talks about I have some invit supplies which are commonly used for taxable and Exempted what is the manner of availment and reversal of ITC for the purpose of this rule 42 you need to follow a particular procedure so in this procedure we need to know the meaning of certain terms first we need to know T what does t refers to T refers to Total ITC that is total GST paid on invit supplies so you can just put the numbers over there so that you will understand understand what it is about the total GST paid on Inver supplies is 4 lakhs the total GST paid on invit supplies is 4 lakhs and this four lakhs we should segregate into four that is invit supplies used for non bus purpose init Supply is for non- business purpose can we take itz no while discussing section 41 read with rule 37 a what is that we have seen self assessed itz I told you in that self assessed itz what is the discussion I have been making so matched ity and three things even though comes in 2B we should not take what are those three things so invit supplies which are used for non business purpose Exempted supplies and blocked ITC we should not take correct even though it is coming in to be say for example non bus purpose is 50,000 and invert Supply used for Exempted supplies is 75,000 and invert supplies which are blocked credit is 25,000 now this 50 + 75 + 25 can we take itz or we cannot take ITC we should not take itz now based on this you tell me what is itz availed in gstr3b what is itz availed in gstr3b 4 lakh - 50,000 - 75,000 - 25,000 so therefore this will be 150,000 you take out so 150,000 if you are taking out so what is the remaining amount that is left 250,000 this 250,000 is what itz Avail 250,000 is called as itz Avail okay understood up to this what is the first step or first process first T T minus T1 T2 T3 what is T1 T2 T3 non business Exempted blocked itz remaining itz we will take in 3B 250,000 now this 250,000 can we enjoy fully no why we should not enjoy fully because this 2 l50 we don't know fully used for taxable or what so we cannot enjoy it okay but we have availed it we have availed it out of this 2 lh50 how much is used for taxable purpose 2 lakhs so can we enjoy this 2 lakhs fully yes yes now what is a common credit what is a common credit 50,000 how we got common credit 2 lh50 minus 2 lakhs which you could not segregate in these four places is known as common credit so the common credit is 50,000 this 50,000 we can arrive in two ways number one you take 4 lakhs from 4 laks you reduce everything that is 50,000 75,000 25,000 and 2 lakhs so the remaining is 50 either you do this way or you take so 2 lh50 is the itz AIL from that itz ail you separate fully used for taxable that is 2 lakhs the remaining is also common credit 50,000 rupe now this common credit you cannot enjoy fully so proportionate to Exempted you need to reverse so that's what we did in this question so what we did is that first we have taken the ITC after itz AA we reduce the proportionate reversal proportionate reversal how we calculated common ATZ into Exempted by total so common ATZ into Exempted by total we need to reduce say for example so common ATZ is 50,000 into Exempted turnover is 10 lakh and the total turnover is 25 lakhs this is what we have taken so 10 divided by 25 how much is the itz that we will reverse 50,000 into 10 divided by 25 50,000 into 10 divided 25 how much 20,000 we need to reduce so means this 20,000 we cannot enjoy as ITC then common credit with respect to non bus purpose so 50,000 into 5% so that will be how much 2,500 so 2,500 we need to reduce now this is what we need to do so remember first we need to take t t refers to Total ATZ on invit Supply that is total GST paid on Inver supplies minus T1 T2 T3 T1 non- business T2 Exempted T3 blocked these three we should not take this three we should not take so how much we should take in the gstr 3B itz availed in gstr 3B 250,000 so 250,000 is the itz availed in gstr 3B now after availing this now you need to do the computation of common ATC how we will get the common ATZ from this ITC ail you take out exclusive list for taxable and business purpose that is 2 lakhs if you take out so remaining 50,000 is the common ATC this 50,000 proportionate to Exempted so into 10 divided by 25 what is this 10 and 25 10 is Exempted turnover 25 is total turnover that you need to check in the question okay then we will be getting 20,000 then the common at attributable to non- bus purpose because if you are using partly for business and partly for non- business you can take proportionate it so non- business purpose is 5% so 2500 now how much we need to reduce from the availed itz how much we need to reduce 22,500 we need to reduce so 250,000 minus 22,500 what is the balance that will be net eligible it easy for set off 2 lakh 22,00 27,500 will be the net eligible it for set off so this is how we need to arrive at the answer so you need to remember the no format T that is total GST paid on invite supplies while reading the question itself you put T1 T2 T3 T4 properly in the Sol work book already I have given few questions related to that along with the QR code so you try that questions okay so first you need need to take t t is total GST paid on Inver supplies minus T1 that is invit Supply used for non- business minus T2 Inver Supply used for Exempted minus T3 blocked ITC the balance is known as C1 what is C1 ITC availed in gstr 3B minus T4 fully used for taxable purpose that is 2 lakhs in this case so 2 lh50 minus 2 lakhs Common itz 50,000 next we have d 1 common is attributable to Exempted that is C2 common credit into e by F Exempted divided by total then common credit attributable to non- business purpose C2 into 5% okay but why sir 5% only because you don't know how much is exactly used for business and how much is for non- business if you know exactly how much is business how much is non- bus that you will divide in the T1 T4 stage itself for example one3 non business 2/3 bus bus means 1/3 you will put in non- business T1 and 2/3 you will put it in T4 so it will not come in common credit if it is not coming in common credit itself you don't do into 5% okay and here 5% of the total common credit if we have 10 invoice in the common Credit in the 10 invoices only one invoice is used for partly business partly non- business but all these 10 invoices into 5% we need to do so it is not only that particular purchase or invite Supply used for business and non- business we need to multiply 5% total common credit we need to multiply 5% why is it so sir because that is a ad hoc assumption that we are taking if you don't want that 5% to happen then you assertain how much is used for business and non- business that you segregate in the beginning stage itself that is T1 and T4 stage itself so this is how you need to arrive at the answer then here C3 will be computed separately for cgst sgst means this computation whenever in exam you do you do it separately for cgst sgst and igst and then this computation majorly this is our Focus D1 and D2 so this is the itz away this is the itz Reversed so this D1 and D2 so we will do on month on month every month we will do this computation again at the end of the financial year we need to do this computation once again and we need to compare it between month on month versus D1 and D2 comput at the end of the year say this D1 and D to compute for the whole year by taking Exempted turnover and aggregate turnover for the whole year for example D1 and D2 that we have computed month on month so that is called as provisional D1 and D2 say the provisional D1 and D2 which is computed every month every month so the total is 15 lakhs and final D1 and D2 this final D1 and D2 that we are Computing at the end of the financial year is say 12 lakhs means how much we have reversed this 15 lakhs is already reversed this 15 lakhs is already reversed whereas this 12 lakhs is to be reversed this 12 lakhs is to be reversed now already reversed 15 lakhs but actually you need to reverse only 12 lakhs what is the excess reversed excess reversed is 3 lakhs and and this three lakhs can be availed as ITC you understood availed as itz and when we will do this computation say this computation we will do from April 2023 to March 2024 we do provisional D1 D2 every month we will do whereas this final D1 and D2 is there now this final D1 and D2 We Do It by 31st March March 2024 at the end of the year we will do and the excess reverse we will arrive and that excess reverse we will Avail as itz by 30th September not November usually the time limit for availment of it is 30th November of the next financial year but in this case it is 30th September of next financial year that is 2024 by 30th September 2024 we should Avail this ITC not return of September any return but that return should have been filed by 30th September of the next financial year so because what happens is that in McQ we will think time limit for availment of ITC 30th November they will give 30th September 30th November 31st October and some other date we will think time limit is 30th November only and we will select 30th November but in this place it is not 30th November it is 30th September okay see this D1 and D2 will be for the whole year by taking Exempted turnover and aggregate turnover for the whole year if this amount is more than the amount already added so actually we have seen the next point if this amount is less than the amount added to Output tax liability every month the additional amount has to be claimed back as credit in the return of any month till September of the succeeding Financial year then next suppose if it is like reverse what if the provisional amount the provisional D1 and D2 the provisional D1 + D2 is say 15 lakhs this 15 L is already reversed already reversed whereas the final D1 and D2 this final D1 and D2 that will be like say 18 lakhs 18 lakhs this is to be reversed this is to be reversed so this computation we are doing from ail 2023 to March 2024 and this computation we will do by 31st March 2024 and now what is the shortfall shortfall in reversal shortfall in reversal is 3 lakhs okay and this three lakh shortfall in reversal we need to reverse why we need to reverse actually we should have reversed 18 lakhs but how much we already reversed this 15 lakhs so this 3 LH should be reversed by when so it should be reversed by September of this exceeding Financial year same date it should be reversed by 30th September 2024 but here along with interest when we reverse decess we will not get interest and all don't expect interest from government so you are getting this it itself that itself is greater but when there is a shortfall you need to pay along with interest along with interest at the rate of 18% perom from 1st April 2024 because we should do this computation by when March so they're asking us to do the interest computation from 1st April 2024 till the date of reversal and in many plac places they use the word reversal or payment interchangeably both are same if you have balance in ATC you will reverse if you don't have balance in ATC you will make the payment okay so that is this so here what they're telling you see so if the amount already added to Output tax liability if this amount is more than the amount already added to Output tax liability so we need to do it till September of succeeding Financial year along with interest rate 18% from 1 April of succeeding Financial year till the date of payment again here we need to do reversal by September what if we are not doing it by September then recovery recovery will be made so in this case if you are not availing itz by 30th September it will be lapsed whereas in the second case second example what we have discussed if you are not reversing by 30th September what will happen they will initiate recovery when they initiate recovery even they will Levy the penalty also okay that is with respect to this then is is about rule 40 2 then rule 43 is it necessary to remember all the sections uh not required but you know I don't know what is your objective your objective is 40 marks not required if your objective is 40 marks really not required so just this revision lectures will help you you don't have to remember any section number or rule number Etc and all just happily go to the exam you will definitely get 40 45 Etc and all so you don't have to remember but what is your objective depending upon that objective it will be so no student will read indirect access with the objective of 40 to 45 so because there are other subjects as well so called as DT DT and IBS Etc and all and which are not actually bankable subjects and all so due to that reason ID if you are targeting 80 plus only so you will be on a safer site so that aggregate problem will not happen for that reason only even though it is a throat pain for me I'm repeating it thousand times so the same point okay so like by mistake that number may come in the exam and you will write it okay so say this rule 43 rule 42 is the manner of availment in case of inputs and input services so there's a process you need to follow just because my name is Tun Raj I did not keep tea and all law itself they gave tea I did not keep okay because one student messaged me why are te because you name is Tun Raj R also you can give now this T T1 T2 I did not give here it's a coincidence my name matches here you understood so but actually this is given in the law itself so even in exam also you should write this only T T1 T2 T3 then rule 43 manner of availment of itz with respect to capital goods what does it says so I have capital goods which is used for taxable or business purpose can I enjoy ITC on this capital goods yes no restriction we can enjoy because it is used for tax and business purpose okay I have some capital goods which are purchased and used for Exempted or non- business purpose can I take ITC on this capital goods no you should not take ITC on this capital goods because your outward Supply is Exempted or non- business okay I have purchased some capital goods which is partly us for taxable or business and partly for Exempted or non business can I take itz yes take itz but conditions apply this it EAS is not enjoyable fully so you have to reverse it over a period of next 16 months for example you purchase this capital goods you can write the numbers over there 10 lakhs excluding GST at 12% so this is the value of the capital goods that you have purchased 10 lakhs excluding GST at 12% so what is the ITC what is the itz 1ak 120,000 is the itz now this 1 lak 120,000 what you should do can you enjoy the itz yes Avail the itz 1ak 120,000 you Avail itz on the month of purchase itself this month you purchase this month itself you take the ITC but you are using it for both taxable and Exempted so for the next 16 months for the next 60 months you need to do the reversal so what is the monthly ITC 1 120,000 divided by 60 so that will be how much 2,000 Rupees is the the monthly ITC sir should we take 60 only that is usual assumption which is given in the law the law says up to 60 months which means you can take 48 months also 36 months also but go by the question if the question says 36 months you take 36 months if the question says 48 months you take 48 months if there is no information in the question you take 16 months okay so 16 months should be taken standard as per the you know assumption but if there is a lesser period given in the question also you can take that lesser period otherwise you take 60 months so the monthly itz will be 2,000 Rupees now what you should do with this monthly ITC you should reverse proportionate to what Exempted to Total Exempted to total of that month every month say for example first month 2,000 into Exempted turnover say 10 divided by total turnover say 25 so 2,000 into 10 by 25 how much 300 800 800 rupees you need to reduce 800 rupes you need to reduce from where 1 l20 1 lh20 is the Avail minus 800 rupees that much only sir no this for month one like that we need to do for 60 months okay and 800 rupees you need to compute interest how much you reverse 800 but this 800 is out of this 1 lak2 already Avail so you need to compute interest at what rate 18% from when from the date of availment usually interest we need to compute from the date of utilization till the date of reversal or payment everywhere correct but in rule 43 we need to do it from the date of availment usually on account of interest in itz you should compute it from the date of utilization till the date of reversal in this place alone we need to do it from the date of availment till the date of reversal because it is specifically given in rule 43 like this due to that reason Only We Are doing this so the amount above amount to be added to Output tax liability for every month for the next 60 months along with interest rate 18% so this 800 into 18% into number of months number of months we have divided by 60 sorry sorry number of months divided by 12 for example if this is pertaining to third month if it is pertaining to third month first month you Avail the ATZ so first month to Second month second month to third month that is two months we need to compute interest okay means for 60th month sir 59 months we need to compute interest into 59 divided by 12 18% Paran over the period date of availment first month date of reversal is 60th month so which means for 59 months we need to do the interest computation then this procedure is not applicable from when during the 60 months any one month the asset is sold then the asset itself is not there why I should do the reversal I don't have to do the reversal or the asset got converted into capital goods one the asset got converted into capital goods one means it is used only for taxable so again don't do the reversal okay that is what I have given not the above procedure is not required from the month in which capital goods are sold why because GST anyhow you are paying under 18 subsection 6 so what is this 18 subsection 6 whenever capital goods are purchased on which ITC has been availed and that capital goods are sold or disposed now you need to apply 186 what does 186 says GST payable will be highest of the following a ITC a minus 5% depreciation for every quarter or part thereof from when to when from the date of purchase till the date of sale or GST on sale value whichever is higher anyhow I'm going to pay the GST on this Which is higher of what unutilized ITC how you got unutilized ITC ITC availed minus 5% for every quarter from when to when date of purchase till the date of sale for example you used for two years boss you used for two years and you are selling it so let's see what will happen in this case say 1 April 2020 you purchase capital goods and you purchase capital goods for 10 lakhs excluding GST at 12% okay now you are using it what is the life of the capital goods life of the capital goods is what 60 months or 5 years so that is what 313 2025 this is the life of the capital goods correct now what happened somewhere after 2 years so that is 313 2022 okay so you are selling the capital goods sale of capital goods sale of capital goods for 6 lakhs 6 lakhs excluding GST at 12% you tell me what would have happened in this case and this is common common capital goods this is common capital goods common capital Goods 14 2020 itself ity availed correct how much is the it availed and 14 2020 1 lakh 120,000 now from 14 2020 to 313 2022 how many months 24 months 2 years what we would have done in this two years so monthly reversal correct monthly reversal now you are selling the capital good Goods when you sell the capital goods at this stage itself GST payable under Section 18 subsection 6 what is it GST payable under 18 subsection 6 ITC Avail minus 5% for every quarter Hour part there from the data purchase till the date of disposal that is 24 months means how many quarters eight quarters two years here one full four quarters here two fulls means eight quarters correct or not so 1ak 120,000 - 8 qus into 5% okay how much that comes to 8 5 are 402,000 minus 40% 72,000 or B so what is the sale value of the capital goods 6 lakhs into 12% that is 72,000 so exactly it is the same so I'll just change here instead of 6 lakhs so CG sale of capital goods for 650,000 excluding GST at 12% so that will come to 78,000 so whichever is higher not lower 6 lakhs into 12% sorry 650,000 into 12% 78,000 whichever is higher so which is higher that is 78,000 is the GST payable so you paying actually 24 months you reverse and here at this stage you are paying 78,000 you got it now for the remaining life what is the remaining life 36 months for this 36 months whether monthly reversal required or monthly reversal not required huh not required monthly reversal not not required why monthly reversal not required because already you paid the GST here at the time of sale of this capital goods you got it so somehow my intuition says that this concept will be tested so this concept might be tested so in the fourth coming exam for May 24 because quite a long time they didn't touch on capital goods on inputs and all they have been testing but not on capital goods so merging these two concepts they can check a question on 186 as well as on monthly reversal then next another point we will see so looking to the next below discussion there are two situations initial purchase cg1 and at a later point of time cg2 and another case is initial purchase cg3 and at a later point of time cg2 okay and here one query whether we need to take this as calendar quarters or 3 months should be counted as one quarter calendar quarters calendar quarters means what so it's like any one day in that quarter you should take it as a full quarter for example you know instead of 313 2022 if it is 44222 then automatically it will become nine quarters how it will become nine quarters in the next quarter see up to 313 2022 eight quarters here path thereof now in April few days came now so that should also be counted as one quarter you understood so therefore be careful while doing the quarter computation everywhere actually only one place there was a difference Duty drawback alone we should count three months as one quarter like say for example 15th January means how we will count quarter is 15th January to 15th April one quarter like that we used to count where in Duty drawback but now Duty drawback chapter is removed so everywhere in GST and Customs we have calendar concept only calendar quarter only so 15th January means it should 15th January to 15th April how many quarters two quarters how two quarters Jan Feb March one quarter April few days are there that will be counted as one quarter got it so everywhere in GST and Customs it will be calendar quarter only now so looking to this initial purchase cg1 and later point of time cg2 cg1 means what it is used fully for taxable and at a later point of time it is used for common now what will happen in this case so the logic is simple that is I purchase the capital goods so on4 2020 and the life of the capital goods is 313 2025 so the life is 5 years or 60 months now somewhere on 313 2022 that is 24 months 24 months and 36 months initially I purchased it and used it for taxable okay initially I purchased it and used it for taxable so 10 lakhs is the worth of capital goods excluding GST T at 12% and it is used for taxable used for taxable now what happened on 313 2022 is that I'm not selling in the previous example I took for sale now I'm changing the situation I'm not selling but I started using it for common used for taxable and Exempted used for taxable and Exempted now what will happen in this case so 142 2020 itself itz availed or not availed itz availed why itz availed at the time we have purchased and used it for what purpose taxable so we would have availed ITC at the time itself how much is the ITC availed at that time 1 lakh 120,000 itself we have taken ITC at that time and for 24 months we are using it for taxable whether any reversal required for this 24 months no reversal not required why reversal not required because you're using it only for taxable purpose now from 313 2022 till 313 2025 for 36 months whether reversal required or not yes why reversal required because we are using it for both taxable and Exempted so monthly reversal required monthly reversal is required and when you do the monthly reversal how much we will take as ITC so we will Avail the ITC now at the time already availed or not availed already availed so whether we will Avail the itz no no no we will not Avail any itz so at this stage itz not availed why ITC not AA because already we have taken in the beginning now don't take any ITC just consider as common ITC lakh 20,000 whatever is there 1 lak 120,000 consider as common itz don't do anything else just consider it as common ATC for the next 36 months we will do the month monthly reversal that's it got it so initial purchase we are using it for cg1 taxable so ITC already availed at the time of purchase so no need to Avail common credit no need to Avail common credit just consider it as common credit and what is the monthly ITC same no change original ITC divided by 60 because the life of the capital goods cannot be more than 60 months now proportionate reversal from the date of conversion for the balance useful life so what is a balance useful life here 36 months for 36 months we need to do the reversal monthly reversal required then another situation initial purchase cg3 and at a later point of time cg2 now same scenario but there is a change here what is that change that is 14220 I purchased the capital goods and the life of the capital goods is what 31 3225 and I purchased capital goods for 10 lakhs excluding GST at 12% and used only for Exempted and used only for Exempted and what will be the life of the capital goods so 5 years now somewhere on 313 2022 that is for 24 months okay after 24 months I started using it for used for both taxable and Exempted used for both taxable and Exempted now you tell me whether ITC would have been availed at the time of purchase no why not Avail because it was used only for Exempted that's what we have seen if capital goods are purchased and used only for Exempted we should not take itz so we have not taken itz here itz not availed so itz not Avail at the time of purchase but are we supposed to take the ATZ now yes why we are supposed to take the ATZ now because we have not taken at the time now you are using it for both taxable and Exempted so itz avail how much is the itz that will be availed 1 lakh 120,000 you Avail now but last 24 months you are using it for what Exempted now can you enjoy the ATZ for this period this 1 lakh 120 you should have taken 14 2020 but you are taking it now but this 1 lh20 contains the component of 24 months yes or no so this 24 months you used it for what Exempted which means you should not enjoy the ITC so therefore it is a reversal this is for the past period for the past Karma we are reversing it now you understood so it isz reversal how much is the it reversal 1ak 120,000 into 5% into how many quarters eight quarters so please do the calculation 1 lakh 120 into 40% that is 48,000 now you are availing the ITC 1 lh20 sir should I Avail 1 lak 120 or I should Avail 1 lh20 minus 48 72,000 how much I should Avail Avail 1 lh20 thereafter you reverse for the past period you understood and then you consider it as common itg consider as common ITC and for the next 36 months for the next 36 months you need to do the monthly reversal monthly reversal required sir why should I do sir this is for the future Karma you understood past sin wipe off fully future since as and when you do you wipe off you understood so monthly reversal over the next 36 months last 24 months now it you reverse okay so two reversals will come but in the previous situation only one reversal why because for the past 24 months you did only good deeds you understood you don't have to wipe off anything so full Good Deeds taxable only you did only future you are going to commit some sins for that only you need to do the reversal you understood or not but here past also bad future also bad so therefore first clear the past fully so that's for 24 months you are fully reversing then for the remaining 36 months month on month you do the reversal you got it that is about this so itz not availed at the time of purchase so we are availing it now what is that original GST paid ineligible itz to be reversed for the period it was used for Exempted past past used for Exempted how much GST paid into 5% into number of quarters or part thereof from the date of purchase till the date of conversion and monthly ITC same proportionate reversal for the balance life so this is about capital goods three special cases so these three special cases can definitely be tested possible so these are the three special cases first special case we saw was that common capital goods at a later point of time we sold it next One initial purchase for taxable and then used for common then initially purchase for Exempted and used for common these three can be tested for May 24 which is a very important area untapped area that's why then we are moving on to 17 subsection 4 171 and 172 talks about proportionate ITC 173 talks about the meaning of Exempted supplies rule 4243 talks about the manner of availment and reversal of ITC in case of inputs and input service rule 42 capital goods rule 43 now 174 talks about special provision for availment of ITC by a banking company and financial institution including nbfc basically for a bank financial institution or nbfc they will be having two incomes two major incomes that is interest income and other income interest income will be Exempted income no need to pay GST on that and the other income will be taxable income why because any bank or financial institution or nbfc interest on loans advances and deposits other than interest involved in credit card is Exempted so interest in credit card will be taxable but interest on loans advances deposits will be Exempted and all other income for the bank will be taxable we don't have any exemption like know check collection charges demand draft commission or nft charges rtgs charges debit card charges like that every charges will be taxable so therefore interest income Exempted other income will be taxable which means Bank cannot take full itz they can take only proportionate itz because part of their outut supp taxable and part of their out Supply is Exempted so they have to do the proportionate computation how they will do the proportionate computation total ITC into Exempted turnover divided by total turnover that is for inputs and input service for capital goods just know we discussed now rule 43 that they need to follow but Bank it is difficult for them to follow this rule 42 and 43 because they have lot of documentation and administration work for them they have been given one special option that is called as ad hoc itz option under that ad hoc itz option flat 5050 50% of the eligible ITC they will be getting which means assumption is one 50% of their out supplies will be taxable and 50% is Exempted so now they need to choose between either option one or option two now whichever is feasible for them they can choose but they have to choose it when beginning of the financial Year and that will be applicable throughout the financial year month on month they cannot choose so beginning of the financial year option once exercise cannot be withdrawn remain during remaining part of the year option one is what proportionate it option in proportionate it option they will follow rule 4243 option two Avail 50% of the eligible ITC that is ad hoc ITC option now in case of option two see this usually in option one what is common ATC listen carefully Inver Supply used for taxable fully you can take where in option one listen very very important discussion invert suppli used for taxable option one enjoy fully Inver supply ised for Exempted don't take common ITC proportionate correct whereas in option two invert Supply is for taxable invert Supply is for Exempted as well as invert Supply used for both taxable and Exempted all three will be treated as common only so I'm having some Inver Supply used for taxable Tre as common invit Supply used for Exempted treated as common invit Supply used for both both tax and Exempted that is also treated as common so the meaning of common ATZ will differ that's what I'm trying to convey here see this in case of option two exclusively used for non- bus and blocked ITC itz should not be availed same ah option one also same correct but what is extra 50% computed on remaining ITC means exclusively used for Exempted and exclusively used for taxable both will be treated as common ITC okay for example say this so itz used for taxable it is used for taxable outward it is used for taxable outward is one lakh ITC used for Exempted outward Exempted outward is 50,000 it used for both taxable and Exempted both taxable and Exempted kindly make note it is used for both taxable and Exempted 2 lakhs okay so these are the three Inver supplies that we have used for taxable outward Exempted outward and both taxable and Exempted now interest income interest income is 60 lakhs and other income other income is 40 lakhs now what will happen in case of option one what will happen in case of option one option one how much is the you know proportionate ITC net itz eligible eligible ITC net itz net itz what we will do 1 lakh we will take fully 50,000 we will not take correct why 50,000 will not take Inver Supply is for Exempted so we will not take okay then option one is what proportionate ITC correct are you are you able to understand init Supply used for taxable can we take full ITC yes so 1 lakh into 100% you take fully whereas 50,000 don't take don't take zero and two lakhs two lakhs you take proportionate aty how much proportionate you will take 40% by 40% H other income is only 40% interest income is Exempted now interest income is Exempted interest income is Exempted other income is taxable so how much it you will take only 40% means first you will take full itz minus reduce Exempted so 40% literally you will take so how much is a net itz 1 lakh into 100% full 1 lakh 2 lakhs into 40% 80 so how much is the net ATZ 1 lakh 80,000 this is under which option option one but option two option two what you will think you will think as net itz equals to net itz equals to 1 lakh into 100% plus 0 plus 2 lakhs into 50% no wrong answer wrong answer all three 1 lakh plus 50,000 plus 2 lakhs everything treated as common which means 350,000 into 50% 350,000 into 50% is what 1 lakh 70 5,000 175,000 so this will will be the net ITC okay so there is a change in the answer so don't blindly take into 50% only so exclusively for taxable exclusively for Exempted is also treated as common under option two but exclusively for taxable treated as taxable exclusively only and Exempted we will not take remaining only common for option one so this is another difference so what about block D and use for non- business that is common like that is treated as not eligible ineligible only in both the places op option one as well as option two then what is the first difference we have seen in case of option one option two option one proportionate it option two 50% ITC second difference is what fully used for taxable and fully used for Exempted also treat as common in case of second option but we will not do that in case of option one then another difference in case of option two restriction of 50% shall not apply to invit supplies from a distinct person for example there is a bank so idfc Bank Bank in Tamil Nadu so which is receiving services from its branch in Karnataka so this is a invit supply from a distinct person in that case no need to reverse 50% if it is option option one proportionate ITC proportionately we will take but in case of option two 50% shall not apply so which means no need to reverse 50% with respect to invert Supply from a distinct person so these are the three differences that we have between option option two and you need to do this computation and finally you need to decide so which option you want and that you need to follow throughout the financial year so these about 174 again in the 174 this area is important this can be tested whatever you have written now this is something which is not tapped in exam either in McQ or somewhere so in McQ I feel it can be tested because we will do mistake in McQ they can highlight this then next one block thec and there is one very good query one student has asked me sir here you are availing the ITC sir here you are availing the ITC there is a time limit for availment of ITC that is so you purchased it on 14 2020 means it pertains to financial year 2021 so 2021 means the maximum time limit for availment of it is 30th November 2021 only now sir how you can take ity on this date so here rule 43 is overriding any other General provision rule 43 here is a specific provision in case of conversion so as they have given clearly that we can take ITC which means it will be like a exception to section 16 subsection 4 time limit for availment of itz usually when there is a general provision and a specific provision always specific provision will prevail over General provision due to that reason we can take this ITC okay no restriction of time limit then look into blocked credit 17 subsection 5 so the first block credit is Motor Vehicles related blocked credit so total block block credits means what ineligible credits when you are making some purchase you should not take itz with respect to this so that is block credit we have motor vehicle related block credit and then construction related block credit and other block credits these are the three divisions that we have now first we will see motor vehicle related block credit Motor Vehicles basically divided into three Motor Vehicles for transportation of persons that is two wheelers four wheelers three wheelers will come under Motor Vehicles for transportation of persons then vessels and aircrafts so ships aircrafts helicopters all these things will come under vels and aircraft then other Motor Vehicles other Motor Vehicles means other than these two that is trucks Road rollers JCB crane Etc will be coming under other motor vehicles liues and all so other Motor Vehicles we don't have any restriction itz always available so the Restriction is only in case of Transportation of persons vessels and aircrafts other Motor Vehicles it always available whereas Motor Vehicles for transportation of persons divided into two capacity does not exceed 13 and capacity exceeds 13 suppose if capacity exceeds 13 example buses Tempo Travelers Mini Bus Etc so it available we don't have any restriction but the capacity does not exceed 13 is the blocked credit so what is the POS block Credit in case of Motor Vehicle motor vehicle for transportation of persons capacity does not exceed 13 is the block credit however we have three exceptional cases where it is available for this block credit what are the three exceptions number one if the motor vehicles is used for further supply for example a car dealer who is buying the cars and selling the cars car is a motor vehicle for transportation of persons capacity does not exceed 13 and it is coming under further Supply so it easy available I'm into the business of renting of Motor Vehicles I purchase a car so car is a motor vehicle for transportation of persons capacity does not exceed 13 but it is coming under further Supply further Supply Supply does not mean only Sal Supply includes r renting leasing hiring also so therefore I can take itz second Point used in the business of Transportation of passengers I'm running a travel agency or Ola Uber Etc and all now in that case I purchase a car again car is a motor vehicle for transportation of persons capacity does not exceed 13 but it comes under the second exception used for transportation of passengers so it is available then third exception driving schools imparting driving schools so these three cases basically capacity does not exceed 13 means ITC not available but in these three cases ITC available for example a Rapido driver purchases a two wheeler for the purpose of using it in the business of Transportation of passengers can he take itz yes because capacity does not exceed 13 even though it is a block credit it comes under the exception now pza H is purchasing pza H or dominoes Etc is purchasing a two- wheeler for the purpose of food delivery where it will come it will first of all not come under transportation of persons it will come under other motor vehicles and itz can be aail with respect to that and remember motor vehicle means capacity should be exceeding that is greater than or equals to 25 cc so if it does not exceed 25 cc it will not be called as a motor vehicle okay 25 cc because this point in one attempt they have tested so they tested a company purchased a two- wheeler which is having a capacity of 10 CC okay I don't know what motor vehicle is available on Earth which has 10 CC okay but they have given a question like that now ITC available or ITC not available with respect to that yes because first of all it is not a motor vehicle because to come into the definition of Motor Vehicle so the capacity should be how much greater than 25 cc okay so that will only be coming and therefore it will not and what if dunzo zepto Etc people or Flipkart they buy a two- wheeler and they use it for delivery of goods can they take itz with respect to this no why because in case of pizza hat or dominoes or food delivery they will make one box on the backside which means that it cannot be used for transportation of passengers consequently it will come under other motor vehicles but these people will not fix any box on the back but they carry one bag with them means the same vehicle they can also use it for transportation of persons as well so due to that reason it will not come under other Motor Vehicles it will come under for transportation of persons two wheelers and capacity does not exceed 13 and it will come under these three exceptions no so due to that reason it not available so some companies and all will buy two wheelers for the purpose of giving it to collection agents this is also one attempt they have tested collection agents a company is having a lot of collection agents for the sake of that collection agents two wheelers are purchased and they're giving it to this collection agents for collecting the money now these collection agents are basically employees of the company can the company take itz on this two wheelers no why they cannot take itz on two wheelers because it is for transportation of persons correct or not persons only now people only now they will transport in that and capacity does not exceed 13 so due to that reason it will not be available because it not it will not come under the exceptions okay so Rapido why it available Rapido also transportation of persons but it comes under the second exception what is that it is used in the business of Transportation of passengers that's why it available you got it then next vessels and aircrafts vessels and aircraft is also blocked credit we have four exceptions for this these three exceptions common so further Supply used in the business of Transportation of passengers imparting driving skills extra what we have is that used for transportation of goods so for example there is a diamond Merchant this diamond Merchant purchased an aircraft for the purpose of transporting the jewelry and diamonds from one shop to another shop can they take ITC with respect to the aircraft purchased yes mainly it is used for transportation of goods so due to that reason they can take ITC then next second part in this is that there are four services in relation to Motor Vehicles repair and maintenance insurance and servicing repairs and maintenance servicing difference is that servicing is usually done in the authorized service center whereas repair and maintenance will be done in the private workshops then insurance is General insurance which is Tak taken on the motor vehicles then hiring renting and leasing of Motor Vehicles is like taking Motor Vehicles on rent these four services are in relation to Motor Vehicles vessels and aircrafts if Motor Vehicles vessels and aircrafts is eligible for ITC then on these four service also itz available if motor vehicles vels and aircrafts not eligible for itz then on these four service also itz not available for example there is a chartered accountant who purchased a car for using his profession can he take itz on the car purchase no why because car means capacity does not exceed 13 and it is not coming under the exceptions now that chartered accountant takes the insurance on that car and along with insurance he paid the GST on insurance that insurance GST cannot be taken as ITC why as motor vehicle purchased is not eligible for ITC even Insurance Service also not eligible for ITC then another example a company purchased a car for transporting its employees can they take itz on the car purchase no car means capacity does not exceed 13 and it is not coming under three exceptions therefore itz not available to the car purchase now instead of purchasing the car if they take a car on rent can they take itz no they cannot take rent uh rent itz because as the car purchased is not eligible for ITC renting of Motor Vehicle also not eligible for ITC so that is what we need to learn so what are the four Services repairs and maintenance Insurance Services servicing hiring renting and leing of Motor Vehicles if the motor vehicle purchased if the motor vehicle purchased is eligible for ITC then these four services to that motor vehicle also eligible for itz if the motor vehicle purchased is not eligible for itz this four service also not eligible for itz then see this key points while determining the capacity driver should be included that is while determining this 13 capacity 13 is including the driver seat okay then next further Supply includes purchase and sale of Motor Vehicles or motor vehicles used in the business of renting or hiring or Leasing and repairs insurance and servicing of Motor Vehicles received by a general insurance compan is always eligible for ITC second Point already I explained further Supply means what further Supply means not only sale but also renting so that's what I said I am into the business of renting of Motor Vehicles I purchase a car and I give it on rental basis can I take it yes I can take itz because it is used for further Supply so it is eligible that is the second Point okay so further Supply includes not only sale but also renting then what is this third point there is a insurance company say for example I purchase one car and for that car I have taken a bumper to bumper insurance and this car has met with an accident now what I will do I will take the car to the service center and I will not pay one rupee also as it is covered in the insurance now the insurance company will do the repairs and in the sense the service center will do the repairs and they will raise Bill to the insurance company now the insurance company will make the payment I will not make any payment now the insurance company can take itz with respect to this Bill yes the Restriction is not there for insurance company the Restriction is there only for the owner of the car for me I cannot take ITC on the car purchase correct so as I cannot take ITC on the car purchase on insurance or repairs and uh like maintenance also cannot take it easy but this restriction is not there for the insurance company repairs insurance and servicing of Motor Vehicles received by a general insurance compan is always eligible for ITC then next hiring or renting or leasing of motor vehicle as a statutory obligation by employer to employee is also eligible for at and the statutory obligation can be under any law for example say there is a government order which says that companies which are working in night shifts should mandatorily provide cap facility to their employees because of which they have received a rent cap service generally car is a motor vehicle for transportation of persons capacity does not exceed 13 so car is not eligible for ITC because it's not covered under these three exceptions as car is not eligible for ATC repairs hiring renting and leasing of car also not eligible for at so rent a cab is a block credit but what is the exception here as that rent cab is under a statutory obligation so ITC can be availed understood how to interpret so as the rent cab generally rent cab block credit why rent cab block credit if the car purchased is eligible for itz no so rent cab also block credit but if the rent cab is under a statut obligation it available then what if a bus is taken on higher bus taken on hire for transporting the employees can they take itz on that rent yes because if bus is purchased eligible for ITC yes as bus purchased because bus means what capacity more than 13 as bus purchased is eligible for ITC so even renting of the bus is also eligible for ITC we don't have any restriction there then ambulance and Caravan are not Motor Vehicles for transportation of persons because ambulance and Caravan will come under other Motor Vehicles because ambulance and Caravan is not for transporting the persons it will come under other Motor Vehicles because the primary purpose of of ambulance is to provide first aid during the travel and Caravan is for the purpose of short-term accommodation so it will come under other Motor Vehicles itz can be Avail but the problem with ambulance is that as the hospitals outward Supply is Exempted transportation of patient in ambulance is Exempted Services due to that reason even though ambulance as for blocked credit we don't have any blocked credit on that it available but there is another restriction which will come because as the hospitals outward Supply is Exempted so they cannot take itz on invert Supply because that is what we have discussed in section 17 if my outward Supply is Exempted I cannot take itz on my invert Supply that discussion then sir what if the same motor vehicle is used for both dunon Rapido then itz blocked or allot simple if I'm using the motor vehicle partly for transportation of persons and partly for delivering the food items Etc now I need to divide the turnover into two whatever turnover that is whatever money that I got by way of transportation of passengers that proportionate itz available whatever money that I have collected for delivering the parcels Etc that is as dunzo or zepto itz not available so what is the ratio of my receipts If the ratio of my receipts is 8020 means proportionately I'll take this is as good as invit Supply used for partly taxable partly Exempted we have now same way we need to do okay then another point ebike will be given on rental bases or kilometers whether it is eligible for itz yes because the process is like renting they are buying electrical bike and they are giving the electrical bike on rental basis rental means it will come under further Supply further Supply means no restriction and we can take itz with respect to that then looking into the second area that is construction related blocked credits what is this construction related block credits I have three invit supplies used for construction of an immobile property itz not available on those invit supplies what are they any service Works contract Service or any Goods purchased so what is the difference between Works contract Service and any service usually in Works contract there will be both transfer of property in Goods as well as Construction so it will be for a lumpsum amount a contract involving both transfer of property in Goods as well as provision of service in relation to an immobile property for a single consideration then it is called as Works contract for example I want a building to be constructed I can buy the material required for construction from the market and I can appoint a construction contractor that will be called as a pure labor contract wherein the service provider will provide only the construction service suppose if I'm not buying the material from the market I ask ask the supplier only to buy the material from the market and he also provide the construction service then the name of that contract is known as Works contract so whether it is any service construction interior decoration architect any service or Works contract service including Goods purchase for construction of an immobile properties blocked credit these are the three block credits however we have three exceptions to this where it is available what is the first exception the above discussion is not applicable to supplier that is Works contractor will buy the material now he can take ITC there is no restriction Works contractor will receive interior decoration service Works contractor reive will receive construction service he can take at the Restriction is only to owner of the property owner of the property cannot take itz with respect to the Inver supplies and second construction of plant and missionary for example construction of lifts and escalators or construction of any missionary Etc we can receive these Goods or Works contract Service or any service we can take ITC but plant and missionary excludes telecommunication towers and pipelines laid outside the factory gate suppose if the pipelines are laid inside the factory gate and for that pipelines if you receive construction service can you take ITC yes it will come under plant and missioner suppose if you are constructing a telecom towers for Telecom Towers we will construct a foundation cement foundation for the cement Foundation we purchase a cement can we take itz no because plant and missionary excludes telecommunication towers and for laying down pipelines outside the factory gate we receive some construction service can we take itz on that no why we cannot take itz on that because plant and missionary excludes pipelines laid outside the factory gate then suppose if construction expenditure is charged to pnl then also it available so because if construction expenditure is capitalized then only itz not available but if it is charged to pnl ITC available okay now in the absence of information in the question you assume that the construction expenditure is capitalized unless it is given specifically that construction expenditure is charged to pnl so don't take the Assumption so this is common for all blocked credits remember in everywhere in the blocked credit they have given exception now in the question they gave the blocked credit but they did not give exception which means that exception is not satisfied you understood example they gave construction of construction of building so much is the GST paid like that they have given now generally construction of building block credit there is a exception when if the construction expenditure is charged to pnl is the exception given in the question not given in the question means that exception is not satisfied and which means it is blocked credit only you got it then another case we have seen motar Vehicles car purchased car purchased and used in the business they didn't give anything means the exception should be given now what is that exception used in the business of Transportation of passengers or used for driving skills or further Supply they have not given means exception not satisfied exception not satisfied means blocked credit only got it and then they will give so a factory purchased the car for transporting its workers but they did not tell statutory obligation if they have given statutory obligation then only it will be exception otherwise exception not satisfied you got it be careful in the way you read the questions okay same way here nothing even plant like construction expenditure they give but they did not give construction of a factory shed GST paid two lakhs what is your answer blocked credit why block credit because Factory shed definitely capitalized suppose if they say construction of a factory shed where the expenditure is charged to P andl then ity available that is if construction expenditure is charged to pel then also ITC can be availed on above inet supplies now in this regard I want to add one more Point basically these Builders who are constructing residential buildings generally Builders don't have any blocked credits Builders can take enjoy the ITC so because first exception the above discussion is not applicable to A supplier means if a builder is purchasing the material if Builder is receiving the construction service they can take ITC now that Builder is constructing a residential Apartments residential Apartments the rate of GST is 1.5% or 7.5% without ITC you can see sale of building by a promoter or Builder when covered under Supply GST 1.5% or 7.5% in which case it is 1.5% or 7.5% residential residential Apartments residential apartment apartments or units will be having the rate of GST 1.5% 7.5% so usually the rate of 1.5 or 7.5 is without ITC means can they take ITC on the invit supplies no even though there is no restriction for the Builder but as a builder is doing a residential construction the rate of GST for residential construction is 1.5 7.5 without ITC so they cannot take itz on invit supplies itz not available even though such invit supplies are not blocked credit suppose if the outw supplies are taxable at 12% or 18% which one commercial commercial constructions commercial constructions like Bridges roads and then commercial complexes Etc the rate of GST will be 12% or 18% with ITC so can they take itz with respect to these invit supplies yes itz available on invit supplies other than blocked credit so they don't have any blocked credit now so it they can enjoy got it that is with respect to this next other blocked credits you see other blocked credits membership of a club health and fitness center is the block credit and what is an exception for that if it is provided by employer to employee under a statutory obligation membership of Club health and fitness center gym membership blocked credit Social Club membership blocked credit but on the GST paid sir yes GST is paid on that but it will be a blocked credit so like lot of people but it's a business expenditure I'm not talking about personal expenditure because if it is a personal expenditure anyhow it is El not eligible for ATC because section 16 the second condition says the init Supply should be used or intended to be used in the cor or furtherance of business so here it is a business expenditure only but even then it is blocked credit membership of a club health and fitness center what if government has mandated the company to take membership of a social club on behalf of their employees and in that case on that GST paid can be taken as ATZ yes that comes under the exception employer to employer stat obligation then second Point travel benefits extended to employees on vacation so employees is going on a vacation and the travel expenditure bond by the company now company cannot take itz with respect to the travel expenditure however same exception if it is incurred under statutory obligation by employer to employee suppose if the law mandates that the employer has to mandatorily provide the travel facility leave travel facility in that case if the employer has bone that expenditure can he take itz yes because this is under a statutory obligation now the employee is going on a business visit can the itz be taken yes itz can be taken because the point given is employees on vacation the next one non-resident taxable person nrtp so non-res taxable person is a person who is coming from outside India to India who is not having any fixed place of business in India so this nrtp can take ITC only on import of goods exception is only import of goods by the nrtp so basically these nrtps can come into India for the purpose of providing any services or supplying any Goods example of nrtp you remember so this cricketers basically who come to India to play to play IPL matches will be coming under nrtp now that it is IPL season so lot of foreign cricketers and all will be coming to India and what is the stay will the stay be for a period more than 180 days no definitely not more than 180 days hardly 90 days they will stay so that two depends upon you know which team they are playing and which team will go for qualifiers playoff Etc and all so therefore why they will stay for 180 days and they will not stay so which means they are called as a nrtp nonresident taxable person they're coming from outside India to India except Warner every other person will come under nrt nrtp only because Warner will behave as if he is Indian only all his reals and all will be based on Indian movies deels only okay so except David Warner every other person literally nrtp they don't have any fixed place of business in India and they will enter into India to make supply of goods or services now can they take ITC on any inet Supply that is in India no only on import of goods what goods they will import sir their Cricket kits Cricket kits garments Etc and all they will be importing why they will import that yes baggage and all they will not be bringing because recently one Amani great Indian fat wedding has happened so in this wedding so one person has come for dancing you understood H not singing singing so I don't know what is her name also H Rana okay rihana came and when rihana came rihana was not great news so her costume was a great news like some big big luggages came cargo containers luggage and all came in cargo containers like that this cricketers and all will be bringing their luggage in cargo that will be import of goods on import of goods customs duty along with igst paid that igst can be taken as input tax credit apart from that import of goods no other init supplies they can take ITC that is about nrtp then food and beverages remember food Beauty Insurance food Beauty insurance so food and beverages outdoor cing related to food beauty Beauty treatment including cosmetic surgery plastic surgery hair transplantation number three Insurance life insurance and health insurance these three are blocked credit food Beauty and insurance is block credit however we have three exceptions to this first exception common statut obligation statutary obligation that exception is there provided by employer to employ under a statutary obligation example there is a factory which is providing food to their workers which is under the statutory obligation under factories act now they purchase the food can they take it on the food purchase yes because it is under a statutory obligation even though it's a block credit then first exception init Supply outward Supply in the same category so for example there is a hospital which is providing cosmetic surgery to its patient cosmetic surgery is taxable now they don't have a surgeon so they approach another hospital another hospital provided the cosmetic surgeon and build to this Hospital can this Hospital take itz with respect to that yes because invert Supply generally cosmetic surgery is block credit but invert Supply outward Supply in the same category so itz will be available then in Supply is part of composite or mixed outward Supply there is a airline company which is into the business of Transportation of passengers and providing food to their passengers now they purchase the food for providing it to their passengers as inw Supply is part of outward Supply they can take it on food and beverages purchase so three first block credit is what food food related to food food and beverages outdoor cing related to beauty Beauty treatment cosmetic surgery plastic surgery hair transplantation related to Insurance life insurance and health insurance these three are block credits but three exceptions first exception in Supply outward Supply same category inward Supply part or component of outward Supply and statut obligation employer to employee then balance blocked credits suppose if you are purchasing from a person opting for composition scheme it's a blocked credit moreover it is already given there in the meaning of input tax input tax excludes tax under composition scheme then if you are making purchases and used for personal consumption you cannot take ITC it is also already given in section 16 Inver Supply should be used or intended to be used in the course or fur and of business if it is used for personal purpose we cannot take ITC again it is repeated as blocked credit suppose if it is used in obligations under CSR Corporate social responsibility under companies act so there every company has to spend uh their 2% I think some average profits 2% they need to spend for CSR so this amount of spending involves you know some expenditure on that expenditure there will be some GST paid so these expenditures what and all will be constituting CSR like that when schedule is there so in that schedule they will specify this this this this activities they can do for these activities some spending will be involved in that spending every expenditure will have a GST component can the GST component be taken as itz even though it is like a business expenditure no it cannot be taken because it is a blocked credit now that's an amendment then Goods lost stolen destroyed written off or disposed of by way of gifts or free samples I'm purchasing some goods and that Goods got stolen I cannot take ATC and that Goods got got destroyed because of fire accident I cannot take ITC so that can be even destroyed on account of natural calamities also normal or abnormal it is irrelevant so therefore whatever the goods purchased are lost stolen destroyed written off for any reason itz not available or disposed of by way of gifts or free samples so I purchased some goods and I disposed of those goods as gifts are free samples I cannot take itz on those goods purchased suppose if the gifts are free samples constitute Supply can I take itz yes that's an exception that we have see the note if gifts are free samples St as Supply under 71c then ITC not required to be reversed on Inver supplies for example there is a company so that company wanted to give a mobile phone as a gift to their employee so there is a company which is giving a mobile to their employee gift of mobile gift of mobile okay and they have to buy the mobile now so therefore from A supplier from A supplier so this company has purchased mobile purchase of mobile and the value of this mobile purchased is 60,000 plus 12% GST now gift of mobile to employee is this Supply or not a supply this will become Supply why it will become Supply under 71c because the value of gift exceeds 50,000 so as value of gift gift by employer to employee exceeding 50,000 paranam per employee is a supply and employer employee treated as related parties so value of gift exceeds 50,000 perom so it is Supply as it is Supply can the company take itz on the mobile purchase yes itz available okay so that will be 60,000 into 12% that is 8,000 7,200 so they can take this 7,200 as ITC there is no resp restriction with respect to that that's what I said generally gift of mobile is blocked credit but if gift of anything is block credit but if that becomes Supply because of 71c then they can take ITC on the gifts purchase there is no restriction so that is this note basically gift or free sample block credit but if gift or free sample treat Supply under 71c then ITC not required to be reversed on invit supplies and then one more point if GST is paid under section 74 129 or 130 74 talks about short payment of GST non-payment of GST or wrong availment of ITC Etc on account of fraud fraud okay then 129 is we are transporting the goods without valid documents then the officer will stop that vehicle and will seize those goods and will recover the penalty from us 130 is confiscation in these three cases supplier has not paid the GST voluntarily but it has been recovered from him by the government now you cannot take itz as a recipient but logically this point is meaningless now why it is meaningless sir if he has not voluntarily paid he would not have reported in gstr1 correct he has intention to Aid boss means he would have not reported in gstr one means it will not come in 2B if it is not coming in 2B you cannot take this as ITC you got it had he reported in gstr1 these sections will not come these sections are coming in which place only when he is not reporting in gstr1 okay so it has been recovered from him GST paid under these sections and such GST is not match ATC basically it is not a match ATC why it is not a match at because he will not report it in gstr1 and it cannot be availed sir but that he can Rectify n he voluntarily did not pay but thereafter it has been recovered from him now can he rectify the return sir usually there is a concept of rectification of return gstr one we can Rectify and in Amendment we can add now sir yes yes but that amendment should not be on account of any audit or investigation or any enforcement activity voluntarily if you made a mistake and you identify that you can add because because this point is there in rectification of returns so in the returns chapter if you see page 137 rectification of returns so gstr one we can Rectify but when you rectify gstr1 the rectification should not be on account of scrutiny audit inspection or enforcement activity means your supplier has not voluntarily paid it has been recovered from him the moment it has been recovered from him through Amendment he can think through amendment I will add it in gstr one so when he adds in gstr1 it will come in your 2B so you can take ity but the problem is that it should not be done why it should not be done it is not in input tax credit some other place it is restricted wherein they are telling you cannot do the rectification of return on account of scrutiny audit inspection or enforcement activities got it so which means once he has has not voluntarily paid and it has been recovered from him he can never put it in gstr1 when he cannot put it in gstr1 it will not come into B if it is not coming into B you cannot take that as ITC that's a conclusion of this story so this is about that blocked Credit Point then so we have completed blocked credits see the next discussion section 18 section 18 talks about I easy in special cases sir rate of GST is 5% for construction of buildings no it is 1.5% and 7.5% only that 1% and 5% is the effective rate of GST how that effective rate is arrived usually whenever we sell any flat so including the land UDS we will get a oneir reduction with respect to the contract price okay so see this for example contract price is contract price contract price of flat including UDS including UDS is 75 lakhs now in this case we will get 1/3 reduction towards 1/3 towards UDS you will get a reduction this is an exemption we have so which means 25 lakhs will be be Exempted so what is the value on which GST payable value on which GST payable will be 50 lakhs and what is the rate of GST rate of GST is 7.5% so GST payable will be GST payable will be 50 lakhs into 7.5% so that will be 3 lakh 75,000 but normal lay man cannot understand this why 1/3 reduction what is UDS all these things Builders cannot explain to the buyers so what they will tell is that this 75 lakhs into 5% is GST that will also come to 375,000 okay so rather than putting this way in Market this is is the way in which it will be shown 5% like that so we also like stupids we will think that 5% is a rate of GST 5% is not the rate of GST the rate of GST is 7.5% this only you need to follow for exam purpose okay so in reality you can follow anything but for exam purpose don't write 5% you know what when you do this this exemption also will give one thir thereafter if you do 5% answer will be wrong okay so this is the only way in which you need to do so don't remember the rate as 1.5% uh 1% or 5% remember it as 7.5% 1.5% that is one question then next uh seating capacity 13 any logic regular bdge then will ebike comes under motor vehicle definition actually yes because the power can be the power of propulsion can be through the internal source or can be from the external source so either using fuel it can be or it can be from recharge electric charge okay both will be coming under Motor Vehicles okay uh simple logic usually for electric vehicles also registration is required and for whichever electric Vehicles registration is required those vehicles and all will be automatically coming under Motor Vehicles okay so it will come then next they have taken solar panel as IM iMobile property yes of course solar panel immobile property only but it will come under plant and missionary the solar panel will come under plant missionary in rtps there is one question related to that it should be planted missionary dear okay then can swiy take itz on its inputs buying from other restaurant food no because basically the rate of GST applicable for food is 5% without ITC so due to the that reason so restaurants which are supplying food cannot take ITC because that is like rate related provision those rate related provisions and all you don't have so don't worry about that and uh then yes sir will you solve few questions for better understanding I'm doing that really I'm doing see how many questions I have written from morning I'm doing no this only I can do you cannot expect me to solve uh you know past exam questions all these things there is a limit bro hello bro see this section section 18 availment of ITC on closing stock so this is about section 18 subsection one that is there are four situations where we can take ITC on closing stock so 181a a person is liable to get registered and applied within 30 days so before I was not registered now I am liable to get registered I made application for registration within 30 days now before the date I'm liable to get registered I have some closing stock on that closing stock I have not taken ITC why I have not taken itz because at the time when I purchased the closing stock I was a unregistered person now I registered I will use this closing stock so I can take itz on the closing stock see this you are liable to get registered and you made application within 30 days now you have some inputs what is the meaning of closing stock input as such held in stock inputs in the form of WIP held in stock and inputs in the form of EFG held in stock and which date closing stock should be taken immediately preceding the date on which he is liable to get registered and so this stock should have been purchased within one year prior so means on Obsolete stock or non-moving stock and all they are not giving credit they're giving credit only on those stock which is purchased within one year prior to the closing stock date why they are giving itz why we have not taken itz at the time when it is purchased because at the time when you have purchased we were unregistered person being unregistered person we cannot take ITC then why are they giving now because using the closing stock we are making outweight supplies and when we make out supplies we need to pay GST on the outw supply so logically they are giving ITC on the closing stock then 181b what is the difference between 181a and 1B 181a I am liable to get registered and I made application for registration within 30 days but in 181b I'm voluntarily getting registered but the closing stock meaning is same inputs as a h in stock inputs in the form of wiip held in stock inputs in the form of FG held in stock which date I need to to take before the date I get the registration certificate so whatever is the closing stock sir on capital goods can we take credit under 1811b no why they are not giving credit on capital goods under 1811b because 1811b do not require matching moreover matching cannot be made why matching of ATZ cannot be made at the time when you purchased you were unregistered person being unregistered person you would not have given your GST means your supplier would have shown it under b2c supplies so which means you cannot take ITC with respect to that so that's the reason why matching is not required as matching is not required definitely fake invoices can be brought and capital goods and all involves a huge credit so that's why they are not giving credit in case of 181 a 1B with respect to capital goods but if you see 181 c1d for 181 c1d they are giving credit on capital goods and when 1 c1d will be applicable you were under composition scheme so under composition scheme you would not have taken itz now you have migrated to normal scheme under normal scheme you can enjoy the ATC so from the date you are migrating from composition scheme to normal scheme at the time there was some closing stock now on that closing stock GST paid can be taken as ITC but what is the meaning of closing stock here same inputs as such H in stock inputs in wiip h in stock and inputs in FG what is the extra point we have capital goods but sir capital goods can we take full credit no you cannot take capital goods full credit credit it should have been purchased past now so we should reduce how much we should reduce usually what is the depreciation for ITC 5% for every quarter or part thereof so see the note Below in case of capital goods ITC shall be GST paid minus 5% into number of quarters from the date of purchase till the date of migration or conversion for example say this so it is like on4 2024 I'm moving into regular scheme I'm moving into regular scheme and before that I was under composition scheme now when I was under composition scheme I would not have taken ITC now I'm migrating from composition scheme to regular scheme now pre previously when I was under composition scheme on 8 February 2023 8th February 2023 I purchased the capital goods and the value of that capital goods is 10 lakhs excluding GST at 12% excluding GST at 12% now how much itz I can take in case of regular scheme how much it I can take on this capital goods under regular scheme calculate that so this is under 181 C now yes 181c composition scheme to normal scheme so how much is the ITC under Section 181c how much is the ITC so capital goods is purchased and on with GST is paid so 10 lakhs into 12% how much 1 lakh 1 lakh 120,000 minus 5% into how many quarters 8 to 2023 I purchase 8 to 2023 when I have purchased it you count the number of quarters so that is Jan Fe March one quarter then again uh April May June July August September October November December again Jan Feb March so five quarters correct so 5% into five quarters that is 25% how much 1 lh20 into 25% 30,000 so 30,000 we need to reduce and remaining 90,000 we can take as ITC you understood you do this way so that your result will be failed Kum we have discussed within one year back only it should be purchased correct am I right so the above closing stock including capital goods should have been purchased within one year prior to closing stock date so everything don't nod your heads so 14224 means within one year prior here you will not get one rupe also itz will be zero why itz will be zero because the capital goods are purchased before one year we cannot take ITC on that capital goods and for 181c or 181d all the goods including capital goods should have been purchased within one year prior capital goods are not purchased are not purchased within one year prior to what is the closing stock date 31st March 2024 okay so means everything should be purchased within one year prior including the capital goods then how to Avail this ITC whether we Avail this ITC in gstr 3B no we need to file one declaration in itz 1 and that itz 1 when we should file within 30 days from the date of migration or from the date of registration like that okay now one more case you see 181d what is 181d a person whose Exempted supplies became taxable when Exempted supplies became taxable he need to you know take ITC at the time when his outward Supply was Exempted he would not have taken itz now the moment Exempted Supply became taxable he can take itz on his closing stock so but again what is the closing stock same input asset H in stock inputs in w h in stock inputs in FG held in stock and even on capital goods and which date immediately before the date of such conversion okay so what are the four situations that we need to remember liable to get registered and made for registration within 30 days voluntarily got registered number three registered person migrated from composition scheme to normal scheme and registered person Exempted supplies have become taxable now in these four situations what is the difference between first two situations so first two situations liable to get registered and made application within 30 days voluntarily got registered and date also will change so in first case it is before the date the person is liable to get registered second case immediately before the date of registration then what is the difference between third case and fourth case third case composition scheme to normal scheme fourth case Exempted supplies to taxable supplies and date also same immediately before the date of migration here immediately before the date of conversion what is the difference between first two points and the next two points first two points we cannot take ITC on capital goods but the next two points we can take it on capital goods how much ATC we can take on capital goods total GST paid minus 5% for every quarter or part thereof from the date of purchase till the date of conversion and one more difference first difference is capital goods second difference matching is required in case of 18 1 C 1D but 1 b 1 a 1B matching is not required and third difference 1 a 1B is applicable for unregistered person who is now only getting registered but 1 c1d is applicable for a registered person whose outweight supplies became taxable from Exempted or registered person who is migrating from composition scheme to normal scheme now let's see one more situation in this that is I commenced business commenced business commenced business on 105 2023 commenced business on 105 2023 making Exempted supplies so as I'm making Exempted supplies I am Exempted from registration correct making Exempted supplies and on 1110 2023 Exempted Supply became taxable Exempted Supply became taxable and and person got registered person got registered after 11 10 2023 okay now capital goods capital goods purchased in 31 purchased on 317 2023 whether it available whether ITC available it is purchased within one year prior only but why ITC not available because in this case the applicable section is 181d or 181a no applicable section is 181a not 181d why not 181d 181d is applicable when registered person's Exempted Supply becomes taxable but is this person a registered person no now only he is getting registered so applicable section is 181a but not 181d under 181a can we take itz on capital goods no therefore itz cannot be availed cannot be availed on capital goods clear that is with respect to this next one see below here all the above closing stock should be purchased within one year prior and itz with respect to GST paid on inputs can be availed as ITC no restriction full ITC you take inputs inputs no issue but for capital goods alone we need to reduce 5% for number of quarters from the date of purchase till the date of migration or conversion and one electronic declaration we need to file to take this ITC that is itc1 and that itc1 should be filed within 30 days in case of 181a from the date we get the registration certificate 181b from the date we get registration certificate 181c from the date of migration 181c from the date of conversion within 30 days or extended time limit and suppose if the claim of ITC exceeds 2 lakhs it should be certified by a ccma suppose if the ITC claim does not exceed 2 lakhs then it will be self-certification so this about 181 and 182 183 will be applicable in case of transfer of ITC so whenever I transfer my business with specific provision for transfer of liabilities so whatever is the an utilized idz from the transferer will be transferred to transfer electronic credit ledger so but remember the transfer of business should be with specific provision for transfer of liabilities means both assets and liabilities should be transferred means it should be transfer in the nature of merger or amalgamation but it should not be mere procurement of assets or procurement of brand name or a simple takeover so there should be all R and rewards incidental to the business should be transferred means assets and liability should be transferred and the transfer should have the intention to continue the business as a going concern so then only it will be called as transfer of business with specific provision for transfer of liabilities then transferer will file one form itg2 itz one is for availment of itz on closing stock itc2 is for transfer of itz in case of transfer of business and this itc2 should be certified by a CAC itc1 should be certified by ccma if the claim of ITC exceeds 2 lakhs but itc2 should be certified always always whatever may be the amount and what is that CMA will certifi that this business is with specific provision for transfer of liabilities then in case of merger of two companies say a limited and B limited gets merged into a limited no issue so whatever itz that is there in a limited will be transferred whatever ITC that is there in B limited also will be transferred so this is not a big deal but when a limited is getting demerged into a limited and B limited now from single Source the itz needs to be transferred then what is the ratio to be followed so you take the assets ratio of a limited and assets ratio of B limited immediately after de merger and the itz will be transferred in case of Dem merger credit shall be transferred to the new entities in the ratio of net assets net assets so we should take all assets whether ITC is availed on that assets or not availed on that assets that should be taken post demerger then transfer change in ownership also includes transfer change in ownership due to death of Soul proprietor so what happens is that there is a soul proprietor who is dead and his son has taken over the business in that case also itz can be transferred from the father's GST to son's GST should the son get a new registration definitely son should get a new registration because there is a death of Soul proprietor means permanent account number changes when the permanent account number changes gstn is connected to permanent account number so new registration should be obtained and thereafter son can log in in the name of the father and he can file it2 for transfer of itz from Father's credit ledger to son's credit Ledger then transferer and transfer should be in the same state so this is the rtion which is given in the portal and that is included in the circular so when cbac clarification has been given for example transfer is in Tamil Nadu transfer is in Karnataka itz cannot be transferred so means transfer should get a registration in Tamil Nadu and then only the itz can be transferred so transferer and transfer should be in the same state then this transfer of itz is also applicable in one more case what is that there is a single registration which is now converted into multiple registrations for example within the state we have an option whether to go for single registration or separate registration for example say in Karnataka there is a person who is having a place of business as Bengaluru Hui and mauru like the three places a person is having place of business and he was under a single registration because it is optional when I have multiple place of business either I can go for single registration or I can go for separate registration now I'm going for single registration in Karnataka and it is optional for me so I selected single registration now so far I am having one GST in Karnataka now as my business demands so I want to go for separate registration so I got separate registration in Bengaluru Hui and muru I'm getting a separate GST separate GST in Bengaluru separate GST in Hubli and separate GST in mauru now so far I'm doing I was doing business in the single GST now from the single gsin the itz will be transferred to all these three GST okay so for that purpose because so far I have been doing single registration only now means itz will be accumulated in that registration that itz can be transferred for which one it 2A form needs to be filed for transfer of itz between single registrations to multiple registrations so that is this when a single registration get converted into multiple registrations then ITC against single registration can be distributed to multiple registrations by filing one form what is that form ITC 2A in what ratio sir in what ratio simple assets ratio same way in De merger Visa assets ratio in that assets ratio between the three registrations itz can be transferred then next we are looking into 18 subsection 4 and 29 subsection 5 this is with respect to reversal of itz on closing stock this opposite of opposite of 181c and 181d 181c is what a registered person migrated from composition scheme to normal scheme now opposite normal scheme to composition scheme means he's going into composition scheme as he's going into composition scheme he cannot enjoy the ITC so he need to reverse the ITC then registered person Exempted supplies became taxable okay now taxable supplies becomes Exempted so as the taxable Supply become Exempted he need to reverse the itz on closing stock so what are the two situations that we have seen normal scheme to composition scheme taxable supplies to Exempted supplies or cancellation of registration third case so RSE reversal of itz on closing stock in three situations what are the three situations normal scheme to composition scheme taxable supplies to Exempted supplies cancellation of registration say on 14 so this happened now you take the closing stock as on before date what is it before dat 31st March as on 31st March what is the closing stock input as a child in stock input in the form of WIP inputs in the form of FG these three input whatever ITC we have already availed that we need to reverse ITC availed equals to ITC reversed whereas capital goods also we need to reverse how much we need to reverse for capital goods itz aail divided by 60 into balance life so here we follow a different way so it is not minus 5% for every quarter or part there so far everywhere it is minus 5% for every quarter or part there in this place alone what we will do total ITC divided by 60 into balance life so that's what we will do as ITC reversal now sir I have one doubt while availing the it on closing stock you told that the closing stock including capital goods should have been purchased within one year PR while reversing the itz on closing stock that one year time limit is not applicable no not applicable even if three years before you buy also you reverse you understood because availing it is lost to government so time limit reversal of it is gain to the government so therefore for no time limit even 3 years four years before if you have purchased also you can happily do the reversal okay then inputs and capital goods can be purchased any time on which itz is availed if itz not availed on such inputs or capital goods reversal shall not arise suppose if capital goods is purchased before 5 years then it will become zero why it will become zero itz aail divided by 60 months 5 years over into balance life zero anything multiplied by 0 is zero so we don't have to do any reversal if capital goods are purchased before 5 years on which it is availed and reversal shall not arise now sir matching required or not required not required reversing now why matching availing only matching you understood reversal gain to the government no matching matching not required but then what if invoice is not there don't worry today you'll have a market value for these Goods you take that market value and do the reversal and as you are taking market value get a certificate from a c CMA okay if invoice pertaining to such Capital inputs are not available then market value can be considered and practicing ccma certificate is required in that case and all these details of reversal will be reported in itz 3 itz 1 availment of itz on closing stock itc2 transfer of itz itz 2A transfer of itz from single registration to multiple Reg registration itz 3 reversal of itz on closing stock itz one when CM certification itz amount exceeds 2 lakhs itc2 always cacm certification itz 2A not at all required it3 cacms certification if market value is replaced with invoice value then suppose if there is any balance in ATC after reversal sir what will happen with respect to the balance balance will be lapsed and and suppose if there is any shortfall then we need to pay that shortfall for example so what is the itz say this case a case b the balance in itz before reversal balance in itz before reversal before reversal case a 2 lakhs case b 1 lakh then reversal of itz on closing stock reversal of itz on closing stock is 1ak 125,000 now what will happen so here 1 l25 we will adjust with 25,000 and balance in ATC balance in it 75,000 here zero this 75,000 will be lapsed that will be lapsed and what is the GST payable whether we need to pay any GST yes here 25,000 we need to pay why 25,000 we need to pay how much was the balance 1 lakh how much we need to reverse 1 l25 this 1 l25 we will adjust from 1 lakh so remaining 25,000 we need to pay whereas in this case 2 lakhs and 1 lak 125,000 we will adjust remaining 75,000 will be lapsed anyhow it will be lapsed now sir then why we need to do reversal mainly to know whether GST is payable or the itz will be lapsed for that reason only we need to do this computation and this computation should be done separately for cgst sgst utgst and agst then this 18 subsection 6 already I told you remember when 18 subsection 6 will be applicable I'm purchasing some capital goods at the time of purchase of capital goods I have availed the ITC and that capital goods is being disposed of so in that case the GST payable will be itz Avail minus 5% for every quarter or part thereof from the date of invoice till the date of Supply or compare it with what GST on sale value of that capital goods whichever is lower should be taken or whichever is higher should be taken whichever is higher but we have an exception to this in case of refractory bricks moles and dice Jigs and fixtures three Goods you remember refractory bricks molds and dice jig and fixtures if it is sold as crap then in such case GST is payable on normal sale value so means ARB whichever is higher not applicable just the B Point only will be applicable then next section 19 talks about job work Provisions so section 19 should be read with Section 143 of cgst act what does it says so I'm sending the inputs or capital goods for the job work and at the time when the inputs or capital goods are sent for the job work I don't have to reverse any ITC on that normally I can send but from the job workers place the inputs are capital good the processed Goods or the capital goods should be brought back what is the time limit within which it should be brought back processed Goods should be brought back within one year and capital goods should be brought back within 3 years this one year can be extended for a further period of one year one year and the capital goods can be extended three years can be extended for a further period of two years remember 1 + 1 year 3 + 2 years so processed Goods should be brought back within one year and capital goods should be brought back within 3 years and capital goods or inputs first we will see inputs inputs to be received within one year which is sent directly from the principal's place of business and if it is not received within the time it will be deemed as Supply on the date of reip by the job worker for example I'm sending the goods to the job worker you are the job worker I should have got the goods back from your place within one year you did not send me then on expiry of one year it will be deemed as Supply in my hands so means one year back itself it was Supply now I will come to know that it is Supply now I have to pay GST so logically I need to pay even GST for example 14 2023 I sent you inputs here and you should send me the processed Goods by what time 31st March 2024 you have not sent as you have not sent so one year time limit is over further it can be extended for further period of one year by the commissioner commission is not giving extension now it will be treated as sale in my hands on which date on which date it is treated as sale in my hands 4 2023 one year backwards and I have to pay GST now now means which date I'm in4 2024 you got it and I have to pay GST pertaining to which month one year before means I have to pay interest for last one year that is the additional burden that I will be having you got it and this GST I will recover from you it because of your mistake only now I have paid so I will recover it from you now what happens you have returned the goods to me after this one year now in that case whatever itz that I have whatever GS that I have paid I will reil as ITC no no it will be treated as new sale made by the job worker to the principal you got it so section 143 basically puts the time limit what is the time limit the good should have been brought back to the principal's place within one year plus one year in case of processed goods and capital goods should be 3 years plus 2 years if 143 breached then what will happen section 19 will come into picture that is deemed fiction what is a deemed fiction it will be deemed as Supply on which date it will be deemed as Supply on the date of dispatch to the job worker okay now see this ITC not required to be reversed by principal when goods are sent on job work and such Goods should be sent under the cover of a delivery Chalan and EV Bill yes because Goods sent on job work is not a supply at the time when we are sending it for job work so as it is not a Supply the document that is required is delivery Chalan and E Bill always required in case of goods sent on job work even if goods are directly received by job worker itz can be availed by principal how itz can be availed by principal Bill to ship to transactions when the goods are received by the job worker the invoice will be raised to the principal the day on which job worker has received the goods it is deemed that the principal has received the goods and the principal can take ITC with respect to that and see this additional points job worker can ITC with respect to inputs or input Services used for job work so job worker also will do some process now so he can take ITC on that if the processed Goods or capital goods are returned by the job worker after one year or 3 years then it will be treated as new Supply by the job worker and chargeable to GST and as you pay GST you can recover that from me and I can take ITC with respect to that the period of one year in case of processed goods and 3 years for capital goods on sufficient cost being shown be extended by the commissioner for a further period not exceeding one year or two years respectively and what if job worker is not registered there is one condition here if the job worker is not registered the principal should show job workers place as the principal's additional place of business that is one point if job worker is not registered principal should declare job workers's place as principal's addition place of business and jurisdictional commissioner should be intimidated about the job work contract and processed Goods may be brought back to principal's place or it can be sold or exported from the job workers Place directly and every principal who is sending the goods on job work and receiving it from the job work they need to file one form what is that itz 4 itz 4 this itc4 will be filed on a yearly basis if the aggregate turnover of the principal during previous year does not exceed 5 crores 5 crores it does not exceed 5 crores annually by when 25th April so Financial year get over by 31st now so 25th of April suppose if the aggregate turnor exceeds 5 crores then it will be two times half yearly half yearly by 25th of the month following every half year so first half year is what April to September by 25th October and the second half year is what October to march by 25th of April so this is about section 19 r with Section 143 okay and we have this input service distributor so we'll take a break huh and then we will complete this okay fine okay we'll start so there is one query 10 cc bikes ITC available Yes actually ITC available for 10cc bikes because 10 cc bikes will not come under motor vehicles and as it is not Motor Vehicles we don't have any blocked credit so which means it will be like used in the corser furtherance of business and ITC is available so that is about that then next input service distributor section 20 and section 21 of cgst act basically input service distributor is like a head office that head office will receive the services and distribute the credit with respect to these services to the branches which are having the same permanent account number as that of the head office so basically head office will receive the tax invoices with respect to input service remember only input service inputs and capital goods credit cannot be distributed this way only input services and this ISD input service distributor distribute the credit to its branches having the same permanent account number and this ISD is required to get a separate registration even though that company is already having that is each and every branch is having a separate registration even then for ISD they need to get a separate registration and distribute the ITC and here there is one important condition ISD is say in Tamil Nadu ISD is in Tamil Nadu and the branch is also in Tamil Nadu then cgst credit will be distributed as cgst sgst as sgst igst as igst whereas with respect to registrations in other states say Branch one this is Branch one and this is Branch two and this is Branch 3 now with respect to Branch two and three so three is in Andra Pradesh with respect to Branch one cgst will be distributed as cgst sgst as sgst igst as igst with respect to Branch two with respect to Branch 2 cgst sgst as well as agst everything will be distributed as igst only okay so the ISD which is in Tamil Nadu with respect to Branch 2 and Branch 3 with respect to these two branches cgst r sgst or I igst distributed as distributed as what igst distributed as igst whereas to Branch one to Branch one cgst r sgst or igst distributed as distributed as cgst yes sgst R igst accordingly so that is what I have given below cgst and sgst distribute as cgst sgst for the unit in the same state of ISD so ISD is in Tamil Nadu whereas Branch one is also in Tamil Nadu so credit will be distributed in the same manner same name and distributed as igst if the unit is in the different state than that of ISD so suppose if the unit is in different state than that of ISD then everything will be distributed as igst only then suppose if the service is attributable only to one branch entire credit will be distributed to that Branch only if the service is attributable to more than one branch it will be distributed to those two branches or three branches in the ratio of its turnover so input service attributable to one unit entirely distributed to that unit input service attributable to two or more units such two or more units we will distribute the itz in what ratio turnover ratio suppose if the input service is attributable to all units ITC will be distributed to all units which are operational based on the turnover ratio now turnover whether we need to take current year or previous year turnover we need to take previous year turnover or the last quarter based on the availability then how this should be distributed the ITC should be distributed on a monthly basis is not on a quarterly basis and for distribution of this itz one return needs to be filed that is gstr 6 by 13th of the month following every month and excess distributed ITC can be recovered by issuing a ISD credit note for example this ISD has distributed to Branch one some excess ITC and to Branch two and Branch three there is a shortfall now what they can do excess they distributed now to reduce that excess distribution so this ISD can give credit note to Branch one that's what they are telling excess distribute ITC can be recovered by issuing ISD credit note now for branch two and Branch three there is a shortfall for Distributing that shortfall they can give a ISD invoice and distributed credit should not exceed the credit available for distribution suppose if the ITC available with ISD is 5 lakhs then while Distributing it to these three the total should not be more than 5 lakhs means excess credit should not be distributed if the ISD has distributed excess credit to any one recipient the excess can be recovered from the recipient with interest for example they should distribute three lakhs three lakhs and three lakhs to these three units but instead what they did they distributed 4 lakhs 2.5 and 2.5 two two branches instead of 3 3 three they distributed 4 2.5 and 2.5 now to which unit they have distributed exess Branch one they distribute excess now from Branch one the recovery of 1 lakh will be made so if the ISD has distributed exess credit to any recipient the exess can be recovered from the recipient with interest and every ISD should get a compulsory registration in respective of their aggregate turnover then so we will come across turnover in three places one is Rule 42 common ITC used for both you know taxable and Exempted proportionate it available then rule 43 rule 43 also same total ITC divided by 60 into Exempted turnover by total turnover again input service distributor also we come across turnover ratio wherever we take the turnover ratio in the turnover we need to you know exclude we need to exclude old indirect taxes what are they excise duty Central sales tax and value added tax should be excluded also value of supply of Duty credit scripts should be excluded okay which means Duty credit scripts even though it is Exempted but it will be excluded from the Exempted turnover now it should be treated as taxable turnover but this point already I gave there so you remember only one point what is that one point you should remember old indirect taxes should be excluded generally this old indirect taxes will form of turnover value under 1528 which says all taxes duties and S by whatever name called other than GST should be included in the turnover because of that reason so this should be added generally as per 152a but there is an exception while determining turnover in three places what are the three places rule 42 rule 43 and rule 40 like section 20 in these three places so turnover excludes old indirect taxes then next one we have a circular on replacement of parts during warranty so these are some additional circulars which are basically amendments for May 24 exam so please concentrate carefully listen so this circular is basically about purchased Goods which are used in replacement during warranty period so here waranty can be given by the supplier so whenever there is a like standard warranty or additional warranty so during that warranty period if there is any manufacturing defects or Etc so freely the part will be replaced by the supplier so this is that background so here issue number one Sleek is a modular kitchen supplier so they have done the interior decoration to Mr X who is a customer for which the customer pays a consideration of 8 lakhs plus GST 18% this a normal contract interior decoration contract under this contract if there is any part which is used in the modular kitchen is damaged so that will be replaced by this company for a period usually 6 months or one year or two years that will be a warranty period in that warranty period they will replace the parts and now what happened is that Mr X asked Sleek to replace a part during warranty period and Sleek will purchase that part for replacement so Parts purchased by Sleek for replacement to customer during warranty period and the value of that part is 50,000 and GST is 6,000 now they have replaced that part during warranty period and they did not charge any amount for that who did not charge any amount for that this leak supplier did not charge any amount for that now the question here is on the 6,000 can itz be taken or cannot be taken first anywhere we have block credits related to this Goods used in warranty period so it is blocked like that anywhere we learn no and is it used in the cors OR furtherance of business yes so as a business practice they have to give this assurance to the recipient then only the recipient will undertake like receive the services from the supplier so therefore as a part of this business only they do the replacement during warranty period means logically they can take ITC we don't have any restriction you got it so reversal of itz by manufacturer shall not arise even if such replacement of parties without any consideration so yes they can enjoy this ITC of 6,000 rupees now sometimes they charge in nominal amount rather than giving it for free absolutely so they will charge a nominal amount like 10% or 20% depreciation value like that they will charge see you used for 3 months now I am replacing a part new then for the three months you use now so for that reason I will charge some money from you 10 10% or 25% like that I will charge now in that case also is there any restriction with respect to ITC no whether you charge or you do not charge that is irrelevant and you are using the goods for replacement during warranty period so happily you can take the ITC if any consideration is charged with respect to such replacement then it is Supply under 718 which Supply under 71a that money collected that 10% or 25% and GST payable on such consideration but reversal of itz shall not arise so what is one point that you need to remember based on this example if I am purchasing any goods and used it as replacement during warranty period for that replacement whether I charge any consideration or not charge any consideration I can take ITC on the goods purchased clear then second issue issue number two you see so there is a car manufacturer Toyota is a car manufacturer lansen toyoto is a dealer and they are making sale of car including warranty for 3 years to Mr X a buyer so car manufacturer will sell the car to the dealer and dealer will sell the car including waranty to the buyer now in this background what happened is that so dealer has paid paid 12 lakhs plus GST to the manufacturer and they collected 15 lakhs plus GST from the buyer why they are getting three lakhs that is their profit margin dealer's margin three lakhs now dealer will provide the service free after salale service in this free after Sal service dealer will do Service Plus even change the part during the warranty got it now this services Plus Part whether the dealer is really doing it for free or he will get the money he will definitely get money from whom he will get the money not from the buyer he will get money from the manufacturer dealer will get the money from the manufacturer so lansen dealer provided free after sale service of 3,000 and replacement of Parts 2,000 this is the background okay now in this case we need to understand certain things first dealer is procuring the parts for replacement from the third party means this replacement of part 2,000 is there now the dealer did not get from the manufacturer but he purchased it from the market and he used it for free replacement during warranty period and charged consideration from the manufacturer now you please step into the dealer shoes as a dealer as a dealer what what is that you are doing first you are buying the part from the market for replacement can you take itz on the part purchased yes or no from dealer point of view you Please interpret yes or no yes that already we discussed in the previous Point what is that if any goods are purchased for replacement during warranty period whether we charge or we do not charge we can take ITC on the part purchase correct so on this part of 2,000 Rupees whatever GST is paid as a dealer you can take KC on that done second point now you are incurring 5,000 rupees what you will do 5,000 rupees you will incur out of your pocket or you will charge it to manufacturer you will charge it to manufacturer on that will you pay GST also yes and in turn you will recover it from the manufacturer you got it so see the Dealer's perspective first invoice for Recovery of cost from manufacturer 3,000 after Sal service replacement of part 2,000 total 5,000 GST 18% % so 5,900 now dealer will pay this 900 Rupees to government then on Parts purchase 2,000 into 18% 360 itz is available to the dealer and whether any reversal of itz no even though you are doing it for free or you are charging you can enjoy the itz of this 36 no reversal of itz required by the dealer in case of replacement of Parts this is from the dealers perspective now from the manufacturer point of view we will see so as a manufacturer stepping into the shoes of a manufacturer now what you are doing you are paying 5,900 Rupees to the dealer correct now can that 900 rupees be taken as itz by you yes because dealer will raise invoice to you and you can take itz with respect to that 900 that is simple manufacturer shall pay 5,900 to the dealer and itz of 900 can be claimed by the manufacturer so you tell me this is example from this example you should remember the provision I have not given the provision directly because if you read the provision directly nothing you will understand that's why through numbers I making you understand so not tell me what is the treatment when the part is procured from the third party as a dealer dealer will recover the charges from the manufacturer and GST will be payable on those charges recovered and on the parts procured ITC can be availed and as a manufacturer manufacturer will pay the charges to the dealer and on the charges GST itz can be availed by manufacturer then second situation same same scenario question is same scenario two situation two what happens in situation two if replacement of parts are received by dealer from the manufacturer so means what happens here that part dealer is not procuring dealer is not procuring that part that part dealer got it for free from the manufacture faure okay and the dealer has used it in the buyer which means as a dealer how much you will recover from the manufacturer 3,000 or 5,000 3,000 why you will recover only 3,000 because part you got it for free from the car manufacturer so to the car manufacturer you raise a bill for 3,000 plus applicable GST and you will pay the GST as you did not procure the part so the question of it e does not Aras so see that as a dealer you will raise invoice to the manufacturer 3,000 rupees after salale service GST 540 and invoice value 3,540 and you will pay 540 Rupees to government now you tell me as a manufacturer what you will do so as you procure the part freely you have given to the dealer but you would have procured the part as a manufacturer as a manufacturer on that path procured so you can take ATZ yes because you're using that part for what purpose free replacement during warranty period as a manufacturer you can enjoy the ITC on that part procured and even dealer will raise invoice TOA for that 3,000 rupees plus GST that 540 rupees can be taken as itz so see that manufacturer shall pay 3,540 to the dealer and itz of 540 can be claimed by the manufacturer with respect to after Sal service then 2,000 into 18% sorry you just change this to 360 2,000 into 18% that is 360 rupees what is this 360 rupees GST paid on the part purchase GST paid on the part purchase so can be taken as ITC and any reversal of ITC required by the manufacturer no not required now you tell me what is the treatment of this as a provision what is the SC what is the situation so parts are procured by the manufacturer and given it for free to the dealer in that case can the itz be enjoyed by the manufacturer yes and whenever dealer raises the invoice for free after sale service on the GST paid can be taken as itz by the manufacturer dealer will simply pay GST on whatever money that he has recovered from the manufacturer and dealer will not purchase the part so the question of ITC does not arise now third situation listen what happens in this third situation is that 100 numbers of spare par is supplied by the manufacturer to the dealer at 2,000 Rupees excluding GST at 18% so these parts are for sale basically these parts are for sale manufacturer will send it to the dealer for sale Parts but the dealer out of this 100 one part he has taken and used it for replacement during warranty period which means dealer is required to pay to manufacturer for 100 parts or 99 parts only 99 Parts why 99 Parts again I'm repl again I'm discussing this concentrate I'm a manufacturer you are my dealer I'm sending you 100 Parts I will raise invoice for 100 parts to you but you will pay me for 100 parts or 99 Parts only 99 Parts why not 100 Parts because one part you are using it for replacement during warranty period and for which you are not required to pay me money correct or not which means first I will raise as a manufacturer to you invite for 100 Parts thereafter I will give you credit note for one part because you are not required to pay money for that you got it now as a dealer first you procure 100 parts and you Avail the ITC and as you got the credit note you need to reverse the ITC got it this is related to the parts over job done now how much you will charge to the manufacturer for after s Serv 3,000 so into 540 rupees that I will take as itz Okay so say this first from the dealer point of view situation three 100 numbers of spare parts supplied by manufacturer to dealer at 2,000 excluding GST out of that one spare part is used as replacement during warranty period so the dealer will pay 2 lak 36,000 to manufacturer first why because manufacturer will raise invoice for 100 into 2,000 2 lakhs and GST 18% 2 lakh 36,000 and in that 2 lakh 36,000 itz dealer will take 36,000 now one credit note will be given to the dealer so ITC must be reversed by dealer based on credit note so if 100 Parts GST is 36,000 for one part it is how much 360 that 360 needs to be reversed then as a dealer you will raise invoice to the manufacturer for 3,540 and you will pay GST of 540 this is the job in the hands of dealer now in the hands of manufacturer what will happen manufacturer will first raise invoice for 100 part now 2 lakh plus 36,000 and one credit note will be given for reducing that and dealer will raise invoice for 3,540 to manufacturer and 540 can be taken as itz by the dealer okay actually this is given in pure English in the circular they have given a circular related to this and in that circular they have given fully about this you know uh in English which we cannot read and comprehend even in exam also they will not test whatever you learned in circular you write like that they'll not ask a question so they will convert it into numbers like this so that's why this will be useful so just literally like this only they can ask questions on this then next another issue issue number three this is related to you know usually warranty we pay additional amount for warranty if you pay that additional amount for the warranty at the time of purchase of the product itself what is the GST rate applicable for this additional warranty at the time of purchase of the product itself you pay for warranty whatever is the GST rate applicable to the product that should be taken for additional warranty also suppose if you buy the additional warranty separately not at the time of purchase of the product then for the warranty the general rate 18% will be applicable for example iPhone 15 Pro Max 1 lakh 159900 say rate of GST 28% and coverage is there usually extra money you have to pay for the coverage apple plus coverage 15,000 includes of GST now this 15,000 is taxable at what rate of GST now if the coverage is taken at the time of purchase of iPhone this 15,000 will be taxable at 28% if the coverage is taken at a later point of time then this 15,000 will be taxable at what rate 18% because it will be treated as a separate contract then another circular is related to cross charge so it's not gross charge it is cross charge in this alphabet it's cross charge it's not gross charge cross charge so what is this cross charge means cross charge means one office will raise invoice to the another office it can be head office or branch office so ISD opposite it is cross charge so either we can distribute the credit based on ISD concept or we can also follow the cross charge it's like head office head office is there and below the head office we have branch office one branch office two and branch office three and there is a supplier and this supplier will raise invoice to the head office will raise invoice to the head office and the head office will Avail ITC will Avail ITC and this ITC will be distributed to all the three branches so this is the concept of input service distributor okay now here what is the disadvantage in this ASD they should distribute it in turnover ratio correct Distributing turnover ratio now I don't want to follow this instead I want to make it simple that is the supplier will raise invoice to branch office one and the branch office one will raise invoice to branch office two branch office 2 will raise invoice to branch office three or branch office one will raise invoice to branch office 3 so I just wanted to structure it that way so branch office one branch office 2 branch office three now I want to eliminate this concept of of ISD so the supplier will raise invoice to branch office one now branch office one will take ITC ITC availed full full ITC now branch office one will raise invoice two branch office two and branch office three invoice they will raise you got it and this concept is known as cross charge this is known as cross charge whereas this is known as input service distributor okay so but both cases the objective is achieved all the three branches are taking the ITC now based on this invoices so here branch office to will take ITC aail and even branch office three will Avail the ITC you understood whereas in ISD also the objective is same all the three branches so distribution of ITC so three three branches will also take the ITC now should I follow ISD or cross charge circular says anything you follow either you follow ISD or you follow cross uh cross charge but ensure that in Cross charge this service is not attributable to only one division the service is really attributable to other divisions also then you do this but what is the advantage we can achieve in this cross chart turnover ratio we don't have to follow got it turnover ratio turnover ratio need not be followed need not be followed okay now this particular circular will be applicable only for May 24 exams reason being they gave finance bill 2024 as per the finance bill 2024 they are telling that this cross charge should not be followed ISD only should be followed previously ISD only should be followed circular gave either cross charge or ISD you follow again Finance Finance act 2024 they are telling follow ISD only okay so then so therefore why why why they change that I don't know but this circular is applicable only for your exam okay what is that either ISD or cross charge can be followed by head office for distribution of credit to branch office in case of cross charge in case of cross charge normal invoice is raised by head office to branch office turnover ratio need not be followed but those Services should be attributable to branch office okay and even in case of cross charge separate registration not required that head off is one separate registration we used to get now that is also not required that all those things are only for ISD not for cross charge then now one more point they have given in the circular related to internally generated services see with respect to services procured from the Third thir party either they can follow ISD or they can follow cross charge no doubt but with respect to internally generated services what is this internally generated services means branch office HR branch office HR function is taken over by the head office means head office or corporate office is only looking after the HR of all the branches because HR they will make centralized they will not do separately h are Finance marketing and sales these things and all they will make it like a common they will not give it separately for each and every Branch if that is the case then good one one ched accountant can be appointed for one one branch so but usually finance and all they will concentrate only in the centralized location now in that case what happens is that head office will incur the expenses even for the branch office also and will raise a debit notee for Recovery of the expenses common expenses this only we call as apportionment of overheads common overheads we will apportion between the divisions so head office will incur the common Services they will incur the expenditure and how they will recover the expenditure by raising the debit notes to the branches they will Inc recover the expenses now what is the treatment of that recovery of expenses this is not procured from the third party this is internally generated what is the treatment of that Services provided by head off to branch office not procured from the third party internally generated now this will come under transaction between distinct persons in case of transaction between distinct person head office is one distinct person branch office is one distinct person the value needs to be determined under rule 28 we have rule 28 of valuation rules which says that you take either open market value or like kind and quality or Cost Plus 10% if the recipient is eligible for full ATC the open market value is nothing but the transaction value okay now see that is Branch off is eligible for full ITC or Branch off is not eligible for full ITC if branch office is eligible for full ITC whether amount recovered or not from the branch office by head office value under rule 28 is nothing but invoice value why open market value deemed to be transaction value you can write that open market value deemed to be transaction value because of that reason even value can be taken as nil also no issue suppose if branch office is not eligible for full ITC then we need to determine the open market value amount recovered from branch office by head office open market value should be taken what if open market value not available like Canon quality or Cost Plus 10% that will come what if amount not recovered from branch office even then open market value should be taken but this is exception to rule 28 what does they are telling no value of taxable Supply so this is exception to this is exception to rule 28 actually rule 28 says whether consideration is there or not sir if the amount is recovered it will become Supply under Section 71a if the amount is not recovered it will become Supply under Section 71 C whether it is Supply under 71a or 71c transaction between distinct person the value will be as per rule 28 as per rule 28 if the value is open market value only should be taken but in this case when the amount is not recovered from the branch office by head office the cbac circular says that you don't have to take any value okay so value will be taken as zero and no need to pay GST this is an exception which they have created in the circular okay so these are the amendments that we have in input tax credit with that we have completed ITC so we will see the next area that is value of Supply so please take value of Supply what's the page number page number 71 so value of Supply we don't have any amendments it is the same old story and uh except for in rule 28 one corporate guarantee provision they have otherwise everything will be same so section 15 deals with the value of Supply what does section 15 says section 15 subsection one says value of Supply is nothing but the transaction value what is transaction value price actually paid or payable and this transaction value will be taken as value or ass value provided two conditions are satisfied condition number one price must be the sole consideration supplier and recipient are not related both these condition should be satisfied if any one condition is not satisfied transaction value not applicable and we need to determine the value as per rules and for this transaction value we have some inclusions as per 15 subsection 2 what does it says so first supplier will supply the goods or services to the recipient for which recipient will pay some money that amount which is paid by the recipient will be taken as transaction value 15 to a total five inclusions we have the first inclusion is tax taxes duties and S by whatever name call other than GST so that is any tax other than GST if charged by the supplier to the recipient it should be included in the value for example so entertainment tax which is collected by the cinema theater from the audience so price of the ticket say 190 rupees entertainment tax somewhere like 30 rupees so now while Computing the GST whether entertainment tax should be added or not yes we need to add same way at the time of import of goods we need to compute the customs duty while Computing the customs duty and igst so igst should be computed even on customs duty component also yes so a value of goods imported plus customs duty on that igst should be computed which means that for computation of GST all taxes duties and say by whatever name call other than GST should be included in the value that is this any tax other than GST should be included in value then 152b recipient is in inuring some expenditure on behalf of the supplier that expenditure should be included in the value this is like say supplier is liable to pay some money for example I am a finished goods manufacturer and I have procured some raw material for 4,000 rupees now I need to pay that 4,000 but I asked you to pay the 4,000 and pay 6,000 Rupees to me so 6,000 rupees will be transaction Value Plus 4,000 which you paid to my raw material supplier on behalf of me is like any amount that the supper is liable to pay but incurred by the recipient should be added to the value so that 4,000 should be added so the value will be taken as 10,000 rupees that is about 152b what if recipient is incurring the expenditure on his own account will that expenditure be included in the value no it will not be included in the value because it is expenditure incurred by recipient on his own account example Transportation charges the sale is a exor room sale ex show room sale means my sale is completed the moment I hand over the product in my showroom thereafter you should only incur the transportation cost now you incur the transportation cost will it be included in the value no because expenditure incurred by the recipient on his own account that will not be included in the value then 152c says if supplier is incurring any expenditure and recovers from the recipient then it should be included in the value but here we need to check is that expenditure incured by supplier and recovered from recipient as a pure agent of the recipient if it is supplier acting as a pure agent don't include that expenditure in the value so we need to check whether it is as a pure agent on behalf of recipient such expenditure shall be excluded from the value when supplier will act as a pure agent of the recipient firstly it should be the liability of the recipient which is incurred by the supplier and supplier should satisfy certain conditions what are those conditions number one there should be a written agreement between the supply and the recipient where supplier is acting as a pure agent recipient should authorize the supplier to act as a pure agent to incur the expenditure so first condition contract you can see in the next page conditions for Pure agent supplier should enter into an agreement with the recipient and supplier should recover only the actual amount incurred mean supplier should not make profit out of the transaction supplier should not hold the title of the goods or services so procured means the invoice should not be in the name of the supplier the invoice should be in the name of the recipient and supplier should not use a set goods or services so procured for his personal purpose now example there is a chartered accountant who is doing the income tax filing of a client and the chared accountant incurred the income tax liability of the client and recovered the filing fees as well as income tax paid on behalf of client now in this case whether pure agent point will be applicable or not definitely it will be applicable first income tax liability is the liability of the client that is recipient who incurred it supplier has incurred now check the condition number one whether the recipient is authorizing the supplier to incur that expenditure yes number two whatever is the actual expenditure of income tax that much only is recovered and the income tax Reed definitely will not be in the name of chared accountant but it will be in the name of client and it is not the chared accountant's income tax liability he recovered so there for it is not used for the personal purpose of the supplier due to that reason supplier acts as a pure agent and in this case filing fees is 10,000 income tax 5,000 15,000 recovered but GST payable only on 10,000 that 5,000 income tax liability which is of recipient supplier incur as a pure agent and it will be excluded from the value got it so when you need to apply pure agent concept first you need to check is that expenditure the liability of the recipient number two incurred by the supplier number three supplier is acting as a pure agent okay so when the supplier is acting as a pure agent for the third point four conditions so when the supplier is acting as a pure agent first agreement through an agreement recipient should authorize a supplier second the title should not be in the name of the supplier number three only the actual amount should be recovered and it should not be used for the personal purpose of the supplier then suppose if it is not a pure agent it will be in the course of supply and that expenditure should be included for example door delivery contract in door delivery contract what will happen supplier will undertake to deliver the product to the recipient's location now supplier will incur the transportation cost this Transportation cost should be included in the value or not yes expenditure incurred by the supplier and charged to recipient other than as a pure agent so that should be included in the value that is about 1550 to C 15 to a first value equals to transaction value if two conditions are satisfied supplier and recipient are not related and price must be the sole consideration five inclusions in that three inclusions we have seen 15 to a any taxes duties and S by whatever name called other than GST and first one is recipient incurring expenditure recipient incurs expenditure on behalf of supplier that should be included in the value the next one is supplier incurring the expenditure and charge it recipient divide into two pure agent it will not be included otherwise as a pure agent it will be included in the value then 152d talks about interest late fee or penalty for delay and receipt of consideration that is whenever supplier has to get the money from the recipient but the recipient has not made the payment on time because of it supplier will be collecting some interest from the recipient this interest is known as interest on account of delay in reip of consideration that should be included in the value and charge to GST so basically interest will come in two places in GST one is interest on loans advances deposits which is Exempted no need to pay GST whereas interest on account of delay and receip of consideration it should be included in the value and chargeable to tax accordingly include in the value means so if the invoice is taxable this interest also taxable if invoice value is Exempted this interest also Exempted means this interest is not read as a separate activity this interest will derive the character of the invoice for which this interest is collected okay then that is with respect to this 152d then 152e is about subsidy subsidy is basically an amount which will be collected from one person and this subsidy is not arising out of any contract it is like a grant which is given by one person to the another person and these grants maybe with certain objectives or it may be out of gratitude anyway it can be given so subsidy basically divided into to two is it directly linked to price or not directly linked to the price what is the meaning of not directly linked to the price means subsid is nowhere connected to the outward Supply whereas if the subsid is connected to the outward Supply it is called as directly linked to the price if I am selling a electric motor vehicle so I will get a subsidy from central government 10,000 rup per two wheeler sold so this 10,000 rupees per Two wheer Sold is directly linked to the out Supply correct directly linked to the price for every two wheeler sold I'm getting 10,000 rupees means it is directly linked to price recently also if you are installing a you know panel that is the solar panel you will get a subsidy from the government is it related to your outward Supply no it is General subsidy for installation of a solar panel they are giving this this is not linked to outw supply means it is not directly linked to the price so directly linked to theice price means subsidy based on outward supplying not directly link to the price means subsidy respective of the outward supplying if the subsidy is General subsidy example to set up a power PL or to set up a green energy plan to set up a solar plan you are receiving some money so this money received will be called as general subsidy that General subsidy should be ignored it should not be considered for valuation purpose ignored and not considered in value you treat it like a donations whereas directly linked to the price that is subsidy based on outward Supply so is it from central government or state government or is it from others if it is from central government or state government to be excluded from the value suppose if it is from others to be included in the value now how we need to understand this particular implication now say for example the price there is a coaching Center there is a coaching Center and this coaching coing Center is getting three revenues from student from student they are getting 10,000 and from central government they're getting 3,000 from NGO from NGO they are getting 2,000 what should be taken as the value of Supply so this 10,000 will be taken as the transaction value and this 3,000 rupees from central government will it be included in the value or not included in the value not included in the value because subsidy both are directly link to the price because 3,000 per student 2,000 per student you understood directly L to the price but subsidy from central government or state government not include in the value but subsidy from NGO to be included in the value therefore what will be taken as the value of Supply in this case the value of Supply in this case will be 12 ,000 rupees okay now problem is whether this 10,000 rupees is inclusive of 3,000 and 2,000 or non-inclusive of 3,000 2,000 that's the confusion where we will be getting it is very simple concept only so subsidy from CGS G don't include subsidy from others you include okay and if it is not directly L to the price you ignore it but problem is whether the price is considering subsidy or without considering the subsidy in this case is this 10,000 rupees is without considering subsidy sorry considering subsidy after considering subsidy after considering subsidy what is the meaning of after considering subsidy means the coaching Center knows that they will get 3,000 and 2,000 from others so they would have reduced it from the original price and they would have collected only 10,000 rupees from the student means the given price price the given price is based on original price minus subsidy that is the meaning of considering subsidy after considering subsidy means the given price what is the given price 10,000 is after reducing subsidy means there is a original price what could be the original price 15,000 could be the original price from 15,000 they reduce 3,000 and 2,000 and they got given price 10,000 rupees now what we need to do in that case in that case first we need to take transaction value so what is the transaction value transaction value is 10,000 rupees now subsidy from CG subsidy from CG as per provision subsidy from CG to be included or to be excluded to be excluded in the given price it is already excluded see this minus subsidy already it is is excluded so therefore ignore got it so as per provision to be excluded to be excluded as per section 152 e and in the given price in the given price it is it is already excluded so what you need to do ignore don't consider okay then subsidy from NGO subsidy from NGO subsidy from NGO as per provision it is to be included but in the given price it is excluded excluded we excluded it so therefore we need to add so to be included to be included as per section 152e and in the given price in the given price it is excluded so what you should do you should add how much is that 2,000 now you will get the transaction value sorry the assessible value the assessible value or value of Supply so that value of Supply will be 12,000 rupees so this is all we need to do now sir what if the given price of 10,000 is without considering subsidy then how it will change if given price of 10,000 is without considering subsidy what is the meaning of without considering subsidy without considering subsidy means the original price itself is the given price the given price itself is the original price means they have not reduced any subsidy they have not reduced any subsidy then in that case what will happen sir then same story first transaction value you will take and transaction value under section 15 subsection 1 that will be 10,000 rupees and subsidy from subsidy from whom first CG subsidy from central government to be included or to be excluded to be excluded and in the given price what we have done not excluded so therefore we need to deduct okay so subsidy from CG to be excluded to be excluded and in the given price in the given price it is not excluded so what you should should do deduct so we have to reduce that 3,000 then next subsidy from NGO subsidy from NGO it is to be included and in the given price already included when it is already included again are you required to do anything no simply ignore so therefore value of Supply will be value of Supply will be 7,000 so this is how the answer will change accordingly based on which assumption we need to take so if the question is silent which assumption I should take so just take the Assumption as price after considering subsidy that point I have given there you can see note if the question is silent consider the given price as after reducing the subsidy amount given in the question that is original price minus subsidy is the given price that's how we need to take the Assumption there then this conditions for Pure agent already we have seen now there is one point related to Pure agent passenger service fee and user development fee usually airport operators Airport Authority of India or any airport operator they will be providing access to the airport to the passengers for which they will be collecting psf passenger service fee or UDF user development fee but this fee they will not collect from the passenger they will collect from the Airlines and at the time of booking the ticket Airlines will collect it from the passenger so Airlines will pay UDF or psf to the airport and will recover it from the passenger so whether this UDF and psf will be included in the value of the ticket for computing the GST no basically this uh UDF and psf will come as a pure agent expenditure actually it is whose expenditure passengers expenditure who is paying Airline is paying and recovering it from the passenger and moreover here so passenger authorizes the airline to incer that expenditure and the title is not in the name of the airline and only the actual amount incurred they are recovering so it is not the personal expenditure of the airline so therefore pure agent will be applicable and while Computing the GST on the ticket fair this UDF psf which the airline is collecting from the passenger should not be included see there passenger service fee and user development fee collected by Airline operators from passengers are to be remitted to airport operator and falls under expenditure incurred as a pure agent and it should not be included in the value then exclusions from the value of Supply as per 15 subsection 3 so far we have seen inclusions five inclusions and we have excl inclusion only one that is discount so discount is divided into three discount given before or at the time of Supply is it allowed as reduction yes so discount given before at the time of Supply it will be duly recorded in the invoice it will be allowed as deduction for example 10,000 rupees is the product price and I'm giving 3,000 rupees as a discount now GST will be payable only on 7,000 10,000 minus 3,000 7,000 only GST payable there is no confusion in that whereas if the discount is given after Supply so pre Supply discount always allowed us reduction post Supply discount post Supply discount means what discount given after Supply but they are telling whether conditions are agreed before at the time of Supply or not you check if conditions are agreed before at the time of Supply then in that case supplier can give a credit note to the recipient because of which the liability of the supplier will get reduced and the recipient will reverse the ITC so what is the need of credit note and debit note whenever the invoice value increases basically credit note and debit note is given by supplier to recipient and recipient shows what balance in suppliers books debit balance so when the debit balance increases the name of the document is debit note when the debit balance decreases the name of the note is credit note now sale invoice given so recipient will show a debit balance now a credit note to be given why discount now when I'm giving a discount what I will do for Discount what is the entry that I will pass in my book supplier books discount discount allowed account debit to recipient account means recipient I'm crediting now due to that reason the name of the document will be credit note and when credit note is given by supplier to recipient because of the credit note the liability of the supplier gets reduced and even the recipient should reverse the ITC with respect to that okay and that is this credit note allowed as deduction credit note shall be issued and recipient should reverse the proportionate ITC this is in case of post Supply discount example for post Supply discount is Cash discount suppose if it is a post Supply discount and the terms are not agreed before at the time of Supply example end of season sale discount will it be allowed as deduction no it will not be allowed as deduction which means GST will be payable on entire value before discount I gave you goods worth one lakh and thereafter I gave you a post Supply discount of 40% means you will not pay me one lakh you will pay only 60,000 but this post Supply discount terms are not agreed before the time of Supply consequently it is not deduction which means I need to pay GST on 1 lakh or 60,000 1 lakh even though I collect 60,000 I should pay GST on 1 lakh rupees that is with respect to this then next one whether GST is applicable on additional or penal interest on the overdue loan so basically if you are not repaying a Emi so there will be a penal interest that will be charged now in the TMI whether the interest is taxable or Exempted you check if the interest involved in the Emi is Exempted the penal interest for non-payment of the Emi is also Exempted if the interest involved in Emi is taxable the penal interest for non repayment of the Emi is also taxable for example housing loan you have taken housing loan Emi interest is Exempted because it will come under interest on loans advances deposits as the interest in housing loan is Exempted housing loan Emi is Exempted so for nonp payment of the emi1 penal interest is charged that penal interest is also Exempted whereas credit card Emi so is taxable interest involved in credit card Emi is taxable so when you swipe the credit card and convert into Emi there will be interest component in that Emi that interest will be taxable we don't have any exemption and nonp payment of this credit card Mii they will be charging a penal interest that penal interest will be taxable or Exempted that will be taxable so you need to remember if the interest involved in Emi is Exempted Penal interest also Exempted if the interest involved in EMA is taxable penal interest is also taxable so higher purchase transaction in higher purchase transaction there will be a Emi so higher purchase transaction there will be two parties higher vendor and the higher buyer so higher vendor will give the asset on higher purchase for which the higher purchaser higher buyer or purchaser will pay the emis this interest is on account of delay in receipt of consideration so interest involved in this Emi will be taxable in which Emi higher purchase transaction Emi or higher purchase financing Emi higher purchase transaction Emi so non repayment of this Emi interest penal interest will come that penal interest is also Exempted whereas in higher purchase financing what will happen there will be three parties higher vendor higher purchaser and one financier will be there like baj Finance Etc now in that case the financi year will recover the Emi from you so in that Emi the interest is Exempted because it will come under interest on loans advances deposit for non-payment of this Emi there will be a penal interest that baj finance will charge that interest is Exempted as the main interest is Exempted penal interest is also Exempted now that's where many people instead of calling it as penal interest they will be calling it as bounds charges or finance charges etc for non-payment of Emi whether this charges will be taxable yes be careful in the question whether they are using the word penal interest or finance charges if it is finance charges example know same baj Finance Emi if you are not missing a Emi if you are not paying a Emi instead of leving penal charges they call it as Emi bounce charges Emi bounce charges even though the interest involved in the Emi is Exempted but these Emi bounce charges will be taxable why sir because it is not penal interest only penal interest is Exempted but not any other charges the other charges and all will be taxable you got it so this logic of penal interest is only for penal interest okay not for other charges so that is about this then next point you see treatment of inclusions or exclusions in the given price what we should check is that first as per provision whether an amount is to be included example so this packing charges packing charges included or not yes packing charges is an expenditure incurred by supplier and charged recipient before delivery of goods so definitely the packing charges should be included in the value but in the given price it is already included so what is the treatment ignore already it is included don't add it again second an amount is to be excluded as per provision example so Discount pre- Supply discount should be excluded as per provision but in the given price it is already excluded means the given price itself is after discount whether you need to deduct it no ignore an amount is to be included example Transportation charges Transportation charges incurred by the supplier and charged to recipient so to be included in the given price it is not included so what you should do you need to add then an amount is to be excluded example subsidy from central government or state government to be excluded in the given price it is not excluded means you need to deduct okay so then see next two points will complete with this this two points you see whether no claim bonus given by the insurance company to the insured can be claimed as deduction while Computing the value of Supply so here what is this no claim bonus no claim bonus is like uh whenever insurance company you have taken a general insurance there is no concept of no claim bonus in life insurance okay in life insurance you cannot say I will not claim I will die this year again next year I will be born I will take there is no concept so usually in case of General insurance only there is a concept of no claim bonus and if you are not lodging any claim in the last year this year while paying the premium so you will get a reduction that is what no claim bonus is basically this no claim bonus is like a deduction pre- Supply discount because we will know this no claim bonus at the time of paying the premium itself and in the invoice it will be duly mentioned that this is is the premium minus no claim bonus this is the net premium that you need to pay so it is like a pre- supply discount and it is allowed as a deduction that is this whether no claim bonus given by insurance company to insured can be claimed as deduction while Computing the value of Supply yes provided the same is shown in the invoice it is allowed as deduction because basically it is like a pre- supply discount then another circular you see usually for these low value UPI transactions what is low value UPA transactions up to 2,000 Rupees up to 2,000 Rupees low value UPA transactions or beam UPA transactions or rupe debit cards in that case the people that is acquiring banks will not be charging any processing fee for C to C there is no no processing fee at all C to C consumer to Consumer for example I am transferring amount to you in GP so there is no problem there so there is no processing fees at all but B2B and B to C there is processing fees for example you are purchasing a book or you are making some fees to us so now you will pay using scan scan and you will make payment do you think there is no charges no there is charges there is procing fees but if it is a low value transaction up to 2,000 Rupees there won't be any charges why there won't be any charges because the acquiring Bank like PTM or phone pay or Etc the these people get a incentive from Ministry of electronics and information technology so because this UPA platform is developed by Ministry of Information Technology and electronics so this incentive received from them is like subsidy from central government or state government and that should not be included in the value and not chargeable to GST is it clear read there whether incentive paid by Ministry of electronics and information technology to acquiring Bank under the incentive scheme of rupe debit cards and low value UPA transactions so it is considered in the nature of what subsidy by central government and therefore it will not be included in the value okay so these are the points related to value of supply and then we have rules related information that we will see in the next class okay so this is about today's discussion and uh so tomorrow we will see value of Supply the remaining portion and as I said a composition that we will be completing and even I will take exemptions and RCM so that is the agenda for tomorrow okay thank you so there is one quy in situation two how it will affect the manufacturer turnover supply of spare parts for without consideration it will not be a supply so manufacturer who is sending this paare part free of cost to the dealer one example Vis will it become Supply in the hands of manufacturer or not a supply not a supply because to become Supply 71c should get attracted so that 71c will come or will not come manufacturer purchasing the part and ITC availed on that part manufacturer give the part free to the dealer you understood situation to V is it Supply or not a supply it is Supply disposal of business business asset on which ITC is Avail so it will become Supply and it will be added to his turnover okay whose turnover manufacturer turnover okay then next in the warranty case three is it not simple to treat the transaction as independent pay for 100 components and charge the manufacturer for that one part used for warranty we can do that but in the business practice what will happen manufacturer will be sending the parts to the dealer and they don't know which part will be used for free warranty and which part will be used for sale and uh Logistics the problem is logistics for one part we need to send a CER instead of sending a CER for one part anyhow we are sending at regular intervals parts so manufacturer will be sending it so practically that's how it happens okay and tomorrow class timings will be from 10: to 6: that's regular time so no change in that tomorrow day after tomorrow that's regular time only okay and uh please upload only amendment lecture separately so let me do here because see you have to think about my situation also just because you cannot attend revision lectures and you want amendments only separately so from my point of view also you think of same thing I have to repeat again I'm also human being only n are I'm not a mission and I'm going every time extra mile and doing benefit for the sake of students just because some person is doing you should not take things for granted little bit have a feeling for me also first you attend this revision lectures if time permits I will do otherwise I cannot okay please try to understand okay yes thank you so we were into the discussion related to value of Supply in that we have seen section 15 and now we are looking into summary on cgst rules related to valuation so you can see this when these rules are applicable these rules are applicable mainly when so price is not the sole consideration or supplier and recipient are related so first rule 27 we have what does rule 27 says when price is not the sole consideration means consideration is Park clean money and Park in other form or consideration is in non-monetary form then in that case rule 27 will be applicable then when 28 is applicable in case of transaction between related parties including distinct persons rule 28 is applicable and Rule 29 is applicable in case of principal agent transactions so this information is in page number 73 so first so three rules are there rule 27 28 and 29 27 is when price is not sold consideration 28 related party transactions including transaction between distinct person 29 principal agent transaction first we are seeing rule 27 it says that so when price is not sold consideration you please take the open market value so if open market value not a attainable the first priority is open market value if that is not available then only we need to take money received plus money value of non-monetary consideration so suppose if this is also not available why this is not available money value of non-monetary consideration is not available then we need to take like kind and quality like kind and quality also not available then rule 30 which says that we need to take Cost Plus 10% so when we are taking Cost Plus 10% So Below in note two I have given so what should be taken as a cost the cost will be in case of manufacturer cost of production in case of a Trader it is cost of acquisition in case of service provider it is a cost of providing the service suppose if I'm a manufacturer and I'm giving it to a person where I am getting partly in money and partly non-monetary form now open market value not available so and price money received plus money value of non-monetary consideration I got some non-monetary consideration from the recipient so that also not available here so like Canon quality also not available then what I will do I will take cost of production add 10% or into 11% anyway you can remember and that will be taken as a value for payment of GST and here what is the difference between open market value value and like kind and quality so first we need to check open market value if not available only so then the second money received plus money value of non-monetary consideration if that is also not available then like kind and quality what is the difference so omv and LKQ comparable time if you see for omv it is the same date open market value it is the same date which means that today what is the price at which the transaction has happened so I am making sale today so for that what is the open market value I need to take open market value also today only same date whereas like Canon quality need not be the same date it can be any nearest date also can be taken that is this and comparable value open market value should be like transaction value transaction value means so that is only uh the price involved in the transaction it should not be value under any rules whereas in case of like and quality either it can be transaction value or value as per rules also and who is the supplier comparable supplier in case of open market value same supplier or any other supplier whereas in case of light kind and quality it should be same supplier and comparable Goods in case of open market value it should be same Goods so different goods and all will not be taken whereas in case of like kind and quality so minor differences are acceptable so that's what usually I tell in the class so you take a washing machine for a washing machine so if you take front load washing machine the open market value should be another front Lo washing machion only and in case of like kind and quality also it should be front Lo washing machion only but minor differences minor differences means what so change in the color or change in the capacity little bit there could be a change but more or less it should be same so minor differences are acceptable that is what like kind and quality is and in case when money received plus money value of non-monetary consideration is available we will go back by that but remember when we have open market value as well as this we cannot decide here it's not up to the option of the supplier so first open market value available means we need to go by open market value only so what are the four priorities omv money received plus money value of non- monetary consideration like kind and quality Cost Plus 10% what if cost is also not ascertainable then fifth point is there that is residual value where the value will be determined by the officer so if the above value is not possible then the value will be determined as per rule 31 rule 31 is residual value so we will follow the principles of valuation and we can determine the value or alternatively we can go for provisional assessment we can request the officer to determine the value so that is this residual value rule 31 now in the second case what is the second case related party transaction including transaction between distinct persons so we will be taking so only four points so in the second case second point is missing so what is the second Point here money received plus money value of non-monetary consideration is not there in the case of rule 28 so for remember for second situation second point is missing okay so first open market value if that is not a attainable like kind and quality immediately we will jump to like kind and quality if like kind and quality also not available Cost Plus 10% if that is also not available residual value related to this open market value there is one point what is that if recipient is ible for full ITC whatever is the transaction value in the invoice that itself will be deemed to be the open market value for example I'm making sale to a related person I'm raising a invoice for some 100 rupees that 100 rupees itself will be taken as the value provided my recipient is eligible for full itz when my recipient is eligible for full itz if his outward supplies is fully taxable if his outward suppli is partly taxable partly Exempted he cannot take full ITC if my if his outward Supply my recipient outward Supply is fully Exempted also he cannot take ITC so therefore recipient is eligible for full ITC means what his outward Supply whose outward Supply recipient outward Supply fully taxable then only he is eligible for full ITC then only whatever price that I declare in the invoice that itself will be taken as the open market value what if recipient is not eligible for full ITC then we need to determine the open market value sir in question if it is silent they have not given anything about recipient eligible for full ITC or not eligible for full ITC you take the that recipient is not eligible for full ATZ if recipient is eligible for full ATZ specifically it will be given in the question if the question is silent which means that recipient is not eligible for full ATC and we need to determine the open market value that is this point now alternatively alternatively means instead of following this omv like kind and quality Cost Plus 10% alternatively we have another option also for the supplier and the supplier can choose between either omv LKQ Cost Plus 10% or this option what is this option 90% of the resale price option means I'm selling to you you are my related person I'm selling to you you in turn sell it to unrelated person so that sale to an unrelated person into 90% will be taken as my value for example I'm selling to you for 10,000 rupees and that will not be taken why that will not be taken because that may not be the True Value because you are a related person and you are not eligible for full ITC so this 10,000 irrelevant now you are subsequently selling to an unrelated buyer what is the price at which you are subsequently selling say 20,000 rupees that 20,000 assumption here is 10% is the profit margin that you will make so 20,000 into 90% what is 20,000 into 90% 18,000 will be taken as my value so that should be taken here so this is alternative only which means either I can go for omv LKQ or Cost Plus 10% or I can follow 90% for example open market value is only 15,000 and 90% of resale price is 188,000 so now what I can choose I can choose 15,000 whichever is lower option only that I will be choosing but remember this 90% of the resale price option is available only in case of goods not in case of services rule 27 is common for both goods and services rule 28 also common for both goods and services but this 90% of the resale price option is only applicable in case of goods and one more condition for this 90% of resale price is that recipient should not process that for example I'm selling to you you are my related person or you my distinct person you should be selling it as such you should not do any processing if you do any processing this 90% resale price option will not be applicable so recipient should not process those goods but should have been sold it as such then there is one more provisor that has been added this is an amendment so which is applicable for May 24 exam onwards what is that it is about in case of corporate guarantee which is given by so one company to the another company for the purpose of Boral so so here usually what happens whenever we make some borrows unsecured loans and all so Banks expect someone to give guarantee secured loan means there is a proper security available but when it is unsecured loan there is no security so the bank will expect so us to get some guarantee this guarantee can be given by any person so who is having some good Financial standing and this guarantee can be given by individuals also or this guarantee can be given by corporates also okay now there is a company which is borrowing some money so now when it is borrowing some money another company usually who will give guarantee holding company will give guarantee to the subsidiary company suppose if the subsidiary company is so sound then the subsidiary company sometimes will give guarantee to the holding company but that is minor case only but usually holding companies will give the guarantee when the loans are being taken by the subsidiary company now holding company and subsidary Company are treated as related parties usually in case of this guarantee there is a concept called as guarantee commission so if I am gu guaranteeing a loan taken by you so I expect a commission from you because I'm giving you the guarantee for the loan that you are taking so therefore a commission will be expected so here holding company when it gives the guarantee to the subsidiary company so the subsidiary company will pay guarantee commission to the holding company so now in that case it's a related party transaction sometimes the guarantee commission may not be paid also consideration may be there or consideration may not be there but here the logic is it is coming under 71c why it will come under 71c holding company and subsid Company are treated as related parties any transaction between related parties is treated as Supply under Section 71c so in this case what should be taken as the value the value should be taken as the open market value logically correct or not so because it's a related party transaction rule 28 should be applied but in case of corporate guarantee between related persons they have added one provision what does it says supplier of services providing corporate guarantee to any banking company or financial institution on behalf of the recipient that is related know party value of Supply will be 1% of the guaranteed amount or the actual consideration whichever is higher according to me it is one stupid provision because holding company is giving guarantee to the subsidiary company for 100 crores now in the case of this 100 crores guarantee the commission guarantee commission which is paid by the subsidiary company to the holding company could be somewhere like 10 lakhs 10 lakhs could be the actual guarantee Commission Now when 10 lakhs is the actual guarantee commission but GST will be payable not on 10 lakhs okay see this there is a holding company and this holding company is giving a guarantee to the subsidiary company subsidiary company for the loans being taken okay guarantee guarantee with respect to loans guarantee with respect to loans for which subsidiary company will definitely pay a guarantee commission so what is that guarantee commission let's take the guarantee commission as 10 lakhs guarantee commission that guarantee commission let it be 10 lakhs 10 lakhs is taken as guarantee commission and what is the loan amount the loan amount is 100 crores the loan amount is 100 crores now is it Supply or not a supply definitely it is Supply under Section 71c why it is Supply actually 71a itself will come because there is a consideration as there is a consideration it will come under 71a it's a supply but we need to determine the value as per rule 28 because they both are related parties now so due to that reason value under rule 28 here this holding company and subsidary Company are treated as related parties so value under rule 20 is simple 1% of guaranteed amount what is a guaranteed amount 100 crores 1% of 100 crores are actual consideration actual consideration is 10 lakhs whichever is higher or whichever is lower whichever is higher means even though the actual consideration is only 10 lakhs so therefore the value will be taken as one CR correct 100 crores into 1% so that will be taken as one CR will be taken as a value and on which GST is payable now what if there is no guarantee commission what if what if there is no guarantee commission there is no guarantee commission even in that case the answer will be same so in case when the guarantee commission is not there also still the value will be taken as value under rule 28 will be 1% of 100 crores or actual consideration there is no actual consideration so whichever is higher is what definitely one CR in one CR one CR will be taken as the value of Supply which means just because a guarantee is being given unnecessarily the holding compan is required to pay GST on this one CR and whatever GST that they pay and definitely they can recover it from the subsidary company and the subsidiary company can take itz with respect to this but the twist here is what if the subsidary company is engaged in Exempted supplies the entire GST is lost for them now so that is the stupidity in this provision and but we need to do but remember this provision is applicable only in case of corporate guarantee not in case of personal guarantee personal guarantee means what so wherein a director will be giving guarantee with respect to loans taken by the company okay so director giving guarantee is called as personal guarantee so that personal guarantee point we are not discussing right now we are discussing only about the corporate guarantee okay now so there are multiple combinations in corporate guarant that could be possible so let's try to understand the corporate guarantee situations so what are the various situations that will be possible in case of corporate guarantee corporate guarantee so given by you know unrelated company to company between unrelated companies or between related companies possible so even unrelated company also can give corporate guarantee yes given by given by one related company to another related company one related company to another related company so when the corporate guarantee is given by one related company to another related company so is it Supply or not a supply yes it will be Supply it will be Supply under Section now we need to see whether it is for consideration or without consideration so for consideration for a consideration so then it will become Supply under Section 71a and suppose if it is Corporate guarantee given by one related company one related company to another related company to another related company without consideration another related company without any consideration without any consideration so in this case it will become Supply under Section 71 C Supply under Section 71 C in both these cases what should be taken as the value in both these cases the value will be common so value and under rule 28 value under rule 28 is what 1% of guaranteed amount guaranteed amount or actual consideration whichever is higher actual consideration involved whichever is higher suppose if it is by related company to another related company without any consideration value under rule 28 what will be taken as value under 28 only 1 Point 1% of guaranteed amount 1% of guaranteed amount suppose if unrelated company is giving the guarantee then what will happen can unrelated company give guarantee yes they are basically associate companies so not holding subsidiary company holding and subsidary only will be treated as related under GST but Associated companies are not treated as related so for example one company has invested 26% in the other company as per income tax they are treated as Associated companies but under GST they are not treated as related persons so due to that reason but sir there is one point related to 25% in related parties what is that 25% there are two companies having a common shareholder and that common shareholder has invested 25% or more then these two companies will be treated as related but here I'm not talking about that I'm talking about one company investing 25% in the other company so they are associated or 26% in the other company they are associated but they are unrelated for the purpose of GST now what will happen in that case so third Point corporate guarantee given by unrelated company unrelated company for a consideration for a consideration is it Supply or not a supply definitely it will become Supply under Section 71a because there is a consideration that is involved then what will be taken as a value so definitely rule 28 will not be applicable why rule 28 will not be applicable because they are not related as they are not related we need to take the value under section 15 what is the value under section 15 that is transaction value which is nothing but the actual consideration that will be taken in this case and then another point so number four what if it is given by what if it is given by unrelated company unrelated company without consideration without consideration is it Supply or not a supply it is not a supply why it is not a supply because it is unrelated and there is no consideration so in order to become Supply under 71c four points will come D rip drip D for disposal of business asset on which ITC is availed that is not applicable here related party transaction including transaction between distinct persons that is also not applicable here and then we have input of service from a related person not applicable principal agent transaction that is also not applicable consequently it is not a supply when it is not a supply we don't have to determine the value for payment of GST so this is in case of corporate guarantee now one more point is also possible that is guarantee given by government so what what if the guarantee is given by government to a company whether it may be with consideration or without consideration then what is the impact of that so this point also we will write that is guarantee given by guarantee given by government guarantee given by government to to whom they will be giving public sector undertakings they will not be giving it to normal companies they will be giving it to psus psus what about this is it Supply or not a supply and it may be for a consideration definitely it is for a consideration called as guarantee commission for a consideration is it Supply or not a supply definitely it will become Supply under Section 71a but should we determine the value here no why because it is called as Exempted Supply why it is Exempted Supply we have seen some activities of government to business entities in that list of 14 activities there are 14 specific exemptions with respect to Services provided by government to business entities in that 14 exemptions one of the exemption is guarantee commission earned by the government so government will give the guarantee with respect to loans taken by psus for which the psus will pay a guarantee commission that guarantee commission which is received by the government will be Exempted so we don't have to bother about any valuation here because the activity itself is an Exempted Supply then what if it is a personal guarantee what if it is a personal guarantee so who will be giving the personal guarantee and what is the treatment related to that so personal guarantee can be given by director or a ex director so director giving guarantee to the company so that we are taking so continuing to this so the sixth situation is director giving guarantee director giving guarantee to company Direct giving guarantee to company is it for consideration or without consideration definitely it should be without consideration why it should be without consideration because there is a RBI circular which says that whenever a director gives the guarantee to the company with respect to loans taken by the company so the company should not pay any consideration as per RBI circular so due to that reason director giving guarantee to company so will be without consideration without consider consideration why it should be without consideration so as per RBI circular as per RBI circular consideration should not be paid consideration should not be paid so due to that reason consideration will not be there will this become Supply or not a supply it will become Supply under Section 71 C why sir it will become Supply under 71c because the circular says that director and Company are deemed to be related they are Tre as related under which point they are Trad as related such persons or officers or directors of one another's business under that point so director of a company and the company will be treated as related so director and Company director and Company are treated as related are treated as related and and moreover it is without consideration so it will become Supply under 71c and we need to determine as they are related we need to determine the value under rule 28 what will be taken as value under rule 28 whether this 1% of the guaranteed amount or actual consideration whichever is higher is applicable in this case not applicable because that provisor is applicable only in case of corporate guarantee but what we are discussing is not a corporate guarantee it is a personal guarantee which is given so but value will be determined as per rule 28 what will will be the value as per rule 28 open market value what is that open market value nil as per cbic circular why as per cbac circular the value will be taken as nil because RBA circular says that there should not be any consideration involved means consideration should not be paid by the company to the director means open market value generally there won't be any consideration so how to determine the value it cannot be determine due to that reason here the open market value should be taken as nil this is as per RBI circular so and cbic circular these two are connected that's what I have already given here in the note in case of personal guarantee by director to company without consideration value shall be considered as nil as per cbac circular why why like that they have given because as per RBI circular consideration should not be paid in case of personal guarantee by director to company so there should not be any consideration for that reason sir but can this circular be overridden yes so we can override the circular companies can override the circular but they will not do this so because you know we are not talking about the provisions when the companies breach so they will if RBA circular is given they will follow that but what if they are not following RBA circular and all is not useful for exam because those kind of questions in exam they will not be asking okay so this point only will be tested in exam don't worry about that then next what if x director giving guarantee to company here whether RBI circular will be applicable so no because RBA circular is applicable only in case of director giving guarantee to the company not ex director giving guarantee to the company means when X director is giving guarantee to the company will there be consideration involved or not may or may not be so therefore seventh case X Director X director giving guarantee to company guarantee to company for a consideration for a consideration is it Supply or not a supply definitely it will become Supply under Section 71a but rule 28 will not be applicable why rule 28 will not be applicable because they are not related parties X director and Company are not read as related so therefore we need to determine the value under section 15 what will be taken as value under section 15 that is transaction value that will be actual consideration whatever is involved will be taken okay now last case what if there is a x director and that X director giving guarantee to company giving guarantee to company without consideration possible yes without consideration then what will be the activity is it Supply or not a supply as it is without consideration we need to refer to 71c and as per 71c they are not related parties and even principal agent also will not be applicable consequently it is not a supply when it is not a supply we don't have to bother about the valuation so therefore these are the eight different combinations which are possible on this amendment now any question can be tested in exam so you should be clear with respect to the treatment so it is again a very very important area if you are not getting question on this return the paper and come that much important it is trust me it will come many times my intuition didn't go wrong so even every attempt I was telling this so This attempt definitely this area will be tested so these eight combinations any combination can be tested at least worst come scenario as a McQ they will be testing it okay so that is about this area and this is an amendment we have seen so we have seen so far rule 27 and Rule 28 then next principal agent transactions and here in this regard one more point also so that sir what if director is giving guarante to company so will it come under RCM I'm telling the value itself is nil there is no GST at all when there is no GST at all why RCM fcm will be applicable so when RCM will be applicable first there should be a value and there should be a GST then only RCM will be applicable moreover here RCM will not be applicable why because there is another amendment which is there in RCM which says that one circular has been given so whether director who is providing services to the company in his personal capacity generally director service to company will come under RCM but what if the director is providing service to the company in his personal capacity for example director is having a immobile property commercial property which he is giving on rent so now in that case will it come under RCM or fcm only fcm only it will not come under RCM generally director Serv to company comes under RCM if it is director service if the director is acting in a personal capacity in his personal capacity that will never come under RCM it will be fcm only and that discussion is not at all applicable here because here first of all the value will be taken as nil and there is no GST liability rule 29 talks about principal agent transactions in case of principal agent transaction rule 29 is applicable only in case of goods not in case of services rule 27 is applicable for both goods and services 28 is applicable for both goods and services but this 29 is applicable only in case of goods what should be taken in the third Point third point is missing so in the second situation second Point gone in the third situation third point is gone so what should be taken omv if not available Cost Plus 10% but for this omv they are asking us to compare with 90% of the resale price so we need to take open market value or 90% of the resale price at the option of the supplier otherwise then Cost Plus 10% will be taken and see this notes suppose if any of these is not possible so rule 31 will be applicable and Rule 30 cost means what it we have seen so in such case that is when open market value is deemed to be transaction value when the recipient is eligible for full ITC any value declared in the invoice will be deemed to be the open market value means one rupe invoice also can be raised yes one rupe invoice also can be raised in that case invoice can be generated for any value even one rupee is considered as value then in case of services rule 30 will not be applicable why because rule 30 talks about you know like Cost Plus 10% so cost of providing the services is difficult to assertain so therefore in case of services we can skip rule 30 and directly go to rule 31 that is residual value and this is the difference between omv and LKQ so here we have completed rule 27 28 29 30 and 31 so these are the five rules that are connected in this now we are looking into rule 31a so rule 31a is applicable in case of specified actionable claims so there is an amendment in this aspect here that previously all actionable claims other than Lottery betting and gambling was excluded from Supply but now they modified this to all actionable claims other than specified actionable claims are excluded from supplying so what are the specified actionable claims so you remember this keyword HC blog so what are the specified actionable claims the specified actionable claims the specified actionable claims is H C blog what is that H H refers to horse racing horse racing and C refers to casinos and B refers to betting and L refers to Lottery and War refers to online money gaming not online gaming online money gaming and G refers to gambling sir why online gaming will not come under specified actionable claims because online gaming is treated as IDR Services due to that reason it will not be coming under specified actionable claims so that se as service and these specified actionable claims are treated as Goods all these specific actionable clams are treated as Goods what is the difference between online gaming and online money gaming online money gaming means so generally we deposit some money and with the objective of winning the money we play the game that is known as online money gaming online gaming means normally we spend money to play the game but there the objective is not winning the money so that is not the objective just playing the game but we spend the money to play the game so that is known as online gaming like for example so this uh sniper 3D or pubg or free fire so a lot of Call of Duty these are all some games which people will play and they will spend money to play the games even GTA also GTA y c Etc so these are like where we spend money to play the game that is online gaming whereas online money gaming is like betting platforms like Ramy Circle online Ramy or dream 11 so these are all some websites wherein we spend money to play lot of games are there betting games like Ludo also there Ludo betting game is there you can put 100 rupees you can play Ludo and if you when you will be getting 400 rupees so that is called as online money gaming betting is involved so that will come under specified actionable claims and these are all treated as goods and what is the rate of GST for this the rate of GST will be 28% in all these cases now what should be taken as the value in this case in case of lottery so there are total six specified actionable claims in that for lottery we are discussing the value first what should be taken as the value so Lottery tickets always assume to be inclusive of GST always assume to be inclusive of GST and we need to take face value of the lottery ticket or the price notified by the organizing State whichever is higher into 100 by 128 will be value GST will be 28 by 128 always inclusive only and we will never calculate in case of Lottery on exclusive basis and face value of the ticket means that price that is printed on the ticket price notified by the organizing State means so sometimes the price may be lesser than the face value of the ticket so if the demand is less so they will try to reduce the price of the ticket if the demand is high they will increase the price of the ticket who the organizing state so therefore whichever is higher will be taken into 28 by 128 will be GST into 100 by 128 will be taken as the value that is with respect to supply of Lottery and always inclusive basis only okay and here rate of GST so this uh 20 8% is the rate of GST this 12% is not applicable GST rate is 28% and always assumed to be inclusive of GST always GST computed on inclusive basis computed on inclusive basis then in case of specified actionable claim related to betting gambling and racing three for three cases so horse racing betting and gambling for these three cases they're telling 100% of the face value of the bet or the amount paid to the totalizer for example there is a horse racing 10 horses are there and people will randomly Place BS on different different horses but only one horse will win now all the horses people have placed the bet now that is called as a total B value not the people people who plays bet on the winning horse all the horses so whether you are winning or losing government will always be winning so therefore the total bit value will be taken as a value for payment of GST you understood means even on losing horse also people will place a bit so that amount also GST will be payable so the total B value or the total amount collected in the B and here whether it will be compute on inclusive basis or exclusive basis that depends this they are not telling it will be always on inclusive basis so you go by the question if the question says inclusive you take inclusive the question says exclusive you take exclusive but here we don't have any mandatory provision like it should be computed on inclusive basis so in case of lottery ticket what should be taken as a value come on and this valuation is given in rule 31 a b c Rule 31a Rule 31b and Rule 31 C previously rule 31a was only there now they have added Rule 31b and Rule 31 C so first in case of Lottery what should be taken as a value face value of the ticket or Price notified by the organizing State whichever is higher and it should be always computed on a inclusive basis number two in case of betting gambling and horse racing these three cases what should be taken as a value so 100% of the face value like 100% of the amount collected so it is like so total amount collected by the totalizer or organizer that should be taken as a value not the commission total amount collected then next we have Rule 31b and 31 C 31b is in case of online money gaming and 31 C is in case of casinos okay so in case of online money gaming sir what about online gaming for online gaming also we can apply rule 31 B so but online gaming will not come under specified actionable claims online gaming will come under which category oid services but online money gaming will come under specified actionable claims but when it comes to valuation the valuation will be common for both online gaming as well as online money gaming and 31 C is in case of supply of actionable claims in casinos first we will see online gaming and online money gaming what should be taken as a value the value will be amount paid or payable or deposited with the supplier by way of money or money's worth including virtual digital asset by or on behalf of the player so usually what happens is that when we play the online money gaming so we will deposit some money to play the game so either it can be money or or it can be virtual digital assets like cryptocurrency using cryptocurrency also we can place the bit so this money deposit will be taken as the value for example so you have downloaded one you know Ramy app or some betting app and you started playing first you need to deposit money say you deposit at 10,000 rupees and this 10,000 rupees will be chargeable to GST 10,000 rupees should be taken as the value now when you play the game say for example 6,000 rupees you have spent for playing the game and you lost 6,000 rupees now how much is the money left 4,000 rupees now you realize usually people will not get this habit so what they will do is that let's spend this also so that the 6,000 we can win because it will become an addiction only a great heart will have the guts to withdraw the money okay so therefore you realize 6,000 rupees you spend at least 4,000 rupes you want to sell so therefore 4,000 rupees you have withdrawn which means how much you placed as bet is only 6,000 rupes but the GST is payable on 10,000 rupees if you withdraw 4,000 you will not get any GST refund which means GST is payable on the amount deposited if any amount is withdrawn out of that we will not get any reduction in the value is it clear or not then suppose 10,000 rupees you have deposited you paid GST on 10,000 rupees in that 6,000 rupees you have spent for playing the BS and you won some BS and you got more money say for example you deposited 15,000 now in your account 15,000 is there you deposited 10 in your account 15,000 is there that 5,000 Rupees is what gain on that gain are you required to pay any GST no either if you withdraw no need to pay GST even using that 5,000 again you will play the game then also no need to pay any GST on the winning amount okay only on the amount deposited initially we need to pay now see the twist you are withdrawing that 5,000 rupees again you are putting that 5,000 Rupees to play the game now it will be considered as a new deposit again on the GST will be payable so without withdrawing if you use it for playing the game on that there won't be any GST the moment it is withdrawn and again deposited it will account for new deposit and again new GST will be attracted so see this value of Supply will be remember amount deposited value of Supply is what amount deposited that amount can be in the form of money or it can be in the form of money's worth or it can be in the form of virtual digital asset any way it can be so sometimes what will happen some betting platforms and all they will not allow you to deposit the money so the moment you want to play the game so they will be giving you some mobile numbers to that mobile numbers you need to do gpay the moment you make gpay to that mobile number so in your account they will be giving some tokens or coins so this tokens or coins or points Etc so is money's worth so you did not deposit money but you got some tokens or points how it is that it is money's worth sometimes without attracting any GST people will try to play the games or betting using the cryptocurrency like Bitcoins or ethereum coins or Dodge coins or Raven coins Etc even those coins also will be considered as money's worth only and on that GST will be payable that is this money deposited or amount deposited now see this point any amount returned or refunded by the supplier to the player including including amount paid or deposited with the supplier which is not used by the player shall not be deducted from the value of Supply so 10,000 rupees we deposited that's the example I gave you so 10,000 deposited for this first point for this first point what is the example I gave you 10,000 deposited 10,000 deposited 6,000 used for playing and 4,000 withdrawn 4,000 withdrawn now GST payable on GST payable on 6,000 or 10,000 10,000 so this withdrawn 4,000 rupees withdrawn will not be reduced so whatever money that is withdrawn which is not used by the player shall not be deductable from the value of supply okay and next second any winning amount which is used by the player without withdrawing shall not be considered as the amount paid to or deposited with the supplier what is that say this 10,000 deposited and used for playing used for playing and one 15,000 1 15,000 okay which in turn which Inn is used for playing is used for playing so now GST payable on GST payable on 10,000 rupees any winning amount which is used by the player without withdrawing shall not be considered as the amount paid to or deposited with the supplier suppose in this case 10,000 deposited 10,000 deposited and used for playing used for playing and W 15,000 5,000 withdrawn withdrawn and again deposited again deposited for playing now what will be taken as the value so GST will be payable on 15,000 GST payable on 15,000 so simply remember whatever is the money that you are depositing on the deposit there will be GST okay and uh one friend has given super nice point so GST on deposits and income tax on withdrawals correct of course so when you deposit you need to pay GST when you withdraw you need to pay income tax because it comes under gains now betting Etc correct then so but it's not on the withdrawal literally it is on whatever gain whatever gain that you are getting on that you need to pay so this is about online money gaming whereas Casino also same point no change for casinos also same story but only difference is what in casinos you will not directly deposit the money you will spend money to buy the coins chips in Casino there will be like something called as chips like green color red color yellow color chips and all will be there so to buy these chips we will be spending money so that money spent for purchasing of chips will be treated as the value and suppose we win the money we win the chips and we redeem it at the time whether we get reduction in the value no so same story everything same only difference is what in online money gaming we deposit and here we spend money to buy the chips say this value of Supply will be amount paid or payable for purchase of token chips or coins or tickets for using the casino buy or on behalf of the player and these points are common in this case so again this is another area which you can definitely expect a question at least a McQ on this so McQ at least a two marks McQ they will be testing on the specified actionable claim what should be taken as the value then rule 32 we are moving on so this rule 32 is applicable in case of five specified transactions rule 32 is a optional valuation either we can follow the transaction value or we can follow the value as per rule 32 what are the five cases where rule 32 is applicable number one foreign exchange transactions including money changing number two air travel agent number three life insurance business and number four secondhand dealer in goods and number five vouchers coupons Etc so these five cases Only Rule 32 will be applicable again remember rule 32 is a optional valuation which means that either we can follow transaction value or we can follow the value as per rule 32 so value of Supply in special situations either transaction value or value under this rule at the option of supplier for each Supply with respect to each invoice we can decide the first one is foreign exchange transactions including money changing means basically here we will exchange one currency to another currency and in that again we have two options rule 32 itself is a option in that rule 32 again we have two options option one rule 322a what does it says check whether one of the currency invol exchange involves Indian rupe and RBA reference rate is available for that currency on that day then either bid rate or ask rate and the RB reference rate into units of currency will be taken as a value say for example there is a quot which is available rupee per dollar that is 82 and 85 so this is the quote and in this case what happens is that we are exchanging exchanging $10,000 for Indian rupees now RBA reference rate and RBA reference rate and RBA reference rate for the day for that day is 83.5 per dollar rupees 83.5 per dollar what will be taken as the value value under rule 32 sub rule 2 a a refers to First Option a refers to first option we need to take so either bid rate or ask rate depends which rate should be taken here bid rate should be taken because we are exchanging 10 ,000 when we are exchanging $10,000 bank is buying $10,000 so therefore the relevant rate will be bid rate 82 and what is the RBA reference rate 83.5 so the difference will be 1.5 on that 1.5 into units of currency how many units of currency 10,000 so that will be equals to 1.5 into 10,000 15,000 rupees will be taken as the value so when one of the currency exchange involves Indian rupe and RBA reference rate is available for that day we need to take either bid or R depending upon the transaction and the RB reference rate the difference should be taken into units of currency this will be taken as the value under rule 322a suppose in the same case what will be taken as value under rule 322b another option rule 322b is like a slab rate model in this slab rate model what will happen is that if the gross amount does not exceed one lakh then 1% of the gross amount or 250 whichever is higher will be taken if the gross amount exceed 1 lakh but does not exceed 10 lakhs 1,000 rupees plus .5% of the gross amount exceeding 1 lakh if the gross amount exceed 10 lakhs 5,500 plus .1% of the gross amount exceeding 10 lakhs subject to maximum 60,000 you need to remember this percentages 1% 5% and. 1% say for example if the gross amount exchange is 60,000 Rupees 60,000 rupees into 1% that is 600 rupees or 250 because 60,000 will come in the first lab so 60,000 into 1% 600 600 or 250 whichever is higher will be 600 suppose if the gross amount exchange is 20,000 still it is in the first lap 20,000 into 1% 200 200 or 250 whichever is higher will be taken as 250 suppose if the gross amount exchange is exactly 1 lakh 1 lakh into 1% will be 1,000 1,000 or 250 whichever is higher will be th000 so when you are moving into the second slab the minimum amount will be 1,000 say for example 3 lakhs 3 lakhs means you are coming into the second slab for the first first 1 lakh it will be th000 and remaining 2 lakhs 2 lakhs into .5% will be 1,000 so 1,000 + 1,000 2,000 rupes will be taken as a value what if it is 9 lakhs so again second slab first 1 lakh th000 remaining 8 lakhs 8 lakhs into .5% so that will be 4,000 4,000 + 1,000 will be 5,000 what if it is exactly 10 lakhs still second slab first one lakh it will be 1,000 remaining 9 lakhs 9 lakhs into .5% will be 4,500 4,500 Plus ,000 will be 5,500 so the moment you're moving into the third slab it will be 5,500 rupees plus so there will be extra amount into .1% say for example if it is 80 lakhs 80 lakhs means you are in the third slab first 10 lakhs it will be 5,500 remaining 70 lakhs 70 lakhs into .1% so 70 lakhs into .1% will be 7,000 7,000 + 5,500 so that will be uh 7,000 + 5,500 is what 12,000 500 will be taken as the value now what if it is like 800 lakhs 800 lakhs first 10 lakhs will be 5,500 remaining 790 lakhs into1 79,000 but the maximum amount is only 60,000 that will be taken as the value now applying this here in this case what is the gross amount suppose if you are determining the value under rule 32 sub rule 2B what will be taken as a value take take the gross amount Exchange in Indian rupees what is the gross amount Exchange in Indian rupees $110,000 into 82 rupees so gross amount in Indian rupees gross amount is $10,000 into 82 rupees per dollar that will be how much 8 lakh 8 lakh 20,000 8 lakh 20,000 means that comes under which slab second slab for the second slab what should be taken first th000 minimum 1,000 1,000 rupees plus what is the extra amount 7 lakh 20,000 720,000 into .5% so please do this 720 into .5% plus th000 4,600 will be taken as a value so this is how we need to arrive at the answer then second what if RBA reference rate is not available if in above case if in above case RBA reference rate RBA reference rate not available so then what we will do simple we will be taking gross amount exchanged in Indian rupees into 1% say this one of the currency exchange involves Indian rupe and RB reference rate not available for that currency on that day so gross amount in Indian rupees into 1% so this is in case of rule 322a so the value under rule 322a value under rule 322a is gross amount into 1% what is the gross amount 8 lakh 20,000 8 lakh 20,000 into 1% that will be 88,200 will be taken as value whereas what will be taken as value under rule 32 2B no change so whether RBI reference available or not available this will be always same 1,000 rupees plus 720,000 into 5% that will be coming to 4,600 then next we will be taking number three what if both the currencies exchange invols in foreign currency so when both the currencies exchange involves foreign currency convert both the currencies into Indian rupees using RB reference rate into 1% whichever is lower will be taken say for example we have dollar per pound so is 1.5 and 1.8 we are exchanging we are exchanging so £6,000 £6,000 for dollars okay RBI reference rate RBA reference rate for rupee per doar is 85 and rupee per pound is 140 then what will be taken as the value in this case as per 322a value under rule 32 value under rule 322a will be gross amount exchanged in Indian rupees using RB reference rate into 1% so lower of lower of what so take the sold currency that is £6,000 £6,000 into RBA reference rate that is 140 per pound into 1% so 6,000 into 140 into 1% how much that will come to 8,000 8,400 now 6,000 1.5 rupees means how many dollars so dollars wise if you see £6,000 if you take 1.5 you will be getting 7,000 $500 now that $7,500 into exchange rate 85 rupees per dollar into 1% so how much that comes to 9,000 6,000 into 1.5 9,000 9,000 into 85 into 1% 7,650 whichever is lower therefore 7,650 will be taken as the value so therefore the purchased currency as well as sold currency convert both the currencies into Rupees using RB reference rate into 1% whichever is lower will be taken as the value in this case and in this case whether 322b is possible no value under rule 322b not possible why 322b not possible because both the currencies are exchanged which are foreign currencies so we cannot determine the value in case of rule 322b so this is about 322a and 322b now in these two options which option I should choose I can choose any option but that option chosen in the beginning of the financial year will be applicable throughout the financial year but sir you said invoice wise we can choose yes invo WIS we can choose transaction value and value under rule 32 but the moment you go into rule 32 in rule to we have two options that we need to decide in the beginning of the financial year that will be applicable throughout the financial year option to be decided in the beginning of the financial year which shall be applicable throughout the financial year and what will be taken as a transaction value currency conversion fee or currency markup fee so whatever is the actual consideration that the bank or Forex dealer is collecting from us for doing the currency exchange so that markup fee or currency conversion fee will be taken as a transaction value we can go by transaction value also wherever rule 32 is not possible we can determine the transaction production value this is about 32 sub rule 2 then 32 sub ruu 3 is in case of air travel agent services in case of air travel agent services so air travel agent is required to pay GST on 5% of the base fair in case of domestic bookings and 10% of Base fair in case of international bookings base Fair will be the basic amount that will be there in the ticket in air ticket there are three components base Fair fuel surcharge other charges and tax in that the base fair is the first component on that first component into 5% in case of domestic bookings 10% in case of international bookings then life insurance business in life insurance business so if it is a RIS discover policy RIS discover policy means term insurance wherein we will pay the premium if nothing happens we will not get anything backwards so that is called as term insurance in case of term insurance entire premium will be income to the insurance company so therefore on entire premium GST will be payable by the insurance company whereas in case of reinvestment policy in reinvestment policy whatever premium that we pay will not go into the hands of the insurance company in that they will deposit a percentage in the stock market or some debt instruments Etc so the remaining amount will be taken as value on which they will pay GST so premium collected minus amount allocated for investment but condition important condition is that the amount allocated for investment should be communicated to the policy holder at the time of collection of the premium so where the amount allocated for for investment is intimated to the policy holder gross premium minus amount allocated for investment then single premium anity policy there is only one premium that is involved rather than paying every year a single premium will be paid so in that case 10% of that single premium will be taken as the value so Rover policy entire premium collected single premium anity policy 10% of the single premium reinvestment policy amount collected premium collected minus amount allocated for investment if amount allocated for investment is not communicated to policy holders then what it will be it will be like a normal life insurance policies in case of normal life insurance policies so what should be taken as a value 25% of premium in first year and 12.5% of Premium of subsequent years so every year insurance company will have first year premium and subsequent year premium so this year whatever new policies that they have given premium collector is first year premium those who already took the policies in the previous years they will pay premium this year that is known as subsequent year premium so first year premium into 25% subsequent year premium into 12.5% that will be taken as a value in this case then next one rule 32 subr 5 buying and selling of secondhand Goods in case there is a person a dealer who is engaged in purchase of secondhand goods and sale of secondhand Goods so then only this will be applicable my purchase also used Goods my sale also used Goods then I need to take the margin scheme what is margin scheme sale price minus purchase price will be taken as the margin scheme and on the difference only GST will be payable for example I'm purchasing a used car for 150 I'm selling this used car for 250 now what is the margin here 1 lakh so I need to pay GST only on 1 lakh sale price 2 l50 purchase price 1 l50 so 2 l50 minus 1 l50 on one lakh only GST will be payable so value equals to selling price minus purchase price that is margin scheme what if it is negative for example I'm purchasing a car for 2 lh50 and I selling it for 2 lakhs so 50,000 Rupees is loss for me whether I need to pay any GST no as the margin is negative so you don't have to pay any GST value will not be there itz should not be availed on the purchase so I should not Avail any itz if the itz is Avail margin scheme is not possible means at the time of purchase of the car I should not have taken any itz so if itz AV anyhow I will pay GST effectively on margin only so due to that reason this margin scheme is not applicable even though I gave you example of car but this is applicable in case of all secondhand goods and then suppose in case where we do the reposition and sale we are a finance company we would have given Finance with respect to an asset Motor Vehicles or assets Etc now the person has not repaid emis when he is not paying the emis as a financi year we will do reposition of that asset and this repossessed asset we will sell at the time of repossession whether this asset is a new asset or a used asset used asset and we are selling that used asset to recover our finance amount so which means we will also come under the category of second and dealers so in this case what should be taken as the sale price the price at which that asset repossessed asset is sold but what will be taken as a purchase price we are not buying it we took it as a reposition then what should be taken as a value so we need to give a depreciation how to calculate the depreciation 5% for every quarter or part thereof from the date it is purchased the asset is purchased till the time it is sold so repossessed and sold so we need to count that so purchase price is original purchase price to the defaulting borrower who is unregistered defaulting borrower minus 5% for every quarter or part thereof from the date of purchase till the date of disposal of that reprocessed asset so that should be taken as a value in this case then in case of coupons or vouchers so the value will be money value of suppli is redeemable against such voucher or coupon so for example we have got a voucher that voucher if you redeem you will be getting goods worth rupees th000 then what will be taken as a value of this voucher 1,000 rupees will be taken as the value of this voucher money value of supplies redeemable against such voucher that will be taken then there are some notified surveys between distinct persons without consideration the value should be taken as nil but the surveys are yet to be notified for this purpose so this rule is not applicable at present so you don't have to remember this then next point is related to TCS generally as per 152a all taxes duties and say by whatever name call other than GST should be included in the value then whether the TCS which is collected by the supplier from the recipient under Income Tax Act should also be included in the value no because TCS is not a tax on income TCS is a tax on expenditure so it is a interim living not having the character of tax for example I'm a car dealer I'm I'm selling a car to you and apart from the price of the car I'm also collecting TCS at 1% from you plus GST also I'm collecting while Computing GST whether this 1% TCS should be included in the value of the car no because this is basically your expenditure on your expenditure I'm collecting this 1% which is a interim Levy and I will deposit it so that you have to show the source of income to the income tax department and you need to pay tax suppose if you don't have any income tax that 1% you will fully get it as a refund so due to that reason it is not having the character of tax it is basical interim Levy so cbic circular says that this TCS collected by the supplier from the re under Income Tax Act should not be included in the value that is this any taxes duties and S shall be included in the value but TCS is not includible in value as it is an interim Levy but not having character of tax due to that reason then next usually in case of banking companies financial institutions they will be appointing business facilitators and business correspondents these people are basically like agents so whichever work the bank has to do that work will be done by this business facility ators and correspondents so they will be collecting some service charges so this service charges they collect and remit to the bank so on the service charges they are not required to pay GST the GST is payable by the bank then what will be included in the value of their supply it is only the commission so they get a commission that will only be their value of Supply see this there is a banking company and there is a business correspondent or business facilitator and there is a customer now business correspondent or facilitator will provide the service on behalf of bank to the customer and they will be collecting service charges from the customer and they will remit that service charges to the banking company for doing this activity so they will get a commission now what will be taken as value of Supply in the hands of BC and bf it is commission what will be taken as value of Supply in the hands of the Banking Company it is the service charges then next we have rule 34 which talks about relevant date for determination of exchange rate in case when the transaction is in foreign currency I mean sale of goods or purchase of goods or supply of services or any import of services we need to pay GST on that now the invoice is in foreign currency now for me I have to pay GST in Indian rupees so I have to convert the invoice which is in foreign currency into Indian rupes for that what exchange rate should be taken in case of goods I need to take cbic notified exchange rate in case of services Gap rate usually Gap rate is average of the buying rate and the selling rate so that will be taken so in case of goods cbic rate in case of services Gap rate prevailing on which date prevailing on the time of supply for this transaction for every transaction there will be a time of Supply you see the time of supply for the transaction on that date whatever is the cbac rate or Gap rate you take and multiply you will get the value in Indian rupees on that you pay the GST suppose if I have taken 85 rupees per dollar and I paid the GST on import of goods and actually so I am paying 8 86 rupees per dollar 85 is the CBC notified rate but the time when I made the remittance it is 86 rupees per dollar now on the extra one rupee again should I compute the GST not required so ignore the foreign exchange gain or loss so exchange gain or loss shall be ignored for the purpose of GST so these are the various points related to value of Supply we completed this and there are few queries so let's see so what will be the value of a secondhand car if itz is aail if itz is Avail the value will be full value sale value don't go for margin scheme full sale price will be taken as the value in rule 32 sub Rule 5 quarter means calendar quarter everywhere in GST and Customs yesterday itself I told you that we need to take only calendar quarter only it should not be like so January 15th to April 15th if you see actually it is 3 months only but it should be taken as two quarters why it should be taken as two quarters because calendar quarter logic we should apply so everywhere it will be wherever quarter comes in GST and Customs it will be calendar quarter only okay then next gaming agency is a supplier so supplier of online money gaming has to pay GST yes so definitely supplier only will be paying GST even if the supplier is located outside India so that point comes in section 14a place of Supply there I will discuss with you so online money gaming supplier is only liable to pay GST online money gaming is not covered under RCM it is covered under fcm always supplier only will pay sir what if the supplier is located outside India then also that supplier only will be paying GST then sir the gaming agency is only has to pay gsts correct then what about the bonus given Ramy circle into the user account see that bonus is basically not coming here because bonus will be coming under an incremental amount only like a winning amount only they will be giving so on winning amount there is no GST now only on the amount deposited there will be GST so how much amount you have deposited that only should be taken into that user account yes fine then we will move on to the next area that is composition scheme so please take that page 98 segment 10 section 10 deals with composition scheme so in this composition scheme only some minor amendments are there and composition scheme under Section 10 is applicable so two composition schemes are there 101 and 102a 101 composition scheme is applicable for manufacturer Trader and supply of food service provider but 102a composition scheme is applicable to any person manufacturer Trader and any service provider now 101 composition scheme is applicable if aggregate turnover during previous Financial year does not exceed 1.5 crores whereas in case of8 States it will be taken as 75 lakhs so what are the eight special category States for which 75 lakhs will be taken you can see that mmn usam Manipur missor tripura nagaland mmn Manipur mizoram tripura nagaland U for utarak s for sikim a for arunachal Pradesh not Assam and for meala so these are the eight states for which the limit will be 75 lakhs for other state the limit will be 1.5 cres so I'm talking about 101 composition scheme I'm a registered person my aggregate turnover during the previous year does not exceed 1.5 crores or 75 lakhs in the eight states then current year I can up for composition scheme now what if I'm having business in two states one in Tamil Nadu another in nagaland Tamil Nadu the applicable limit will be 1.5 crores nagaland will be 75 lakhs because nagaland will come in the list of that eight states then what should be taken as my effective limit so that if it crosses current year I cannot go for composition scheme 75 lakhs because in composition scheme you remember one point all in all out if one registration is ineligible for composition scheme all other registrations of the person is ineligible for composition scheme when you see Tamil Nadu registration Tamil Nadu I can go for composition scheme because aggregate turnover is 1.5 crores whereas in nagaland I cannot go for composition scheme because aggregate turnover will be only 75 lakhs as I am enable unable to go for compostion scheme in nagaland so consequently I will not be able to go for composition scheme in case of Tamil Nadu also so therefore the limit will be taken as 75 lakhs the lower limit only will be taken if in few States we are under 150 lakhs and few states it is 75 lakh 75 lakhs only should be taken as the limit then next point is that to whom it is applicable so first when applicable when applicable aggregate or not during previous year does not exceed 1.5 crores or 75 lakhs in case of eight states what are those eight states mmt and usam Manipur missor tripura nagaland utarak sikim arunachal Pradesh and meala and to whom it will be applicable manufacturer Trader supply of food service provider only three manufacturer Trader supply of food service provider but we have a relaxation here what is that relaxation we can provide services up to 10% of turnover during previous year or 5 lakhs whichever is higher that is I am a man manufacturer I'm a Trader I'm a supply of food service provider I can also provide any other services up to what limit there is element being a manufacturer being a Trader being a supply of food service provider so I can provide services but I should ensure that the turnover for these Services Services being a manufacturer I have outer limit of 1.5 cres of 75 lakhs but I can provide services to what extent I can provide the services 10% of turnover during previous year say previous year my turnover is 120 lakhs 120 lakhs into 10% is 12 lakhs 12 lakhs or five lakhs whichever is higher so I can provide services only 12 lakhs during the current year so what services any Services other than supply of food supply of food there is no restriction being a manufacturer being a Trader being a supply of food service provider no restriction but other services I can provide only 10% of turnover during previous year or five laks whichever is higher why five lakhs is given here because previous year this is the first year I'm starting the business my previous year turnover is zero and 0 into 10% will become zero so that's why minimum five lakhs Services can be provided and what is the benefit of reduced rates now if I am a manufacturer the applicable rate for me is 5% cgst and 5% sgst on what turnover taxable turnover or total turnover total turnover whereas if I am a service provider engage in supply of food supply of food service provider then what is the rate of GST 5% that is 2.5% cgst 2.5% sgst on what turnover again total turnover suppose if I am a Trader or provider of services up to 10% limit in these two cases I am a Trader or limit up to which Services provid is 10% now the 10% Services the rate will be same 5% cgst 5% sgst on what or no tax turnover so 1% that is5 cgst 5 sgst on taxable turnover in case of Trader or service provider up to the Limit allowed this is the benefit of reduced rates and current year current year up to what limit I will be into composition scheme up same up to 1.5 crores or 75 lakhs I will be in composition scheme after Crossing that I will be going into normal scheme and what is the situation in case of 102a so 102a applicable when if my aggregate are not during previous year does not exceed 5050 lakhs for 102a the limit is 50 lakhs and to whom 102a is applicable manufacturer Trader and any service provider so I can be into anything so basically if 101 is not applicable then only people will go for 102a because for a manufacturer 101 is only preferable because the limit is 150 lakhs or 75 lakhs whereas 10 to8 is only 50 lakhs so for manufacturer Trader and supplyer food service provider 101 is only best so 102a is basically for a service provider other than supply of food they will go for 102a in 102a the limit of 10% is not applicable they can provide any amount of services but the overall limit outer limit should be 50 lakhs what if current year we cross 50 lakhs means we will go out of the composition scheme and we will move into normal scheme and what is the benefit of reduced rates this is 3% cgst 3% sgst on total turn over okay so rate wise also for 102a it is high than 101 and next is there any difference in the conditions yes so people who are making certain supplies during the current year cannot go for composition scheme in case of 101 so that list of conditions is yes 9 RCM that you can see in the page 100 third page so S9 RCM so persons during the current year all these conditions you should see for the current year previous year is not applicable current year the moment you op for composition scheme you should not make these supplies what is that yes this is about 101 yes is with respect to service providers other than supply of food and Beyond 10% limit so if I am a service provider providing service other than supply of food or Beyond 10% limit I cannot continue in composition scheme 101 now so that is a restriction then y y for non-resident taxable person so already we know non-resident taxable person person I asked you to remember cricketers who are coming from outside India to India not having any fixed place of business so they are nrtp then I interstate supplier of goods or services so if I am under composition scheme I should not make Interstate supply of goods or services if I make I'm disqualified from the composition scheme and in non- taxable supplies so what are non- taxable supplies alcoholic liquer for human consumption and petroleum products if I make those supplies I disqualified from the composition scheme then another point is e supplier of services through e-commerce operator that is the amendment previously if you are supplying goods or services through e-commerce operator you cannot go for composition scheme but now they have amended this only supplier of services through e-commerce operator cannot go for composition scheme so supplier of goods through e-commerce operator can go for composition scheme yes for example I'm a Trader I'm selling good through e-commerce operator can I go for composition scheme yes but remember the other condition should be satisfied what is that you should not make Interstate supplies means you can make only intrastate supplies see through e-commerce operator you make supplies but ensure that you are not making inter because through e-commerce operator if you make inter the other condition is breach because of which you will be disqualified from the compostion scheme means you should make only supplies within the state so that's the reason why many times in M show Etc and all when you enter the PIN code they will tell this product cannot be shipped to your location because that supplier might be under composition scheme so he can make supplies through e-commerce operator but they should not make Interstate supplies that is a restriction so Services no services not possible for example restaurant which is supplying food through swiy zato Etc can they go for composition scheme no being a restaurant they can go for composition scheme but the moment they make Services through e-commerce operator it is not possible then R for RCM under n subsection 4 you remember this easily yes 9 RCM so section 9 is RCM usually section 9 is RCM so S9 RCM s for services other than supply of food or Beyond 10% limit nine n for non resident taxable person I for Interstate supply of goods or services another n non taxable supplies e supply of services through e-commerce operator R RCM in that RCM n subsection 4 RCM to whom n subsection for RCM is applicable to a promoter or Builder who is having some init Supply from a unregistered person so they need to pay GST under RCM if they have not paid any GST under RCM 94 then they cannot go for composition scheme even otherwise they cannot go for composition scheme because promoter or Builder by selling one flag itself they will be making a huge amount so therefore this point is practically irrelevant then C for casual taxable person who is a casual taxable person a person who is coming from other state to the state who is not having any fixed place of business in the state is called as a casual taxable person so basically actors who come from other state to act in this movies so of this state will be coming under NR CTP so like nrtp nrtp outside India to CTP is from other state to this state and both case they don't have any fixed place of business in this state and Casual taxable person also cannot go for composition scheme then M4 manufacturer of certain notified Goods what are those notified Goods ice cream Ed ice pan Masala tobacco and tobacco products arated Waters bricks and roofing tiles so these are the only Goods so what are those notified Goods first related to ice cream ice cream ediz then tobacco products pan Masala tobacco uh tobacco products then arated water beverage industry then bricks and roofing tiles manufacturer of these Goods only cannot go for compostion scheme but at Trader of these Goods can go for composition scheme yes so this is about S9 RCM whereas in case of 102 also this S9 RCM is applicable but in that s point we don't have why we don't have because any service Prov provider can go for 10 to so difference in conditions if you see here it is S9 RCM here it is only 9 RCM then next one what is the meaning of aggregate turnover for determining the eligibility for composition scheme so both cases these are the only differences between 101 and 10 2A and all other points will be common between 101 and 10 to a so apart from this page the next page information and all so will be common so therefore first aggregate turnover in both places we come across aggregate turnover here aggregate turnover during previous year should not exceed 1.5 crores and here aggregate turnover during previous year should not exceed 50 lakhs so what is that aggregate turnover generally the meaning of aggregate turnover is it will include taxable supplies Exempted supplies non- taxable supplies zero rated supplies usually aggregate turnover will be computed on a all India basis and aggregate turnover excludes only two things that is Inver supplies covered under RCM and then taxes GST cgst sgst utgst igst and compensation says this is the general meaning of aggregate turnover for determining the registration Etc now what is the difference between that aggregate turnor definition and aggregate turnor for the purpose of composition scheme ditto same but except for two differences difference number one interest on loans advances deposits generally part of aggregate turnover but for composition scheme interest on loans advances deposit should be excluded and then pre-registration turnover will not be taken generally that aggregate turnover for composition scheme pre-registration turnover will be included so these are the two adjustments you need to remember so aggregate turnover will be computed on the basis of turnover on an all India basis and will include the value of all taxable supplies exempt supplies and and exports made by all persons with the same permanent account number but would exclude invit supplies under reverse charge as well as GST and interest income will not be considered for calculating aggregate turnover as well as turnover in a state or Union territory now you can see in the last page I have given the turnovers various turnovers that we come across so that I have given in page number 244 you can see that page number 244 so I have given meaning of various turnovers under GST so there you see what and all first we have aggregate turnover for determining eligibility for registration so what will come in this turnover taxable supplies will come Exempted supplies will come non- taxable supplies will come but init supplies under RCM basically turnover means outw Supply so inw supplies under RCM will not come in turnover even though you are paying GST then GST all gsts you should exclude it should not come in turnover then old indirect taxes whether old indirect taxes will come in turnover yes only in one place I told you it will not come where for itz purpose for itz purpose rule 42 rule 43 and section 20 old indirect taxes will not come but that also I have given here say this so turnover for computing reversal of itg and distribution of it C by input service distributor this old indirect taxes will not come in the turnover okay I gave the comparison over there then next interest on loans advances deposits generally in aggregate turnover it will come whereas interest on account of delay receipt of consideration also it will come and this aggregate turnover for determining eligibility for registration whether we do it on all India basis or statewise we do it on all India basis and whether we will check it for the current year are the previous year current year for registration first we are discussing the general meaning of aggregate turnover for registration purpose we will check it for the current year and whether Interstate supplies also will be included in this yes whether pre-registration turnover will come that is not applicable because we are determining this aggregate turnover only for the purpose of registration see this is the general meaning of aggregate turnover so what and all you should remember taxable supplies Exempted supplies non- taxable supplies zero rate ated supplies and init Supply under RCM will not come GST will not come and so this is the basic meaning of aggregate turnover now from this aggregate turnover for determining the eligibility for registration to aggregate turnover for determining eligibility for composition scheme you see what are the differences so this aggregate turnover for composition scheme we see for the current year or for the previous year we see it for the previous year so that's what we studied if my aggregate turnover during previous year does not exceed 1.5 crores or 75 lakhs for the current year I can opt for composition scheme so therefore I need to check this aggregate or not for previous year whereas usually aggregate turnover will be computed for current year but for composition scheme purpose we check it for the previous year that's the difference then another difference you see generally aggregate turnover includes interest on loans advances and deposits but for composition scheme aggregate turnover do not include interest on loans advances deposits then pre-registration turnover should be included in the aggregate turnover for composition scheme apart from this is there anything that is changed no everything will be same okay now you may get a doubt sir if you are making non- taxable supplies you said we cannot go for comp composition scheme but we are including in composition scheme aggregate turnover so non- taxable supplies that's what I said so previous year you can have non- taxable supplies previous year you can have Interstate supplies previous year you can have anything but current year the moment you go for composition scheme you should not have any of those S9 RCM if you have any of those S9 RCM you are disqualified from the composition scheme so now what are the extra points you need to remember from regular meaning of aggregate turnover to aggregate turnover for determining the eligibility for composition scheme so first aggregate turnover will be taken for previous year then number two interest on loans advances deposits will not be included and pre-registration turnover should be included remaining points are same then next we have turnover for determining 10% limit what is the difference between aggregate turnover and turnover for determining 10% limit what is it change you see this generally aggregate turnover will be computed on all India basis but turnover will be computed statewise it will not be on all India basis it will be statewise then another point is that so here aggregate turnover whatever we have seen everything is same only this difference correct only this difference so what is a difference between aggregate turnover and turnover for computing 10% limit what is the purpose of aggregate turnover to check whether I'm eligible for composition scheme during the current year what is the purpose of this turnover for 10% limit because during the current year I can provide services up to 10% of turnover during previous year or five lakhs whichever is higher for that purpose we need to know what is the difference between these two both are same aggregate turnover definition as well as turnover definition both are same only difference is that aggregate turnover will be computed on all India basis turnover will be computed statewise how it is going to impact so it so happens that during the previous year during the previous year so we are doing business in three states Tamil Nadu Karnataka and Kerala and turnover if you see 60 lakhs 30 lakhs 60 lakhs 30 lakhs and 40 lakhs so this is the turnover during previous year so the total turnover if you see 13 lakhs is the total turnover during the previous year now during the current year what is the limit up to which Services can be provided current year limit for services current year limit for services under Section 101 we are under composition scheme 101 so what is the limit up to which Services can be provided under 101 you take the previous year so 130 lakhs 130 L into 10% is what 13 lakhs or 5 lakhs whichever is higher will be 13 lakhs that is the correct answer correct wrong answer so because the 10% should be computed statewise it should not be taken on all India basis so 10% of turnover during previous year it's not 10% of aggregate turnover 10% of turnover during previous year so that is 60 lakhs into 10% or 5 lakhs whichever is higher so whichever is higher is what 6 lakhs that is the service up to which we can provide in Tamil Nadu whereas in Karnataka 30 lakhs into 10% 3 lakhs or 5 lakhs whichever is higher so what is the limit up to which Services can be provided 5 lakhs not three lakhs then 40 lakhs into 10% 40 lakhs into 10% is 4 lakhs or 5 lakhs whichever is higher so what is the limit up to which Services can be provided 5 lakhs then what is the overall limit up to which Services can be provided 16 lakhs is the limit up to which service can be provided and this 16 lakhs is divided like 6 lakhs in Tamil Nadu 5 lakhs in Karnataka and five lakhs in Kerala if you cross six lakhs in Tamil Nadu or five lakhs in Karnataka or five lakhs in Kerala you are disqualified from the composition scheme in one state consequently you're disqualified from composition scheme in all other states as well so mainly turnover is statewise that's how this will be tested then next one so in composition scheme we come across three turnovers one is aggregate turnover for determining the eligibility whether you can go for composition scheme or not number two is turnover for computing 10% limit the third turnover is turnover for payment of GST under composition scheme what should be taken in that case so turnover for payment of GST under composition scheme whether we pay GST based on current year turnover or previous year turnover current year turnover so we should not see previous year turnover we should take the current year turnover the moment you see turnover turnover will always be statewise and then pre registration turnover will be included or excluded pre-registration turnover will be excluded also you should not have Interstate supplies because if you have Interstate supplies during the current year you are disqualified from the composition scheme and even you know non- taxable supplies you should not have if you have non- taxable supplies also you disqualified from the composition scheme so that is the difference and remaining points and all will be same no change in that and only difference is what from regular turnover for 10% limit to turnover for payment of GST under composition scheme turnover for computing 10% limit we take the previous year turnover but turnover for payment of GST under composition scheme we need to take the current year turnover and this S9 RCM should not be there in the current year means non- taxable supplies Interstate supplies and all should not be there in the current year and pre-registration to now that's a main point pre-registration turnover will be included generally for aggregate turnover as well as turnover for computing 10% limit but for computing tax payable so this pre-registration turnover will not be included how that will be connected say this so this is like we have got during the current year so during the previous year during the previous year our turnover is zero because we have not commenced the business during the current year only we commen the business current year only we commence the business okay and after commencing the business we crossed a threshold limit of 40 lakhs we crossed a threshold limit of 40 lakhs this is the threshold limit for registration and thereafter our turnover is somewhere like 180 lakhs 180 lakhs is our aggregate turnover during current year aggregate turnover our turnover during current year is 180 lakhs now this person is a Trader this person is a Trader and what is the GST that it will be payable now what is the overall aggregate turnover or turnover agregate turnover or turnover how much 180 lakhs in this 180 lakhs what is the turnover under composition scheme and normal scheme composition scheme is 150 lakhs and normal scheme is 30 lakhs now in this composition scheme pre-registration turnover you need to exclude pre-registration turnover what is the pre-registration turnover 40 lakhs that we need to exclude take out the pre-registration turnover so what is the balance turnover 110 lakhs okay so on this 110 lakhs you need to pay GST at 1% correct that is5 cgst .5 sgst whereas on this 30 lakhs we need to pay GST at what rate normal rates whatever is the normal rates that is applicable that should be taken so this is the meaning of pre-registration turnover will be excluded so first overall turnover you take divide into two what is a turnover under composition scheme what is a turnover under normal scheme whatever is a turnover under composition scheme you reduce the pre-registration turnover so remaining turnover will be coming under composition scheme so that is the meaning of this statement so these are the three turnovers that we come across in composition scheme one is aggregate turnover for determining the eligibility to offer composition scheme second is turnover for computing 10% limit and third is turn or for payment of GST under composition scheme now so coming back to the discussion where we started so this appendix turnover will help you because in many places you know it will be useful then so what is the meaning of aggregate turnover you understood then next Point person opting for composition scheme can provide service up to 10% of turnover this point also we have seen and 10% % of turnover during previous year or five lakhs whichever is higher and while determining this interest on loans advances deposits will not be taken yes we have seen even for aggregate turnover three turnovers interest on loans Advan deposits will not be taken if you want to check the appendix so aggregate turnover definition also we will not take interest on loans advances deposits then turnover for computing look into book don't look in my face when I ask you to look turn your pages little bit effort you put so you are studying you are not sitting here to watch a movie you are sitting here to study okay turn the pages see the last page so you can see their aggregate turnover so interest on loans advances deposits will not be included even for 10% limit also interest on loans advances deposits will not be included even for payment of GST under composition scheme interest on loans advances deposits not included so there is a common point between these three turnovers correct so therefore for Computing the 10% limit also interest will not be included then the tax rate applicable for these services that is Sir during the current year I'm providing some service up to 10% limit so for these Services what is the rate applicable I told you the rate applicable to a Trader what is the rate applicable to a trader5 cgst 05 sgst on taxable turnover then other procedural Provisions so how to opt for composition scheme if I am already a registered person I need to make application so for composition scheme so in cmp2 when I can go for composition scheme before commencement of the financial year during the year that is mid of the year I cannot go for composition scheme if I'm already a registered person I need to wait till commencement of the financial year and then only I can go for composition scheme suppose if I'm not already registered now only I'm getting registered at any time can I go for composition scheme yes at any time I can go for composition scheme along with registration application I will select the option to go for composition scheme and every person opting for composition scheme should display composition taxable person in every notice sign board displayed at the principal place of business and additional place of business and they required to file a quarterly return so that quarterly return is in CMP 8 what is the time limit by 18th of the month following every quarter and even they need to pay tax also by 18th of the month following every quarter means along with cm8 they have to discharge the liability as well and GST will be payable on value as per bill of Supply so there is one concept generally GST is not payable on advances in case of goods so because of section 12 subsection two read with notification number 66 2017 in time of Supply this provision is there which says that if you are making supply of goods on advances you are not required to pay GST GST is payable only on the basis of invoices but that is is not applicable in case of composition scheme so a person opting for composition scheme is required to pay GST on advances also so therefore what they need to do is that they need to take the value of Bill of Supply during the quarter and they pay GST on quarterly basis so all bill of Supply is during the quarter value as per bill of Supply why bill of Supply they will not be giving tax invoice why they will not give tax invoice because a person opting for composition scheme should not recover the GST from the recipient so what is the name of the document bill of Supply you take the value as per bill of Supply during the quarter and advances received during the quarter for which bill of Supply will be generated in future means supplies will be made in future but you received Advance you add minus advances already received in the past for which bills are raised in the current quarter so because these advances would have been already taxed in the past so now we need to reduce that so this adjustment we need to make GST payable on value as per bill of Supply during the current Act current quarter add advances received during the current quarter pertaining to next quarter minus advances received during the previous quarter pertaining to the current quarter then a person opting for composition scheme is also required to file an annual return and that annual return will be filed in gstr 4 by 30th April of the succeeding Financial year so these are some procedural aspects and this already we have seen validity of composition schem if all conditions are satisfied option remains you know valid so we don't have to submit the cmp2 every year so once we have submitted cmp2 if all the conditions are satisfied you will be in the composition scheme suppose if the conditions are not satisfied means you cross the turnover limit or you made supply of service through e-commerce operator or you made Interstate supplies Etc when conditions are not satisfied you need to exit from the composition scheme and go for normal scheme and you need to file one form for exit for entry what is the form cmp2 for exit it will be CMP 4 and that CMP 4 you need to file within 7 days from the breach of conditions and issue tax invoice for taxable Supply voluntarily also even if you have not breached the conditions voluntarily also anytime you can exit from the composition scheme by filing CMP 4 now whenever you are filing CMP 4 for exiting the composition scheme 181c will be applicable so what is that you are under composition scheme now you're going for normal scheme now you can Avail the ITC on closing stock so along with this CMP 4 you need to file one ITC form what is that itz form itz 1 so CMP 4 and itz 1 is one combination CMP 4 and itc1 is one combination CMP 4 is exit from the scheme when you exit from the scheme you will Avail the itz on closing stock and when you need to exit from the composition scheme whenever you Breeze the condition within 7 days and when you need to file this ITC one for availing ITC on closing stock from the day you migrated from composition scheme to normal scheme within 30 days 30 days then next the moment you enter into composition scheme you need to reverse the itz on closing stock 18 subsection 4 so the moment you enter into composition scheme so these two will become a combo cmp2 and itz 3 for reversal of itz on closing stock we file ITC 3 now so cmp2 is for entry into composition scheme when you can enter into composition scheme so this is entry into composition scheme intimation prior to commencement of the financial year and you need to reverse the itzon closing stock that reversal of itz on closing stock is in it3 what is the time limit within 60 days from the commencement of the financial year because you can go for composition scheme only in beginning of the financial year now the moment you go into composition scheme from there within 60 days you need to file itz 3 for reversal of itz on closing stock then mainly these are all tested for McQ purpose suppose you breach the condition but still you are continuing in the composition scheme so proper officer will give a notice in CMP 5 so proper officer has reasons to believe that taxpayer not eligible or contravent the act or rules a notice will be given in CMP 5 and within 15 days from notice a reply should be given in CMP 6 and after reply within 30 days so proper officer will pass a order in CMP 7 either accepting the reply means you will continue in the composition scheme or denying the composition scheme means you need to exit from the composition scheme so CMP 5 is notice CMP 6 is reply to notice CMP 7 is order and notice whenever they identify reply 15 days and Order within 30 days from notice CMP 8 what is CMP 8 quarterly return return quarterly return to be filed by 18th of the month following every quarter now whether this denial of composition scheme is prospective or retrospective whenever we breach the condition and we continued in the composition scheme department will identify and will give a order now that order of will be prospective or it can be retrospective back date also but not before the date of breach for example on 18th January we breached the condition and we continued in the composition scheme next year they identified that we have breached the condition on 18th of January now they can deny the composition scheme prospectively whenever they identify or retrospectively but not before 18th January because 18th January only I breach the condition up to 18th January I supposed to enjoy the composition scheme you got it so in case of denial of option to pay tax under composition Levy by the tax authorities the effective date of such denial shall be from a date including any retrospective date as may be determined by tax authorities however such effective date shall not be prior to the date of contravention of provisions of the act or rules then when is it advisable to opt for Section 1028 so you tell me when it is advisable to uper 10 to a if I'm providing Services other than supply of food or I'm providing Services Beyond 10% limit then I cannot continue in 101 I'm I'm providing Services Beyond 10% limit then I cannot be in 101 so I can go for 10 to8 so who is exclusively engaged in supply of service other than restaurant or who is engaged in supply of services along Ong with supply of goods and Resturant service of value exceeding 5 lakhs in the current year why five lakhs because my previous year turnover should not exceed 50 lakhs and 50 lakhs into 10% is what 5 lakhs or five lakhs whichever is higher five lakhs if I cross the five laks of services I can go for 10 TOA then this is the meaning of various turnover already I gave you this table at the end also and here also for reference purpose I have just given so aggregate turnover for determining eligibility for composition scheme turnover for determining 10% limit and turnover for payment of GST under composition scheme here if you are making non- taxable supplies export of goods or service or Interstate Supply during the current year you cannot go for composition scheme so not applicable means these supplies cannot be made during the current year and if made by the person is disqualified from the composition scheme okay so with this we completed composition scheme we'll take a break and then we will continue with exemptions and RCM okay okay so there are few queries let's answer those queries first sir in case of Dem merger you said credit shall be transferred in net assets ratio what if one Dem merged entity receives ENT assets on which itz not Avail and balance by entity on which it availed whether itz availed or not on that net assets it is irrelevant for example I'm transferring it to a limited and B limited a limited I am transferring four assets B limited I am transferring two Assets Now in that case don't see whether ITC availed or not availed on that assets so in the assets ratio we need to distribute the ITC so whether it availed or not is irrelevant then next what will be the value if PA transactions under services that I don't I didn't understand your question dear then gaming agency only has to pay GST yes gaming agency only has to pay GST problems related to HC blog there are no like questions and all on this it's only the concept which I already told you through numbers so that only will be tested and 102a point B it is simple here my previous year turnover is 150 lakhs so my previous year turnover if you see yes so previous year turnover previous year aggregate turnover if you see is somewhere like 50 lakhs exactly 50 lakhs and current year I'm a Trader I'm a Trader so naturally I would have gone for which composition scheme composition scheme under 101 composition schem scheme under Section 101 and I want to provide services what is the limit up to which Services can be provided limit up to which Services can be provided is 5 La correct is five laks now I want to provide more services so beyond this then automatically I should go for which composition scheme 10 to a so compos composition scheme under 10 TOA composition scheme under Section 10 TOA if Services greater than 5 lakhs needs to be provided okay if the servic is greater than 5 lakhs needs to be provided we need to go for 10 to a that is the point which I have explained okay sir if my turnover during previous year is 60 lakhs then what is the limit up to which I can provide services 6 lakhs now I want to go beyond 6 lakhs is it possible to go for 10 to a no why it is not possible to go for 10 TOA because previous year turnover is 60 lakhs which is more than 50 lakhs which is not possible so that is that then next sir if existing composite taxpayer had a turnover of 140 lakhs and provided other than restaurant service for 15 lakhs so 140 + 15 means it will be like 155 lakhs 155 lakhs means they will be disqualified from the composition scheme for the current year and even next year they cannot go for composition scheme because for next year this is the previous year now so next year they cannot go for composition scheme then can you please tell us any of these GST Concepts also important for IBS uh everything is important for IBS no yes IBS is not separate subject yeah IBS is definitely the merger of all the subjects but I can say that whatever topics yesterday I told you as important very important for GST those Concepts only are being tested in the case studies so IC has released around some 15 case studies and then three case studies in this uh student journal and two case studies in the RTP so in all these case studies what I have observed is that they tested only on these areas whichever areas I said as important yesterday 10 chapters 10 topics I said now from that only so that only focus for IBS as well then next value of Supply when business asset disposed on which it Avail other than capital goods no everything will be covered business asset means not only capital goods even other Goods also current assets also will be coming under that point then what will be the transaction value if principal agent transaction under Services first of all princip agent transaction under Services if it is without consideration it's not a supply so the activity itself is not a supply 71c Dr is there now P for principal agent transaction that should be only Goods if it is Services it will not be coming and suppose if it is for consideration it will come under 71a so 71a normal transaction value only will be taken first of all principal agent transaction without consideration become Supply only in case of goods in that case only we will be applying rule 29 okay then next so these are the queries they have asked we are moving on to this uh Supply we will see first because some students are asking even doubts on Supply so Supply we will complete and then we will see RCM otherwise while discussing RCM you will ask doubts on Supply also maybe you guys have not at all studied and you are attending rocket revision here so see this page number 13 we studied too many subjects now would have forgot so possible I'm not blaming you so looking to page 13 Supply under GST so what is the taxable event taxable event under GST supply of goods or services or both and that Supply is defined under Section 7 section 7 of cgst Act 7 subsection one talks about inclusions in the meaning of Supply seven subsection two red with schedule 3 talks about exclusions from Supply 7 subsection 1 a is classification of Supply into goods or services 73 it is reclassification of supply of goods into supply of service and vice versa but at present we don't have anything notified for this purpose so we have only these three subsections 71 inclusions 72 exclusions and 7 subsection 1 a classification of Supply into goods or services now 7 subsection one so we have Supply includes in that Supply includes we have 718 any activity for consideration in the course or furtherance of business three points any activity and that should be for a consideration it should be in the course or further of business 71 AA any activity between a person other than individual and its members again it should also be for a consideration between individual between a person other than individual means HF company firm aop Boi Cooperative Society Etc and members that is HF you take members of HF that is co- personal so there is a karta or other members of the HF between HF and them any activity or between firm and partners any activity between company and the shareholders any activity so between them for a consideration it will also become Supply then 71b import of services for a consideration whether or not in the course or furtherance of business so you are importing services for a consideration it may not be in the course of Rance of your business even then it will become Supply under 71b 71c comes under activities in schedule one even though without consideration when there is no consideration then only you need to refer to 71c in 71c we have four activities d r i p d for disposal of business asset this business asset can be capital goods or other than capital goods on which ITC has been availed R for related party transaction including transaction between distinct person I for import of services from a related person or another establishment located outside India then P for principal agent transaction with respect to Goods okay principal agent transaction with respect to Goods where agent is acting on behalf of principal so these are the four activities and in detail so this seven subsection one difference table you can see in page number 15 so in 71a any activity and consideration should be there course or furtherance of business from whose perspective we need to see whether it is in the course or furtherance of business or not supplier point of view and coverage is both goods and services 71 AA what is the difference between 71a and 71 AA everything is same except that 71a is between any person to any person but 71a is between a person other than individual and its members so now there is a partnership firm which is giving some remuneration to the part whether that will come under 71 AA so it will not come under 71a it is nothing but withdrawal of profit but if there is a separate contract between the partner and the partnership firm where partner provides some services to the partnership firm for which partnership firm will pay some amount of consideration to the partner then it will come under 71 AA but mere remuneration arising out of the partnership de is withdrawal of profit that will not come under Supply okay because this point can be tested in exam so what is it we have to see here what is it we need to understand so remuneration to partner remuneration to partner to a partner by firm by firm is withdrawal of profit withdrawal of profit and not a supply not a supply however however consideration to partner consideration to partner for services for services provided to firm provided to firm is Supply under Section 71 AA so the the 71 AA mainly come to picture in case of activities between a person other than individual and its members either members to the you know like person or person to the members anyway one more example is a company which is providing share transfer to the shareholder so shareholder request the company to transfer the shares from his name to some of his relative name or his wife's name for which there is a share transfer fee which will be collected by the company so this share transfer fee collected from the shareholder also will come under Supply 71a so basically 71a is between any person to any person 71a is between a person other than individual and its members then 71b what is the difference between 71a and 71b in 71b only one activity is there that is import of services consideration yes and it may or may not be in the course or further end of business and 71b import of service should always be interpreted from the recipient point of view for example you are importing Amazon Prim or Netflix OT platform services for which you will make some payment so it is import of service for a consideration not in the CES or furtherance of your business even then it will become Supply under 71b and 71b the coverage is only Services then 71c Dr D for disposal of business asset in that all these four cases consideration is not required but in case of disposal of business asset whether it should be in the course or furtherance of business it may or may not be in the are furtherance of business we are disposing the business asset it may be related to CSR obligation or it may be to an employee under employ welfare or it may be to an outsider not in the cor or furtherance of business but if you dispose of the business asset on which it is Avail it will become Supply and here supplier point of view and the coverage is only Goods whereas related party transaction should be in the cors OR furtherance of business supplier point of view coverage is both goods and services import of services wherever import of services comes so always we need to see it from the recipient point of view what is the difference between import of service under 71b versus import of service under 71c import of service 71b should be for consideration here it is without consideration here it is may or may not be in the course or furtherance of business but here it should be in the course or furtherance of business and principal agent transaction only Goods coverage is only Goods service is not there and it should be in the cour OR furtherance of business from Supply point of view this is about inclusions and whenever you are referring to 71c you need to write red with schedule one and then when an activity will be excluded from Supply so as per seven subsection two Supply excludes so this is red with schedule three so you need to remember sped slow yes for Sovereign functions of government that is all activities of garment other than the following is excluded from Supply only four activities of garment is covered under Supply what are those four activities Department of post transportation of goods or passengers and airport or Port Services and services to business entities these are the four activities which are covered under Supply and all other activities of government is excluded from Supply P refers to post post that is constitutional post government post or nominated post government post means MLA MP Etc constitutional post means president governor Supreme Court chief justice Etc then nominated post means there is a body where the head of that body or any member of that body is nominated by the government so that is nominated post for which government will pay money to them that will also be coming under exclusion example RBA Governor sebi chairman or any Nomine director appointed by government in the you know company government company so all these are nominated post then that is also excluded from Supply s paa a for actionable claims other than specified actionable claims so what are the specified actionable claims HC blog so horse racing casinos bitting Lottery online money gaming online money gaming and gambling okay here this online gaming basically will not come under specified actionable claims so this online gaming will not come only online money gaming because online gaming is shifted to oid Services due to that reason so online gaming online gaming Falls Ander Falls and under oid Services oid Services then gambling so this will be coming under specified actionable claims so previously Lottery bitting and gambling was there and now they have changed it to specified actionable claims so s Sovereign functions P post a actionable claims other than specified actionable claims L legal fees legal fees collected by home collected by court or tribunal and L land sale any sale of land is excluded from Supply even sale of building is also excluded from Supply but when sale of building is excluded from Supply when entire consideration is received after obtaining completion certificate or first occupation whichever is earlier and then e for employee to employer in the course of employment so employee getting salary from the employer will be excluded from Supply D for death related that is funeral burial marchy transportation of diseased Etc that will be excluded this is about SP then slow yes for sale on high seas that is we are importing the goods before the goods being imported we sold these Goods by way of transfer of documents to title to some other person now whatever money that we receive is known as sale on highes so that is excluded from Supply because the subsequent buyer is going to file the bill of entry and pay the customs duty along with igst so our sale is excluded from Supply that is known as sale on highes that is sale before import then liquor license granted by state government state government will be giving giving license to sell liquor to various people and for which they will collect a license fee that license Fe is also excluded from supplying then outside the country movement of goods supper is located outside India and like supper is in India recipient is in India but the goods are moving from outside India to India for for example you know it's like I'm person located in India you are my recipient located in India and I have a branch in Australia from my branch in Australia the goods are coming to India then it will be import of goods import of goods is covered but but not in GST it is covered under Customs okay that's why in GST we don't have any discussion related to this but what is this point outside the country movement of goods means Goods originate outside India terminates also outside India means you have a branch in Germany I have a branch in Australia from my branch in Australia to your branch in Germany the goods are moving but the financial impact of the transaction is happening in India even then it will not be chargeable to GST it will be excluded from Supply then warehoused goods sold under Customs we saw that input tax credit Warehouse Goods in the sense like so I have deposited the goods in the warehouse I am the Importer I imported the goods I kept the goods in the warehouse and thereafter I transfer the document of title to you Warehouse receip to you now you will pay some money to me I will not pay any GST on that because anyhow when you clear the goods from the warehouse you pay the customs duty along with igst so I'm excluded from Supply that is the sale of warehoused goods under Customs so these are the activities which are excluded from Supply whenever you write exclusion from Supply you write section seven subsection to read with schedule 3 then see one more Point here gifts by employer to employee employer and employee are treated as related parties if employer is giving any gift to the employee and if the value of the gift does not exceed 50,000 peram per employee then also it is not a supply what if the value of the gift exceeds 50,000 entirely it will be treated as Supply and chargeable to GST then next one so there is like uh when activity becomes Supply or not first you need to check 7 subsection 2 if the activity is covered under 7 subsection 2 it is not a supply so first you need to check while reading the question so you see the activity the first thing you need to see is that is the activity given in the question covered in seven subsection 2 yes if it is covered in 7even subsection 2 it is not a suppl if it is not covered in seven subsection 2 no then you check seven subsection one inclusions is it covered anywhere in seven subsection one yes then it will will become Supply if it is not covered under seven subsection one also then it is not a supply you need to write that the said activity is not a suppl so first you need to see the activity or transaction this activity or transaction okay is covered in 7 subsection 2 is covered in section 7 subsection 2 R with schedule 3 see this is how you need to interpret in the exam okay that's why I'm giving you first you need to to see the activity of transaction given in the question and check whether it is covered in seven subsection two r with schedule 3 yes it is covered in schedule 3 then what will be your answer if this is yes is it Supply or not a supply it is not a supply so what is it you need to write in exam the said activity first you need to write as per seven subsection to Red with schedule three employee to employer in the course of employment is excluded from Supply in the present case employ getting salary therefore it is not a supply like that you will write okay suppose if it is no it is not covered in schedule 3 that is s subsection to Red with schedule 3 then you check whether the activity our transaction our transaction is covered in is covered in section 7 subsection 1 that is inclusions anywhere either 71a or 7 1 a a r 71 a r a a r 71 B R 71 C anywhere it can be covered okay anywhere it can be covered suppose if the answer is yes it is covered in seven subsection one then what will be your answer if this is yes the activity is Supply suppose if it is no it is neither covered in 7 subsection 2 nor covered in 7 subsection one then also the activity is not a supply so what is it you will write say for example disposal of business asset on which itz not availed so now you'll write as per seven subsection one C disposal of business asset on which itz availed is Supply in the present case itz not Avail consequently the said activity is not a supply like that you will write and the Seven subsection two is called as neither supply of goods nor supply of services that is the correct name which is given in the law so the name for this is neither supply of goods neither supply of goods nor supply of services nor supply of services so this is the correct name that is given in the law okay so you write that not a supply but not a supply is generic but specifically it is neither supply of goods nor supply of service why because in one McQ one attempt they have given this transaction in Securities is Dash option A neither supply of goods nor supply of services B not a supply both are correct neither supply of goods nor supply of service is also correct not a supply is also correct so which should be taken as the answer not a supply so neither supply of goods nor supply of services will come into picture when only when the activity is excluded from Supply as per seven section to Red schedule 3 that's sped slow in the case of that sped slow only you need to write neither supply of goods nor supply of services in other cases and all you should write it as not a supply okay so therefore that is how now once the activity becomes Supply the activity becomes Supply what's next so the next aspect is that you need to check is that activity you know taxable or Exempted so that is the next aspect but do we have taxable list no we have negative list only means we have water all Exempted so the balancing figure will be taxable so where is that Exempted we need to check whether whether the set Supply is Exempted whether the set Supply is Exempted Exempted where we need to check for that section 11 read with notification one notification is there where they have given list of services what is it notification number 12 of 2017 so this is for services sir what about Goods Goods related exemption we don't have so you don't have to remember Goods related exemptions is not in syllabus or not required whether the said activity is Exempted if it is yes so activity is Supply but it is Exempted if it is yes then whether GST payable or GST not payable GST not payable now what is the explanation that you will write because majority of the answer sheets that I have seen and what I that I have observed is that every student who shared with me the answer sheet they writing correct answers only but the explanation is pathetic they're not writing the reason proper reason they are not writing so whatever is analysis in your mind that should be written in the answer sheet otherwise you will not get marks so don't expect full marks and all when you are not writing proper justification so now what is the justification you will give you will say that even though the said activity is Supply but the same is covered under Section 11 read with notification 12 2017 therefore it is Exempted and consequently GST not payable like that you should write okay so develop the habit of writing we have ample time now that the revision get over so try to solve more and more questions and write the answers then only you will know as to how that should be presented in exam okay justification is very very important you remember it's like you are married and you need to give explanation to your wife how you will give explanation everything you sit you give explanation stand you give explanation you sleep you give explanation you come late you need to give explanation out of experience I'm telling you therefore everything you think you have to give explanation you understood in your life you think like that only in exam Hall also so exam Hall also so you read something you write something for that you need to give explanation justification is important here in life you understood so that you have to write in the answer sheet if you are not giving explanation your life will be hell your answer sheet also hell you understood so please ensure that properly you are giving so this is the explanation that you will give what is that the activity Supply but it is Exempted okay so consequently GST not payable suppose if it is no it is not Exempted then what is the answer for this the said activity is taxable so Supply it is a taxable Supply it is a taxable Supply if it is a taxable Supply what is the next thing that you need to see who is liable to pay GST the next aspect is who will be liable to pay GST so for that you need to check RCM fcm is not there fcm is balancing figure so whether the set taxable Supply the set taxable Supply is covered under RCM is covered under RCM RCM means reverse charge mechanism so where we need to check in case of goods you need to see section 9 93 red with red with notification number 4 of 2017 so Goods related Provisions we have for exam then Services if it is Services section 93 read with notification number 13 of 2017 sir should we remember all these things then why am I writing am I idiot or what to write all these things I have lot of work to do but I am writing it because you know important you have to remember this don't put a question there should we remember all these things remember you're writing CA final exam at least this you remember okay so that the valer will think you are a knowledgeable person okay because you are writing notification numbers and all and section numbers and all remember nothing wrong so Goods notification 4 2017 Services notification 13 2017 suppose if it is covered under RCM if the answer is yes okay if the answer is yes so who will pay GST liability to pay GST is on liability to pay GST to government to pay GST to government is on on recipient is on recipient suppose if it is no it is not covered there then who will be having liability to pay GST liability to pay GST is on supplier now wait we cannot conclude here one more aspect you need to see whenever the liability to pay GST is on the supplier check whether that supplier is required to get registered or not required to get registered that's the fourth aspect the first aspect you need to see is whether an activity is Supply or not the second aspect you need to see is whether it is taxable or Exempted the third aspect you need to see is who will be liable to pay GST the fourth aspect is registration so if the supplier is not required to get registered then GST not payable so therefore in this whether Supply is registered or liable to get registered are liable to get registered if this is yes if this is yes then who will pay GST supplier shall pay GST to government suppose if it is no if it is no GST not payable if it is no I'm just connecting to this or separately also you can write if it is no if it is no GST not payable so what you need to write don't change the service as Exempted the said activity is taxable and it is coming under fcm but as the supplier is not registered GST not payable like that you need to write and suppose if the transaction is covered under RCM then what will happen liability to pay GST is on recipient for recipient also should we check yes is the recipient Exempted from registration you check if the recipient is Exempted from registration compulsory registration is not applicable otherwise the recipient is liable to pay GST okay so therefore the next aspect that we check here is whether whether recipient is Exempted from registration recipient is Exempted from registration if the recipient is Exempted Ed from registration if this answer is yes GST payable or GST not payable GST not payable if the answer is yes GST not payable suppose if the recipient is not Exempted from registration no then compulsory registration compulsory registration compulsory registration and recipient shall pay GST to government to government and wherever this GST not payable in this place you know you remember section 23 overwrites section 24 section 23 talks about exemption from registration section 24 talks about compulsory registration so therefore section 23 overes if a person is Exempted from registration section 23 overrate section 24 so they are Exempted from registration and GST not payable in this case so this is how you need to analyze a transaction and you need to arrive at the answer okay so accordingly here we need to check that that's what I have given if an activity is not covered in 7 subsection 2 exclusions then 7 subsection one should be checked if the activity is not in seven subsection one then the activity is not a supply then you can see circulars related to exclusions there is one point sale of land so this sale of land is usually excluded from Supply but I'm not selling the land as such I'm selling the developed land in that case what is the treatment if the developed land is sold and if a single consideration is collected towards the sale of land so I will buy a piece of land which is like a you know undeveloped land I will do the leveling and I will put it like a plots and I will down the roads I will put the electric connection pipeline water pipeline Etc and all now the developed plot I'm selling so like plots 1,200 sare ft or 500 squ ft 800 ft like the developed plots I'm selling now I charge a single consideration like 3,000 rupees per square feet everything all inclusive now in that case this 3,000 rupees will be excluded from Supply suppose if I charge 1,800 rupees per square feet for land 1,200 per square feet for development charges I developed the land now so I incured some charges suppose if I build it like that now 1,800 rupees per square feet for sale of land is excluded from Supply but the 1,200 rupees per square feet for development charges so that will be covered under Supply that's what circular says sale of land after some development such as leveling laying down of drainage lines electricity lines Etc is also sale of land is excluded from Supply however service es provided for development of land is not excluded from Supply and shall attract GST so towards development charges if we collect some amount that will attract GST then another point is related to perquisite if any perquisite is given by employer or to employee that will not be treated as gift so the difference between perquisite and gift is that perquisite will be covered under the offer document whereas gift will not be covered under offer document so for gift only you need to check that 50,000 Rupees point for perquisite whatever may be the amount it will be excluded from Supply why perquisite excluded from Supply because perquisite will be coming under salary it forms part of salary so perquisite given by employer to employee in terms of contractual agreement entered into between them will not be subject to GST when the same are provided in terms of contract then next you can see some important definitions below see page number 15 so first definition is related to Goods so Goods is given under Section 2 Clause 52 so Goods means any kind of movable property so that will be coming under the meaning of goods so immovable property will not come under goods and this includes actionable claims growing crops grass and things attached to our forming part of land which are agreed to be SED before Supply or under a contract of Supply so actionable claims will come under Goods which actionable claims all actionable claims but out of these actionable claims other than specified actionable claims are excluded from Supply same way anything which is attached to earth like trees plantations Etc will also come under Goods if we have agreed to sever it cut it before delivery so then it will be treated as goods and goods excludes money and securities not only Goods even service definition also excludes money and securities so money and securities is neither Goods nor services and services means anything other than Goods will be coming under services and services includes generally service excludes money but transaction in money for a separate consideration will be included in the service and service excludes Securities but facilitating or arranging transaction in Securities is treated as service example stock broker service deposit service Etc it is not sale of security sale of secuity excluded from Services as well as Goods but transaction in Securities facilitating or arranging transaction in Securities means stock broker service depository service underwriting service Etc will be coming under Services then transaction in money for a separate consideration I have 500 rupee note I'm giving you and you are giving me 500 rupe notes it is transaction in money without consideration it is neither Goods nor Services suppose if I'm giving you 500 rupee note and you're giving me 400 rupe notes and 15 50 rupees note and 50 rupees is a commission for you mean separate consideration that will be treated as service which will be treated as service that 50 rupees will be treated supply of service and what is the meaning of money money is Indian currency or foreign currency or any instrument recognized by RBI but does not include old currency which is not in the circulation so currency means what Indian currency or foreign currency includes any instrument recognized by RBI but old currency will not come under money definition so say of old currency will be treated as sale of goods and it will attract GST even cryptocurrency cryptocurrency is also not treated as instrument recognized by RBA correct so therefore sale of cryptocurrency also treated as supply of goods and it will attract GST okay so sale of old coins sale of old coins sale of old coins are sale of cryptocurrency sale of crypto currency treated as sale of goods and attract GST attracts GST then next so remember Securities transaction in Securities is only not goods or services but any other activity connecting to Securities so any other activity connecting to Securities is what so we have you know this uh security you know lending like that one concept is there security lending means we are renting the Securities or lending the Securities that is not transaction in Securities not sale of Securities we are just lending the Securities that will be coming under facilitating or arranging transaction in Securities okay then next actionable claims actionable claims means any instrument which entitles right to receive a benefit so four condition should be satisfied then only it will be called as actionable claims what are those first you should have a instrument that will give you right to receive a benefit or recover a DAT that can be transferred from one person to another person and it is legally enforceable and the holder of that instrument is entitled to receive the benefit or recover the debt then it will be called as a actionable claim so Bill of exchange promisory note check lottery ticket and even in casinos the chips are there now all these are called as actionable claims but in this actionable claims if it is covered under money definition because check bill of exchange and promisory note is covered under money definition as it is covered under money definition it is neither Goods nor Services say this actionable claims which are covered under money definition that is Bill of exchange promisory note and Bearer check it is neither Goods nor Services whereas other actionable claims are treated as Goods in this other actionable claims so this specific ifed actionable claims is covered under Supply and other actionable claims are not a supply okay then so what is the specified actionable claims online gaming will not come under specified actionable claims I Told You So online gaming means offering a game on the internet or electronic Network and includes online money gaming but online gaming other than online money gaming will come under oid services online money gaming so the basically this these three are online gaming okay online gaming will be treated like IDR Services okay then online money gaming so means online gaming in which players pay or deposit money or money's worth including virtual digital asset this is a highlight point in the expectation of winning money or money is worth that should be there then only it will be called as online money gaming in online money gaming there should be expectation to win the money including virtual digital Assets in a event including game scheme competition or any other activity or process whether or not its outcome or performance is based on skill chance or both so let it be a game of skill or game of chance game of skill so definitely certain games will be game of skill chess online chess is a game of skill so people put bet on that that and all and they will play and they will win the money so it's a game of skill definitely it's not a game of chance whereas Ludo is a game of chance there is no skill involved in that because that dice when you throw you don't know now which number will be coming so it's a game of chance so then there is a dispute like dream l so whether it is a game of skill or a game of chance so for which you know they have made this amendment so if it is a game of chance it will come under betting and gambling if it is a game of skill it will not come under betting or gambling that's why they included both in the definition now whether it is game of skill or game of chance everything will come under online money gaming so they need to pay and on dream 11 they served a 9,000 CR uh not not 9,000 90,000 CR sorry 90,000 CR tax demand has been served on them okay so to pay the GST and they ran away so whether or not its outcome or performance is based on skill chance or both and whether the same is permissible or otherwise under any law for the time being in force so this is about online money gaming and then meaning of consideration so we have seen meaning of goods and meaning of services looking into the meaning of consideration that is given in section 2 Clause 31 consideration includes and consideration excludes consideration includes either monetary or non-monetary monetary means what payment received or receivable non-monetary means it can be in the form of goods or it can be in the form of services that is not important but consideration excludes what consideration excludes refundable security deposits and subsidy from central government or state government so these two are excluded from consideration and consideration can be received from recipient or any other person what we need to see is presence of consideration example yesterday we have seen that dealer will be providing free after sale service which they will recover it from the manufacturer so he's not getting money from the buyer but he's getting money from the manufacturer so whether he gets money from the buyer or he gets money from the manufacturer there is a consideration that is involved in the transaction so therefore it is treated as consideration not necessary that it should be received from the recipient and consideration should be in respect of in response to or for the inducement of supply of goods or services in respect of mean we will tell in the beginning itself like this is the activity this is the consideration this is the amount that you need to pay for it it is known as in respect of whereas in response to so we are not committing any amount but for that activity in response to some amount is received so example I told you usually this actors and all will be receiving car Etc as gift from the producer for acting in the movie so once the movie becomes hit producer will give the car as a gift is that car coming under consideration yes in response to acting in the movie had the person not acted in the movie he will not receive it now so therefore it will be coming under consideration and inducement of inducement of means offering some gift to make the work done so that gift given to make them sign a contract will also come under consideration that is known as inducement of then activity without consideration or consideration without activity is not a supply under 718 so activity without consideration so like for example I'm taking classes now and I'm not collecting one rupee also from you so therefore it is activity without consideration is it Supply or not a supply not a supply and consideration sir tomorrow because of this you will be getting some students and therefore they will be purchasing your lectures I don't think so so because there is no Guaranty certainty element should be involved there is no certain element here probable and all cannot be called as consideration so therefore there is no consideration consequently it is not a supply same way consideration without activity what is an example for that donations so we are getting some money but in return we are not doing anything for that so then it will also not be trated as Supply what if we got a donation and in return we are doing something so for the donation then it is called as a conditional donation conditional donation will be treated as Supply so basically donations are divided into two conditional donations and unconditional donations conditional donation means obligation on supplier to do something whereas unconditional donation means no obligation on supplier to do anything so therefore conditional donations means you're giving me some money and you're putting a condition on me to do something for you you display my name somewhere on the top of the building so I'm doing the donation for it it is known as what conditional donation so means I have an obligation to do something for you so this conditional donation is treated as consideration and the activity will become Supply under 718 suppose if it is unconditional donation you're giving me donation and you have not made me oblig for anything means I don't have any obligation to do anything in return to you then it will be unconditional donation not treated as consideration consequently it will not become Supply now you gave me money and you have not ask me to display your name Anywhere But as a gratitude I displayed your name is it condition donation or unconditional donation unconditional donation however cbic circular says display of name gives a business advantage to the donor by displaying your name you are getting a business Advantage then it is deemed to be conditional donation and it will become Supply if donor name is displayed anywhere in the premises against the donation not obligated but as a gratitude it is being done display of name does not give business advantage to the donor not a supply so I have just mentioned donated by by so Mr Ram nothing else so therefore it is not treated as conditional donation unconditional donation not a supply so donated by Mr Ram proprietor Ram fancy stores like that I have mentioned now in that case so display of name gives a business advantage to the donor therefore it will be coming under Supply under 71a display of name gives business advantage to the donor okay then and I just said Ram as a person name not that jri Ram you understood so people those who are watching these lectures don't put in the comment and all something okay I didn't mean anything about that because if I speak anything it is going in some other sense okay now coming back to this meaning of person meaning of person so person under income tax act so we already know that is individual HF company body corporate or firm everything will come but extra we have central government and state government also that is called as person under GST so this is person under Income Tax Act individual HF company firm aop Cooperative Society local Authority artificial judical person and any other body corporate extra extra central government or state government so that is called as person under GST sir if we use doctor Ram then will it be coming under Supply sir deemed Supply no yeah because Dr Ram can be any person they are not specifically giving suppose if you mention Dr RAM and Clinic name his Clinic name will be there now that clinic name if you put automatically it will be coming under business Advantage so your name because you will be having too much fancy towards CA and all the moment you qualify CA everywhere you will put CA like that your name because you like that it's your effort you have made lot of effort in getting that CA nothing wrong in that so you will put everywhere in wedding card and all you will put and suppose if because you know one invitation has been given in that invitation that person is asking no my name only mentioned where is CA before that CA so took the wedding card or invitation CA so so then only his ego got satisfied so therefore people are like that now you donate when you donate it they will put your name but you want them to put CA like that just because of this you're are not getting any business Advantage suppose if your name along with your firm name comes you will have a firm name now if the firm name is mentioned then there is a business Advantage like that then meaning of business so business definition is relevant because there are many places we have in the course are furtherance of business not in the coures are furtherance of business Etc so there have there is a general meaning of business and there are some specific activities what is the general meaning of business trade Commerce manufacture first three trade Commerce manufacture next three profession occasion Adventure these are related to skills profession is by way of qualification occasion is by way of experience Adventures as a passion you are doing it and vager vager refers to betting activ activities or any other similar activity so these eight activities trade Commerce manufacturer profession occasion Adventure vager or any other similar activity its incidental or anary is also covered so there is a chartered accountant who takes classes and he gets some money that will be incidental or anary to his profession and he WR WR authors a book and he gets some royalty income that will come under incidental or anary to his profession and he takes seminar and he gets some fees for you know giving lectures in seminar so that is also coming under incidental or anciliary to his profession suppose if he starts acting in movie that will come under Adventure because it is no way connected to his profession that's a different skill as a passion is doing that so that will come under Adventure so extension of this activities is incidental or anary all together a different skill will be coming under Adventure then irrespective of volume frequency or regularity sir only one transaction we made let it be that is also treat as business whether or not for a pecary benefit so there is a charitable trust that charitable trust is selling some Goods but not for profit motive even then it is business yes whether or not for a pecary benefit whether it is for not profit motive or profit motive it is business then there are some specific activities first one entry tickets entry tickets like admission to cinema theater admission to park or admission to Museum admission to temp Etc all these are Trad as business then holding an office which is accepted by a person in the course are furtherance of his trade profession or occasion so there is a Trader who became a head of a trade Union for which he is getting some money so that will be covered under business and then there is a actor who became head of a artist Association for which he is getting some money so that will also be coming under business and there is a professional like a doctor who became head of the Medical Association for which he got some money that is also coming under business so holding an office which is accepted in the cor or furtherance of your trade profession or occasion Suppose there is a doctor who became secretary to a temple and for becoming secretary to the temple he got some money will it come under business no why it will not come under business it is not in furtherance of his trade profession or occasion then next supply of goods or service in connection with commencement or close closure of business so at the time of commencement of business I do some activity that is not actually my business for example I purchase 10 AC's and out of the 10 Aces four AC's I used in the business six Aces I am selling that sale of six AC is not my business even then it is in connection with commencement of business so therefore it will be treated as business I'm shutting down the business when I shut down the business assets and all I will sell sale of assets is not my business but it is in connection with closure of business so that will also be coming under business then provision of facilities are benefits to its members by a club Society or Association there is a resident Welfare Association that's apartment Owners Association this apartment Owners Association will be incurring common area expenses like lift maintenance parking maintenance security Garden Etc and they will be recovering the money from the members in the form of Maintenance charges so that will also be coming under business then any activity of a race club including betting activities all activities of race club betting activity anyhow coming under business but all other activities like supply of food and beverages to the people who come over there and supply of merchandise parking tickets all these will come under business and all activities of government is also business but in these all activities of government only few activities of government is covered under Supply and remaining activities are excluded from Supply what are the activities of government covered under Supply Department of Forst transportation of goods or passengers airport or port and services to business entities this is covered under Supply and remaining activities are excluded from Supply but all activities of government come under business then next one meaning of related what is the purpose of related parties so two places we will come across related in Supply definition 71c r and I related party transactions including transaction between distinct person there and import of services from a related person in these two places we come across related Whenever there is a transaction between related parties even though without consideration it will be Supply and one more impact also is there rule 28 will be applicable transaction value will not be applicable and we need to determine the value as per rule 28 so transaction value under section 15 not applicable and value determined in terms of rules and total nine relationships are there and they will be treated as related so first point such persons or officers or directors of one another's business so for example X is appointed as officer of y's business and Y is appointed as officer of X business now X and Y are treated as related and in this one more point also I have told you director of a company and such company are also trat as related so first point such persons are officers or directors of one another's business second Point such persons are legally recognized partners of a firm so there is a partnership firm in that partnership firm there are three Partners a b and c and this is a legally recognized Partners means what that firm should be a registered partnership firm there are three Partners a BC A and B are related B and C are related and A and C are related but the firm and partners are not related Partners in a firm are related however partners and firm are not related then such persons are employer and employee employer and employ also treated as related so first three points you should remember such persons or officers or directors of another's business they are legally recognized partners of a f employer and employee next three points is related to control so Point number four there are two companies having a common shareholder holding 25% or more in these two companies now these two companies are treated as related so any person directly or indirectly owns controls or holds 25% or more of the outstanding voting stock or shares of both of them and same point same nine points are there in related definition in customs also but the difference is that here 25% is there now whereas in customs it will be 5% okay so in custom for this fourth point in customs 25% replaced with replaced with 5% so no need to remember separately for custom the same definition is there even for Customs related parties then fifth point one of them directly or indirectly controls the another so when there will be control control can be by way of investment investment more than 50% there is a control or control can be by of majority Common Board of Directors for example two companies company a and Company B for company a x y and Zed are the directors for Company B it is XY and P are the directors now these two companies two out of three directors are common majority are common therefore these two companies are having control so therefore they are Traders related so either investment greater than 50% or majority Common Board of Directors or can be control of operations one company controls the operations of the another company even though investment is not more than 50 even though there is no majority board of directors even then they will be treated as related then point number six both of them are directly or indirectly controlled by a third person so two companies having a same parent company so X limited y limited X limited is under the control of a limited why limited is also under the control of a limited because these two companies are having the same parent company these two companies are treated as related so what are the first three points such persons or officers or directors of one another's business they are legally recognized partners of a firm employer and employee next three points two companies having common shareholder holding 25% or more one company directly or indirectly controlling the another third point two companies are under the common control of a third person then last three points Point number seven together they control a company so there is a company having many sh shareholders but you take two shareholders because always relationship we will see between two parties supplier and recipient so you take any two shareholders those two shareholders are having investment more than 50% now those two shareholders controls the company now now these two shareholders are treated as related so together individually they may not control the company but together they control the company so these two shareholders will be treated as related then point number eight they are members of the same family so family is defined in GST but family is not defined in customs family not defined family not defined in customs family not defined in customs so what is the meaning of family for the purpose of GST so family means parents grandparents brothers and sisters who are wholly and mainly dependent on that person whereas spouse and children whether or not dependent on that person spouse and children not necessary that they should be dependent always family but remaining remaining means brothers sisters parents grandparents they should be wholly or mainly dependent on that person then soulle agent soulle agent or Soul selling agent or soulle distributor they are also deemed to be related now there is a transaction between a principal and his soul selling agent whether we need to determine value as per rule 28 or rule 29 we need to determine the value as per rule 28 generally principle agent transaction rule 29 but Soul selling agent is related when the soul selling agent is related we need to determine the value as per rule 28 okay so transaction between transaction between principle and soul selling agent principle and soul selling agent which rule value under rule 28 not 29 value will be under rule 28 but generally principal agent transaction will come under rule 29 but in this case as so selling agent is related you should apply rule 28 only so these are the nine points related to related definition then next meaning of various supplies we have taxable Supply Exempted Supply non-t taxable Supply and zero rated Supply what are considered as zero rated Supply supply of goods or services to sez or export of goods or services is known as zero rated Supply what are non- taxable Supply alcoholic liquor for human consumption and five petroleum products will come under non- taxable Supply what are Exempted supply for payment of GST three Exempted Supply notified as Exempted nil rated and non- taxable and the remaining balance is known as taxable Supply whether taxable Supply includes Exempted Supply no so supply of goods or services divided into two chargeable to GST not chargeable to GST why is it not chargeable to GST maybe it is not leviable to GST that is non- taxable or maybe leviable to GST but nil rated rate of GST nil or it may be like notified for non-payment all these three will come under Exempted so what is the meaning of Exempted supplies notified for nonpayment notified as Exempted nil rated non- taxable so the balancing figure is taxable supplies means whether taxable supplies includes Exempted supplies no because Exempted supplies includes non-taxable Supply so taxable supplies do not include in it Ambit Exempted supplies then meaning of aggregate turnover just know we have seen aggregate or definition so what and all will come in aggregate or no all these four will come in aggregate or no taxable Supply Exempted Supply non- taxable Supply and zero rated Supply but what are excluded from aggregate turnover init Supply on which GST is payable under rcmm because basically turnover means outward Supply so in Supply even though you pay GST it will not come and cgst sgst igst and compensations say also will not come in aggregate turnover then next point you see GST on sale of flats and buildings generally when it will be excluded from Supply sale of building if the entire consideration is received after obtaining completion certificate or first occupation whichever is earlier so now if Entre amount is received before completion certificate or first occupation covered under Supply or excluded from Supply covered under Supply if enter amount is received before obtaining completion certificate covered under Supply GST payable and it will be treated as Works contract Service if Entre consideration is received after obtaining completion certificate then it is excluded from Supply GST not payable and we Tre it as sale of immobile property What If part consideration is before completion certificate and remaining consideration after completion certificate whether it is covered under Supply yes when it is excluded from Supply when the entire consideration is received after aining completion certificate then only it is excluded from Supply part before part after it is covered under Supply and GST is payable on the entire consideration total consideration on entire amount and it will be treated as Works contract Service so here consideration can be either money monetary or non-monetary and CC refers to completion certificate F4 refers to First occupation usually completion certificate is issued by the competent Authority First occupation means the date on which out of the flats One Flat is registered in one person's name that is known as first occupation date on which flat is occupied by the buyer in the project it is deemed as completion and remaining Flats unbooked will be excluded from Supply then distinct persons why distinct persons is relevant we have seen 71c related party transaction including transaction between distinct persons there are two points in distinct persons number one one registration of a person to another registration is known as a distinct person why a person is required to obtain more than one registration if the person is doing business in multiple States and if he is liable to get registered he need to register in every state from where he is making taxable supplies and that is mandatory so for example I'm doing business in four states and in four states I making taxable supplies and I am liable to get registered why am I liable to get registered because my aggregate turnover exceed the threshold limit now I should register in each and every state so now four states I will get four registrations now one registration to another registration if any transaction happens that's treated as a transaction between distinct persons even though without consideration it will become Supply what if I'm doing business within the state multiple place of business I have an option either to go for separate registration with respect to each place of business or I can go for single registration if I go for separate registration then one registration to another registration is also treat as distinct person so you can see in the next page I have multiple business and I'm doing business in different states now separate registration with respect to each state is mandatory I'm doing multiple businesses in the same state but in different place of business is this separate registration mandatory no so optional separate registration with respect to each place of business optional if I'm doing multiple businesses same state and same place same building I'm doing multiple businesses in that case can I go for separate registration no I cannot obtain separate registration now one registration of a person to another registration of the same person is treated as distinct person every registration of a person to then another registration is distinct person next Point registered establishment of a person in a state and unregistered establishment of that person in another state is also distinct person what is this for example I'm having business in four states say Tam Nadu Andra Pradesh Karnataka and Kerala I'm having business in four states now what happens is that in Tamil Nadu I'm making taxable supplies and Exempted supplies taxable supplies and Exempted supplies so in Tamil Nadu it is 8 lakhs and Exempted supplies 2 lakhs Andra Pradesh three lakhs 2 lakhs Karnataka 5 lakhs and 5 lakhs whereas in Kerala it is we don't have taxable supplies we have only Exempted supplies 10 lakhs if you see my aggregate turnover has exceeded the threshold limit say the applicable threshold limit for me is 20 lakhs so my aggregate turnover exceeds the threshold limit so what is my aggregate turnover 8 + 2 10 15 so 20 25 + 10 35 so applicable threshold limit for for me is 20 lakhs applicable limit is 20 lakhs and here it crossed 20 lak so I need to register where we need to obtain GST we need to obtain GST in Tamil Nadu we need to obtain GST in Andra Pradesh we need to obtain GST in Karnataka but we don't have to obtain GST in Kerala no need to obtain GST in Kerala why because I'm not making taxable supplies even then for Tamil Nadu registration AP registration and Karnataka registration carala business will be treated as distinct person even though we don't have a separate registration over there between Tamil Nadu to AP or AP to Tamil Nadu Tamil Nadu to Karnataka Karnataka to Tamil Nadu this will be covered in the first point itself because one registration to another registration it is distinct person but one registration one registered establishment to another establishment in another state even though not registered that is also treated as distinct person registered establishment of a person in a state and unregistered establishment of that person in another state so between Karnataka to Kerala if there is any transaction that will also come under distinct persons okay so even though there is no GST in these are the two points that you need to remember now what is the consequences of distinct person if there is any stock transfers or Branch transfers that will be treated as you know Supply because stock transfer Branch transfer will happen between head office branch office Factory Depot Etc now so that will become distinct persons and it will become Supply then next one meaning of recipient so who will be called as recipient if consideration is involved in the transaction the person who is liable to pay the consideration is the nipan not the one who pays the consideration for example I got an order from the holding company to provide the services to the subsidiary company so to me who is the recipient holding company or subsidiary company who is required to pay money to me who place the order with me holding company means privity of contract is between me and the holding company so holding company is my recipient even though I provide the goods or services to the subsidiary company so the one who is liable to pay the consideration is called as the recipient if consideration is involved if consideration is not involved then the one to whom I am delivering the goods or the one to whom I am providing the services will be called as a recipient so these are the points that we need to know related to supply once an activity becomes Supply then so we have seen seven subsection One 7 subsection 2 the activity became Supply now we need to check whether the activity supply of goods or supply of services how to check that for that we need to refer to seven subsection 1 a red with schedule 2 so three schedules you you need to remember in GST related to supply what are the schedule one schedule one is related to what 71c activities which are treated as Supply even though without consideration then schedule two schedule two is section 7 subsection 1 capital A classification of Supply into goods or services then schedule three what is schedule three that is section 7 subsection two so exclusions from the supply so remember these three schedules 71 that is 71 C when you are writing red with schedule 1 7 subsection 1 a readed with schedule 2 7 subsection two readed with schedule 3 okay so we are looking into 7 subsection 1 a red with schedule 2 first you need to check movable property when movable property will become and remember when activity becomes Supply only you should refer to 718 when activity is not a supply we don't have to do the classification so classification comes only when the activity becomes Supply so now there is a movable property when it will become Goods if there is a transfer of title it will be called as Goods if there is a transfer of right to use it will be called as Services I have a car I'm giving you the title of the car means sale of goods I'm not giving you the title of the car I'm giving you right to use a car means renting it will be coming under Services what if the title is transferred at a future example higher purchase in case of higher purchase what will happen today we enter into contract to deliver the product today but the title will be transferred at a future date correct on payment of last installment but the title is to be transferred at a future date is also treated as supply of goods so higher purchase transactions are treated as supply of goods only so transfer of title either at present or at a future is supply of goods transfer of right to use movable property is treated as service immovable property will never come under Goods so even though there is a transfer of title it is excluded from Supply now sale of land sale of building Etc so it will not come under Goods but it will come under Services when it will come under services so if there is a transfer of right to use immobile property or in case of bringing into existence immobile property that is construction activity or transfer of right in relation to immobile property then intellectual property rights intellectual property rights example copyright trademark patent Etc and and if it is a permanent transfer it will come under supply of goods if it is a temporary transfer of IPR it will come under supply of services example for permanent transfer patent of a technology sold to a company permanent transfer sale of goods so music director composing music for a movie it's not permanent transfer temporary transfer that will come under supply of services then point number four carrying out process on the goods belonging to the other person now whether substantial material is given by the supplier or by the recipient you need to check for example I am a tailor and you gave me cloth I did the stitching substantial material who gave supplier or recipient recipient which means it will come under supply of services for me because I'm just doing the job work so you gave me the material I do the process so it will be covered under supply of services if I only buy the cloth and I only do the stitching and give it to you mean substantial material is supplied by me so therefore it will be coming under supply of goods so if substantial material required for the process is supplied by the supplier it is supply of goods if the substantial material required for the process is given by the recipient then it will be Trad as supply of service then suppose if it is supply of goods along with services so means in a transaction there involves both goods and services then in that case three notified activities these three notified activities will always be treated as supply of services what are these three notified activities works contract information technology software and supply of food these three involves both goods and services but it will always be treated as supply of service what are those three notified activities Works contract information technology software and supply of food apart from this other supplies any other Supply that involves both goods and services check whether it is composite Supply or mixed Supply if it is a composite Supply the principal Supply is Goods then inter activity trade as Goods if the principal Supply service inter activity trade as service for example ACN installation is a composite Supply AC is Goods installation is service so principal Supply is AC so the entire activity will be treated as supply of goods then coaching plus study materials is composite Supply coaching is Services study material is Goods but here what is the principal Supply coaching so entirely it will be traded as supply of Services then suppose if it is a mixed Supply if the highest rate is Goods entirely it will be treated as Goods if the highest rate is service entirely it will be treated as service for example so TV is Goods optional warranty is service the highest rate is TV so entirely it will be trated as supply of goods then video lectures plus pend Drive video lectures is service pendrive is Goods the highest rate is video lectures so entire activity will be cre supply of service so what you need to remember if it is a composite Supply if the principal Supply is Goods entire activity is Goods if the principal Supply is service Entre activity service if it is a mixed Supply highest rate is Goods Entre activity Goods highest rate service Entre activity service apart from this any other activity that any other activity will always be treated as service what is that doing an act not doing an act or tolerating an act balancing figure will come under Services doing an act so doing some activity not doing an act example non-compete fees I'm collecting some money for not starting a competing business so that is supply of service tolerating an act damages so usually breach of contract some damages will be collected so that will come under consideration for tolerating an act even that is supply of services then you can see meaning of Works contract and meaning of job work basically Works contract means what I told you already Works contract means it involves both Goods element as well as service element and that should be in relation to what immovable property and there should be a lumps some amount then it will be called as a Works contract Works contract will always be treated as supply of service then job work you see job work means carrying out process on the goods belonging to the other person is called as job work okay but the other person should be a registered person then only the ACT activity name is job work if it is not job work then it will be traded as some other services for example I A supplier and I'm doing some process on the goods belonging to you you have supplied some Goods to me I do the process now you are registered so this activity name is job work you are not registered this activity name is Services it will not be called as job work because what is the main ingredient to be called as job work the recipient should be registered in job work who is the supplier who is the recipient the one who carry out the process is the supplier the one who Supply the goods will be the recipient so job worker supplier may or may not be registered but the principal manufacturer should be registered process carried out may or may not be manufactured job work is supply of service usually in case of job work the rate is 6% or 12% and if it is not job work if the recipient is unregistered it is not job work but treated as some other service and the rate of GST 18% will be applicable then this is about section 7 and in this Supply chapter one more section we have is Section 8 section8 talks about composite Supply and mixed Supply so composite Supply mixed Supply so we have a definition so first we need to understand the differences between these two so composite Supply means two or more supplies and taxable two or more taxable supplies of goods or service or both or any combination thereof which are naturally bundled in the ordinary course of business one of which is a principal Supply whereas mixed Supply two are more individual supplies so in case of composite supply all the supply should be taxable but in case of mixed Supply not necessary that it should be taxable and in case of composite Supply it should be naturally bundled but in case of mixed Supply not necessary because it is not a composite Supply and in in case of composite Supply one of which is a principal Supply but that is not relevant in case of mixed Supply so there are three differences between composite Supply and mixed Supply first difference in composite supply all the supplies involved are taxable but in mixed either taxable or Exempted or any combination second Point principal Supply is it required in case of composite Supply yes but in mixed Supply principal Supply not required what is the meaning of principal Supply the predominant Supply in the transaction is known as principal Supply that's a main activity and other activities are called as anary activities then third point in case of composite Supply that Supply should be naturally bundled in the ordinary course of business naturally bundled means what one cannot be supplied without the another then it will be called as naturally bundled in the ordinary course of business whereas in case of mixed Supply it is not required that it should be naturally bundled now what should be taken as the rate of GS if there is supply of goods or services or both and when there involves more than one Supply and if it is naturally bundled it is composite Supply in case of composite Supply we will take the rate of principal Supply suppose if it is no not naturally bundled it is mixed Supply and we will take the GST rate of Supply having the highest rate suppose if there is no more than one Supply then the question of composite Supply or mixed Supply does not arise and here you need to know that there should be a single price in case of mixed Supply if there is no single price it is not treated as mixed Supply it will be treated as individual supplies and taxable at the respective rate okay so what is that we need to know here is that first you need to check whether there involves more than one Supply so two or more supplies two or more supplies in a transaction two or more supplies in a transaction if the answer is yes two or more supplies in a transaction if the answer is yes then only we will apply Section 8 suppose if it is no Section 8 not applicable Section 8 not applicable and there involves two or more supplies in a transaction now three conditions you need to satisfy to become composite Supply what are the three conditions all supplies are taxable all supplies are taxable then naturally bundled naturally bundled in ordinary course of business in ordinary course of business it is naturally bundled in ordinary course of business yes then principal Supply identifiable principal Supply identifiable this is also yes then what is the name of this so it is called as composite Supply don't bother about the price the price can be separate or the price can be single single okay but these three conditions should be satisfied all the supplies are taxable and naturally bundled in nonary course of business and the principal Supply is identifiable then it will be called as composite Supply if it is a composite Supply what is the rate of GST that will be applicable rate of principal Supply rate of principal Supply applied on entire transaction rate of princip Supply applied on entire transaction okay suppose if any one condition is not satisfied all the supplies are taxable no all the supplies taxable but not naturally bundle all the supplies taxable naturally bundle but the principal Supply not identifiable if it is no then only one condition you need to check whether it is for a single price or not whether it is for a single price or not you need to check if it is for a single price yes it is for a single price first to become mixed Supply it should not be composite Supply first always apply composite Supply in the question it should not be composite Supply and there should be a single price then it will be called as mixed Supply if it is mixed Supply what is the rate that you will take highest rate highest rate applied on entire transaction highest rate means in those supplies what is the highest rate applied on entire amount suppose if it is no we don't have you know like single price separate prices we have then it is neither composite nor mixed neither composite nor mixed means what it will be individual supplies in case of IND individual supplies what we will do respective rate for respective Supply respective rate for respective Supply that will be taken so this is how we need to arrive at the composite Supply or mixed Supply or individual supplies the main challenge that you will have in exam is about naturally bundled or not naturally bundled everything else will be given in the question this this is the place where you need to apply your mind and check whether it is naturally bundled or not how to check that little bit of general knowledge is also required in this case but it will be given in the question itself majority of the cases remember one cannot be supplied without the another it is called as naturally bundle in the ordinary course of business don't see the exceptions see the most probable side example AC and installation usually who sell AC will only do the installation and so only AC we cannot buy so because if we buy AC and get it installation warranty will not be covered so they will definitely do installation so it is naturally bundled whereas laptop and laptop bag sometimes laptop will be sold without laptop bag also but in the ordinary course of business they will sell laptop along with laptop bag so most probable side only you see so it will be again coming under naturally bundle don't see it from the recipient point of view see it from the supplier point of view example inverter and Battery inverter and battery not naturally bundled why not naturally bundled so inverter will not work without battery battery will not work without inventor but that you are seeing from the recipient point of view see from the supplier point of view when there is a seller who is selling battery and inverter can the battery alone be sold without inverter yes can the inverter be sold without the battery also yes can it be sold together also yes therefore it will not come under naturally bundle then so looking to three notes related to this note one in case of servicing of cars composite Supply test should not be applied for cars alone they have given usually in servicing of cars what is the goods element Parts replaced during servicing is the goods element and what is the service element there so labor charges for replacement usually it is composite Supply why path taxable labor charges taxable all are taxable naturally bundle because service center only will s the parts and they will only do the replacement naturally bundled principal Supply is Parts if the part is not there the labor charges for replacement of parts will not come but don't apply composite Supply you have to treat always as individual supplies only in this case so the test of composite Supply should not be applied Parts replaced and labor charges for replacement are treated as individual supplies if the amount is shown separately for each what if it is given together huh then you apply composite Supply concept when it is given separately so usually bills they will give separately only they will clearly mention so Parts how much labor charges for replacement of part how much so therefore we will treat it like individual supplies only then second note related to food and beverages purchased in a theater taxable as individual supplies you go to a theater you book The Ticket then in the break interval you go and buy popcorn Coke Etc and all you purchase so this food which is sold in the theater is taxable at what rate is taxable at the rate applicable to food 5% supply of food is taxable at 5% that 5% only will be applied okay if the same is purchased along with the ticket means what combo so there are some theaters wherein for the ticket itself they will give you the food also as a part of the ticket example PVR director cut so one theater is there in Bengaluru ticket price is 1,500 rupees okay so 1,500 rupees when you pay and luxury seat and all amazing environment of course you like to watch everything in telegram itself so for you it will not be applicable so people who have money and can go and spend so they will go I didn't go I didn't go so I also belong to your category only in I will see and therefore a lot of people who go there they will put the post and all so I went to this movie Etc so in that I just inquired them how much is the price 1,500 rupees and they will get the popcorn and coke as a complimentary along with the ticket now in that case that popcorn and coke is taxable at what rate the rate applicable to the theater so cinema theater rate is 28% the 28% will be taken if the same is purchased along with the ticket then it may attract composite Supply in such case food and beverages taxable at the rate applicable to entry to cinema Hall you got it suppose sir I'm booking the ticket in the app sir and thereafter I also buy the food and beverages in that case will it come under composite Supply no it will come under individual supplies why it will come under individual Supply you are not paying the single price for Ticket separate and for whatever you order buy so that is separate that is individual supplies taxable at the respective rates only you got it means food and beverages taxable at food and beverages 5% cinema theater rate taxable at 28% when it will come only when it is like a combo you are buying it as a combo and then in that case composite Supply may get attracted and what is the principal Supply Here entry to cinema so that rate will be taken then if there are two or more supplies which is not a composite Supply and also not involving a single price then these are treated as what individual supplies and it will be taxable accordingly got it so this is about Supply composite and mixed Supply we have some circulars related to this we'll take a break and thereafter we will continue with this and few queries are there so up to to some queries we have completed then there is one good query can I offer 101 in one state and 10 2 a in another state no so I have composition scheme 101 I am going for one state and 10 2 a in another state not possible all the states should be 101 all the states should be 10 2 a mix and match is not possible I should not do that then sir for warehoused goods is it processed Goods or linished Goods any Goods warehoused Goods which is sold any warehoused Goods which is sold the money what we receive that is original importer is receiving money by sale of wost goods is excluded from Supply then can you give examples where the recipient is Exempted from registration I gave you now that is Advocate Advocates outw Supply I gave you yesterday only this example Advocates outw Supply is covered under RC either Exempted or RCM as Advocate outw Supply is covered under RCM Advocate is Exempted from registration as Advocate is Exempted from registration even though they are importing some services on which they need to pay GST or RCM but they are not required to get registered because section 23 overrides section 24 so they are Exempted from registration that's one example sir Securities are excluded from Goods by but why security lending scheme is Trea Supply because that is not sale of security ities it is lending of Securities lending of Securities will not be coming under sale of Securities it will be coming under facilitating or arranging transaction in Securities then sir in related party definition why 6 is relevant because anyway point four explains yes point four tells two companies with a common shareholder 25% but Point number six is not about investment alone it can be majority board of directors any kind of control is given in point number six they are telling two companies is having a parent company the parent company either can control by way of investment or can control by way of majority board of directors or can control by way of operations so Point number six is so more broader than Point number four point number four is restricted only for investment 25% okay then next point 6 explains common control yes I have given sir if another state is having place of business trade as additional place of business like for storage purpose is it treated as distinct person another state yes so in another state if you have a place of business so even though it is unregistered even though it is unregistered that is also your distinct person you can do anything over there if it is unregistered establishment also it is distinct what if it is a registered establishment that is also distinct how we will consider if Supply involves nil rated Supply Plus 18% Supply in the normal course of business then it will will not come under taxable supplies because nil rated is what Exempted one taxable and one nil rated means it will come under mixed Supply only it will not come under composite Supply because in composite supply all the supply should be taxable so one taxable and one Exempted will come under mixed Supply and the highest rate should be taken between that provided there is a single price what if there is a separate price for nil rated no GST and for 18% taxable 18% will be taken okay fine so these are the queries okay so we'll see summary of important circulars which is in page number 24 these circulars are mainly related to the aspect of Supply so the first circular is with respect to Interstate M of any conveyances that is between distinct person so there is a lry which is taking some goods from one distinct person to another distinct person on that Goods definitely GST will be payable but the question is whether GST payable on the lry no GST is not payable on the lry even though lry is Goods so first point you need to remember is that there is a conance which is carrying goods or people from one distinct person to another distinct person GST not payable on that conveyance second point if the conance is taken from one distinct person to another distinct person for repairs whether GST payable on that conveyance if it is taken for repairs no so even on repairs also GST like the conveyance is taken for repairs also GST not payable see this it is clarified that such Interstate M of train buses trucks tailers tankers Etc carrying goods or passengers or both or for repairs or maintenance shall not constitute Supply and not chargeable to GST so this is the first point you need to remember then however applicable GST as the case may be shall be leviable on repairs and maintenance activity done for such so when we are sending the conveyance from one distinct person to another distinct person for repairs GST not payable on the convs but on the repair activity GST will be payable for example there is a factory so a limited is having a factory in Tamil Nadu a limited Factory in Tamil Nadu to a limited having a Depot in Karnataka so they are sending the lri containing the goods so whether GST payable on this lry which is containing the goods so Goods GST payable but on lri GST not payable so value of goods GST payable whereas value of lri value of lri there is no GST same way the vehicle is being sent for repair purpose say a limited is having a factory in Tamil Nadu and they have a workshop in Maharashtra so a limited is having workshop for repairs in Maharashtra now they are sending the lri whether GST payable on the lri No No GST there is no GST on the lry even after repairs the lry will be returned after repairs so whether GST will be payable on the lry which is sent after repairs no no GST however so a limited Workshop is providing the repair services on that repair services GST will be payable hope you understood this GST will be payable on the repair activity done by one distinct person to another distinct person then one more point so first point is related to movement of conveyance between distinct person carrying goods or people GST not payable second point mement of conveyance between distinct person for repairs GST not payable however on the repair activity on vehicle no GST but on the repair service GST will be applicable third third point is related to so movement of goods or tools between the distinct person not for further Supply but for consumption in the distinct person also the above circular is extended to Interstate movement of rigs tools and Spares and all Goods on Wheels and except in case where the movement is for further Supply what is that usually some spare parts will be sent from one distinct person to another distinct person not for further Supply but for consumption in the distinct person on that spare parts also GST not payable even though this particular circular is given for Interstate movement the same principle is applicable even in case of intrastate movement so in the circular they did not specify about intrate mement but logically the circular can be applied for intrate mement as well then another point when an agent will be called as agent acting on behalf of principal why because principal agent transaction will come under Supply 71c only if agent is acting on behalf of principal when agent is called as acting on behalf of principal in case of sale transaction invoice is raised by the agent in his name in case of purchase transaction the invoice is in agent's name then only agent acting on behalf of principal if agent is acting on behalf of principal between principal and agent if there is any activity that will become Supply okay so when agent is acting on behalf of principal agent is representing principle on all aspects and invoice is raised by the agent in his name in case of sale and the purchase invoice is in the name of the agent then next one is related to print activity in print activity what is the goods element paper and ink is the goods element Printing and binding is the service element now whether it is supply of goods or supply of services for that they are telling if printing constitutes principal Supply when printing constitutes principal Supply in case of books brochers Flyers Etc the main element is printing paper and ink is just ancillary so therefore it will be treated as supply of service whereas paper constitutes the major element in which case tissue papers or letter heads or envelopes Etc where the paper is the principal Supply and the printing is ancillary then it will be traded as supply of goods so in the print activity two elements are there so paper and ink is the goods element Printing and binding is a service element if printing constitutes principal Supply it is supply of service if paper constitutes principal Supply it is supply of goods then next whether the activity of bus body building a supply of goods or supply of service again that should be determined based on principal Supply so in bus body building so they will do fabrication of materials and they will construct one body so in that the metal or material used in the structure is called as Goods element and the fabrication welding and installation is called as a service element usually what is the principal Supply fabrication is only the principal Supply so it will be read as supply of service so print activity as well as bus body building these two cases we need to classify based on principal Supply what constitutes principal Supply then whether the activity of rethreading of tires is supply of goods or supply of service services in rethreading of tires the old tires is taken from the buyer and the supplier is only doing the rethreading it is like carrying out process on the goods belonging to other person it will be coming under supply of service suppose if old tire is purchased by the supplier and he supplies the rethreaded tire then it will be treated as supply of goods the next priority sector lending certificates these certificates are sold by One bank to another bank which has the deficit it in meeting the priority sector loan Target every bank has to spend some money towards the loans for priority sector out of the public deposits if there is any shortfall they will buy the priority sector lending certificates from another bank which has given excess loans to the priority sector so this sale of priority sector lending certificate will be treated as supply of goods and moreover it will come under RCM so transaction involving sale of priority sector lending certificate by One bank to another bank will come under RCM so selling bank will pay GST or buying bank will pay GST buying bank will pay GST that two it is deemed interstate so always igst will be applicable because this sale will be happening through e portal of RBI so supplier don't know who is the recipient so it will be deemed interestate and chargeable to igst so in GST there is no exemption to trading in pslc thus they are always taxable as Goods always chargeable to igst under RCM as we have list of goods which are covered under RCM this point you need to keep in mind so trading in pslc comes under RCM then next whether the artwork sent by artist to galleries will it become Supply on the date it is sent to the gallery no artist sending the artwork to the gallery will become Supply only when Art Gallery is subsequently selling it to a buyer if the art gallery is not selling it to the buyer in the hands of artist it is not a supply and GST not payable whether tency rates or pagadi system is chargeable to GST tency rate arises in a situation where I transfer the tency right to another person so tency right is like a lockin contract I will enter into a lockin contract with the property owner and I get a tency rate this tency rate I can either transfer it or I can renounce it for transferring the tency rate or renouncing the tency rate I will get a premium from the another tenant called as teny premium so this tency premium is for are vacating the property before the end of the tency contract so this tency premium whatever I am receiving as a tenant will always be taxable in my hands but the tency premium received by the property owner will be taxable if the rent of that property is taxable if the rent of the property is Exempted the tency premium received for the property is also Exempted then when the rent of the property will be Exempted generally rent of property is always taxable only in two two cases it is Exempted renting of property is Exempted only in two cases number one if it is a residential property given on rent for residential purpose to a unregistered person it will be Exempted residential property residential purpose to an unregistered person is Exempted residential property residential purpose to a registered individual for his personal family state in these two cases only it will be Exempted remaining case renting will be taxable so tency premium received by the property owner also will be taxable in these two cases rent is Exempted now so for that if any tency premium is received that tency premium is Exempted so in relation to residential property it will be Exempted in relation to commercial property it will be taxable in which case in the case of a property owner but for a tenant always teny premium will be taxable so just write down that so tenant premium teny premium is always taxable is always taxable in the hands of tenant in the hands of tenant in the hands of tenant whereas this point is there now in relation to residential property commercial property this discussion is only to a property owner in case of owner in case of owner property owner if it is residential property then it is Exempted commercial property it will be taxable but the two residential property when it will be Exempted if it's a residential property for residential purpose to an unregistered person or residential property for residential purpose to a registered individual for his personal family State anyhow this discussion again comes in exemption there I will connect that then another Point GST on director's remuneration generally director getting remuneration from the company will be coming under RCM but in case the director is acting in personal capacity then whatever money that is received by the director will not come under RCM so director is only required to pay GST under fcm so and one more Point related to this is that what if the director is not a you know employee then only it will be coming coming under Supply what if the director is an employee then it is not a supply because employee to employer in the course of employment is excluded from Supply how do we know whether a director is employee or not an employee for that we need to refer contract of service or contract for service the contract that is entered by the director with the company if it is contract of service then the relationship is employer employee and the activity is not a supply what if it is contract for service then it will be Supply and GST payable by the company under RCM suppose if the contract of or contract for cannot be Asain there is another test that is under Income Tax Act if the TDs is deducted by the company under 192 then the money received by the director will come under salaries and it is excluded from Supply if the TDs is deducted by the company under 194 J then the money received by the director will be coming under pgbp so therefore it will be covered under Supply and liability to pay GST is on the company under RCM see this executive director or holdtime director is an employee of the company and TDs is deducted under 192 therefore it will not come under GST because 192 means salaries now then suppose if that part of the director remuneration which is declared separately other than salaries and subject to TDs under 194 J then it will be treated as consideration and taxable under RCM so who will pay GST company will pay GST under RCM in this regard one important point you should note is that so if the director is acting in his personal capacity if director is providing Services is providing services in personal capacity in personal capacity then it is taxable under then it is taxable under fcm then it is taxable under fcm this point already come in a different place I'm just connecting it here then next one no claim bonus so this no claim bonus already we sign in value of Supply is no claim bonus treated as consideration yes it is a discount that's okay but is this no claim bonus treated as a consideration no basically no claim bonus is not a consideration because no one is receiving that it is just like a deduction from the premium that we need to pay so that cannot be treated as consideration then whether interest received by a Del creader agent is chargeable to GST so interest is divided into two in GST interest on loans advances deposits which is Exempted interest on account of delay and receipt of consideration include in the value and chargeable to GST now there is a Del Crader agent who is getting the interest is it taxable or Exempted that depends now listen if there is a Del Crader agent who is Raising invoice in his name then Del Crader agent is the supplier so whatever interest that is collected by the Del agent so that interest will be taxable because it is on account of delaying receip of consideration if Del agent is not raising invoice the principal is Raising invoice means deler agent is a mere agent so whatever interest that is collected by deler agent is for giving Finance facility therefore it is Exempted so you need to divide it into two for the sale of goods who raised the invoice Del cred agent rais the invoice then interest collected by Del cred agent will be taxable invoice is raised by the principal not by the agent then in that case interest collected by Del CR agent will be Exempted if Del CR agent is Raising invoice in the name of the the principal so principal is Raising invoice then interest collected by Del cred agent is Exempted if the invoice is raised by the Del cred agent in his name then whatever interest that is collected by Del crit agent is taxable on account of delay and receipt of consideration then next whether owning controlling interest in the form of shares by a holding company in subsidiary company supply of services first of all transaction in Securities is neither Goods nor Services one student has asked me sir since Securities are neither Goods nor Services shouldn't we call sale of Securities as supply of neither Goods nor Services see that is different I'm telling neither supply of goods nor supply of services neither supply of goods nor supply of services that word we should use when in case of exclusion from supply for Securities the correct word is neither Goods nor services not supply neither Goods nor services and consequently it is not Supply that is the wording you should use okay then but here it is what holding company is having the shares of the subsidiary company holding the shares is not called as a activity correct activity of holding shares of subsidiary Company by holding company cannot be traded as supply of service and cannot be taxed under GST and this circular already we saw whether supply of food and beverages in cinema Hall will be taxed under the service of Cinema exhibition yes provided it is along with the ticket suppose if it is separately then it will be taxable as restaurant Services okay so these are various circulars that we have and now we are moving on to the next chapter that is Levy and collection under cgst then so there are like three queries how nomin director sitting fees is paid so any director for that matter Nomine director or independent director or non-executive director all these directors whatever money that is received from the company will be coming under you know RCM taxable it is 194 J only it will not come under 192 so therefore it will be taxable under RCM the company has to pay GST under RCM but if there is a nominee director who is getting some remuneration from the government so then it will be coming under you know excluded from Supply why excluded from Supply nominated post under the category of nominated post it will be excluded from Supply government post constitutional post nominated post is there now there it will be coming then next earlier what I meant was if goods are disposed of as free samples but covered under 71c then there is no need to reverse ITC however if these are capital goods we have 18 subsection 6 what about other than capital goods section 15 so usually capital goods are disposed of on which it Avail we will apply 186 what if it is not capital goods section 15 normal transaction value we will be taking what if there is no transaction value because it is disposed of without consideration now so when there is no transaction value we need to determine the value as per rules which rule will be applicable rule 27 will not be applicable because price is not sold consideration means there should be consideration but apart from price and Rule 28 not applicable because it's not a related party transaction rule 29 also not applicable but rule 30 will be applicable what is that rule 30 Cost Plus 10% if that is not there then residual value will be applicable in that case then next one student has commented yesterday that gstr 2B is not 13th it is 14th actually it is 13th midnight it will be generated okay so 14th we will be able to see 13th morning we cannot see 13th midnight we can see so 13th midnight or 14th morning both are same okay so I didn't tell anything wrong in that then next how Nomine director already I said then we will move on to segment three Levy and collection under cgst so section n talks about the levy and collection under cgst as per section 9 subsection one generally liability to pay GST is on the supplier apart from alcoholic liquor for human consumption and N subsection 2 says in case of five petroleum products right now there is no GST but as and when GST Council decides it will come into the Ambit of GST so the general rule is that 9192 liability to pay GST to government is on the supplier whereas in case of 93 94 and 95 supplier will not pay GST to government but some other person will pay GST to government in case of 93 who will pay GST to government recipient will pay GST to government in case of 94 who will pay GST to government recipient will pay GST to government in case of of 95 e-commerce operator will pay GST to government when this 93 will be applicable there are some notified goods and notified services in case of that notified goods and notified Services liability to pay GST is on the recipient and that list of services and goods both are applicable for exams now so initially at the time when we have sent this book for print so they have not given the statutary update and later on they have given that's why at the end I have added so what are the list of goods which are covered under RCM as additional amendments so we sent the book they got printed it and last we have sent this so it is there in the book but at the end it is there additional amendments this is the list of goods which are covered under RCM okay so therefore we have both Goods as well as Services which are covered under RCM and the goods related notification is what notification 4 of 2017 so list of goods this is applicable for exam what is the notification 4 of 2017 list of services which are notified where is it given 13 of 2017 so remember exemptions are given in 12 2017 RCM service is given in 13 2017 RCM Goods is notification 4 2017 so only for these notified goods and services RCM 93 will be applicable then who will pay GST we know recipient supplier should the supplier be registered may or may not be supplier may be registered or supplier may not be registered what about recipient whether recipient is compulsorily required to get registered yes subject to exemption so every recipient who is liable to pay GST and or RCM is compulsorily required to get registered suppose if they are Exempted from registration under 23 then they are not required to get registered and pay GST who are all Exempted from registration if my outward Supply is fully covered under RCM I'm Exempted from registration if my outward supplies are fully Exempted then also I'm Exempted from registration if my outward supplies are fully covered and like fully non- taxable then also I Exempted from registration or if I am an agriculturist then I am Exempted from registration so four people are Exempted from registration who are they exclusively RCM supplies exclusively Exempted supplies exclusively non- taxable supplies and agriculturist so even though they are having Inver supplies on which they need to pay GST and or RCM they are not required to register because section 23 overwrites section 24 otherwise every recipient who is liable to pay GST and RCM is compulsorily required to get registered so this is about 93 and when 94 is applicable 94 is applicable only in case of one transaction that is Inver supplies of a promoter or Builder from a unregistered person so one student asked me sir 94 is not applicable for exam no yeah 94 is applicable for exam because they gave the study guidelines so for May 24 exam in this May 24 exam nowhere it is given that N9 subsection 4 is exclusion so in the exclusion they're talking only about ITC for the real estate sector which is excluded so rate of tax for goods you don't have to remember rate of tax for services you don't have to learn exemption for supply of goods you don't have to learn we will not discuss that and carala fletes we have not learned that I know that it will not be tested in exam I have not discussed at all in any of my batch regular batch or exam oriented batch or FASTT track batch and manner of determination of itz in case of real estate transactions this also I have not discussed with you so because I know that this was eliminated long back itself so they will not be testing this for exam and last manner of reversal of credit of additional duty of customs in respect of gold Door bar this also I never discussed anywhere in my book also it is not there so these things are only excluded but whatever I have given in the book that is there in the syllabus okay so don't skip anything N9 subsection 4 is there N9 subsection 4 is applicable in case of promoter or Builder there is a promoter or Builder who is of 94 recipient will pay GST how the supplier should be definitely supplier should be unregistered person then only 94 will be applicable then 95 when 95 will be applicable there are some notified Services supplied through e-commerce operator then the liability to pay GST is on e-commerce operator what are those notified Services h a t e remember this four h for housekeeping services example Urban company and a for accommodation Services go IBO make my trip oo Etc will be coming and T for transportation of passengers transportation of passengers by any motor vehicle see previously it was radio taxi motor cap Maxi cab motorcycle now any motor vehicle is covered so but it should be transportation of passengers example Ola Rapido Uber Etc then eating food from the restaurant so example swiggy zato so these are the four activities which are covered under 95 where liability to pay GST is on e-commerce operator so tell me what are the four activities H for housekeeping service a for accommodation service P for transportation of passengers by any motor vehicle E for eating food from the restaurant but in this four we have certain conditions in case of housekeeping service and accommodation service first two cases the supplier should be unregistered then only it will be coming under 95 what if the supplier is registered it will not come under 95 supplier only will pay GST see this in case of h and a housekeeping service and accommodation service supplier should be unregistered what if supplier is registered it will not come under 95 supplier only will pay GST whereas the other two other two is what T and E for T and E transportation of passengers and eating food from the restaurant whether the supplier is registered or not registered always e-commerce operator only will pay there is a restaurant which is selling the food directly to their customers no GST because the restaurant is unregistered now that unregistered restaurant supply the food through e-commerce operator so who will pay GST e-commerce operator will pay GST on this even though restaurant is not registered but if the food is sold through e Ecommerce operator e-commerce operator will pay GST on that same is the case there is a driver who is uh know providing transportation of passengers through Ola or Uber now the driver is unregistered so provided service through e-commerce operator will they be chargeable to GST yes e-commerce operator will pay GST even if the driver is registered or not registered the position will be same you got it then next who will pay GST in case of 95 e-commerce operator will pay so these three are the exceptions to the general rule what is the general rule liability to pay GST is on the supplier but in these cases so e-commerce operator or recipient will pay GST now we are focusing on 93 that is list of goods and list of services which are covered under RCM so we will complete this list of goods so kindly look into the you know last page I have given the list of goods which are covered under RCM section 93 read with notification number 4 2017 sir already in this one you know what is that pslc just now we discussed priority sector lending certificate who will be paying GST recipient will pay GST so liability to pay GST is on the recipient priority sector lending certificate okay and then next you need to know I think it's not there it's not there in the book you you could quickly make not somewhere now okay I think I have given that it might be there uh otherwise you can make note of it for the sake of this and all don't buy new book okay of course if you buy it is revenue for me only but what's the point you know many students ask me sir I have November 23 books sir can I make use of it I told them two options number one if you can afford you buy the new book if you cannot offer anyhow amendments and all I am sharing in these lectures I am discussing so just to pause the video and you make note of this amendment okay that's the best thing anyhow it is free only now YouTube it is there how many times you want to pass you can pass and you can make note of it okay and uh say this or if you want to buy you buy good only any thing is fine for me then so 93 red with notification for 2017 the first product that you need to remember is what pslc who will pay GST in this case the recipient will pay GST now see this four Goods four goods sold by agriculturist four goods sold by agriculturist what are those four Goods cashew nuts BD rapper BD rapper leaves means B leaves means what tendu leaves so they will take a leaf put the Tobacco on roll it now is Bey Leaf okay so this poor man cigarette Bey Leaf cashew nuts Bey leaves and tobacco leaves what is tobacco leaves this tobacco leaves will be used inside the product okay outside the product is Bey Leaf inside that we get pieces okay in cigarette inside and all pieces will be there in cigars inside and all pieces of leaves will be there that is tobacco leaves okay bead leaves cashew nuts tobacco leaves and raw cotton not processed cotton raw cotton from the plant they take the cotton now so one big uh kind of will be there raw cotton you would have seen one seed will be there to that seed cotton will be attached so that they will pluck from that seed so that is a raw cotton these four are sold by whom agriculturist then the ability to pay GST is on the recipient okay what is the first point you need to remember priority sect lending certificate acquiring bank that is buying bank will be paying GST then second point you need to remember four Goods what are the four Goods cashew nuts BD leaves tobacco leaves and raw cotton okay sold by agriculturist to any person liability to pay GST is on the recipient you understood and in this case the recipient should be a registered person what if they are selling to an unregistered person as this is covered under 93 or not covered under 93 not covered under 93 because 93 says the recipient should be registered 93 says the recipient should be registered then only it will come under RCM so what if it is unregistered person means it is not covered under 93 when it is not covered under 93 then supplier unregistered recipient also unregistered whether any GST is applicable no there is no GST why supplier is unregistered just now I said agriculturist is Exempted from registration correct four people are Exempted from registration who are those four Exempted from registration exclusively Exempted exclusively RCM exclusively non- taxable agriculturist agriculturist will never register so supplier is definitely unregistered and recipient if registered it will come under RCM what if it is unregistered what if the recipient is unregistered it will not come under RCM 93 which means there is no GST on that because this point can definitely be tested they will tell sale of cash units by an agriculturist to an unregistered person and in the options liability to pay GST is on supplier recipient Yan supplier recipient d none of these the answer is none of this okay why none of these because there is no GST on the transaction 93 will be applicable only if the recipient is registered person you got it so what is it you need to remember first point priority sector lending certificates supplier can be any registered person recipient is any registered person whereas in case of four Goods what are the four Goods cashew nuts tobacco leaves B leaves and raw cotton supplier should be agriculturist who should be the recipient any registered person registered person and then along with this we will also see as raw cotton we completed silk Yar also you see silk Yar silk Yar is sold by a manufacturer a person who manufactures the silkon from raw silk or silk War cocoons for supply of silicon to a registered person then it will be coming under RCM so people who do culture they extract the raw silk now from the silk War cun and even so this raw silk will be supplyed to manufacturers manufacturers will make the silk fabric silk yarn and that Silk yarn they will be selling to garment manufacturers so these people any person supplier can be any person and the recipient should be a registered person then it will be coming under RCM see you have to remember mainly the recipient supplier not a problem recipient only you need to remember then only it will come under 93 then next one so three points you understood next next see this certain essential oils other than those of citrus fruit there's a big list of essential oils that list and all we cannot remember okay L peppermint oil eucalyptus oil like that lot of oils they have given okay so remember essential oils other than those of citrus fruit supplier any unregistered person and recipient should be a registered person and then we have Lottery who is selling Lottery state government is selling Lottery state government or Union territory then only RCM what if Lottery is not sold by state government is sold by Lottery distributor to a lottery retailer will it come under RCM no it will be fcm okay then used vehicles seized vehicles or Goods or confiscated goods sold by government so government is selling seized vehicles or seized Goods or confiscated Goods so they will be selling excluding Ministry of Railways why sir Ministry of Railways it is excluded because write down below in the notes Ministry of Railways is always covered under fcm Ministry of Railways is always covered under fcm we don't have any RCM with respect to this ministry of Railways Ministry of Railways this is also an amendment Ministry of Railways always covered under RCM sorry sorry always covered under fcm so liability to pay GST is on the supplier that's why they have given excluding Ministry of Railways okay then state government Union territory or local authori so supplier is government here supplier is government government means central government state government local Authority or Union territory they are selling it to any registered person so the liability to pay GST is on that registered person under RCM on what this seized vehicles or used Goods or seized Goods or any confiscated Goods then these are the points that you need to remember but please please please remember the supplier and the recipient also because don't remember only the goods if you remember only the goods you may end up with the wrong answer 90% wrong answer only it will be because Goods you know that it is covered under RCM but they will not play in the goods they will play in the supplier and the recipient so therefore they will be giving like recipient is unregistered person you will tell RCM and the recipient is compulsorily required to get registered and all you will write no actually it is not there okay one more point also you write down sale of cashion nuts or sale of tobacco leaves sale of tobacco leaves by agriculturist by agriculturist to unregistered person to unregistered person what is your answer no GST there is no GST in this case only if it is sold to a registered person it will be coming then one student has messaged book is not very costly no point in struggling with the old book and new amendments that's what I said but if I tell no why new book and all then they will say see s wanted to earn money he want to construct four five buildings for the sake of that he's telling like that people will think it's up to you you decide which you need I will not force anyone okay then say this one more Point sale of loty tickets sale of lottery tickets by Lottery distributor Lottery distributor to retailer Lottery retailer H fcm or RCM fcm only when the lottery tickets are sold by government to the lottery distributor or agent then it will be coming under RCM but when any other person is selling it to Lottery retailer or agent that will not come under RCM it will be fcm okay like this points can be tested so this is what you need to remember okay so one last time I'm repeating so first you need to know priority sector lending certificates sold to any sold by any registered person to any registered person it will come under RCM then second point you need to remember cashew nuts B leaves tobacco leaves and raw cotton sold by agriculturist to a registered person number three silk yarn sold by any person any person manufacturer to a registered person it will be coming under RCM and then essential oils essential oils other than those of citrus fruit by any unregistered person to a registered person it will come under RCM Four Points then fifth one is like Lottery Lottery sold by government to Lottery distributor or Lottery agent and the last point you need to know is about you know that used way used vehicles seized or confiscated goods sold by government to a registered person correct or not so now what if say this say this sale of used Goods sale of used Goods by government in Brackets registered to unregistered person to unregistered person what is your answer sale of used Goods by government registered to unregistered person uh GST applicable government is registered fcm between two unregistered persons only no GST don't write everything no GST and all between two unregistered persons only no GST your government is registered to unregistered person it is not covered under RCM why it is not covered under RCM see the wording there so sale of used vehicle seized and confiscated goods and used Goods by government to any registered person then only it will come under 93 RCM okay then sir if agriculturist voluntarily taken registration then agriculturist sold to unregistered person liable to pay tax under fcm or not so if they are selling it to unregistered person it will not come under 93 first you should interpret like this agriculture is selling to unregistered person it will not come under 93 not coming under 93 means what regular fcm fcm and is the supplier registered yes voluntarily he got registered so let him pay GST you got it suppose if the supplier is not registered no GST but if the supplier is registered GST payable same logic this also government selling the used Goods to the unregistered person is it given in 93 not given in 93 not given in 93 means what fcm got it fcm and is the supplier registered yes he will pay supplier not registered no GST got it that is how you need to interpret then what if cash unut shell sold by agriculturist to registered person so not shell that is a processed cash nuts then not the raw cash nuts why agriculturist he will be called as hypothal question it is he will not be called as agriculturist the moment he do the process he will not be called as agriculturist because who is called as an agriculturist who is engaged in supply of agricultural produce produce out of cultivation of land the moment he does the process then it will not be called as a he will not be called as agriculturist if he is not called as agriculturist e covered under this list no so naturally it will be fcm only you got it so therefore this question is a hypothetical question here now these are the points that can be tested it's an amendment then next we will see surveys is covered under RCM you understood now 4 2017 now see the list of Services Under RCM take page number 29 so the list of services which are covered under RCM is given in notification 13 2017 you need to remember this list with this keyword sir CG got salads so I have I have given this in a different manner so previously I gave it separ separately and exemption separately I have merged these two so what are the services which are covered under RCM parallely what are the exemptions related to it and what are the conditions for RCM and what are non applicability of RCM so like this only you remember in your mind also first yes refers to security lending as per sebi by lender of securi to borrower of Securities there is a lender of Securities who is lending the Securities to the borrower why borrow borer will take Securities because the borrower might have made a short sales in order to execute the contract he need the Securities short sales means without having shares in his demat account if he places a sell order that is known as short sales and there will be a huge penalty levied on him due to that reason he will borrow the shares and he will make the delivery thereafter he need to replace the borrowed shares for which he need to also pay a lending fee on this lending fee lender will not pay GST but borrower will pay GST and RCM and do we have any exemptions no we don't have any exemptions and any conditions for RCM no any non applicability of RCM no means always RCM will be applicable okay then second Point import of services import of services there are some good number of amendments in this in case of import of services we have one exemption that is import of other than oid Services by non- taxable recipient is Exempted this was there even before also other than ID Services by non- taxable recipient but what is the meaning of IDR services that got Chang IDR Services means any Services which will be provided over internet full stop not necessary that it should be automated so whether it is automated or not automated previously only if it is automated it will be called as warar now whether it is automated or not automated it will be called as w service for example live classes whether live classes online live classes requires internet definitely requires Internet it's a oid service even though it is not automated the one faculty should be there to take the classes even though not automated now it is ID services and ID Services they are bringing lot of things into ID services like online marketing digital data storage like that but remember one thumb rule simple to Pro provide the service internet is required then it will be called as a IDR service Services whose delivery is mediated by Information Technology over internet then it will be called as IDR Services okay and ID Services imported by any person will be taxable W service always taxable but the exemption is what you read import of other than IDR services that to by whom not non- taxable recipient is Exempted who is a non- taxable recipient three people individuals trust government these three people will come under non- taxable recipient so unregistered individual importing for any personal purpose or a trust importing for charitable activities and government for non buus purpose so these three only called as non-taxable recipient let's take one example for each to understand there is a CA student who is importing so this Microsoft Office software for installing in his personal laptop so it will be coming under import of other than IDR Services by unregistered individual see a student is unregistered individual for what P personal purpose so this activity will be Exempted so there is no GST on that second example there is a charitable trust Swami nityananda charitable trust Imports video conferencing software to interact with the pilgrims so it will be coming under what import of other than W video conferencing software that do not require internet okay software is being imported and it is not wor by trust for what purpose charitable activities why advancement of religion spirituality and yoga will be treated as charitable activity interacting with the piligrims and touching them will be coming under spiritual activity so therefore it will be a charitable activity and that import of service will be Exempted okay then number three that is by government so example government is importing some software for the purpose of you know like automation of the records so like this uh what is it registration records or lot of records and all government will be maintaining now for automation of the records they have imported some software now in this case it will be coming under import of software that is either than ID Services by government for what purpose is it for business or Commerce no it is other than business or Commerce again it will be Exempted then do we have any conditions for RCM no we don't have any conditions for RCM non applicability of RCM sir in one case RCM generally import of service is coming under RCM but in one case RCM will not come fcm will come what is that import of what services oid Services by whom n non taxable online recipient who is a non- taxable online recipient any unregistered person who is importing services for any purpose again amendment is there previously any unregistered person importing for other than business or Commerce only n but now who is n or non- taxable online recipient any unregistered person so any purpose he can import one more Point added registered person only for deducting TDS then they will come under n so who are n any unregistered person or registered person who is registered only for deducting TDS when you will apply n n n extra is what w o for ID only when ID comes you will apply n if ID is not coming n you will not apply okay and in N import services will you come under non- taxable online recipient yes you are a CA student you will come under non- taxable online recipient because you are unregistered person when you import ID Services who will pay GST the supplier located outside India will pay GST it will not come under RCM this is non- applicability of RCM understood here so what you should remember first import of services by any person will come under RCM okay only one exemption we have what is that one exemp commission import of other than IDR Services by non taxable recipient is Exempted and in one case RCM will not come fcm will come what is that import of oid services by non taxable online recipient now three definitions you need to know what is the meaning of IDR so any service which is mediated through internet is ID who is non- taxable recipient an individual unregistered importing for personal purpose trust so whether for charitable activities government for non- bus purpose then n non- taxable online recipient any unregistered person or registered person only for deducting TDS then yes I then are renting of Motor Vehicles so there is one query here sir whether recorded classes will be classified as IDR services so whether the service is mediated through internet no it is not mediated through internet the moment you download the service Sorry download the content thereafter internet is not required for watching the lectures now so due to that reason it will not coming under ID means it should be provided over the information technology Network through internet so means streaming will be there live streaming so the lectures and all will be uploaded in one app and live streaming like you can stream and you can watch okay but to watch you need the internet then it will come under ID but usually recorded lectures which will run through one software so for downloading the lectures only you need internet but not for playing sometimes you can go to the faculty's place and you can copy the entire content into your laptop also and you can play the lectures correct or not which means that do not require any internet once you have activated that and if without internet also you can watch correct for that you should be watching no then only then only it is applicable okay but usually by default internet and all will be there but specifically as he as I told you that that do not require internet therefore it is not a IDR service then next renting of Motor Vehicles generally renting on Motor Vehicles so we have supplier owner of the motor motor vehicle recipient the one who takes a motor vehicle on rent and we have four exemptions for renting of Motor Vehicles see the first exemption I have a motor vehicle that can carry more than 12 passengers that I'm giving on rent to a State Road Transport undertaking okay so then it will be Exempted hiring a motor vehicle greater than 12 passengers 12 passengers means excluding driver seat or including driver seat excluding the driver seat passengers tock State Road Transport undertaking second point you see what is the difference between first point and second Point second point is electric motor vehicle first one is motor vehicle second one is electric motor vehicle and first one should be given on rent to State Road Transport undertaking and the second one should be given to a local Authority now you may get a question sir I have a electric motor vehicle sir more than 12 passengers I gave it on rent to a State Road Transport undertaking taxable are Exempted I have a electric motor vehicle that I have given on rent to a State Road Transport undertaking capacity more than 12 passengers it is Exempted correct this motor vehicle includes electric motor vehicle also now I have a normal motor vehicle which can carry more than 12 passengers instead of giving on rent to a State Road Transport undertaking I gave it to a local Authority is it taxable or Exempted taxable Okay so so this somewhere you make note renting of renting of electric motor vehicle greater than 12 passengers to State transport undertaking State transport undertaking what is it Exempted as motor vehicle includes electric motor vehicle then next renting of Motor Vehicle greater than 12 passengers to local Authority to local Authority so this will be taxable as electric motor vehicle only electric motor vehicle only Exempted then next one third Point hiring of motor vehicle that can carry Goods to a Goods transport agency what is the difference between third point and the first two points first two points is about passenger vehicle this is a Goods vehicle and that we are giving on rent to a Goods transport agency fourth Point hiring of motor vehicle that can carry you know like persons providing transportation services to education institution providing education up to 12th standard or equivalent there is a education institution which is providing education up to 12th standard equivalent which means a school and that particular education institution one person is providing transportation service say you are providing transportation service to education institution up to 12th standard now I provided renting of bus to you now the rental will be Exempted so renting of Motor Vehicle to a person who is providing transportation service to an educational institution up to 12th standard or equivalent why equivalent because in some places 12th standard will not come under school it will be coming under colleges but even that will also be part of this education institution only so these are the four exemptions that we have and in other cases it will be taxable wherever it is taxable if three conditions are satisfied it will come under RCM what are the three conditions supplier should be other than body corporate recipient should be body corporate and the rate of GST should be 5% if all these three conditions are satisfied it will come under RCM if any one condition not satisfied supplier should be other than body corporate what if is body corporate it will not come under RCM supplier should be other than body corporate and recipient should be body corporate what if recipient is other than body corporate it will not come under RCM supplier is other than body corporate recipient is body corporate but the rate of GST is 12% then also it will not come under RCM so rate of GST should be 5% if any one condition not satisfied it will not be coming under RCM it will be fcm then another one renting of res IAL property I have a residential property which is given on rent what are the exemptions in case of residential property just now we discussed two exemptions are there renting of residential property for residential purpose to an unregistered person or to a registered individual for his family state for his family stay for his family State okay not for his employees family stay you understood if there is a person employer taking the house on rent for his employees okay he cannot get the exemption why he cannot get the exemption some other person's family stay he's taking rent it should be for his family stay okay renting to registered individual for family stay here family stay means whose family stay that person that individual family stake okay then next so in other cases it will be taxable and any condition for RCM yes what is a condition for RCM recipient should be registered what if recipient is not registered it will not be coming under RCM moreover it is Exempted that's what we saw now if recipient is unregistered it is Exempted okay now in this regard you should be knowing certain combinations so see this type of property type of property okay type of propert property and purpose purpose rented to rented to and what is the taxability what is the taxability that we need to know type of property is commercial property commercial property and purpose commercial purpose commercial purpose rented to registered person rented to registered person what is the taxability is it taxable or Exempted taxable will it come under fcm or RCM anywhere we have RCM for this commercial property no see commercial property is not there in the list always it is residential property look into the table Yeah residential property only it is there now commercial property not there therefore it will be fcm then next commercial property commercial property for what purpose commercial purpose commercial purpose and this is given to a unregistered person taxable are Exempted uh taxable but the moment you see unregistered person you will remember unregistered person exempt so you'll write it as Exempted no commercial property will be taxable so it will be taxable under fcm and number three so that is commercial property commercial property for residential purpose commercial property for residential purpose how sir commercial property is given for residential purpose hotel is a commercial property it is given for temporary St residential purpose so two registered person two registered person taxable we don't have any exemption and again it will come under fcm then commercial property commercial property for residential purpose residential purpose to unregistered person to unregistered person again it will be taxable under fcm so in this case this third Point case when the residential Pro commercial property given for residential purpose so this residential purpose is basically temporary stay to a registered person can the registered person take ITC with respect to it generally they can take ITC we don't have any restriction but one point you remember cgst sgst paid in the other state cannot be taken as ITC okay so for example I go to k for one work and I stay in a hotel there now that hotel will raise me GST invoice what GST cgst sgst why cgst sgst the place of Supply in case of service in relation to immobile properties location of immobile property so they will raise cgst sgst invoice now I am in Tamil Nadu registered in Tamil Nadu can I take itz with respect to that no I cannot take it with respect to that fine now as the connection came I told you this so commercial property will always be taxable and it will be coming under fcm clear now we are moving on to residential property if there is a residential property that residential property is given on commercial purpose is given on commercial purpose to an unregistered uh registered person to a registered person is it taxable or Exempted it's a residential property carefully interpret and tell residential property commercial purpose to a registered person taxable okay will it come under fcm or RCM will it come under fcm or RCM it will come under fcm but sir there is no Clarity related to this sir yes there is no Clarity related to this for your exam for the time being because there is no clarification as to whether it is fcm or RCM as RCM is not specifically given RCM is given only for residential property for residential purpose so this is actually residential property for commercial purpose due to that reason so it will be coming under fcm only okay and if the supplier is registered he will pay GST if the supplier is not registered it will be Exempted sorry it will not be no GST okay but we don't have any Clarity related to this however there are some contrary answers for this so I have seen so two three other faculties in this place they were telling that it will be coming under RCM this taxable but this will be coming under RCM kindly you know follow fcm itself because in the notification 13 2017 nowhere it is clearly mentioned so due to that reason when the RCM is not applicable contrary is what fcm that's why you follow fcm only without any confusions okay then next suppose if it is a residential property if it is a residential property for commercial purpose for commercial purpose to a unregistered person then then also it will be taxable under fcm this play also same actually this is no Clarity due to that reason we follow fcm for the time being maybe in future if the circular comes it may change then residential property for residential purpose to a registered person what is your answer taxable taxable under RCM it will not be taxable under fcm it will be taxable under RCM what if this registered person is registered individual if this registered person is registered individual okay registered person other than individual other than individual so no confusion now residential property residential property for residential purpose to a registered individual okay registered individual not for his family State not for his family State then taxable RCM suppose if it is residential property residential property for residential purpose to a registered individual for family state for family state that person's family State then it will be Exempted and last Point 10th Point residential property for residential purpose to a unregistered person so then then it will be Exempted so this can definitely be tested because again there is an amendment in this place what is that Amendment registered individual for his family State we have an exclusion so that is Exempted now so now this you don't have to remember this is the application this is application but what you need to remember is what commercial property always taxable under fcm residential property two cases Exempted res residential property residential purpose to unregistered person residential property to registered individual for his family stay is Exempted remaining cases taxable and when it will be coming under RCM if the residential property is given to a registered person then only it will be coming under RCM that is with respect to this discussion then so we have seen s i r r s for security lending I for import of services are for renting of Motor Vehicles and another are for renting of residential property okay then next C for copyright services so what are the copyrights that we have so total four copyrights are covered under RCM original literary dramatic Musical and artistic works so remember in case of this original literary dramatic musical works and artistic works basically so in this original literary the supplier is author dramatic works so musical works and artistic Works basically they are individuals okay so because copyright will be given only for individuals so individuals this is like actually original work original work copyright so the music company has got a copyright so I am the music director I gave the music copyright to a music company now it will come under RCM now the music company will give the copyright to any other person that will come under RCM no it will be fcm only you got it so only when the individual as a music director or individual as a you know dramatic work or individual artist if they are giving it to a supplier recipient then it will come under RCM is it clear so basically these are are by individuals these are by individuals so because they are having the original work copyright okay now is there any exemption with respect to this no it will always be covered under RCM no conditions for RCM also but in case of original literary there is one non applicability of RCM what is that if the author opts to pay GST under fcm then the author only will be paying GST under fcm for the next one year from the date of exercising the option so lockin period is one year from the date of exercising the option if author opts to pay GST under fcm why will Author opts to pay GST under fcm because if my outward Supply is covered under RCM I cannot take ITC on my invit Supply due to that reason I will opt to pay GST under fcm mainly to take the ITC but if I opt to pay GS and fcm as an author for the next one year I only should pay RCM to fcm no lock in anytime we can shift but fcm to RCM there is a lock in for one year in all other cases there is no option always it will be RCM then next one GTA Services Goods transport agency services so basically who is a Goods transport agency any person providing the service by way of transportation of goods by roadways and issues a consignment note by whatever name called is called as a Goods transport agency in case of goods transport agency there are three exemptions number one if they are transporting notified Goods it is Exempted what are those six notified Goods agricultural produce then food grains including floor pulses then milk and salt floor pulses milk and salt okay then organic manure newspapers and magazines relief material for natural man-made disasters and then defense and military equipment these are the six notified Goods transported through GTA the Fright collected will be Exempted okay so again what are the six notified Goods agricultural produce food grains including floor pulses milk and salt organic manure newspapers and magazines relief materials for natural and manmade disaster defense and military equipment then second exemption you see if the recipient is individual HF or artificial judical person who are unregistered all three individual HF and unregistered like ajp unregistered and they are not having Factory then also Services GTA Services provided to them is Exempted then if the recipient is registered only to deduct TDS so this is not income tax TDS everywhere recipient registered only to deduct TDS means under GST section 51 then also it will be Exempted these are the three GTA Services which are Exempted in remaining cases it will be taxable wherever GT service is taxable again GTA is having two options option one fcm they can pay GS Stander fcm or option two RCM where the recipient will pay GST in case of RCM the rate here rates you should remember number in case of RCM the rate will be 5% and recipient who pay GST and RCM 5% they can take ITC for example I am GDs service provider here you are my recipient now I'm not going for fcm option then it will be RCM so you only requireed to pay GST 5% can you take ITC of that 5% you can take ITC of that 5% no issue you are only going to pay and you will only take ITC but there is fcm option also so GTA can go for fcm option and fcm option there are two rates available to GTA what are the two rates 12% with itz and 5% without ITC okay now GTA can choose either 12% or 5% invoice wise it is up to them but this fcm option or RCM option they need to choose for every Financial year 12% 5% invoice wise they can choose but this fcm RCM option lockin period is financial year if GTA opts to pay GST under fcm then lockin period is financial year means not like one year from the date of excising the option can you tell me what is the difference between this and this here it is one year from the date of excising the option here it is One Financial year Financial year wise they need to choose and that to when they need to choose they need to choose between first January to 31st March of the preceding Financial year they need to choose which means it's like this say for the financial year for the financial year 20 2324 for financial year 20232 24 GTA is under fcm option GTA is under fcm option now for 2000 2425 they want to go for RCM they want to go for RCM then when they need to choose if they want to go for RCM in this 2023 24 last quarter is there now 2023 24 Q4 what is it Q4 Jan to march in this Jan to March they need to select the option okay so select RCM option if they select RCM option then for the financial year 2024 4 25 they will be under RCM again 2025 26 they did not select anything in 2425 so by default they will be continuing in RCM option if they have not selected anything no need to select again and 2026 27 and they don't want to go for fcm so they don't have to do any selection but in 20272 8 they want to go for fcm so what they should do whenever they shift whenever they shift now you need to take the Q4 of 2026 27 that is Jan to march in this Jan to March they need to select fcm option okay select fcm option so this is how GTA has to choose this is the amendment previously this point was not there and and now they have added so what is the selection period Q4 previous year Q4 is the selection period okay so they have to choose either fcm or RCM and that will be continuing throughout okay so see this wording so option to be excised between 1st Jan to 31st March of the preceding Financial year okay and what is the rates applicable to them so for GTA services what are the rates applicable to GTA Services either fcm or RCM so GTA service GTA service divide into two option one option two option one is fcm option one is fcm versus option two option two is RCM and this they need to choose with respect to each Financial year correct each Financial year they need to choose again under fcm they have two rates what are the two rates 12% with itz versus 5% without ITC 5% without itz now what about this with respect to each invoice with respect to each invoice they will choose and RCM always it will be 5% at the rate of 5% now whether 12% or 5% or 5% all these cases recipient can take ITC whether supplier is paying 12% or supplier is paying 5% or recipient is paying 5% recipient can Avail ITC recipient can Avail ITC then this with ITC without itz is for whom to the supplier so supplier cannot take itz on his invit supplies who is the supplier here GTA service provider they cannot take itz on their invit supplies you understood or not for example GTA is purchasing a lry and on the L can they take itz yes if their out Supply is taxable at 12% if their out Supply is taxable at 5% can they take itz on the L no so that with itz without itz is to the supplier not to the recipient recipient can always Avail ITC with respect to this this is what you need to remember for GTA Services then next so looking to the next one so so far what we have seen is Sir CG s for security lending and I for import of services and R for renting of Motor Vehicles another R renting of residential property C for copyright Services G for GTA services in this so we have some exemptions conditions so far we have seen in which place two places only we have seen conditions for RCM that is in case of renting of Motor Vehicles supplier should be other than body corporate recipient should be body corporate rate of GST should be 5% so if any one condition not satisfied it will be fcm then again renting of residential property also Visa condition for RCM what is the condition for RCM that the recipient should be registered okay so we'll take a break because we have some more points government services Etc and all a small break we will take and then we will continue okay okay we'll start generally there is one point like cgst sgst paid in the other state cannot be taken as itz so when student has asked me where is it specified in which section Etc it's not actually specified anywhere in the section so that is based on cbic FAQs and that point is there even in our study material also they have given so we cannot take ITC with respect to cgst sgst paid in other state so believe me that's correct only okay then next G for government services so we have been seeing list of services which are covered under RCM in that the government services to business entities now if you see here including Services of parliament State Legislature court or tribunal is now covered under RCM previously government service to business entities only covered under RCM but now that includes even surveys of parliament State Legislature that is assembly then court or tribunal but generally fees collected by court or tribunal is Exempted no fees collected by court or tribunal is Exempted then how come this point is there so usually court or tribunal fees will be excluded from Supply it's not Exempted actually it is excluded from Supply but apart from fees collected by court or tribunal in the form of legal fees apart from legal fees they will provide some other activities like renting of immobile property Etc so those activities are covered under Supply so that's what I have given in case of court or Tribunal it is Services other than legal fees what is other than legal fees that is renting Etc then it will be covered here under taxability now for government services to business entities we have 14 exemptions and in this 14 cases GST not payable so these are 14 specific exemptions what are they right to Information Act charges RTI charges usually you might be knowing about this a lot so because you will be applying for for your evaluated answer sheets so that RTA charges which they are collecting you have to spend money now it's not free some amount you will pay 10 rupees or 20 rupees Etc that amount will be Exempted no need to pay GST on that then interde departmental service Services provided by one Department of central government or state government to another department of central government or state government for example Indian railways providing services to Ministry of Finance or you know Ministry of Finance Finance is receiving services from police department so these are all examples of interde departmental services which is Exempted then right to use Telecom Spectrum so government is having Telecom spectrum and that telecom spectrum they have allocated to Telecom operators and this allocation was before 14 2016 both onetime charges and annual royalty will be Exempted suppose if the Telecom spectrum is allocated after 14 2016 so everything will be taxable if the allocation is before 14 2016 then it will be Exempted then fourth point right to use natural resources what's the difference between third point and fourth point in the third point it is telecom Spectrum in the fourth point it is natural resources in the third Point both onetime charges and annual royalty is Exempted but in the fourth Point only onetime charges is Exempted then fifth one right to use natural resources to an individual farmer so will the individual farmer come under business entity yes so generally business entity means any person engaged in business is known as business entity individual farmer will come under occation so occation is also business therefore individual farmer will come under business entity so right to use natural resources to individual farmer it can be assigned any time both onetime charges and annual royalty will be Exempted what's the difference between fourth point and fifth Point fourth point is assignment of Natural Resources to other persons whereas fifth point to an individual farmer fourth point before 14 2016 fifth Point anytime fourth Point only one time charges Exempted fifth Point both onetime charges and annual royalty is Exempted then sixth one Merchant overtime charges so generally Customs department will be working after office hours on on holidays for which they will be collecting some Merchant overtime charges for doing the clearances this extra amount which is collected by Customs department is Exempted then safety certificate charges will be collected by the safety officer for giving a safety certificate for the premises where they need to obtain the safety certificate so this safety certificate charges collected by safety officer is Exempted then consideration for tolerating an act when we enter into contract with the government we breach the contract when we breach the contract government will expect us to pay some damages so this damages which is collected by the government is called as liquidated damages or amount for breach of contract that will be Exempted that is known as consideration for tolerating an act then share of profit petroleum the share of profit petroleum for assigning right to extract petroleum crude or natural gas is Exempted so in this regard there is one more Point cost petroleum even cost petroleum is also Exempted so now what is this cost petroleum and profit petroleum is all about so generally government state government will assign right to extract natural resources say like any government it can can be state government or central government so government will assign right to extract petroleum crude or natural gas to leas holders and for that the lease holder is required to pay consideration that consideration will be annual royalty and share of profit so government will be giving assignment of assignment of right to extract assignment of right to extract petroleum crude or natural gas so petrol or natural gas for which the lease holder is required to pay a consideration what is that consideration annual royalty annual royalty will be payable plus even share of profit will also be payable so this is the consideration now what will happen they will form a joint venture who will form joint venture government and leaseholder will form a joint venture and in this joint venture government and leaseholder who forms a joint venture that joint venture lease Holder will be the operating member of the joint venture so they will be be generating the petrol or natural resources that they will be extracting the petroleum crude or natural gas and they will be getting some revenue from operations they will get revenue from operations so this is the joint venture Revenue now what will happen with respect to this revenue from operations here this lease Holder will become operating member of joint venture operating member of joint vure now let's see what happens to revenue from operations revenue from operations there are two parties so that is government and leaseholder government and leas holder first government will take away the annual royalty and the lease Holder will take away his expenses he incurred some expenses for extraction so that expenses he will recover that recovery made by the government is known as annual royalty and that recovery which is made by the leaseholder recovery of expenses is known as cost petroleum cost petroleum is the name given this is nothing but recovery of expend expenses recovery of expenses now in this case this recovery of expenses will become Supply under Section 71 AA whereas this will become Supply under Section 71a why sir it will become Supply under 71a because before creating a joint venture they will transfer the right to use natural resources or will transfer the right to extract petroleum crude or natural gas so therefore this particular assignment of rate is before creating a joint venture so due to that reason at the time when they enter into contract it was not a joint venture capacity so that is in the individual capacity only so therefore it will be Supply under 71a this annual royalty will be taxable or it will be Exempted this annual royalty is taxable why assignment of right to use natural ources before 14 2016 also only one time charges is Exempted but annual royalty will be always taxable but this cost petroleum so there is no GST on this so no GST is what given in the circular so we can remember it like now from the revenue we need to reduce from the revenue we need to reduce annual royalty annual royalty and then cost petroleum now the balance that is left is known as profit petroleum and in this profit petroleum a percentage share will go to government share of profit whereas a share of profit will go to leas holder that share of profit which goes to the leas holder is not a supply because it is like return on investment so he is investing and he's recovering his investment in the form of profit so withdrawal of profit is not a supply whereas this share of profit received by the government is for the purpose of assigning right to extract petrol or natural gas so this will be coming under Exempted so you need to remember total Four Points Point number one and any annual royalty which is received by the government from the revenue that annual royalty will be taxable then cost petroleum recovery of expenses by the leaseholder is Exempted and number four share of profit received by the leaseholder is not a supply and third point is share of profit received by the government will be Exempted so two exemptions we have what are the two exemptions cost petroleum and share of profit that is profit petroleum then annual royalty will be taxable and the share of profit received by the leaseholder is is not a supply so this is about this point you should remember see the note cost petroleum is recovery of expenses by leaseholder which is also Exempted share of profit petroleum what is this profit petroleum revenue from operations Minus cost petroleum minus royalty for assigning right to extract petroleum crude or natural gas even that is also Exempted then 10th Point registration charges under any law for the time being in force so for the purpose of incorporating a company or under law some registration charges will be collected like vehicle registration charges or property registration charges all those registration charges are Exempted then fee for birth certificate death certificate driving license Visa or passport basically these are collected from the individuals but here servic is provided by government to business entity on behalf of their employees so five certificates total birth certificate death certificate driving license Visa or passport then 12th point guarantee commission government will guarantee the loans taken by public sector undertakings for which the public sector undertakings will pay a guarantee commission that guarantee commission earned by the government is Exempted then ex's royalty collection contractor to the extent of variable royalty generally what happens is that whenever government is required to collect the royalty from the leaseholder they will be appointing one intermediary called as excess royalty collection contractor government will give the right to this ERC CC excess royalty collection contractor to collect the variable royalty against a consideration of fixed royalty so this is like a swap Arrangement ercc will pay the fixed royalty to the government and will be recovering the variable royalty from the lease holder so in this case on variable royalty anyhow the leas holder will pay GST under RCM so therefore ercc is required to pay GST only on the differential amount for example if the fixed royalty is 50 lakhs and variable royalty is 40 lakhs on 40 lakhs anyhow leas Holder will pay what is the extra amount that ercc is paying so 10 lakhs on the 10 lakhs ercc is required to pay GST what if the variable royalty is 60 lakhs and the fixed royalty is 50 lakhs on entire 60 lakhs anyhow leaseholder will pay GST so ercc is not required to pay any GST which means ercc is Exempted to the extent of what royalty variable royalty ercc is Exempted to the extent of variable royalty then fee for granting National permit so generally for goods which are traveling throughout the country so they will be paying National permit charges that National permit charges are State permit whenever we enter into another state taking a commercial vehicle we need to take the state permit in that state that state permit charges these two permit charges National permit as well as state permit charges is Exempted these are the 14 points that we have under specific exemptions then there are two general exemptions apart from these 14 exemptions any other activity you need to see whether it is provided to a business entity whose turnover during previous year does not exceed threshold limit if it is renting of immobile property this first point General exemption not applicable so Services other than renting of immobile property to a business entity whose turnover during previous year does not exceed threshold limit then it is Exempted and second General exemption is if it is any activity apart from 14 activities see 14 activities always Exempted apart from the 14 activities any other activity provided to business entity where the value of Supply does not exceed 5,000 rupees then it is Exempted whether this 5,000 rupees point is applicable even in case of renting of imov property yes but remember in case of continuous supply of services what is a continuous supply of service a service which takes more than 3 months to complete and involves periodic payment obligations so this 5,000 rupes should be seen for a financial year this 5,000 Rupees is not per invoice this 5,000 Rupees is for a financial year understood or not now so for example there is an advertising company that advertising company they started business during current year previous year the turnover was Zero now government is providing the services by way of allowing the advertising company to place the Holdings for which advertising company has to pay some charges so this Services provided by government to the advertising company is not in the 14 exemptions and it is other than immobile property renting of immobile property so the charges collected by the government is Exempted why it is Exempted because that advertising company turnover during the previous year does not exceed threshold limit due to that reason it is Exempted second case suppose Department of police is providing Security Services to one hotel and that hotel turnover during the previous year exceed threshold liit but the charges paid to Police Department is only 4,000 Rupees is it taxable or Exempted it is not covered under the first exemption because the turnover of the hotel during previous year exceed threshold am but it will come under the second exemption why second exemption because the value of Supply does not exceed 5,000 rupees these are the various exemptions with respect to Services provided by government to business entity is there any conditions for RCM no and always it will be coming under RCM whereas in one case two cases RCM will not be applicable what are those two cases one point I told you Indian railways will always be coming under fcm so in case of supply of goods or services by Indian railways always it will be fcm one more case also RCM not applicable that is renting of immovable property to a unregistered business entity so there is a unregistered business entity to that unregistered business entity government has given immovable property on rent then government only will pay GST under fcm suppose if the business entity is registered then business entity will pay GST and RCM so remember basically all services provided by government to business entity wherever it is taxable it will come under RCM but in two cases it will be fcm number one renting of immobile property to a unregistered business entity number two services or Goods supplied by Indian railways will also be fcm then next o for overseeing committee overseeing committee is providing services to RBI overseeing committee services to RBI now in that case liability to pay GST is on RBI and we don't have any exemptions we don't have any conditions for RCM and we don't have any non-applicability of RCM then T refers to TDR FSI and long-term lease of land so transferable development rights so whenever government takes over the property of a person so instead of giving compensation they will be giving a TDR to that person transferable development PR what that person can do with the TDR he can give the TDR to any Builder to exceed the FSI of a property so for that the Builder will be paying some money to this land owner so who is transferring the TDR same way I have some unutilized FSI that I will be giving to a promoter or builder for which I will get get some consideration or I have a land which I'm giving on long-term lease for which I'm getting some upfront lease amount so these three amounts I will not pay GST as a land owner the promoter or Builder will pay GST under RCM so in which case it will be RCM transfer of TDR FSI and long-term lease of land so is there any exemption with respect to this yes proportionate exemption to residential units booked before completion certificate or first occupation whichever is ear how to calculate this exemption so value of TDR value of TDR are FSI or long-term lease okay value of TDR FSA or long-term lease into 18% into what is the exemption area of residential units area of residential units booked before booked before completion certificate or first occupation whichever is earlier divided by total carpet area total carpet area of project so this will be the formula for exemption so first we need to see what is the value of the TDR FSI and long-term lease and it will come under RCM so who will pay GST promoter or Builder will pay GST under RCM so on this TD FSA longterm Le what is the rate of GST 18% into to what extent it will be Exempted area of residential units booked before completion certificate or first occupation whichever is earlier divided by total carpet area of the project say for example 20 units are residential units and the 20 units carpet area is somewhere like 10,000 square ft² and total carpet area of the project is 30,000 square ft then 10,000 divided by 30,000 that is a proportionate exemption which will be available and remaining will be taxable and the promoter or Builder will pay GST under RCM so this transferable development rights floor space index or long-term lease of land who transfers it to whom by land owner to promoter or Builder by land owner by land owner to promoter or Builder to promoter or Builder so the promoter or Builder will pay GST under RCM then so we have seen sir CG got now we are moving on to this Sal in that yes sponsorship services in case of sponsorship Services who is the supplier organizer of the event is a supplier and the recipient will be sponsored and is there any exemption for sponsorship yes sponsorship of a recognized sporting event is Exempted and any other sponsorship will be taxable and conditions for RCM in case of sponsorship if the recipient is body corporate or firm then only it will come under RCM if the recipient who is recipient the one who pay the sponsorship money if the recipient is other than body corporate or firm it will be coming under fcm see that sponsorship Services exemption sponsorship of a recognized sporting event conditions for RCM recipient should be body corporate or firm and non- applicability of RCM recipient is other than body corporate or firm basically in sponsorship Services who is the recipient here who is the supplier and who is the recipient because we get confused with respect to that aspect generally so in case of sponsorship Services supplier is organizer of event supplier is organizer of event and recipient recipient is sponsor recipient is sponsorer and then we have agent services in that agent Services the first point is insurance agent there is an insurance agent who is provid providing services to the insurance company and on the commission what insurance agent will get Commission on the commission who will pay GST insurance company will pay GST but there is one exemption if the insurance agent is a business facilitator or a business correspondent working in rural area the commission earned by this insurance agent will be Exempted so service of business facilitator or correspondent in rural area is Exempted is there any condition for RCM no and non-applicability of RCM no Recovery Agent remember Recovery Agent here insurance agent will be providing services to whom insurance agent to insurance company insurance agent to insurance company then Recovery Agent will be providing services to home Recovery Agent to Banking Company okay Recovery Agent to Banking Company then only it will be coming under RCM is there any exemption no and is there any conditions for RCM no non applicability of RCM no why I told you to banking companies basically recovery agents will be for Banking Company there is a possibility that there is a Trader who appointed a recovery agent to recover the outstanding debts bad Debs and all now in that case this Recovery Agent services will come under fcm or RCM fcm only only Recovery Agent who is working for a bank will come under RCM so all these points Recovery Agent direct selling agent business facilitator agent of business correspondent Etc all these people are in the context of a banking sector clear so it is not related to other sectors everything is with respect to banking sector huh banking sector that includes Banking Company financial institution and nbfc everyone will be covered in this okay so with respect to banking sector it will be applicable so Recovery Agent to a banking company or a financial institution or nbfc okay then direct selling agent again direct selling agent will be providing services to home to a Banking Company basically what is the work of a recovery agent Recovery Agent will do the recovery of outstanding loans whereas direct selling agent will promote the banking products both people will get the commission but see there Recovery Agent always RCM means bank will pay GST under RCM but in case of direct selling agent if the direct selling agent is you know other than body corporate or firm then only it will come under RCM if the direct selling agent is body corporate or firm it will come under fcm okay for example individual direct selling agent gets a commission who will pay GST bank will pay GST if it is a firm direct selling agent in a firm capacity or direct selling agent as a body corporate if they get the commission who will pay GST fcm the direct selling agent should pay then business facilitator to a Banking Company there is a business facilitator who is providing services to a Banking Company if the business facilitator is working in rural area the commission owned by the business facilitator is Exempted basically business facilitator will do what activities money remittance activities they will not do anything so on behalf of the bank they will do money remittances for which they will be getting a commission and if they are working in rural area it will be Exempted if they're working in urban area it will be taxable and who will pay GST in this case banking company will pay GST under RCM and see that Services by business facilitator in rural area Exempted we don't have any conditions for RCM non- applicability of RCM whereas agent of business corespondent to business correspondent business correspondent is also an agent appointed by the bank to extend its banking operations in the places where there is no branch and this business correspondent will do all the activities which as a branch manager will do like account opening loan processing check deposit check collection Etc so this business correspondent Services is not covered under RCM agent of business correspondent to business correspondent is only covered under RCM where liability to pay GST is on business correspondent but there is one exemption in this regard if the agent is working in rural area then that is Exempted and in other case it will be taxable and we don't have any conditions for RCM and non applicability of RCM related to this business facilitator and correspondent so some more detailed analysis is there you listen that is there is a banking company and that Banking Company is having rural area branch and urban area branch and this Banking Company is having a rural area Branch rural area branch and urban area Branch urban area branch now with respect to its rural area Branch they appointed a business facilitator they appointed a business facilitator and business facilitator Mr a is appointed for rural area branch and Mr B is appointed for urban area Branch again agent of business facilitator agent of business as facilitator means agent of Mr a and Mr B for Mr a Mr X is appointed as agent and for Mr B Mr Y is appointed as the agent now see this now a will provide services to the rural area branch and for this Services the rural area Branch will pay the commission what is the answer for this commission is it taxable or Exempted it is Exempted because business facilitator getting commission from the rural area branch is Exempted same way here this agent of business facilitator Mr X is providing services to Mr a for which Mr y will pay some commission what is the treatment of this commission this commission will be Exempted or taxable this is also Exempted as the main M agents commission is Exempted sub agents commission is also Exempted so what you need to remember business facilitator or agent of business facilitator getting commission from the rural area branch is Exempted now Mr B will be providing services to urban area Branch Mr B will provide services to urban area Branch for which Mr B will get some commission from the bank whether it will be taxable or it will be Exempted it will be taxable and it will come under RCM then who will pay GST on this commission so the banking company will pay GST under RCM whereas Mr why provide services to Mr B for which Mr B will pay some commission so this commission is taxable or Exempted as the main agents commission is taxable sub agents commission is also taxable and it will come under fcmr c m it will be coming under fcm so where the liability to pay GST is on Mr Y and it will not be coming under RCM so therefore agent only will pay which means what is the conclusion we can draw business facilitator shall not pay GST on outward supplies and inward supplies so that is the point you need to remember for business facilitator whereas if it is business correspondent what will happen so the same story let's see it from business correspondent point of view when is making me right again here one second all right again so Banking Company rural area [Music] branch and urban area branch and Mr a Mr B and this is business correspondent now agent of [Music] business correspondent Mr X and Mr y now Mr a provides services in rural area branch and they get a commission what is the treatment of this commission this commission will be Exempted sir even for business facilitator same point yes business facilitator as well as business correspondent everyone it will be same if they are working in rural area branch the commission what they are getting will be Exempted same way Mr X will be providing services to Mr a and for which Mr a will pay some commission what is the treatment of this commission this commission is also Exempted so business facilitator what is the first point you need to remember business facilitator agent of business facilitator business correspondent agent of business correspondent earning commission from the rural area branch is Exempted now now in case of urban area Branch Mr a Mr B will provide services to urban area branch and for which this urban area Branch will pay some commission what is the treatment of this commission this commission will be taxable and it will be coming under fcm or RCM so we don't have any RCM in this case so therefore it will be coming under fcm so therefore liability to pay GST is on on the business correspondent same way Mr y provide services to Mr B for which Mr B will pay the commission and this commission will be taxable or Exempted it will be taxable why it will be taxable as a main agents commission is taxable this also taxable but it will come under RCM that's the last point so agent of business correspondent to business correspondent means the GST will be payable by the business correspond so three points you need to remember first point business facilitator agent of business correspondent earning money from the rural area Branch Exempted second Point business facilitator shall never pay GST on their outw supplies and invit Supplies on their outw supplies bank will pay on their invit supplies agent will pay whereas business correspondent will always pay GST on their outw supplies ined supplies on their outw supplies to bank they will pay GST on their invit supplies also they will only pay GST that is the discussion related to this business facilitator and correspondent then look into the next one so in that salad yes sponsorship Services a for agent Services who are the five agents covered under RCM insurance agent to insurance company Recovery Agent to bank financial institution nbfc direct selling agent to bank financial institution nbfc business facilitator to a banking company for nbfcs and all there is no concept of business facilitator okay due to that reason so Banking Company only business facilitator to a Banking Company agent of business correspondent to business correspondent then L refers to Legal Services Legal Services provided by individual Advocate or form of advocate including a senior advocate so here for individual Advocate other than senior Advocate and firm of Advocates we have four exemptions first for Advocate Services we have four exemption extion what are the four exemptions for Advocate Services if they are providing services to a person other than business entity it will be Exempted who is other than business entity individual so individuals basically who receive the services for their personal purpose will be coming under other than business entity and that service of advocate will be Exempted second exemption you see if they are providing services to another individual Advocate or form of advocate it is Exempted and third exemption if they are providing services to so government government so which is central government state government local Authority government Authority or government entity not government agency government Authority or government entity not to the government agency okay so services to central government state government local Authority government Authority or government entity not to government agency and one more point is that Services provided to a business entity whose turnover over during previous year does not exceed threshold limit these are the four exemptions for Advocate Services either individual Advocate or form of advocate I'll tell you how to Simply remember this okay so for individual Advocate or form of advocate we have four exemptions what are the four exemptions if they are providing services to a person other than business entity Exempted if they are providing services to central government state government local Authority government Authority or government entity examp if they are providing services to another individual Advocate or form of advocate Exempted if they're providing services to a business entity whose turnover during previous year does not exceed thresold limit Exempted in that the third point is there no exemption the third point is not applicable to senior Advocate who is providing Services actually Four exemptions but in case of senior Advocate there is only three exemptions that is first point second point and the fourth point so this third point is not applicable in case of services provided by a senior Advocate means if senior Advocate is providing service to individual Advocate or form of advocate what will happen then that individual Advocate or form of advocate will in turn have one litigant applicant or petitioner not that litigant applicant or petitioner will be taken as the recipient okay and if that recipient is other than business entity Exempted if that recipient is government Exempted if that recipient is a business entity whose turnover during previous year does not exceed threshold limit then it will be Exempted in other cases it will be taxable okay so this point is not applicable to senior advocate so if senior Advocate is providing Services then what we need to do so as this point is not applicable to a senior Advocate if senior Advocate is providing services if senior Advocate is providing Services is providing services to individual Advocate or firm of advocate individual Advocate are firm of Advocates comma litigant litigant or applicant or petitioner petitioner deemed to be recipient deemed to be recipient I have not given this point here because it's already covered in the exemptions it's there in the exemptions I have just given this as a Connecting Point here but it's there in the book don't worry so this is about legal services and any conditions for RCM no any non- applicability of RCM no then next one arbitrator Services arbitrator Services same first second fourth EX exemption what is that first if arbitrator is providing services to a person other than business entity Exempted if the arbitrator is providing service to central government state government local Authority government Authority or government entity Exempted if the arbitrator is providing services to a business entity whose turnover during previous year does not exceed threshold limit it is Exempted sir what if arbit rate or provide service to individual Advocate or form of advocate hypothal it will not arise because arbitrator he is doing out of the Court settlement Advocate is doing so through the court settlement so through the court he will argue the disputes so settle the disputes which means that arbitrator will not provide services to an advocate Advocate will not provide services to an arbitrator it is hypothal if at all service is provided that will be provided to them in their personal capacity means it will come under other than business entity so therefore it will be Exempted okay so that is about this arbitrator services then looking to D in that salad s for sponsorship Services a for agent Services L for Legal Services by individual Advocate or form of advocate another A is for arbitrator Services now d d refers to director services to company or body corporate and in that case do we have any exemption we don't have any exemption but one not a supply point is there what is it not a supply if the director is a employee of the company there is no GS because employee to employer in the course of employment is excluded from Supply if the director is employee of the company or body corporate then it is not a supply and is there any conditions for RCM no and is there any non applicability of RCM yes one case that's an amendment what is that I told you director is providing services in the personal capacity then last Security Services Security Agency Services there is a security agency which is like a Manpower agency which supplies the Manpower called as security Personnel but not all Manpower agencies are covered under RCM only Security Agency providing services to a registered person is there any exemption no we don't have any exemption first condition supplier should be other than body corporate and recipient should be registered what if suppli is body corporate it will not come under RCM fcm so supplier should be other than body corporate recipient should be registered but not opting for composition scheme are not registered only to deduct TDS suppose if registered recipient is registered opting for composition scheme then also fcm if recipient is registered registered only for deducting TDS then also it will be fcm in other case only it will be RCM if any one condition is not satisfied automatically it will come under fcm so what are the two conditions supplier should be other than body corporate recipient should be registered but not opting for composition scheme and not registered only to deduct TDS so this is about Sir CG got salet list of services which are covered under RCM along with exemptions we have seen this exemptions Point again it will be coming under exemptions but we have to learn here itself so that we need to learn it together okay so this way only you remember while you are learning also then next one is N9 subsection 4 when N9 subsection 4 is applicable I told you already there is a invert Supply by a promoter or Builder from an unregistered person so promoter or Builder who is making Inver Supply from unregistered person we need to check is it capital goods or is it cement or balance inputs and input Services we need to do the answer if at all we get a question in the same format First Step number one capital goods whether it is purchased from a registered person or unregistered person if the capital goods are purchased from a registered person then no need to pay any GST under RCM because already we purchased from a registered person he will be charging GST to us whereas if the promoter or Builder is purchasing capital goods from an unregistered person that unregistered person will not be charging GST to promoter Builder so promoter Builder is required to pay GST under RCM 9 subsection 4 at what rate at the rate applicable to the capital goods then Second Step cement cement should always be purchased from a registered person just like capital goods if cement is purchased from unregistered person GST payable under RCM at the rate applicable to cement what is the rate applicable to cement 28% see this cement purchased from a registered person GST not payable under RCM if cement is purchased from unregistered person if cement is purchased from registered GST not payable under RCM from unregistered person GST payable under RCM at 28% now you have to see the balance inputs and input services from unregistered person divided by total inputs and input services so why balance inputs and input Services cement already we considered so balance inputs and input service from unregistered person divided by total in the total cement also we need to take and there are few things which you should exclude from the balance total from the total what are the total five things we should exclude what are the electricity why because electricity is Exempted so therefore definitely the supplier will be unregistered person TDR FSA long-term lease why because TDR FSI long-term lease is anyhow covered under RCM so why we need to again bring it under 9 subsection 4 then petrol Diesel and natural gas petrol Diesel and natural gas non GST there is no GST at all so naturally we would have purchased it from an unregistered person so that should be taken out okay so balance inputs and inputs service from unregistered person divided by total inputs on input service including cement excluding TDR FSN longterm lease electricity petrol Diesel and natural gas now you need to check how much is this if it is less than or equals to 20% no issue it is allowed because we can buy 20% from an unregistered person so it is allowed no need to pay GST stand or RCM what if it is greater than 20% we need to pay GST and or RCM on the X is over 20% what is the rate of GST applicable for that 18% is the rate of GST so this as it is you will not be able to understand or get the clarity we will see with one illustration here say you are a promoter or Builder and you are making purchases from an unregistered person okay so say this promoter or Builder promoter or Builder is having invert supplies during a financial year Inver supplies during a financial year in that from unregistered person and from registered person from unregistered person and registered person capital goods capital goods rate of G GST is 18% uh rate of GST is 12% 12% from unregistered person 40 lakhs and from registered person 20 lakhs then cement cement is purchased from unregistered person 10 lakhs and what is the rate of GST for cement 28% and from registered person 30 lakhs then we have TDR FSI from unregistered person and what is the rate of GST for TDR FSI 18% from unregistered person 5 lakhs nothing is from registered person and then other inputs and input Services other inputs and input Services we have different rates some are 5% some are 12% some are 18% and from unregistered person 20 lakhs and from registered person it is 30 lakhs okay now this is the story what is the total what is the total that you need to do so in this case what is the first step the first step is capital goods we need to check whether capital goods is purchased from a registered person or unregistered person capital goods how much is purchased from registered person 20 lakhs are we required to pay any GST under RCM no so we need to so the question here is compute GST compute GST payable under RCM under section 9 subsection 4 so capital goods purchased from unregistered person so on that only we need to pay GST what is the value of the capital goods purchased from unregistered person 40 lakhs 40 lakhs into 12% that will be 4 lakh 80,000 then Second Step cement cement is purchased from unregistered person registered person no issue from unregistered person how much is cement purchased from unregistered person 10 lakhs 10 lakhs into 28% that will be 2 lakh 80,000 and then we need to take TDR or FSI TDR FSI should be ignored correct other inputs and input services from unregistered person other inputs and input services from unregistered person divided by total inputs and input Services into 100 total inputs and input services into 100 so what will be taken in the numerator other inputs and input service from unregistered person 20 lakhs divided by total what will be taken in the total 10 30 20 30 don't take five TDR FSI will not come capital goods also will not come in the denominator so but cement will come so 30 + 10 40 and 30 + 10 so that is 50 so therefore 90 lakhs so 20 lakhs divided by 90 lakhs into 100 how much is the percentage 20 22. 22 which is greater than 20% so we need to pay some GST under RCM what is the GST that we need to pay under RCM in this case so in this 90 lakhs what is the excess amount Beyond 20% 2.22 exactly 22 or 2222 222 huh okay so then and you do that in calculator 90 lakhs into 2.222 2222 percentage into what is the rate of GST 18% even though some of the goods are 5% 12% 18% but we need to take always 18% only so what is that 18% 90 lakhs into 2.22% into 18% that is 36,000 36,000 will be taken as a GST payable so therefore what is the total GST pay payable under 9 subsection 4 so total GST under Section 94 is 4 lh80 + 2 lh80 + 36,000 7 lak 96,000 so this is how you need to arrive at the answer step number one what we did for step number one capital goods purchased from registered person we are not required to pay excuse me so we are not required to pay any GST under RCM but capital goods are purchased from unregistered person we need to pay GST under RCM at the applicable rates of GST so that's what we did for capital goods purchased from registered person we have not paid any GST purchased from unregistered person we need to pay GST at the rate of 12% that came to 480,000 then cement cement purchased from registered person GST not payable under RCM unregistered perc GST payable under RCM at 28% so cement purchased from unregistered % 30 lakhs we are not required to pay GST but on this 10 lakhs we need to pay 28% that's where 280,000 we got then balance inputs and input service from unregistered person divided by total inputs and input services including cement but excluding TDR FSI so accordingly we have taken total in the total 10 30 20 30 90 will come and balance inputs from unregistered person is 20 so 20 by 90 22.22% Le than 20% or more than 20% if it is less than or equals to 20% GST not payable under RCM because 20% is allowed if it is greater than 20% on the excess amount GST payable under RCM on the excess over 20% what is the excess over 20% 2.22 so total 90 lakhs into 2.22% into 18% that is 36,000 so 4 l80 + 2 l80 + 36,000 7 lak9 6,000 will be GST payable under 9 subsection 4 so there are two questions here sir will the GST paid under 94 will be cgst and sgst possible if it is inate purchases cgst and sgst will be possible whether 9 subsection 4 is applicable for government entities to everyone it will be applicable we don't have any relaxation provided the government entity is a of the public sector undertaking is a promoter or Builder they should be engaged in construction for them also it will be applicable this is common for everyone we don't have any relaxation this about n subsection 4 then nth subsection five you see liability to pay GST on e-commerce operator in case of notified services so what are the four four notified Services housekeeping services accommodation Services transportation of passengers and E for eating food from the restaurant now in the this case how the supplier should be for housekeeping services supplier should be unregistered accommodation service also supplier should be unregistered in case of Transportation of passengers okay supplier can be registered or unregistered in case of eating food from the restaurant supplier can be registered or unregistered now there is non applicability of 95 this is very very important you should remember when 95 is not applicable listen when for housekeeping service 95 not applicable if the supplier is registered and when in case of accommodation service 95 not applicable again if the supplier is registered and in case of Transportation there is an amendment when 95 is not applicable if it is omnius transportation of passengers through omnius by a company there is a company which is transporting the passengers through omnius what is a omnius so a vehicle which is having a capacity of greater than six passengers is called as a omnius you can see there so other than omnius capacity greater than six passengers by a company mainly why they brought it because there are lot of travel agencies which are operating their businesses as a company and which will be providing transportation of passengers through bus okay lot of travels are there now perin travels and then many travels so orange travels like that is there t travels like that and all is there once you go to this uh know bus station you will be seeing if you want to go to any place in South like madur or tii Etc and all lot of private bus operators you'll be seeing so these private bus operators mostly will be registered as a compan they will be incorporated as a company so they don't want in this case RC like e-commerce operator to pay GST that's why it has been excluded from N9 subsection 5 so in case of Transportation of passengers through e-commerce operator whether the supplier is registered or unregistered 95 will be applicable only one exception what is that one exception if it is omnius by a company what if it is transportation of passengers through om Us by a firm by a firm it will still come under 95 95 if it is only by a company it will be coming under exception to 95 exception to 95 means who will pay GST supplier shall pay GST then eating food from the restaurant generally in case of eating food from the restaurant whether the supplier is registered or unregistered it will come under 95 but here also an exception is there what is that exception if there is a restaurant in a hotel that hotel is having a declared tariff per day per room greater than 7,500 rupees so means it's like a four star or a five star hotel per day charges is greater than 7,500 any one room any one room and in that hotel there is a restaurant that restaurant is selling food through swiy or zato who will pay GST the restaurant only will pay e-commerce operator will not pay so if the restaurant is in the specified premises that is in a hotel having declar tari greater than 7,500 per day so then 95 will not be applicable supplier shall pay GST so this is very very important and this can be tested for the exam because 95 you already know what are the list of services which will come under 95 but what they will test is non applicability of 95 they will will be testing okay then see this some important points in this regard so there is one query sir but in case of petrol Diesel and natural gas are non taxable but in 95 it is included in the balance inputs okay so read there here properly read here don't ask me had it been class now some other word would have come out of my mouth clearly I have given here including cement excluding TDR excluding here C properly you see here excluding excluding TDR FSI long-term lease it's not including okay so all these are excluded only cement will be included okay next that's why sometimes I should not see the query huh yes sir yes it's already there under RCM that's why 94 it will not come because it is already covered under 93 so that's why we will not be bringing it here sir if a bus has greater than six passengers it will be treated as Omni bus yes it will be treated as Omni bus only that's what I said capacity greater than six is om bus so if you ask me the same question I don't know what to reply so capacity more than six passengers is om bus only in case of omnius by company 95 will not come by any other person 95 will come then see these important points first one whenever e-commerce operator is liable to pay GST on the above Services they are not required to deduct TCS there is a concept of TCS under Section 52 remember TCS under Section 52 and 9 subsection 5 are mutually exclusive wherever 95 comes TCS will not be applicable wherever 95 is not coming TCS will be applicable where are 955 not applicable many cases supply of goods through e-commerce operator 95 will not come supply of other than these four notified Services through e-commerce operator 95 will not come these four notified service also we have exceptions wherein 95 will not come in that case TCS will be applicable e-commerce operator is required to pay TCS remit the money to the supplier after reducing the TCS okay so when e-commerce operator is liable to pay GST and above Services they are not required to deduct TCS so remember section 9 subsection 5 and section 52 are mutually exclusive then only in case of notified Services e-commerce operator is liable to pay GST in other cases who will pay GST supplier will pay for example Amazon or uh this flip cart Mish show Etc supplier of goods through e-commerce operator now who will pay GST supplier only will pay e-commerce operator will not pay GST on the goods then e-commerce operator will pay GST on what commission if supplier pays GST on the transaction e-commerce operator will pay GST on what commission then every e-commerce operator who is liable to pay GST or who is liable to deduct TCS is compulsorily required to get registered irrespective of their threshold limit which which e-commerce operators two e-commerce operators are compulsorily required to get registered one e-commerce operator who is liable to pay GST under 95 another e-commerce operator who is required to deduct TCS literally whenever 95 not applicable TCS will come which means naturally every e-commerce operator is compulsorily required to get registered also every supplier of goods through e-commerce operator is compulsorily required to get registered under GST irrespective of their aggregate turnover however here also there is one Amendment sir previously supplier of goods through e-commerce operator is compulsorily required to get registered but now they brought in one Amendment which says that if he is making only intrastate supplies who that supplier of goods through e-commerce operator then he is not required to register compulsorily he can register only when he cross threshold limit until that point of time he will be obtaining a unique enrollment number number and using that unique enrollment number he will list his Goods with the e-commerce operator which means can he make Interstate supplies no so just like that e composition scheme supplier of goods through e-commerce operator can op for composition scheme but they should not make Interstate supplies same way supplier of goods if that supplier is making only intrastate supplies then they should register as an when aggregate turnover exceed threshold limit for registration what about service provider supply of notified service or supplier of other than notified service through e-commerce operator is required to get registered only when their aggregate or or exceeds thres limit so therefore this fourth point is important that can be tested wherein if there is any supplier of goods through e-commerce operator if they are making only inate supplies they are not compulsorily required to get registered they need to register only when aggregate or or exceed threshold limit so these are the points we need to remember in this regard you know there may be a confusion related to who will pay GST on what amount okay so now we can categorize this into two two aspects okay 95 is applicable 95 is not applicable you understood Supply is through e-commerce operator say this supply of goods or services through ecoo supply of goods or services through e-commerce operator we will divide into two 95 applicable 95 not applicable section 95 applicable you know now when section 95 is applicable and section 95 not applicable wherever section 95 is applicable on the transaction who will pay GST GST on transaction who will pay eCommerce operator shall pay whereas if 95 is not applicable supplier shall pay got it EO shall pay GST to government on what on the transaction whereas here supplier shall pay GST to government now what is the liability on other person what is the Li ability on the other person liability on other person so e-commerce operator shall pay GST now here correct on the transaction Now who is the other person supplier what will be the liability on the supplier there is no liability on that supplier why there is no liability on the supplier because because on the transaction e-commerce operator will pay but the supplier will receive some share now on that whether supplier is required to pay any GST no then supplier will just show it as non GST outw supplies in the return but they will not pay any GST on the share okay so liability on other person not applicable amount collected by supplier amount collected by supplier here shown as non GST supplies non GST supplies then here what about the liability on other person the liability on other person who is the other person e-commerce operator e-commerce operator shall pay GST on what shall pay GST on on commission and raise invoice to supplier and raise invoice to supplier okay which can be a availed as itz which can be availed as itz by supplier simple this is what you need to remember supply of goods or servic us through e-commerce operator wherever section 95 is applicable on the transaction who will pay GST e-commerce operator shall pay GST now as a supplier I will be getting some share so for example you take accommodation Services through e-commerce operator go I or make my trip or oo oo will pay GST on the transaction whatever money they collect from the guest they will pay GST now they will give me some share say for example 7525 is the ratio they will pay GST on full amount then they will remit 75% to me on that money which is remitted to me should I pay any GST no not required and I will just account it in my books as non GST supplies there won't be any GST just for accounting purpose I will account it as non GST supplies is it clear whereas section 95 not applicable so for example if I'm selling Goods through Amazon or flip cart I will pay GST on the transaction whereas that Amazon or flip cart will get a commission on that commission they will pay GST and they will raise invoice to me and I can take itz with respect to that okay that is with respect to supply of goods or services through e-commerce operator and we completed segment three that is RCM and its related exemptions look into segment four Levy and collection under igst so there are few sections of igst that we need to know first section 7 and Section 8 section 7 talks about Interstate Supply Section 8 of igst talks about intrastate Supply what is the meaning of Interstate Supply if location of supplier and place of Supply is in two different states or two different union territories or a state and a union territory then it will be Interstate supplying and import of goods and import of services are always deemed as Interstate apart from that there are few more deemed Interstate also that is if location of supplier in India and place of Supply outside India then also it will be deemed Interstate where the supplier should be India and the recipient should be outside India then also it will be deemed interestate then Supply to scz or Supply by scz that is also deemed interestate then 75c 75c says Supply in India and not elsewhere covered in the two points are there there number one Supply Beyond territorial Waters and up to 200 nautical miles from the Baseline so that is also deemed interstate and place of Supply is determined under Section 13 and that place of Supply is in India then also it will be deemed Interstate okay for example say this so what happens is that generally the place of Supply in case of service in relation to immobile property is location of immobile property so there is a supplier who is an architect there is an architect and this architect is located in Mumbai Maharashtra and this architect is providing services to Elon Musk Mr Elon Musk so who is a person located in us and to this Ilan musk this architect is providing services in relation to a property where is the property located that property is located in Mumbai Maharashtra now in this case we need to determine the place of Supply Under 12 or 13 so place of Supply will be determined under Section 13 why place of Supply will be determined under Section 13 if any one person in India and the other person is outside India the place of Supply is determined under Section 13 and that place of Supply will be location of property so what is the location of property the location of property is mumbay Maharashtra that will be taken what is the location of supplier location of supplier also Maharashtra when location of supplier is Maharashtra place of Supply also Maharashtra logically we will think that it is a inate supply no as the place of Supply is determined under Section 13 it will be deemed Interstate means it will not become intrastate it will be deemed interstate and section like igst will be applicable okay so once the place of Supply is determined under Section 13 and if the place of Supply is in India don't apply inate it will always be deemed Interstate that is about this then next suppose if the supply takes place in the territorial Waters what will happen so this is the Baseline of India and from the Baseline of India up to 12 nautical miles will be called as territorial Waters up to 12 nautical miles is known as territorial Waters territorial Waters and Beyond 12 nautical miles and up to 200 nautical miles is known as up to 200 nautical miles is known as exclusive economic zone exclusive economic zone and Beyond 200 nautical miles is known as high seas is known as high seas and India extends up to 200 nautical miles from the Baseline so up to 200 nautical miles is called as India now there is a supplier who is located in India and the place of Supply is in territorial Waters supplier in India place of Supply is in territorial Waters it will be either intra or inter depends what is that we need to see the nearest Coastal state or Union territory if the nearest Coastal state or Union territory is the same state of supplier it will become intra if the nearest Coastal state is some other state then it will become inter for example supplier is located in Tamil Nadu and he's providing repair services to a ship which is in territorial Waters and the place of Supply is location where service are actually performed if the ship is nearest to Tamil Nadu then that is Coastal State Tamil Nadu then it will be taken as interstate Supply if the ship is near to Andra Pradesh then it will be taken as interstate Supply like that we need to determine in terms of section n suppose if location of supplier is in India and the place of Supply is in exclusive economic zone always it will be deemed inter that's that's another Point as India extends up to 200 nautical miles if the supply is beyond territorial Waters and up to 200 nautical miles it will be called as deemed inter suppose if the supply takes place in high seas so place of Supply is in high seas then also it will be called as deemed inter why it will be called as deemed inter location of supplier in India place of Supply outside India because it is outside India now this will be called as outside India so therefore then also it will become deemed inter this is as per section 75a and this will be because of section 75c okay but both will be called as deemed inter so that is what you need to remember so tell me out of this what are the activities which are treated as deemed Interstate Number One Import of goods or import of services number two location of supp in India place of Supply outside India number three Supply to scz or Supply by scz and number four so Supply Beyond territorial Waters and up to 200 nautical miles from the Baseline and number five supply place of Supply is determined under Section 13 and it is in India that's a deemed interstate now one more point also export of goods export of goods means what taking goods from India to a place outside India is known as export of goods in case of export of goods where is the location of supplier India what is the place of Supply the place of supply for export of goods is location outside India as supplier in India place of Supply outside India export of goods will come under deemed interstate so as location of supplier India place of Supply outside India consequently export of goods will come under deemed Interstate also what is the meaning of export of services five conditions should be satisfied for export of services supplier should be in India recipient should be outside India and place of Supply should be outside India consideration should be in convertible foreign exchange and wherever permitted by RBA it can be in Indian rupees supper and recipient are not to establishments of the same person in that if you see for export of service where the supplier should be India where the place of Supply should be outside India then export of service also will come under deemed interstate so you need to add one more Point into the list of deemed interstate place what is that export of goods and export of service so import of goods import of services export of goods export of services place of location of supplier in India place of Supply outside India Supply to scz or Supply by SC then Supply Beyond territorial Waters and up to 200 nautical miles place of Supply determined under Section 13 and that is in India one more point which we learned long back priority sector lending certificate trading in pslc will be through e kuar portal and the supplier don't know who is the recipient and the recipient don't know who is the supplier due to that reason it will be read as deemed Interstate Supply then security lending under SE so in case of security lending RCM will be coming now the lender of the Securities don't know who is the borrower because this will happen through Stock Exchange the borrower don't know who is the lender so therefore the security lending also treated as deemed Interstate Supply then one more point we have with respect to deem interestate based on Section 8 so so please see Section 8 section 8 talks about the meaning of intrastate supplies so what is the meaning of inate supplies if the location of supplier and place of Supply is in the same state or same Union territory then it is inate and there are few activities which are treated as deemed Interstate as per Section 8 supply of goods or services to R by sez already we know that import of goods already we know that extra we have is supply of goods to a tourist this is the ninth Point supply of goods to a tourist will be coming under deemed interstate so there is a tourist who is coming from outside India to India and he stay in India is for a period not more than 6 months and he will be procuring some Goods in India so for that we need to charge only igst even though he is located in the same state and we are also located in the same State Supply of goods to a tourist is deemed interesting they created this provision because in section 15 they brought in one defund scheme for the sake of that they created but the tourist defund scheme is not applicable at present but this point of deemed Interstate alone will be applicable okay then apart from these nine points any advance which is collected and at the time of collection of Advance we don't know whether it is inate or Interstate then also it should be deemed as interstate so this is about deemed Interstate supplies total 10 points you can see next page very very very very important because in in case of these 10 points always it should be igst and you should not put it under cgst sgst you need to put it under igst so what are the 10 deemed Interstate supplies Supply to R by acz import of goods or import of services export of goods or export of services location of supplier in India place of Supply outside India supply of goods to a tourist and supply of goods or service Beyond territorial Waters and up to exclusive economic zone location of supplier in India and place of Supply India as per section 13 security lending under sebi trading under trading in priority sector lending certificates then advances received which cannot be categorized into int inter these are the 10 deemed Interstate supplies got it then next supplies in territorial Waters what will be taken as Supply and territorial Waters the location of supplier or the place of supply will be the nearest Coastal State or the union territory that will be taken that's the example I have given if a marine engineer is registered in Tamil Nadu provides repair services to Mr musk located outside India for his ship located in territorial Waters of India and place of Supply will be location where service are actually performed sir but in case of repairs to ship we have an exception sir we need to take location of recipient that is when so repairs overall and maintenance in relation to ship or vessels and its parts if it is for business purpose then only that exception will come location of recipient will be taken otherwise it is location where service are actually performed so don't look at me like this so this is one provision which is there and here it is location where service are actually performed that is location of the ship but as the ship is in territorial Waters Place of Supply shall be the nearest Coastal state where the ship is located and if the nearest Coastal state is Andra Pradesh where this Marine engineer is located Tamil Nadu nearest Coastal State Andra Pradesh means it will be inter what if the nearest Coastal state is Tamil Nadu then it will be coming under intrastate supplies then looking to previous page we have the meaning of export of goods and export of services what is the meaning of export of goods taking goods from India to a place outside India is known as export of goods is consideration essential to be calling it as export of goods no consideration is not essential to call the transaction as export of goods however if you are not able to realize the foreign exchange proceeds within the time limit under femma you will not be able to enjoy any benefit even if you have already claimed any refund that refund will become payable say this taking goods from India to a place outside India is export of goods consideration in foreign exchange is not not a condition however if foreign exchange not realized within the time limit under femma what is the time limit under femma 9 months from the date of export then already we would have claimed refund at the time of export of goods that refund whatever we have claimed will be recovered from us so shall be recovered then what is the meaning of export of services in the meaning of export of service itself they are telling that consideration should be in foreign exchange that's why in case of export of goods very very important Point con conate in case of export of goods we will claim the refund immediately upon export and if you are not realizing the proceeds that refund will become recoverable but in case of export of services we will claim refund only when we realize the consideration in foreign exchange otherwise we cannot that's the reason why for export of goods realization certificate or foreign Inver remittance certificate is not a supporting document but for export of services Bank realization certificate or foreign Inver remittance certificate is one of the supporting document means in case of export of services you can claim refund only on realization of Forex so this time limit for realizing the Forex is not there for export of services why because consideration should be in Forex is one of the condition itself for export of services so what are the five conditions for export of services where the supplier should be in India recipient should be outside India place of Supply should be outside India how the consideration should be convertible foreign exchange but in two cases it is permitted by RBI that the consideration can be in Indian rupees what are the two cases number one if the services are provided to Nepal and Bhutan the consideration can be Indian rupees it's okay second if the payment is credited in special rupee orro account maintained by a bank outside India so this special rupe Ostro account will be maintained by a in Bank wherein any amount that we need to get in foreign currency will be credited in that account any amount which we need to pay in foreign currency will be debited from that account so that the exchange fluctuation will not be happening that conversion will not be happening so this money which is credited into that special wro account which is maintained by the foreign bank is as good as the money received in convertible foreign exchange even though in our account the money will be received in Indian rupees the money will not be received in convertible foreign exchange the money will be received in Indian rupees means what is credited in our bank account is Indian rupees but this Indian rupees we got from a foreign bank that foreign bank is maintaining special ostra account and there it was credited in foreign exchange it is okay that's what RBA is telling so in two cases even though the money is credited in your bank account in Indian rupees it's okay it is as good as it is export of service what are the two cases if the service is provided to Nepal and Bhutan and payment is credited in special rupe WRA account maintained by a bank outside India but in other cases the consideration should be in convertible foreign exchange and fifth condition is that supplier and recipient are not merely establishments of the same person for example there's a holding company in India and subsidary Company outside India will it become export of service yes yes it will become export of service because holding company and subsidary Company are two different companies if the head office is in India and the branch office is outside India then they both belongs to the same company so in that case it will not become export of service what if the branch outside India is separately incorporated as per the law of that country then in that case will it become two establishments of the same person or different persons different persons example I have opened a offshore unit in Singapore this offshore unit in Singapore is incorporated under the laws of the Singapore means it has got a separate legal existence in Singapore now even though it is my Branch when I provide service from here to there it will not be treated as two establishments of the same person it will be treated as two separate persons see this note Supply from a company incorporated in India to its establishment outside India which are Incorporated under the laws outside India would qualify as export of services subject to fulfillment of other conditions then looking to the next area that is zero rated supplies as per section 16 what are considered as zero rated supplies export of goods or services and supply of goods or services to scz unit or developer will be taken as Zer rated supplies and in case of zero rated supplies whether GST is paid on Inver Supply so yes because we have discussed in input tax credit if the outward Supply is zero rated we can Avail the itz on invit supplies and there are two options available in case of zero rated supplies what are the two options option one on zero rated Supply pay igst and we will get the refund that igst we can pay using our ITC for example my liability is 8 lakhs and I have a input tax credit of three lakhs how much net I will pay 5 lakhs 8 lakhs gross liability igst 3 lakhs I have input tax credit so net liability will be 5 lakhs how much I will get as ref and entire 8 lakhs I will get as refund entire gross agst I'll get as refund the logic here is simple on purchases already I paid three lakhs now on export I'm paying 5 lakhs so this 3 + 5 8 lakhs I will get as a refund so my burden will become zero that is what zero rated option one option two I will make outward supplies without payment of GST under Bond or elut without payment of GST in this case what will happen is that so I will be having some utilized itz on my inputs and input services that I will get as refund because on outward Supply I'm not paying any GST but on in supplies I have some unutilized ITC that I'll get as refund don't pay any GST on outward supply and supply it under Bond or UT but get refund of ITC with respect to GST paid on Inver Supply that is inputs and input Services then next generally online money gaming is specified actionable claims specified actionable claims will come under Goods so this is a very interesting point it's an amendment please concentrate specified actionable claims are treated as goods online money gaming is also Goods then when the supplier is outside India online money gaming supplier is outside India and you are located in India will it become import of goods logically yes because specified actionable claims are treated as Goods it will become import of goods when it is import of goods Customs duy is payable now but they have created a car out provision which says that even though specified actionable claims are Goods on import of specified actionable claims customs duty not applicable only GST is applicable you got it see this the central government has notified supply of online money gaming as the goods on import of which igst shall be levied and collected and not in accordance and not in accordance with the provisions of Customs tariff act so on import of specified actionable claims there is no customs duty there is only igst is it clear then this is the point which I told you oid Services includes online money gaming but IDR Services excludes o service includes online gaming but o Serv excludes online money gaming therefore the provisions of VO year service is not applicable to online money gaming but online gaming will be treated as IDR Services okay so these are the various points that we have related to charge under igst so there are few queries here that is Sir RCM deposited on capital goods under 94 is it blocked for ITC under 17 subsection 5 see listen actually wherever 94 is applicable 94 is applicable to whom promoter or Builder and 94 is applicable only in case of Residential Properties wherever the GST rate is 1.5% or 7.5% for those kind of projects only 94 will be applicable so 1.5% or 7.5% rate is what with ITC or without ITC without ITC which means that can they take ITC of RCM paid under 94 no they cannot take please listen concentrate it's a very very good question that is Sir 94 is applicable to me I a promoter or Builder 94 is applicable to me now when 94 is applicable if the type of construction that I making is residential construction only 94 is applicable for commercial projects 94 is not applicable for residential projects only why because the residential projects rate of GST is 1.5% or 7.5% without ITC so whenever I make payment of GST I cannot take itz so naturally I will buy from an unregistered person that's why to stop these people from buying from unregistered person they brought this nine subsection 4 where even though you buy from unregistered person you need to pay GST under RCM that GST we pay under RCM under 94 can we take as ATC no impossible we cannot take ITC it's not because of the blocked credit it is because the rate applicable to the promoter or Builder is 1.5% or 7.5% without ITC then another question sir in FasTrack batch where 95 was applicably mentioned supplier will pay GST on the amount received from e-commerce operator huh yes that is only in some specific cases that is in case of uh that supply of food through e-commerce operator and second case case is that uh omnius transportation of passengers in case of these two even if the supplier is registered it will be coming under you know like e-commerce operator liability now the supplier will receive some money now from the e-commerce operator on that whether supplier is required to pay GST so for that we have one cbic FAQ which says that yes the supplier is required to pay GST on that because he is registered person and he get that share from the e-commerce operator okay but that is actually specific provision you don't worry about that you remember whatever I have discussed then sir on 95 supplies whether supplier can Avail it in respect of inputs used by him in case of 95 who is liable to pay GST e-commerce operator is liable to pay GST so naturally e-commerce operator can take it on their invert supplies whatever invert supplies they have and and in case of restorant service the rate of GST applicable is 5% without ITC in that case also e-commerce operator can take ITC on inputs and input Services there is no restriction okay then next under 93 are residential property given on rent for registered individual for his own State not his family his family includes his own stay also so his family does not mean you know something else his family means own what if he is a single throughout his life he is a single but he live with many girls then also he will be called as family only his family means him for his purpose okay I don't want to add anything extra Beyond this so it will be coming yeah coloring so therefore his family I mean what if he is not married sir he will stay not there that is his family means it includes him also okay then what if he's having different families that okay fine huh anything yeah see export of service I did not say related all what I said is that in case of export of service the fifth condition is that supplier and recipient are two establishments of the same person so then it is not export of service the moment you say holding company subsidary company holding to subsidary or subsidary to holding there are two separate companies so definitely it will become export of service there is no restriction on that then so you have energy no half half an hour just a half an hour yes huh so we'll see one small no area we will complete that that's why I'm asking you so have a look into time of Supply page 59 segment 6 time of Supply there are total three sections we have section 31 which talks about what is the due date of invoice section 12 talks about time of supply and case of goods section 13 talks about time of supply and case of services section 14 talks about time of Supply in case of change in rate of tax what is the purpose of time of Supply time of Supply is for the purpose of determining the due date of payment of GST and time of Supply is for determining the exchange rate and time of supp place for determining the rate of GST if for any transaction time of Supply Falls in this month then by next month 20th I need to pay GST on the transaction so the due date of a transaction depends upon time of supply and already we have seen rule 34 value of Supply which says that the exchange rate prevailing on the time of Supply as notified by cbic or Gap should be taken so therefore time of Supply is relevant for determining the exchange rate third time of Supply is relevant for determining the rate of GST on different dates there could be different rates of GST but we need to take the rate of GST prevailing on the time of supply and the time of supply for a transaction depends upon the due date of invoice that due date of invoice is given under section 31 in case of goods we have three Provisions so normal cases continuous supply of goods sale on approval or on return basis 31 subsection one talks about normal cases if normal cases Supply involves movement of goods the due date of invoice is at the time of removal so on or before the date of removal the invoice needs to be given if Supply does not involve movement of goods at the time of delivery so Supply involves movement of goods Supply does not involve movement of goods what is the difference under the contract of Supply if the goods are taken from one place to another place then it is known as Supply involving movement of goods basically this door delivery contracts or e-commerce transactions will come under Supply involving movement of goods Supply does not involve movement of goods means we go to the seller's place we buy the goods and the supply is terminated there thereafter we bring the goods that is Supply not involving movement of goods in case Supply involves movement of goods the due date is at the time of removal if Supply does not involve mement of goods the due date is at the time of delivery this is 31 subsection one normal cases 31 subsection 4 continuous supply of goods in case of continuous supply of goods what is is a continuous supply of goods there will be successive supply of goods for which the payments are settled on a periodic basis so frequently I will be supplying Goods but I'll not collect money so either fortn nightly or weekly or monthly or quarterly I will be collecting money that is called as continuous supply of goods in case of continuous supply of goods we need to check whether the payments are received based on account statement or the payments are received irrespective of account statement what is this account statement as I'm making successive supply of goods so for a periodic basis I will prepare One account statement and I will be giving that account statement to you now that account statement will contain on which date what is the value of goods that I have supplied to you now some payments are collected as advances irrespective of this account statement so for those amounts it is the date on which payment is received will be taken as the due date of invoice whereas some amount will arise based on account statement for example 6 lakh 52,000 in that 6 lakhs already you paid 52,000 the differential amount you need to pay based on account statement for that 52,000 the account statement will be taken it is not whichever is earlier because lot of people are understanding that account statement date or payment received date whichever is earlier no it is account statement date or payment received date as the case may be which means if the payments are arising based on account statement it is account statement date date on which account statement is issued if the payments are received irrespective of account statement and the payment received date as the case may be it is not whichever is earlier then sale on approval or on return basis in case of sale on approval or on return basis when the invoice to be given 6 months from the date of removal or date of acceptance by the buyer whichever is earlier today deliver the goods to you and if you confirm then only it is considered as sale until that point of time it is not sale you confirmed within 6 months the date on which you confirm that is the date of sale I will raise invoice suppose you have not confirmed within 6 months deemed that on expir of 6 months you confirmed and I will raise invoice now say after 6 months you return the goods but already on expir of 6 months I prepared the invoice now you return the goods what should I do in that case I need to give you a credit note cancelling this invoice so what is the due date of invoice in case of of sale and approval or on return basis 6 months from the date of removal or date of acceptance by the recipient or buyer whichever is earlier then in case of services we have three subsections subsection two is normal cases subsection five is continuous supply of service and subsection six is session of service in normal cases so we need to check is it banking sector or Insurance sector or others in case of banking or Insurance the due date of invoice is 45 days from the date of completion in case of others it is 30 days from the date of completion so banking or Insurance 45 days from the date of completion other cases 30 days from the date of completion then continuous supply of service what is a continuous supply of service a service which takes more than three months remember more than three months and and involves periodic payment obligations both should be there if a service takes more than 3 months to complete and there is no periodic payment obligations it is not treated as continuous supply of service or if the service takes less than 3 months to complete but involves installments that is also not continuous supply of service both the conditions should be satisfied it should take more than three months to complete and should involve periodic payment obligations then in case of continuous supply of service whether the due date of installment is ascertainable from the contract yes the due date of installment will be taken as the due date of invoice if due date of installment is notable from the contract but the installments are based on some Milestone events so that is completion of an event as an when the event is completed that date will be taken as the due date of invoice suppose if the payment due date is not given in the in the contract or even the payment is not linked to completion of an event as and when the installment amount is received that date will be taken as the due date of invoice date of installment Asser aable from contract such due date of installment due date of install inment notable from contract as and when payment is received payment is linked to completion of event as and when the event is completed then in case of secession of service immediately upon secession we need to give the invoice secession refers to abruptly stopping the service is known as session of service immediately upon secession with respect to the proportionate amount retained the invoice needs to be given so this is about due date of invoice in case of goods and services then section 12 talks about due date of Eno time of Supply in case of goods section 13 talks about time of Supply in case of services in that we have some situations first situation is time of Supply in case of fcm second is time of Supply in case of RCM then time of Supply in case of vouchers and time of Supply in residual cases and time of Supply on account of interest late fear penalty for delaying receipt of consideration and in that this vouchers Point residual cases and interest late fee is common between 12 and 13 there is no change in the provisions whereas in case of fcm and RCM there is a change in the provision first look into 12 subsection 1 and 13 subsection 1 so the subsection one says that liability to pay GST is determined on the basis of time of Supply so the purpose of time of Supply is given in subsection one then subsection two you see 12 subsection 2 when 12 is applicable Goods subsection two is applicable when fcm you have to remember with subsections so 12 is Goods subsection two is fcm Goods fcm what is the provision see there in case of a person opting for composition scheme and specified actionable claims that's an amendment in case of a person opting for composition scheme and specified actionable claims what will be taken as the time of Supply it is due date of invoice actual date of invoice or date of payment whichever is earlier which means whether GST payable on advances yes for a person opting for composition scheme and for specified actionable claims GST payable on advances because date of payment is also one of the date there you understood whereas for others for others so what will be taken as the time of Supply due date of invoice our actual date of invoice whichever is earlier this date of payment is not there which means GST is payable on Advance or not payable on advances not payable on advances so be careful with respect to this in McQ they will test time of supplying case of fcm 12 subsection 2 in case of person opting for composition scheme and specified actionable claims time of Supply is Adi ADI means actual date of invoice DD means due date of invoice or date of pay payment whichever is earlier so GST payable on advances or not yes GST payable on advances whereas in other cases it will be only two dates date of payment is not there so actual date of invoice due date of invoice whichever is earlier GST not payable on advances whereas in case of services under fcm that is which section 13 subsection 2 13 subsection 2 Services fcm simple whether invoice is given within the due date yes invoice is given within the due date then take the actual date of invoice or date of payment whichever is earlier if invoice is not given within due date take the completion date or payment date whichever is earlier what is the time limit within which invoice to be given General cases 30 days from the date of completion or 45 days from the date of completion is there now that is a due dates so if the invoice is given within the due date date of invoice or date of payment whichever is earlier if invoice is not given within the due date then completion date or payment date whichever is earlier as date of payment is one of the date for determining time of Supply whether GST payable on advances yes then look into subsection 3 12 subsection 3 when 12 subsection 3 is applicable when 12 is applicable Goods when subsection three is applicable RCM in case of goods RCM what will be taken as the time of supply three points the date on which goods are received in case of RCM we need to determine from whose perspective recipient perspective the date on which goods are received or the date on which payment is made to supplier or 31st Day from the date of invoice whichever is earlier date on which goods are received date on which payment is made to supplier or 31st Day from the date of invoice whichever is earlier as date of payment is one of the date here so GST payable on advances then next in case of 13 subsection 3 when 13 is applicable Services when subsection 3 is applicable in case of RCM so what should be taken as the time of Supply date on which payment is made to supplier or 61st day here 31st day here it will be 61st day here date on which goods are received that is not there okay date on which payment is made to supplier or 61st Day from the r of invoice whichever is earlier again here as date of payment is one of the date for time of Supply GST payable on advances generally GST is payable on advances in all cases exception only one case GST not payable on advances what is that Goods fcm other than composition scheme or specified actionable claims then subsection 4 12 subsection 4 and 13 subsection 4 that is common for both goods and services this is in case of vouchers in case of vouchers what will be taken as a time of Supply check whether it is identifiable voucher or non-identifiable voucher in case of identifiable voucher at the time of issuance of voucher identifiable voucher means against which product or service you are going to redeem that voucher is known at the time of issuance so at the time of issuance itself will be taken as the time of Supply whereas non-identifiable voucher means you can redeem it against any product or service of the supplier therefore we don't know against which product you will be redeeming so due to that reason the time of Supply will be at the time of redemption so identifiable voucher at the time of issuance of voucher nonidentifiable ouer at the time of redemption and then 12 subsection five residual cases in residual cases again this is common between goods and services residual cases you check whether they are required to file any periodical return so if they are required to file periodical return who is required to file periodical return a registered person is required to file periodical return the due date of that return itself will be taken as a time of Supply where periodical return is not required to be filed who is not required to file periodical return so unregistered person so unregistered person is not required to file periodical return whenever they pay GST that date will be taken as the time of Supply so where periodical return has to be filed due date of filing such return periodical return not filed date of payment of GST subsection six residual cases in residual cases what will be taken as the time of Supply sorry subsection six is interest late fee or penalty for delay in receipt of consideration interest is always taxable on receipt basis whenever we are actually receiving the interest we need to pay which interest is this interest on loans advances deposits no because interest on loans advances deposits is Exempted this is interest on account of delay in receipt of consideration so GST is payable on receipt basis under GST everything will be payable on acral basis only this interest on late fee interest or late fee or penalty for delay and receipt of consideration payable on receipt basis this is with respect to 1213 and there are some addition points in this regard what will be taken as the date of payment so usually date of payment from the supplier point of view is date of entry in their books or date of credit in their bank account whichever is earlier will be taken whereas from recipient point of view if you see opposite what is that date of entry in the books or date of debit in their bank account whichever is earlier then in case of goods covered under fcm on advances GST not payable generally correct exception is we have seen composition SC specified actionable claims and GST is payable only upon invoice as the time of Supply is date of invoice or actual date of invoice whichever is earlier but in case of service and fcm GST is payable on advances as GST is payable on advances in case of services if you are receiving any excess amount beyond the invoice for that excess amount what will be the time of supply for example I raised invoice for 11,200 but you paid 12,000 800 rupees you paid extra for that 800 rupees this month I am receiving 800 but this 800 will be reflected in the next month bill so invoice is next month payment is this month whichever is earlier means I have to pay GST this month but it will be administratively inconvenient for that there is one provisor which says that if the ex amount is up to 1,000 rupees what is the excess amount here 800 which is up to 1,000 rupees either we can pay based on invoice itself or as per the normal Provisions as per normal Provisions means invoice or payment whichever is earlier or the date on which invoice is raised as the case may be supplier has the option to choose see this up to 1,000 rupees received in excess of the invoice in case of services covered under fcm time of Supply can be date of invoice or determined as per 132 and the supplier has options to choose then in case of supply of services between Associated Enterprises who are associated Enterprises as per section 992a of income tax act we have now list of associate Enterprises basically it is 26% one company or one person holding 26% in the other will become associated Enterprises in case of associated Enterprises import of services generally import of service will come under RCM so what will be taken as a time of Supply import of services RCM RCM Services what is the provision 13 subsection 3 date on which payment is made to supplier or 61st Day from the date of invoice but in case of associate Enterprises we are removing 61st Day from the rate of invoice and we are taking the date of entry in the books of the recipient whichever is earlier so what is the provision so the date on which payment is made to supplier or date of entry in the books of recipient whichever is earlier then when the goods are taken outside India for exhibition is it Supply or not a supply not a supply but if the goods are not brought back within 6 months the deeming fiction under 31 subsection 7 will be applicable like sale on approval or on return basis as the goods are taken for exhibition not brought back within 6 months on exper of 6 months it is deemed to be Supply and invoice needs to be raised that is this when goods are taken outside India for exhibition it is not a supply but when the same is not brought back within 6 months it is deemed to be Supply in terms of 31 subsection 7 the last section that we have is section 14 so section 14 talks about time of Supply in case of change in rate of tax so in case of change in rate of tax when the section 14 will be applicable mainly section 14 is applicable in case of services okay so applicable only in case of services and it is also applicable in case of person opting for composition scheme and specified actionability claims okay so first you should know to whom the section 14 is applicable this section 14 is applicable only in case of services also applicable also applicable in case of also applicable in case of composition scheme composition scheme and specified actionable claims specif ified actionable claims but practically it is irrelevant why because in case of composition scheme the rates will be always same 1% 5% Etc and in case of specified actionable claims also the rate will be always same what is that rate 28% so this change in rate concept will not be coming so practically the section 14 is applicable only in case of services now when 14 will be applicable Services what is the situation where 14 is applicable between three dates there is a change in rate what are those three dates date of completion date of invoice or date of payment between these three dayses there is a change in rate then 14 will come and in that we have two scenarios what is that 14a Supply before change in rate means the completion is before change in rate and then what should be taken as the time of Supply very simple invoice or payment whichever is earlier say this suppose if the compete completion is before change in rate then invoice date or payment date whichever is earlier suppose if the supply is after change in rate then what you need to do then check whether both invoice and payment is before change in rate or one before one after if both invoice and payment before change in rate whichever is earlier if one is before one is after then it will be taken as whichever is later invoice date or payment date whichever is later now what will be taken as the date of payment generally what is the meaning of date of payment date of entry in the books or date of credit in the bank account whichever is earlier however in case of section 14 if the payment is credited in the bank account within four working days from the change in rate then only it will be entry date or credit date whichever is earlier okay if the payment is not credited within four working days from the change in rate then the date on which payment is credited only will be taken as the date of payment so date of payment for section 14 is date of entry in the books or date of credit in bank account whichever is earlier when if the payment is credited within four working days from change in rate or date of credit in the bank account if the payment is credited after four working days from the change in rate now let's see how the section 14 will have a impact so there is a change in rate there is a change in rate with effect from 15223 there is a change in rate with effect from 15 2023 now date of completion date of completion then date of invoice and date of credit date of credit date of entry date of credit where in bank account date of credit in bank account date of entry in books now based on this you need to determine what is the date of payment and you need to determine what is the time of supply and what is the rate of GST whether old rate or new rate is applicable okay now let's see this date of completion is 154 2023 and date of invoice is 34 2023 and date of credit in the bank account is is 25 2023 but the date of Entry is 284 2023 okay now what should be taken as the date of payment so as the payment is credited within four working days we will assume that all days are working days from 1 May because 1 may we don't have any holidays and on so all days are working days so 2 five is within four working days correct or not as the payment is credited within four working days so due to that reason we will take date of credit in the bank account or date of entry in the books whichever is earlier which is earlier 284 20123 now in this case if you see completion is before change in rate invoice also before change in rate payment also before changing rate correct normal provision what is that normal provision in invoice or payment whichever is earlier which is earlier which is earlier so 284 2023 that is invoice date or payment date whichever is earlier will be taken and what is the rate that will be applicable old rate will be applicable so like that we need to determine now see 14 154 2023 invoice is 5 5 2023 and date of credit in the bank account is so 35223 and the payment date of entry in the books is 284 2023 now what will be taken as the date of payment same 284 2023 as the payment is credited within four working days so therefore we need to take 284 and 284 or 55 whichever is earlier even though invoice is given at the new rate but old rate only will be applicable 284 2023 old rate will be applicable next another example say if the completion is 154 2023 date of invoice is 55223 and the credit is happening on 105 2023 but the end entry is 284 2023 whether the payment is credited within four working days no not within four working days when it is not within four working days what will be taken as the date of payment date of entry in the books only will be taken or date of credit in the bank account will be taken date of credit in the bank account will be taken now what will be taken as the time of Supply date of invoice or date of payment whichever is earlier so 55 2023 what is the rate that will be applicable new rate will be applicable okay then next suppose if the completion is 85223 and the invoice is 284 2023 payment is credited on 35223 and 294 2023 so what will be taken as the date of payment is the payment credited Within four working days yes the payment is created within four working days and as the supply is after change in rate Supply is after change in rate carefully see the provision suppli is after change in rate and one before one after or both before both before both invoice and payment before change in rate so we need to take date of payment is 294 2023 no change but we need to take whichever is earlier or whichever is later whichever is earlier why whichever is earlier because both is before change in rate whichever is earlier that is 284 2023 old rate will be applicable now suppose 85 2023 so 2084 2023 the payment is credited on 105 2023 but the account entry is 294 2023 it is not within four working days now what will be be taken as the date of payment date of payment will be 29 or 10 10 so 105 2023 will be taken and date of invoice is before change in rate payment is after change in rate so one before one after means we need to take whichever is later why because this is Supply after change in rate so whichever is later which is later 105 2023 so what will be the rate that is applicable new rate will be applic like that any combination they can give in question you be careful on the provision what is the provision you need to remember completion before change in rate invoice date or payment date whichever is earlier completion after change in rate both invoice and payment before change in rate whichever is earlier one before one after whichever is later what is the meaning of date of payment payment credited within four working days from the change in rate so credit date or account entry date whichever is earlier payment not credited within four working days date of credit in the bank account only will be taken as the date of payment so that is about 14 then with this we completed this time of Supply also and let's see the queries and we will wind up the session why section 14 is not applicable in case of change in rate of goods because of notification 66 2017 there is one notification 66 2017 which says that so for Goods covered under you know like uh supply of goods always we need to take due date of invoice or actual date of invoice whichever is earlier even though section 14 is applicable for goods but we need to take always due date of invoice actual date of invoice whichever is earlier because of the notification 66 2017 then next based on square feet of house and sdv of house rates will be determined 1.5 huh so 1.57 .5 is not in syllabus when 1.5% when 7.5% so don't break your head whatever is there in syllabus that itself we don't have time to learn okay so don't think too much about it it will be given in the question itself okay that's it fine thank you and we will continue with the exemptions tomorrow so in tomorrow session we will be completing exemptions under GST and followed by place of supply and even refunds and other topics okay it will continue thank you we'll meet tomorrow so in the last session we completed up to time of supply and uh let's proceed to exemptions under GST segment 5 page number 40 so in this exemptions already some of the exemptions are there which is covered under uh the RCM discussion so these are the other exemptions that we have and in that even the discussion also will be coming agriculture related Services is the first sector in that we have only five exemptions any service in relation to agriculture or agricultural produce is Exempted so I'm providing some services that is in relation to agriculture or that is in relation to agricultural produce now whatever money that I receive will be Exempted what is the meaning of agriculture agriculture means the you know activity cultivation of plants as well as raring of life forms of animals other than horses for what purpose for food fiber fuel raw material or any other similar produce so therefore culture will come and even fishing will come but horses will not be coming so because horses is no way connected to the agriculture that's why except the raring of horses and for what purpose food so food in the sense Pou Tre Etc fiber that is culture fuel cattle farming raw material honeybee farming or any other similar products agricultural produce means the primary produce out of Agriculture on which no processing is done or some other processing as is usually done by a cultivator or producer so which does not alterate essential characteristics but makes it marketable for the primary market so which means that so whatever we get out of the Agricultural produce so that is agricultural produce whereas if you process it it will not become agricultural produce what if the process does not alter the essential characteristics then still it is agricultural produce example tender coconut is agricultural produce and even coconut is also agricultural produce copra is also agricultural produce these are the process which is usually done by the cultivator which does not alter its essential characteristics due to that reason it will be coming under agricultural produce but using the coconut if you extract the coconut oil or coconut milk Etc that will not be coming under agricultural produce because that will be processed okay so then Patty is an agricultural produce because Patty is the primary produce out of Agriculture whereas rice is processed but this processing from partty to rice is not usually done by the cultivator so it will be done by the rice mils and that will not be coming under agricultural produce but as rice is not an agricultural produce in relation to Rice few activ ities are Exempted what are they loading unloading packing storage or warehousing is Exempted only five activities loading unloading packing four so storage or warehousing both are same these four activities in relation to rise is only Exempted and why this rise andn separately given because rice is not an agricultural produce what about these activities in relation to agricultural produce anyhow it is covered in the first point itself any service in relation to agricultural produce there it will be covered for example storage and wehousing of fruits and vegetables it's covered in the first point itself storage and wehousing of Patty it's covered in the first point itself so like that all these activities in relation to agricultural produce is already covered in the first point then what is the importance of second point the second point is only for the rice as rice is not an agricultural produce and then artificial insemination of livestock is Exempted artificial insemination means through an artificial process so whenever we make the reproduction for that some injections and all will be given to the cattle Etc so that artificial insemination is not directly in relation to agriculture due to that reason separately it has been given service by way of storage or warehousing of cereals and pulses so what about other Goods see storage or warehousing of agricultural produce is already covered in the first point that's what I said warehousing of fruits vegetables and other agricultural produce is covered in one above therefore it is Exempted so the Cals and pulses is not agricultural produce due to that reason separately they have given exemption for this but what if it is agricultural produce like a whole grain whole grain like rajma CH Etc is an agricultural produce it's already covered in the first point what if it is D which is processed so from the whole grain we remove the husk and we process it so the DS is not agricultural produced even though it is not agricultural produced but its storage and warehousing is exemp Ed then wosing of minor Forest produce wosing of minor Forest produce again minor Forest produce is not agricultural produce because it is available in the forest and this like bamboo honey or LAX there are some Goods like shikakai these are all some AIC herbs so which will not be called as agricultural produce but its storage is Exempted so therefore there are three agricultural like not an agricultural produce rice is not an agricultural produce cereals and pules not agricultural produce minor Forest produce is not agricultural produce but its storage or warehousing is Exempted so these are the only exemptions that we have in relation to agriculture sector and is there anything that is taxable yes suppose if the activity is not relation to agriculture then it will be taxable so what are the examples that will be coming in the first point so farmer Education and Training farmer Education and Training is in relation to agriculture definitely will be Exempted sea testing soil testing renting of AGR Machinery these are all in relation to agriculture produce but processing of tomato ketchup so Tomatoes we take and we get the tomato ketchup won't it come under service in relation to agricultural produce no see the output output is what tomato ketchup that is not an agricultural produce due to that reason this Crossing of tomato ketchup will not come under agricultural like activity so that is taxable okay then next second sector is insurance services in case of Insurance Services we have few exemptions service of life insurance business provided by way of annity under National pension system so remember NPS trust if NPS trust is collecting any amount towards the insurance that amount collected by them will be Exempted then group life insurance funds there are five group life insurance funds that is Army Navy Air Force Coastal Guard and Central armed police forces so these five Group Insurance funds only Exempted basically the objective of Group Insurance Fund is that so there will be some group of people and they will be contributing every month some amount towards the insurance and if there is anything that happens to the member of that group to their family members a monetary support will be made out of the group Insurance Fund but not all Group Insurance funds are Exempted only five Group Insurance funds are Exempted that is Army Navy Air Force postal guard and Central arm police forces then service of General Insurance prisoners provided under government schemes so General Insurance there is a general insurance company which is providing General Insurance Services so that can be any insurance company it can be like you know private company or it can be a government Enterprise there is an insurance company that insurance company is providing General Insurance Services but that General Insurance scheme is notified by government under that scheme notified by government if they receive any premium that premium collected will be Exempted so these G insurance which are notified schemes under government schemes what are those government notified schemes basically these are related to Agriculture and Farmers below poverty line women so then that will be Exempted example seed crop insurance then Palm coconut palm Insurance Hut Insurance these are all some examples where in the premium collected will be Exempted apart from that extra one more point you remember Naya health insurance Naya health insurance is also Exempted then fourth point there is an insurance company that insurance company can be government owned or a private one they are providing now life insurance services that life insurance schemes are notified by government now whatever premium that is being collected that will be Exempted so what is that government notified scheme usually it ends with the word y so pranant Janti Bea y pranant Wan y pradan Jan yena these are some yena so if you see the word yoga definitely it's a government scheme so whatever premium that is being collected that will be Exempted see yes there are some big list of schemes but there is no point in Remembering so for the sake of this one just one point you don't have to remember that and all so definitely it will be a notified scheme only that will be given in the question don't worry and then micro life insurance having the maximum sum assur as 2 lakh rupees suppose if the micro life insurance is given but the sum assur is 250 whether the premium will be taxable or Exempted that premium will be taxable so two conditions here first the insurance should be a microl life insurance microl life insurance means a small amount of Premium will be involved and the maximum summer shoot should be 2 lakhs then the premium collected will be Exempted then Insurance Services provided to government so any insurance let it be life insurance or General Insurance Services provided to government so government will be taking insurance from the insurance companies with respect to its employees or it's plant and missioner or buildings Etc so in that case government will pay the premium so this basically Services provided to government that is Insurance Service provided to government whatever premium that is collected from the government that premium will be Exempted then reinsurance of any Exempted insurance is also Exempted for example we are providing Insurance to government for which we collect the premium from the government that premium is Exempted now our insurance company takes insurance with another insurance company and we pay the premium this concept is known as reinsurance so as the main insurance is Exempted its reinsurance is also Exempted then Services provided by business facilitator or business correspondent to insurance company in rural area we discussed that in insurance agent service to insurance company so whatever business facilitator or business correspondent for insurance company working in rural area the commissioner by them will be Exempted so these are the seven activities that we have in relation to Insurance Services then next Banking and other Financial Services in case of banking and other Financial Services we have various exemptions in that the first exemption is there is a transaction involving money without consideration we already know that it is neither Goods nor Services because money definition money is excluded from the definition of both goods and services so but what if there is a transaction in money for a separate consideration transaction in money for a separate consideration is treated as service now we need to check whether the consideration is represented by way of Interest or discount on loans or advances then that will be Exempted if it is any other consideration that will be taxable any other consideration means what interest involved on credit cards commission debit C charges credit card charges minimum balance non-maintenance charges annual maintenance charges like that all these charges will be taxable so suppose if the transaction money is without consideration neither Goods nor Services if it is for a consideration such transaction is treated as service and the consideration is interest or discount then it is Exempted if the consideration is any other consideration including interest involved in credit cards that will be taxable under fcm then next second point there is a Banking Company which is providing services to basic savings deposit account holders under pradan monry Jan yoga so under pmj scheme some people will be allowed to open L balance accounts so these savings accounts holders may receive some services from the bank for which bank will collect some charges from them that charges collected from them will be Exempted interest anyhow Exempted even other charges collected from the savings account holders is Exempted what if it is a normal savings account holder the charges collected from them will be taxable only if it is basic savings deposit account holders under pmjdy scheme it is Exempted then third Point Forex transactions that is money changing one currency to another currency if the foreign exchange transaction takes place between Banks or between Forex dealers or between Banks and Forex dealers whatever consideration that is involved will be Exempted suppose if the transaction of money changing or foreign exchange is happening between bank or Forex dealer and the customer so whatever charges that is being collected will be taxable and whatever fcm RCM we already learned what are the list of services which are covered under RCM so here you don't focus on whether it will be you know fcm or RCM because already you know what are the RCM so therefore whatever we are seeing as taxable if it is not covered under RCM it will be by default fcm then next fourth Point Services by an acquiring Bank basically this acquiring Bank what they will do is that acquiring bank will do the settlement of the transactions between the vendors and the purchasers so purchaser when they using the credit card or debit card or any card so money will be debited from their account and it will be given to the vendar account and One bank will be doing this that bank will be called as acquiring bank that acquiring Bank as they do the settlement they will be collecting some processing charges processing fees this processing fees is not Exempted processing fee will be there but GST on processing fees will be Exempted if the transaction amount is up to 2,000 Rupees suppose if you are using the card up to to 2,000 Rupees the processing fee will be there but on that processing fee there is no GST what if it is a UPA transaction if it is a UPA transaction already we know that there is an incentive which is paid by the ministry of information and electronics so to the acquiring Bank due to that reason there won't be any processing charges and this incentive whatever they are collecting there won't be any GST on that because this incentive will be treated like subsidy from government so there is no GST on that but mainly this particular exemption is given in case of cart payment only not in case of online payments so physically card when we are using then only it will be called as a card payment online when you are using it will not be called as card payment it will be authentication so authentication is through card but does not mean we are making payment through card so therefore this exemption is only in case of card credit card debit card charge card or any other payment card service what you need to remember is that GST on processing charges for a transaction up to 2,000 Rupees is Exempted then fifth point there is a intermediary this intermediary is located in multi-service scz this multi-service scz we have only one multiservice scz that is gift City in guat so in that place when there is a person who is providing services to their customers outside India so intermediary is in India they providing services to their customers outside India in relation to foreign currency now it won't become export of services why it won't become export of service because in case of intermediary Services the place of Supply as per section 13 will be location of supplier in order to become export of service five condition should be satisfied supplier should be in India recipient should be outside India consideration should be in convertible Foreign Exchange Place of Supply should be outside India but here place of Supply will become India therefore it won't become export of service but here also there involves foreign exchange proceeds due to that reason they have given this as a exemption so as it becomes export of services anyhow the burden will become zero but here it is not export of service that's why they brought it under exemption what you need to remember is that there is an intermediary who is located in multi-service s with the ifsc status they are providing services to their customers outside India for which they are collecting some consideration that consideration collected by them will be Exempted that is this so then Health Services in case of Health Services we have only two exemptions at present so number one Health Services provided by a clinical establishment authorized medical practitioner or paramedics including Ambulance Service is exed this is the first exemption second exemption is healthcare service in relation to animals or birds so previously we had some more exemptions like biomedical waste treatment operator now it is taxable and cod blood banks one exemption was there that is also now taxable only these two exemptions are there one is related to human beings another is related to animals or birds in that first one Healthcare Services means what Healthcare Services means pre-treatment that is diagnosis diagnosis includes x-ray scanning Etc and treatment so carrying out any treatment including surgery operation post treatment that is keeping the patient in observation for the purpose of providing the care till the time the person is discharged the patient is discharged for any disease illness injury pregnancy in any recognized system of medicine any recognized system of medicine there are various recognized system of medicin like allopathy Homeopathy Sida unani AIC like that in any recognized system of medicine including transportation of patient and ambulance so patient and ambulance whether it is part of healthare or not part of healthare here separately also ambulance service is given as a part of healthare also ambulance service is given so whether the transportation of patient is a part of healthare means for providing any treatment or not as a part of healthare so normally also it will be Exempted but only transportation of patient in ambulance is Exempted transportation of any other passenger an ambulance will become taxable then next Healthcare Services does not not include cosmetic surgery plastic surgery and hair transplantation because these three will not come under Healthcare Services however if these three are carried out to restore the anatomy of body parts affected due to conial defects conial defects means by birth or developmental abnormalities during the growth stage or any injury or trauma so then in that case whatever cosmetic surgery plastic surgery or hair transplantation that is being done will come under healthcare services and that will be Exempted so this Healthcare Services should be by a clinical establishment clinical establishment means a place where Healthcare servic is provided that can be nursing home or a clinic or a hospital or any other place or authorized medical practitioner medical practitioner here is a person who is having minimum qualification mbbs and is registered with the Indian medical Council or paramedics paramedics means so those who assist the doctors like nurse or lab technician physiotherapist or Compounders they will be coming under paramedics so these services provided by them will be Exempted all healthcare services are Exempted however room charges there is one exception generally room charges is also part of healthcare service and it is Exempted however if the room charges is ICU charges we don't have any restriction always it will be Exempted so ICU can be no critical ICU or normal ICU or neonatal ICU any ICU charges will be Exempted whatever may be the amount but normal room charges will be there that normal room charges will be Exempted if per day it does not exceed 5,000 rupees what if it exceeds 5,000 rupees per day entirely it will be taxable so for room charges alone we have one taxability if it is normal room charges which exceeds 5,000 rupees per day then it will be entirely taxable otherwise all healthcare services will be Exempted then healthcare service in relation to animals or Birds is also Exempted then we have few circulars in this regard renting of rooms to impatients in hospital subject to the point that 5,000 rupees point and food supplied to impatients who are impatients those who are admitted in the hospital is known as impatients is part of healthcare services and it is Exempted not only this even medicine sold food supplied everything given to the impatients and charge it from them will be Exempted then next point is related to Consulting doctors so there is a Consulting Doctor Who is not an employee of the hospital he's getting some money from the hospital that will be Exempted so money collected by the hospital from the patient is also Exempted for Consulting that is out patients so even money collected by the doctors from the hospitals is also Exempted then Services provided by way of ER or IVF treatment for the purpose of curing the abnormality related to pregnancy so this IVF or art treatments will be done then whatever whatever amount that is collected for that is mainly for curing an ailment or curing a like deformity so or abnormality due to that reason it will also be treated as healthcare services and the money collected for IVF treatment will be Exempted then next there is a rehab professional this rehab professional is not a doctor so basically they are psychology experts and they will be possessing the psychological you know degree and they will be registered with the rehabilitation Council of India they will be providing Rehab Services by way of care or counseling if they are working in medical establishments let that medical establishment be government or private or trust it will be always Exempted or education institution Let It Be government or private or trust it will be Exempted but what if they are working in rehab centers if they are working in rehab centers if that rehab centers is operated by government or trust then only the money collected by them will be Exempted if there is a private rehab center then the money collected by the rehab professional will be taxable okay service provided by rehab Professionals in private rehab center will be taxable only if they are working in government or trust owned rehab center then it will be Exempted but when it comes to medical establishments and education institutions that it be government or private or trust the no difference in that the next one we have is inets Sir does audio Logistics come under authorized medical practitioner I don't know yeah so I don't know much about medicine and uh if it is given in the question that he is an authorized medical practitioner he will be coming so I don't know what is that word also audio Logistics Etc so Logistics means I know only Transportation so therefore sorry for that maybe you mean to say some expert in something so if they are really authorized medical practitioner yes they are covered under exemption then even recognized system of medicine there are many recognized system of medicines but some unrecognized system of medicines are also there like chronic healing or raik healing like that so with respect to that it will be always taxable but again it will be given suppose if they coin a new term and all that will be clearly given as to whether it is a recognized system of medicine or not because even CA Institute know that we are not you know studying for Doctor degree and yoga remember it is a like recognized system of medicine yoga is covered then next so feels that your lectures are fully packed end of the day feels that my head is bursting so take class for 3 to 4 hours you watch for 3 to 4 hours afternoon you afternoon you take rest and thereafter tomorrow you continue watching no it's anyhow in YouTube Correct so you can watch what's wrong in that then this and all you are asking us doubts here disturbance in audio I don't think so yeah maybe my throat throat issue ask queries here don't disturb me in this following entry tickets that's why know I stopped for last two or taking online life rocket revision and all I stopped taking online life because know they will be asking like this only questions anyhow if I upload a lecture now students will say Sir online sir online live you are not doing sir Etc if I put online live no so students will not come hardly 50 students or 60 students will be there but in the group no 200 300 students will be asking me online live online live like that and again if I put online live so 6 hours I cannot study then what other work you have huh study here exams are coming you have to put effort so you have to you should not be always in the comfort zone you have to come out of the comfort zone only when you come out of the comfort zone the magic will happen so you cannot say no no I will sit in the comfort zone only and everything should come into my place only then better create a clone and send them for exam or use some artificial robot and send them for exam you do at least is that thing so if you are writing you have to put effort no other goal fine say this so entry tickets following are the entry tickets which are Exempted so irrespective of the ticket price some entry tickets are Exempted if the ticket price does not exceed 500 some entry tickets are Exempted so irrespective of the ticket price so we have first related to animals Museum so related to animals we have Zoo typ Reserve then we have Wildlife Sanctuary these three are related to animals then three places Museum National Park protected monuments these six alone you remember but these two are actually events which were already completed so I don't think so questions will be asked on this but these six you need to remember tiger Reserve zoo and Wildlife Sanctuary whereas the remaining three are places museum National Park and entry to protect monuments then ticket price does not exceed 500 so total nine points you need to remember first four are related to Performance related performance related means dance and then theatrical performance then concert and musical performance this is related to Performance one person is performing whereas related to events related to events we have four circus award function and page and Beauty show and sporting event then one place that is planetarium these are the nine entry tickets which are Exempted if the ticket price does not exceed 500 what if the ticket price exceeds 500 entirely it will be taxable then next what about pharmacies so one question they have asked Pharmacy related to the previous point I told you already medicine sold to impatients is Exempted anything which is sold to impatients or anything which is given to the inpatients will be Exempted if it is to out patients then it will be taxable means Pharmacy should maintain separately with respect to you know like uh outpatients inpatients pilling they need to maintain separately with respect to the billing they will divide as to whether it will be taxable or Exempted a medicine may be taxable but the moment it is sold to inpatient that medicine will become Exempted suppose if the same medicine is sold to out patient it will become taxable means the hospital should maintain separate billing related to that then next one pension services so pension services is related to two pension services are Exempted that is atal pension yogena and state government operated pension fund atel pension yoga is a central government operated pension scheme and state government operated pension fund is also Exempted okay so these two apart from that if there is a private pension fund whatever premium or whatever contribution that is being collected towards a pension fund will be taxable like there are motil LA religare and like SBI like that lot of Pension funds are there but these are private Pension funds so monthly they will collect some contribution that will be taxable only atal pension yoga or state government operated pension fund the money collected is Exempted and then next one number seven Services by some specified organizations these are the specified organizations if they collect any amount that amount collected by them will be Exempted what are those specified organizations esic employees State Insurance Corporation who will be collecting money from the factories for the purpose of providing Insurance to their workers and epfo employee Provident fund organization will be collected from the employers the EPF contribution and from employees so that epfo collecting money is Exempted like epfo for workers who are working in the coal mines we have cmfo Coal Mine Provident fund organization even they collecting The Provident fund is Exempted then nccd refers to National Center for cold chain development basically they provide the required assistance for setting up the C chain and for which which whatever money that is being collected so that is Exempted then foreign diplomatic mission in India so what is a foreign diplomatic Mission basically specified agencies of un Embassy or consulate so specified agencies of un like UNESCO UNICEF whp Etc so whatever money that is being collected by them including the embassies and consulates which will be providing Visa services or which will be providing any other kind of assistance to the people so whatever money that is being collected will be Exempted basically this is foreign diplomatic Mission located in India so these are the organizations previously we had sebi so but now it is not there so any money collected by sebi will be taxable or Exempted taxable we don't have any exemption then any money collected by irda Insurance regulatory authority of India so whether that money collected by them will be taxable or Exempted taxable that is not there in the list of these associations only these organizations collecting the money from anyone will be Exempted then charitable and religious services so there is a entity which is registered under section 12 AA or 12ab of income tax act charitable trust so these charitable trust providing some charitable activities only specified charitable activities the money collected by them will be Exempted what are those specified charitable activities public health so public health is like providing the healthare services but anyhow healthare Services is coming under exemption so even Public Health which is done by the charitable trust is also Exempted number two advancement of religion spirituality and yoga so all these Baba Swami asham Etc and all will be coming into this category and the money collected by them will be Exempted then educational programs to orphans and physically or mentally traumatized persons prisoners or persons over 65 years remember persons over 65 years residing in rural area suppose if the person's over 65 years residing in urban area if the Educational Service educational program is provided to them by the trust that will be taxable so if it is orphans anywhere physically or mentally traumatized persons anywhere prisoners anywhere but for this persons over 65 years that point alone residing in rural area then fourth activity is environmental preservation these are the four charitable activities apart from this any other activity maybe in the nature of charitable but we don't have any exemption only for these four activities exemption is given then next number two Services by a old age home so there is a trust or a government which is running a old age home and they will be providing lodging and boarding services to the people old people so who are considered as old people here aged 60 years or more are considered as old people now from them money collected from them per month if it does not exceed 25,000 rupees then it will be Exempted so if it exceeds 25,000 rupees entirely it will be taxable remember everywhere in exemptions except incub services so if the amount exceeds that limit entirely it will be taxable there are many monitor limits that we have come across so for example here 25,000 if it exceeds 25,000 entirely it will be taxable same way room charges 5,000 if it exceeds 5,000 entirely it will be taxable like that everywhere if the monitor limit is given if you cross that monitor limit entirely it will be taxable the exception is incub services in case of incu services so whatever money that is collected from the incubator up to 50 lakhs is Exempted if it exceeds 50 lakhs the excess only will be taxable so then next one Services by a person by way of conduct of religious ceremony so basically they will be providing like religious activities so priest prit Etc will come into this category and the money collected by them is Exempted Services by specified organizations for religious piligrimage so what are considered as religious pilgrimage Kash Manas SAR yatra and ha yatra these two are only considered as religious pilgrimage but not everyone who is providing this religious prage is Exempted that should be a specified organization so first that organization should be specified organization by the government and they are providing the religious pilgrimage for which they collect some money that will be Exempted so these are the four points related to charitable and religious services so this is the point I was referring to incubator and incubator services so there is a incubator so who is an incubator one who owns a laboratory where the research and development will be carried out and the laboratory is known as incubate and the one who is developing the research or developing any scientific product is known as incubative basically a scientist will be coming under incubating so example China is incubator and Wuhan laboratory where covid is created is called as incubate and the scientist who developed that covid will be coming under incubating okay so now incubator if they are approved by government of India so incubator is basically a owner of the laboratory incubator if they are approved by government whatever money that is earned by them will be Exempted whereas incubating incubating is providing services to the incubator now whatever money that is collected by the incubator if it does not exceed 50 lakh rupees in a financial year then it is Exempted and this exemption is for a period of 3 years and the condition is that previous year the gross reip should not exceed 50 lakhs so which means for example year one it is 30 lakhs Exempted year two 60 lakhs 50 lakhs Exempted remaining 10 lakhs will be taxable year three we will not get exemption why year three we will not get exemption because for year two the amount exceeds 50 lakhs due to that reason year three exemption will not be there and so suppose year one year two year three every year it is 40 lakhs 40 lakhs 40 lakhs and year four whether we will get the exemption no because the exemption is only for a period of 3 years from the date of agreement and therefore thereafter they will not be getting for example you see Cross reip of the incubate is 60 lakhs so first year exemption will be there by default because previous here it is zero so therefore 50 lakhs 10 lakhs will be taxable second year no exemption why second year no exemption because the previous year it exceeds 50 lakhs so second year 40 lakhs no exemption as a previous year exceeds 50 lakhs so 40 lakhs will be the taxable value third year 70 lakhs and whether they will get the exemption for the third year yes because for the previous year that is second year amount does not exceed 50 lakhs so therefore third year they will get the exemption 50 lakhs but 20 lakhs will be taxable this is the only place where you cross the limit so the remaining amount only will be taxable apart from this any other place if you cross the limit entirely it will be taxable then next Education Services Services provided by an educational institution to whom to its students and faculty and staff three people education institution providing services to students faculty and staff any amount collected from them will be Exempted so basically what is an educational institution so there are three categories of Education institutions so that we have category one so see the fourth Point first so so Services provided by an education institution to students faculty and staff category one education institution is up to 12th standard category two education for obtaining a qualification recognized by law category three approved occas education so schools will come under category one education institution colleges and professional education will come under category two whereas vocational education that is skill based will be coming under category 3 education institution these three education institutions provide providing services to students faculty and staff any amount collected will be Exempted sir what about some fees collected from the student so is Exempted that's fine but if application fee or prospective fee is collected he's not at all a student now he will become student in future whether that application fee or prospectus fee is also Exempted yes and what if the student is now leaving the college or leaving the school so we are collecting some money for issuance of transfer certificate or migration certificate so now he's not a student even that fees is also Exempted yes because these were related to that particular student only so therefore cbac has clarified that this application fee for entrance or fee charged for issuing eligibility certificate or fee collected for issuing migration certificate to the student is also Exempted so that is because of the clarification that is given then next one what if entrance exam fees is collected from the students they are not at all the students of the education institution only after writing the entrance exam they qualify and then only they will become the student so now they are prospective students whether the entrance exam fee collected from them is Exempted yes see the first point Services provided by education institution by way of conduct of entrance examination against consideration in the form of entrance exam fees is Exempted now what if there is a body examination body national board of examination or national testing agency its role is only to conduct the examination and they will not do any other work work they conduct the exam entrance exam and they give the score based on that score these people can join in any college based on counseling so there are job is only to conduct the examination will they come under education institution so for which cbic gave a clarification stating that yes so these examination boards are conducting entrance exam without entrance exam the student will not get the qualification so it is coming under part of obtaining qualification so these examination boards are also treated as education Institution for the limit purpose of conducting the examination and the fees collected by them is also Exempted so Central and State education boards are treated as education Institution for The Limited purpose of providing service by way of conduct of examination to the students therefore national board of examination or national testing agency is education institution in so far as it provides service by way of conduct of entrance exam to the students then next Services provided to education institution so see fifth point so so far what we have seen is Services provided by education institution in the fifth point we are seeing Services provided to education institution only specified activities with respect to service provided to education institution is Exempted so what is that first you remember Transportation then catering and security and housekeeping within the premises the security and housekeeping should be within the premises it should not be outside the premises so these four so transportation of students faculty and staff cing security service within the premises housekeeping service within the premises to which category institution to category one institution category one institution is up to 12th standard then this service will be Exempted remember that this is not service provided by education institution this service provided to education institution by education institution always it will be Exempted so for two education institution only for category one it will become Exempted then next point is admission to or conduct of examination so any bringing any admissions to the education Institution for a commission or conduct of examination of the education institution any amount ear for all three category institutions the fees collected will be Exempted so admission to or conduct of examination then online periodicals and journals only for category 2 institution it will be Exempted not for category one and three because online educational journals and periodicals are not relevant for category one and Category 3 institutions so only for category 2 they have given this exemption then next we have one circular cbac circular in this regard so the there is a anganwadi school and that angan school procures the catering services so anganwadi School basically will come under daycare school and this angan schools will be part of category one education institution and when they procure the catering service catering service provided to anganwadi Schools is coming under the exemption because catering services provided to category one education institution will be Exempted accordingly exemption of GST provided to Services provided to an education institution including a gun by way of serving of food including midday meals under any midday meal scheme sponsored by government irrespective of the funding of such supplies from government grants or corporate donations so then next one here suppose if the school is conducting a function annual day function somewhere in an auditorium and they received the security and housekeeping services to that Auditorium whatever money that is paid by that school will be taxable or Exempted taxable because security and housekeeping service should be within the premises suppose if the school is conducting annual fre function in Auditorium and they received the catering services that catering service provided to the school is taxable or Exempted Exempted because catering can be anywhere only security and housekeeping should be within the premises then next point you see second point so first we have seen what are the services provided by education institution next we have seen what are the services provided to education institution then amount paid to training Prov ERS under gram basically this is like a government scheme wherein some volunteers will be going to the rural areas and they will be providing training to the rural Youth and for which they will be getting some money from government so these government whatever these volunteers get under deam that money collected by them will be Exempted then any Services provided by nsdc national skill Development Corporation National skill Development Corporation will set up lot of sector skill councils and below that se sector skill councils there will be assessment agent or training partner these four people will basically provide lot of skill courses so for this whatever money that is being collected will be Exempted so remember four bodies what are they National skill Development Corporation sector skill Council assessment agent or training partner providing any skill course will be Exempted then next Point number six serves by assessment bodies under skill development initiative scheme so here there is a skill development initiative scheme wherein people from the industry will be invited by the government to review the curriculum after reviewing the curriculum so they will suggest the changes based on which the revised curriculum will be imparted to the students so these assessment bodies will be collecting some money from the government so that money collected by them will be Exempted so these are the various activities in relation to education that is Exempted then so is the limit for incubate in previous year is up to 50 lakhs or less than 50 lakhs so it is up to 50 lakhs does not exceed 50 lakhs actually it is less than or equals to 50 lakhs less than or equals to 50 lakhs okay previous year does not exceed 50 lakhs that's how you need to remember it's not less than 50 lakhs does not exceed 50 lakhs does not exceed 50 lakhs then looking into the next one Services provided by government so here already we discussed about Services provided by government to business entities in detail we discussed in that segment three RCM that is 14 specific exemptions we have two general exemptions we have apart from that basically Services provided by government is divided into two so four specified activities which are covered under Supply and all other activities are excluded from Supply what are the four activities Department of post transportation of goods or passengers airport or Port Services services to business entities the services to business entities is already covered above and Department of post in Department of post following are Exempted that is postcard Inland letter and envelopes with less than 10 grams is Exempted all other service of Department of post will be taxable so what are Exempted postcard Inland letter and envelopes paying less than 10 GS not by way of speed post and all so like book post or registered post that will only be Exempted but what are the surveys of Department of post which will be taxable speed post Express Partial Post life insurance services saving schemes or other Enrollment Services so like agency Services there are many things which the department of post will do that will be taxable then transportation of goods or passengers we have a separate discussion and airport or Port Services always will be taxable then Services provided to government so for what we have seen is Services provided by government service provided to government only two government so pure services will be Exempted pure Services means there won't be any Goods element it will be only service element that two it is in relation to function interested to government under article 243g or 243 W of the Constitution as per Constitution government is required to do certain activities and for doing that activities they Outsource that activities to one person so that person is providing the Pure service Labor Service so whatever money that is collected will be Exempted example Solid Waste Management in Solid Waste Management that is cleaning the garbages Etc is the work of the government so they will appoint one person to do this work so this person will provide only pure Services by way of solid waste management so money collected will be Exempted then next what if it involves both goods and services if the value of goods does not exceed 25% of the total value then that activity is also Exempted example so construction of roads in construction of Roads Goods element is the material that is supplied and construction is the service element definitely in this the goods element is more than 25% so therefore this activity will be taxable whereas sanitization of streets in sanitization of streets so what will happen the chemicals that is used is only Goods element and sanitization is a service element the value of goods does not exceed 25% of the total therefore it is Exempted but remember all these activities should be the work which government should do as per Constitution which they Outsource it to some contractors so service provided by any person to government central government state government Union territory or local Authority previously government Authority and government entity was also there that is now omitted because for them a separate exemption is being given okay so this is only to government that is central government state government Union territory or local Authority with respect to functions interested under article 243 grr W of the Constitution and pure surveys are Exempted even composite supply of goods or services where value of goods does not exceed 25 % of the total value is also Exempted and government includes public works department also so public works department basically PWD so this PWD will be receiving some Services of construction of Roads or construction of buildings Etc so then Services provided to them is also Exempted yes so here when I say you know central government state government Union territory local Authority it includes the department of the government also not necessarily government such all Departments of the government is included in that so that is this amendment and there is one cbic circular related to processing of Patty so there sorry wheat into wheat floor so there is like ration shops in north and all they will be Distributing wheat floor to the customers like people over there and for that reason the PDS public distribution system ration shops will be procuring the wheat floor so this wheat floor when they are procuring so there are two elements Goods element is wheat and converting it into wheat floor is a service element definitely the value of goods exceeds 25% of the total so whatever money that is being collected from the government will be taxable so composite supply of service by of Milling of wheat into wheat floor along with fortification by any person to state government for distribution of such wheat floor under PDS public distribution system means ration shops is not eligible for exemption as a value of goods involved is greater than 25% so this is the first exemption with respect to service provided to government then second exemption so as this first exemption is removed for government Authority and government entity they have given a new exemption so this is an amendment for May 24 exam what is that any person who is providing certain services in relation to functions to government Authority okay government Authority because here government Authority government entity They removed now that's why separately they have given but not all activities only these five activities provided to government Authority will be Exempted what are those five activities water supply example bangaluru right now Bengaluru is facing a Water Crisis so people don't have water and now here what happens so this uh government officers or some other places so here they will be having a corporation or a Authority water supply Authority or water supply board so this water supply board will be providing the water facility so for that this water supply board will procure the water so when they procure the water they need to pay some charges that charges which are payable will be Exempted so that is this water supply then Public Health Public Health refers to you know like providing any vaccination services or testing services Etc then sanitation and Conservancy so sanitation like so spraying in the you know streets then drainages and all they will spray that you know chemicals and the gases and all for the mosquito prevention so that then Solid Waste Management is cleaning the garbage and slum Improvement and upgradation like slum clearance boats wherein they will be you know constructing in that slum area they will make all the Huts to be removed and in one place they will construct one big building for them and they will be shifting them to that place that is known as slum Improvement and upgradation these activities provided by any person to government authorities Exempted definitely this will be tested in the forthcoming exam so what are the five activities which are provided to government authorities Exempted water supply Public Health sanitation Conservancy Solid Waste Management and slum Improvement and upgradation then next any training program for which 75% of the total expenditure is Bor by government is also Exempted these also Services provided so what happens here is that so government will be asking some coaching centers to provide coaching on are training to some below poverty L students or economically backward students or minority students for which the fees will be bor by the government so if government is pairing 75% or more of the fees the entire training program is Exempted for example need coaching need coaching to below powerty line students 1 lakh is the fees 80,000 rupes born by government 20,000 rupes born by the student the coaching Center gets 1 lakh 80,000 from government 20,000 from student how much is taxable and entirely Exempted because the training program itself will be Exempted what if government is pending 70,000 and student is paying 30,000 now what about this this will be taxable because government is bearing how much so less than 75% so due to that reason it will be taxable the training program will be taxable then fourth Point Services provided by any institution or NGO under the central scheme of scholarship for students with disabilities so the difference between third point and fourth point is that the fourth point is basically scholarship for students with disabilities where entire expenditure bond by the government then the amount collected will be Exempted whereas apart from this any other training program greater than or equals to 75% of the expenditure should be born by the government then next one renting in case of renting renting of movable property only four exemptions we have that already we have seen in renting of Motor Vehicles hiring a motor vehicle that can carry more than 12 passengers to a State Road Transport undertaking and hiring of Motor Vehicle electric motor vehicle that can carry 12 passengers to a local Authority hiring of motor vehicle that can carry Goods to a Lo to a GTA and hiring of bus to a person who in turn provides transportation services to education institution up to 12th standard so these are the four activities in relation to M Property renting is Exempted whereas in case of immobile property we have for land so in case of land here basically the this is what renting including leasing licensing Etc so in case of land upfront charges and annual lease rentals with respect to lease of land by government to government Authority or government entity remember who is the supplier and who is the recipient who is the supplier here government is a supplier who is the recipient government Authority or government entity is the recipient now they are giving land on Le what type of land is it an agricultural land or industrial land any land on lease what type of lease short-term lease or long-term lease any type of lease they did not tell long-term lease they said lease and what is Exempted whether uper charges is Exempted or annual lease rental is Exempted everything is Exempted so you need to remember clearly because it's a very important point that can be tested in forthcoming exams so what is that there is a government which is giving the land on lease to whom government Authority or government entity for which they will be collecting some upfront amount as well as annual reent both are Exempted and the type of lease can be short-term lease or long-term lease and the type of land can be industrial land or agricultural land any type of land whereas second point you see in case of land what is the difference between this point and that point in this case upfront charges is only Exempted whereas here both upfront charges and annual these rentals Exempted but here only upfront charges is Exempted including preferential location charge preferential location charges is sometimes whenever know the land is given next to highways and all they will be expecting extra charges that is known as preferential location charges so upfront charges including preferential location charges with respect to long-term lease so long-term lease means what lease for a period greater than or equals to 30 years whereas here they did not tell long-term lease or short-term lease they said lease but here it should be long-term lease of what industrial plot or plot for development of infra for business means here they did not tell what type of land any land but here they are telling it should be industrial land or land for development of infrastructure for finance business so by whom by sidco state Industrial Development Corporation sitco so state government Industrial Development Corporation to any person so here recipient they did not tell to whom so supplier will be sitco State Industrial Development Corporation recipient can be any person whereas in the previous case supplier should be government and recipient is government Authority or government entity previous Point any type of lease but here it should be longterm lease previous Point upfront charges and annual lease rentals here only upfront charges previous case they did not tell what what type of land any land but here industrial land or land for development of infra for finance business these are the two exemptions that we have in relation to renting of land or leasing of land whereas looking to the next Point building in case of building so renting of residential property in detail we have seen so two exemptions we have in case of renting of residential property what are the two exemptions residential property for residential purpose to an unregistered person or residential property for residential purpose to a registered individual for his family stain so that is Exempted then next next Point renting of precincts of a religious Place meant for general public registered as a trust under income tax so accommodation halls and shops so here with respect to accommodation if it is per day so basically it is the precincts of a religious Place precincts of a religious place means what the surroundings of a religious place which is given on rent for what purpose it is given on rent it can be given on rent for accommodation or hall or shop but remember that religious place should be registered as a trust either a charitable trust or a religious trust so either a charitable trust Under 12 AA 12 a or religious trust under 1023 C or 1023 D so it can be any trust so they own the premises so the precincts means surroundings of the religious place that religious place should be religious place for general public means it should be like a temple or a church or no mosque or gurar Etc like that it should be a religious placement for general public for what purpose it is being given on rent for accommodation or for conducting any functions hall or for shops if it is for accommodation per day if it is less than th000 Rupees is Exempted what if it exceeds 1,000 rupees or equal to 1,000 rupees entirely it will be taxable remember only less than th000 is Exempted not less than or equals 2,000 is Exempted only less than 1,000 is Exempted that 2,000 Rupees less than 1,000 rupees per day you can remember it like $9.99 you can remember it like 9.99 is Exempted 1,000 rupees will become taxable okay then next halls for Hall also it is Exempted so how much it should be per day it should be less than 10,000 means 9,999 up to this means it will be Exempted so equals to 10,000 rupees also will be taxable and shops shops also $ 99,999 less than 10,000 rupees but it is per month not per day so this is per day and this also per day whereas this is per month then it will be Exempted if it exceeds these limits entirely it will be taxable then sports related Services sports related Services we have so two exemptions one is sponsorship services to a recognized Sports body is Exempted what is a recognized Sports body there are six Sports bodies which are considered as recognized Sports bodies National Sports Federation so BCCI Indian Hockey Federation Etc will come under National Sports Federation interuniversity Sports board which will conduct the games between the universities then par Olympic Committee for the physically challenged people they will be conducting you know games and sports then Indian Olympic Association so then Central civil services cultural and sports board so government for government employees they will be conducting Sports then pchat Sports board so for people in The Villages some matches like caby or volleyball or this boat racing Etc they will be conducting so these are the recognized Sports bodies that is National Sports Federation interuniversity Sports board par Olympic Committee Indian Olympic Association Central civil services culture and sports board and pchat sports board okay and if they receive any sponsorship money that money received by them will be Exempted suppose if there is a sports body which is not a recognized Sports body the sponsorship money collected by them will be taxable then who will pay GST in that case if the recipient is body corporator form it will be coming under RCM if the recipient is other than body corporator form it will be coming under fcm correct so see this recognized Sports body example BCCI and unrecognized sports body example IPL now bcca is getting some money from body corporate so that is Exempted even bcca getting money from a soul proprietor that is also Exempted whereas if IPL is getting some money from a body corporate or from for example Tata and that will be taxable but who will pay GST in this case RCM that body corporate or firm only will be paying suppose if they get sponsorship money from a individual sole proprietor then also it will be taxable but who will pay GST fcm so IPL board only will be paying GST then second exemption is Services provided by individual as a player referee umer coach or team manager to a recognized Sports body is Exempted only five people player referee umire coach and team manager to recognize Sports body Exempted if it is others to recognize Sports body also it will be taxable who are others like curators selectors technical experts commentators Etc and all these people providing services to unrecognized sports body will be always taxable we don't have any exemption so the exemption is what services provided by individual as a player referee Empire coach team manager to recognize Sports body is Exempted then one more exemption is also there Services provided by one recognized Sports body to another recognized Sports body say interuniversity sports board is conducting a cricket tournament for which they asked BCCI to support now BCC is providing the service to inter University sports board one recognized Sports body to another recognized Sports body so the fees collected by them will be Exempted then next one Services by an unincorporated body or a nonprofit entity to its members so following are Exempted so there is unincorporated association or a body they are providing services to their members and the money collected from them will become Supply under 71 yaa so any activity between a person other than individual and its members so it will become Supply under 71 AA but these activities are Exempted suppose if the association is a trade Union so group of Traders they form an association and the members will be the Traders for which they will be pay membership fees whatever may be the membership fees that is Exempted suppose if the service itself is exed so there is Association which is providing vaccination to its members generally vaccination is Exempted even if it is provided by association to its members also it will be Exempted then resident Welfare Association apartment Owners Association they will be providing lot of maintenance services for which they collect the maintenance charges that will be Exempted provided how much should be the maintenance charges does not exceed 7,500 rupees per month per member if it exceeds 7,500 rupees per month per member entirely it will be taxable suppose if it is as an industrial or agricultural labor Association so industrial or agricultural labor Association will be providing services to their members who are nothing but the industrial labor or agricultural labor by way of collecting some membership fees from them whatever may be the membership fees that is Exempted so then apart from this it is any other entity for promotion of trade Commerce and Industry so any other industry so like uh it's like some associations like CIA Confederation Indian industry or fiki like that there are some associations which are mainly established for the purpose of promotion of trade Commerce and Industry if they are collecting some membership fees how much should be that membership fees if it is less than or equals to 1,000 rupees per anom not per month perom then it will be Exempted otherwise it will be entirely taxable up to an amount of, rupees per month sorry not per month per member per anom whereas the 7,500 Rupees is 7, rupes per per member per month then next there is one amendment in this case so very very important Amendment so please concentrate that is electricity charges usually electricity charges will be incurred by the Association and it will be collected from the members how it will be collected from the members whether the bill is in the name of the member which is paid by the Association and recovered from the member if that be the case then the association is acting as a pure agent so that electricity charges collected by the association should not be included in the value for computing the monthly maintenance charges again I'm repeating please concentrate there is a Association which is incurring some electricity charges this electricity charges bill they are paying and recovering it from the members now in this case so whether the bill is in the name of the members yes bill is in the name of members means their flat EB Bill who pay Association pay and Recovery it from the flat owner now in this case they're acting as a pure agent liability of the recipient incurred by supplier as a pure agent of the recipient while Computing the maintenance charges monthly maintenance charges whether these EB charges recovered will be included or not to be included not to be included so electricity supplied by Mals airport operators real estate owner or real estate developer or resident Welfare Association pay the electricity charges on behalf of the members and claims reimbursement of actual electricity charges then it will become pure agent correct that's the first point I discuss to you so pays electricity charges on behalf of members and claims reimbursement of actual electricity charges so it will not form part of value so that's clear whereas second point point you see collects from members on actual basis for electricity as charged by the state electricity board sir what is the difference between previous point this point in the previous point the bill was in the name of the member and the association has paid it and recovered it from the member but in this case second point the bill is in the name of the association for the common area and thus they are recovering it from the members on actual basis actual basis means what if the B is 2,000 how much they should recover it from the members together 2,000 then in that case they are deemed as pure agent this is a deeming fiction created in the circular deemed as pure agent so that 2,000 Rupees need not be included you got it suppose if the bill is 2,000 and by a way of abortion men if they recover some 2,200 rupees extra why extra because you know they will have some they have to go to EB office and pay bill Etc now so some extra amount they recovered now in this case they are not D not acting as pure agent and therefore the entire amount recovered will be included in the value if they collect charges from members on ad hog basis which sometimes exceeds the actual electricity charges of electricity board so then it shall form part of the value entirely so mainly this will be useful for computing the monthly maintenance charges okay so for example see this any how the regular maintenance charges is 5,000 rupees per month okay 5,000 rupees per month now what happens is that there is some common EB charges so common e common EB is somewhere like 65,000 rupees okay that's a big complex okay and this 65,000 on actual basis they recovered so say there are around some 50 Flats there are around some 50 Flats 65,000 divided by 50 how much 65,000 divided by 50 1,300 then specific EB specific EB for each and every flat for this flat this is common EB then specific EB specific electricity board charges specific electricity charges that is 4,000 rupees per month now if you do the total the total exceeds 7,500 but you should not take 4,000 you should not take 1,300 so therefore what is the maintenance charges 5,000 it does not exceed 7,500 therefore it will be Exempted okay now what they are doing rather than recovering it on actual basis so instead of 1,300 they are recovering 1,500 per month okay and this is say 7,000 per month and 1,500 per month now common EB they did not recover on actual basis so whether it will be included in the value yes it will be included in the value so 7,000 + 1,500 will be 8,500 per month which is more than 7,500 therefore it will be taxable you got it so therefore this recovery of EB charges is going to impact the monthly maintenance charges so if the monthly maintenance charges exceed 7,500 entirely it will be taxable so that's why what EB charges should be included what EB charges should not be included they gave a clarification you tell me which EB charges should be included on ad hoc basis if they are recovering an amount which is in excess of the actual EB charges then in that case it should be included in the value what if the ACT ual EB charges is only recovered it will not be included what if the specific electricity charges of that flat which the association pays and recovers from the flat that will also not be included so definitely this point will be tested in the forthcoming exam because of the amendment then so in case of Resident Welfare Association collects an amount exceeding 7,500 per month per member then entire amount will be taxable but also remember they should be crossing the threshold limit why they should be crossing the threshold limit let's take there are only 10 Flats there are only 10 flats and each flat they will pay 10,000 so monthly it exceeds 7,500 rupees like a gated community so gated community wherein all facilities they are providing so definitely it will be 10,000 rupees also into 12 if you see how much is the total turnover so 10 Flats into 10,000 into 12 that will be 12 lakhs 12 lakhs does not exceed 20 lakhs so therefore they are not required to register and pay any GST so just because you see 10,000 taxable don't conclude to computation of GST liability also check how many really number of flats and for how many months they are collecting the maintenance charges the total should exceed 20 lakhs then only they will pay GST because taxable or Exempted is for determining liability but thereafter you need to check as to whether they are liable to get registered or not then next area is transportation of passengers so there is one query sir this exemption of Resident Welfare Association is 7,500 per month per flat per member right because a member may have three to four flats also yes here per member refers to per flat suppose if one person not per person per person may have three Flats means he will be having three memberships so per member here refers to per flat okay transportation of passengers following are Exempted that is in case of Railways first we are discussing transportation of passengers in case of Railways we have two exemptions that is other than first class or AC everything is Exempted what are other than first class or AC sleeper class or General tickets or second class City that will be Exempted if it is first class AC or non AC taxable if it is any AC compartment it will be taxable remaining cases it will be Exempted then Metro mono and trve whatever may be the case it will be Exempted so definitely it will be AC only Metro Rail monor Rail and Tramway that will be always Exempted then when it comes to Airways in case of Airways so there are two exemptions number one if the starting point of of the passenger or ending point of the passenger is in northeastern states or bogra West Bengal so then it will be Exempted so what are considered as Northeastern states mmt and Asam so mmt and usam like that we discuss for composition scheme so that U is utarak here it is not mmn usam it is mmn Asam a for Assam so Manipur missam tripura nagaland Assam sikim arunachal Pradesh and meala so if the starting point or ending point of the passenger is in these places or bakra and West Bengal that entire a ticket will be Exempted but remember it should be in the economy class suppose if it is in business class that will be taxable the next one consideration received from government towards viability Gap funding for a period of 3 years so in case of regional connectivity airport scheme that is Udan scheme so government will be paying some amount to the airlines so as a revenue Gap so some amount they will collect from the passenger some amount they will collect it from the government that amount which is collected from the government is Exempted for a period of 3 years after three years also government will pay money to the airlines yes after three years also they will pay but that amount will be taxable only for three years that two money received from government is Exempted then next when it comes to waterways in case of water waste we have two exemptions first Inland Waters is Exempted transportation of passengers by inland waterways is Exempted inland waterways means what river then suppose if it is Coastal Waters Coastal Waters means sea WS but it should be within India other than for tourism purposes other than for tourism purpose means like public transportation so say Chennai to Andaman so in Andaman also India Chennai also India but the waters will be Coastal Waters it is not for tourism purpose other than for tourism purpose therefore it will be coming under exemption suppose if it is for t ISM purpose then it will be taxable so whether it is a government operated or private operated vehicle so that Ferry can be government Ferry or a private ferry so if they are transporting general public then it will be Exempted if it is predominantly for tourism purpose then it will be taxable then when it comes to roadways in case of roadways we have three exemptions first non AC stage carriage stage carriage refers to a vehicle which stops at every stage during its journey is known as a stage carriage if it is an non AC stage carriage then it will be Exempted suppose if it is non AC contract Carriage other than for tourism or higher that is also Exempted so non AC stage carriage Exempted no conditions non AC contract Carriage other than tourism or higher what if it is a non-ac contract carriage for tourism or higher then it will be taxable and then Meed cap or Auto Ras is also Exempted but there is one important Point here if these three or through e-commerce operator entirely it will be taxable exemption not available if the services are provided through e-commerce operator okay so basically Auto is Exempted but if the auto is through all or Uber then the money collected will be taxable that is about this then next transportation of goods following are Exempted transportation of goods by Railways specified Goods will be Exempted so transportation of goods by Railways what are those specified Goods whatever specified Goods that we have seen for GTA the same list of specified Goods so what are they that is agricultural produce organic manure food grains including floors pulses milk and salt newspapers and magazines relief material for natural man-made disasters and defense and military equipment same list of goods and in case of Airways from outside India to India transportation of Goods by Airways from outside India to India what about India to outside India that is not Exempted that will be taxable only outside India to India is Exempted then when it comes to transportation of goods by waterways inland waterways transportation of goods Exempted so Inland Waters both transportation of goods as well as transportation of passengers is Exempted whereas in case of coastal Waters within India what is Exempted specified Goods again the same list of specified Goods so these three places transportation of specified Goods is Exempted what are the three places Railways then waterways Coastal Waters Coastal Waters within India and then GTA these three places and the list of specified Goods will be same in all these three places then when it comes to roadways other than GTA or career agency all other transportation of goods by roadways will be Exempted so GTA basically is Goods transport agency means any person engaged in transportation of goods by whatever name called they give a document so they should give a document that document will be called as Consignment known even sometimes a document will be called as builing b llty y buil like that you just Google it you will be able to get it so buil like that they will call so which means it is like a consignment note okay so then it will be called as a GTA and next one corer agency so these two people are only taxable so all other people like normal Tata or truck and all they will be operating now whatever charges that they collect will be Exempted then previously transportation of goods by waterways from out uh from outside India to India like that and all we had some exemption now everything will be taxable in case of international waterways transportation of goods by waterways from outside India to India is taxable even transportation of goods by Airways and waterways from India to outside India is also taxable then GTA Services we already know that there are three exemptions in case of GTA spec specified Goods recipient is government so registered only to deduct TDS and recipient is individual HF or ajp all are unregistered and not having Factory and basically GTA is a person engaged in transportation of goods by Road and issues a consignment not by whatever name called and what are these specified Goods already we have seen and in case of GTA what are the rates that are applicable so either fcm so that is fcm again 12% or 5% without ITC and or RCM 5% they can select an option during a financial year such option when they need to select between 1st January to 31st March of the previous year and option one selected remains till the subsequent selection is made then next this is a very very important circular so there are three different circulars which are given related to what is renting of Motor Vehicles what is contract carriage on high Etc so merging that I have just given this chart so please concentrate there is a owner of a vehicle who is providing services to the person requiring the vehicle for transportation but in which vehicle non AC vehicle non AC vehicle okay now whether this vehicle is operated in a predetermined routs based on predetermined schedule yes what does it mean like you are one company you you wanted me to pick your employees and drop in the office again evening Pick the employees from the office and drop in the respective places means the rout is predetermined the schedule is predetermined correct now monthly I will be collecting some amount now this will not be called as renting of Motor Vehicles this will be called as contract Carriage other than tourism or higher other than tourism or higher so consequently it will be taxable or Exempted Exempted what if it is AC because just know Vis saw non AC contract Carriage is Exempted correct non-ac contract Carriage other than tourism or higher is Exempted so therefore this is a non AC contract carage other than tourism are higher therefore it is Exempted what if it is a AC contract Carriage AC contract Carriage always taxable got it then suppose if the vehicle is at the disposal of the recipient means I am giving the vehicle to you the vehicle is at your disposal you are only having that vehicle okay now in this case for the period you are only having the vehicle for a period of time or for a particular voage or Journey that you check is it it for a period of time month or 6 months or one year like that or is it for a particular Voyage so you are taking you know your employees or your people on a vacation so now for the completion of the vacation V will be with you only correct if it is for a particular Voyage or a journey then also it will be called as contract Carriage but this will be called as contract carriage for tourism or higher got it therefore it will be coming under taxable why sir it will be taxable because non AC for tourism or higher will be taxable other than tourism or higher is only Exempted therefore it will be taxable and why fcm contract Carriage we don't have RCM in the list of RCM we don't have contract Carriage suppose if the vehicle is at the disposal of the recipient for a period of time for a period of time if it is at the disposal of the you know recipient then what it will be treated as it will be treated as renting of Motor Vehicles so then renting of Motor Vehicles will be taxable whatever exemption that we have for Motor Vehicles is not applicable here what are the exemptions we have for Motor Vehicles so a motor vehicle more than 12 passengers to State Road Transport undertaking electric motor vehicle to local Authority and GTA and uh education institution school but it is not covered there therefore it will be taxable wherever renting of Motor Vehicle is taxable again we have three conditions what are the three conditions supplier should be other than body corporate recipient should be body corporate rate of GST 5% then it will be RCM other cases it will be fcm so this circular mainly identifies the difference between contract Carriage means what renting of Motor Vehicle means what definitely this will be tested here very very important so there is a chance of asking questions on this then then there is one query sir in case of electricity amount collected along with rent and such EB is on actual basis then EB will be Exempted by business entity registered no see basically you should remember one thing when my expenditure is Exempted when I recover that expenditure from you not that the expenditure will also become Exempted example toll charges is Exempted concentrate this is the mistake what everyone will do this toll charges is Exempted I am a transporter I incur the toll charges toll charges Exempted when I recover the toll charges from you the name of this charges is not toll charges the name of this charges is transportation service so this expenditure will be part and parcel of of my Transportation charges are you getting this I not providing the toll to you I am not collecting the toll charges from you I already paid toll charges when I recover these expenses the character of these expenses is the character of the main activity you understood same way electricity charges I'm paying as Association so electricity charges is Exempted there is no GST on electricity but the moment that electricity charges is recovered from you the the nature of this I'm not providing electricity boss to you I'm not providing electricity electricity is provided by some other person I paid for that that is Exempted when I recover it from you the name of it is not electricity charges then what is it maintenance charges in that electricity charges will be added you understood so don't tell electricity charges as Exempted because I'm not giving electricity I did not create a solar power plant and I am not supplying electricity to you if I am doing that then is Exempted you got it so here that is not the case so when my expenditure is Exempted the moment I am recovering that expenditure from you don't add the character of the exemption to the expenditure this expenditure character will change now simple here when a girl gets married her house name will change or not yes or no correct Sur name will change now like that so here the expenditure was called as electricity but the moment we are recovering the name will change what is the name of it maintenance charges you got it like that then and don't don't take this example in wrong sense and all so feminism zindabad okay say this so import of services so the next aspect is import of services import of services is divided into to two oid service other than ID service already we made a discussion related to this oid service always taxable who will pay GST in case of O service if it is imported by non- taxable online recipient it will be taxable under fcm if it is imported by other than non- taxable online recipient it will be taxable under RCM o Serv is always taxable it's only the matter of who will pay GST fcm or RCM if imported by n it will be fcm if imported by other than n it will be RCM whereas other than IDR service we have an exemption if it is imported by NTR then it will be Exempted if it is imported by other than NTR then it will be taxable under RCM so what is the meaning of oadr service basically a service which is mediated through internet over Information Technology it is called as IDR services so online information database or retrial Services means service whose delivery is mediated by Information Technology over internet and the nature of which renders their Supply impossible to ensure in the absence of Information Technology and includes Electronic Services such as so that telling includes Electronic Services such as advertising over the Internet example Instagram YouTube will come under oid Services Pro providing cloud services like QuickBooks sap Hana these are examples of cloud services then provision of ebooks Movie music software and other intangibles Kindle Spotify Apple music these are all examples then providing data or information retrieval of otherwise to any person electronic form through a computer network udmi so there will be some courses which you will enroll and canva so canva for Designing purpose you can access again it is working on cloud so it's a ID service online supplies of digital content movies television shows Etc example Netflix Amazon Prime OT platforms dig data storage example iCloud Google Drive Etc then online gaming online gaming also yes Minecraft it will work on server so then GTA yct same excluding online money gaming so IDR service excludes online money gaming why because online money gaming will come under specified actionable claims then non- taxable recipient means already we know who is non- taxable recip and any unregistered individual importing for personal purpose or a charitable trust importing for charitable activities or government importing for other than business or Commerce who is non- taxable online recipient any unregistered person or a registered person who is registered only to deduct TDS then next one Construction Services so in Construction Services first point construction of an individual house so you are constructing an individual house whatever may be the floor area whatever may be the consideration the money received by me as a cont contractor will be Exempted irrespective of the floor area what is called as individual house house occupied by individual single family is called as individual house for example Ana like that one big house is there in Mumbai so mukes Aman's house and now that is called as individual house surprisingly why it is called as individual house because it is occupied by one family so it will be called as an individual house and whatever money that is being collected for construction of that house will be Exempted but it should be a pure p labor contract means what it should not be Works contract it should be a pure labor contract we should not buy the material as a contractor so all the material required for construction they should buy they should only do the construction services then it will be Exempted then construction repair alteration renovation Etc of following projects is Exempted again it should be pure labor contract and not works contract that is housing for All Mission and pranant AA what's the difference between first point and second point in the first point only construction is Exempted but in the second case both construction and repair is Exempted in the first case it should be construction of individual house in the second case it will be construction or repair of government projects that is pradan AA and housing for All Mission then third point so that is 1/3 will be reduced towards UDS already I told you we're discussing 7.5% 1.5% whenever we are selling the flat and that flat includes the undivided share of land we will exclude the undivided share of land how we will exclude onethird of the gross amount is always treated towards the you know UDS for example if the flat is 75 lakhs and 25 lakhs will be excluded towards UDS and remaining 50 lakhs only will be taxable then but this is applicable only in case of residential units only and even for commercial units it will be yes provided they are charging some amount towards the land wherever they are charging some amount towards the land this will be constant so for resident IAL as well as commercial but they should be charging some amount towards the undivided share of land then next one transfer of development rights so TDR FSN long-term lease proportionate exemption we have seen what is that proportionate exemption value of Inver supply of TDR FS long-term lease into 18% into carpet area of the residential units booked before completion certificate of first occupation whichever is earlier divided by total carpet area of the project for example you see this value of invert supply of TDR FSI is 10 lakhs excluding GST 18% so therefore GST payable on invert Supply is 10 lakhs into 18% 1 180,000 floor area of the residential units booked before completion certificate is 28,000 Square ft and total floor area of the project is 50,000 Square ft so how much will be Exempted 1ak 180,000 into 28 divided 50 so therefore 1 l800 will be Exempted so remaining will be taxable what is it remaining lakh 180 minus 1 l800 79,2 will be taxable then next Advocate Services already we have seen so in case of advocate Services individual Advocate and firm of Advocates we have total four exemptions what is that if they are providing services to a person other than business entity that is Exempted if they are providing service to another individual Advocate or form of advocated is Exempted if they're providing services to central government state government local Authority or government Authority it is Exempted and if they are providing services to a business entity whose turnover during the previous year does not exceed threshold limit it is Exempted but in these four points this point which point service provided to individual Advocate or from Advocate is not applicable to a senior advocate in that case who should be taken as the recipient the ultimate litigant or applicant or petitioner should be taken as the recipient so see the next page for senior Advocate and arbitrator service we have only three exemptions if they're providing services to a person other than business entity it is Exempted if they're providing service to government it is Exempted if they're providing services to a person business entity whose turnover during previous year does not exceed threshold limit is Exempted and service provided by senior Advocate to individual Advocate or form of advocate is not Exempted in that case who will be taken as the recipient ultimate litigant applicant or petitioner shall be deemed to be recipient and accordingly we need to interpret and one more point is is also there section 23 override section 24 so as advocates outward Supply is fully covered under RCM so they are Exempted from registration and if they have some invit supplies on which they need to pay GST under RCM they are not required to pay GST because section 23 overr rights section 24 these points already I have seen before I'm just giving it then next we have exemptions under igst act so in these exemptions under agst act four exemptions are there number one if both supplier of service and recipient of service located outside India all services are Exempted previously one service was there transportation of goods by Wezel from outside India to India the Importer of such Goods is required to pay GST like that one point was there and because of the supreme court judgment in moit minerals case that particular exemption that particular taxability got removed which means now you remember after Amendment you remember what is that supplier of service outside India recipient of service outside India there is no GST on that all services will be Exempted then number two Services provided by a Indian tour operator so that Indian tour operator is providing tour operator service to whom to a foreign tourist where the tour is conducted fully outside India now whatever money that is collected will be Exempted so Indian tour operator to a foreign tourist in relation to tour conducted wholly outside India why won't it become export of service tour operator will be called as intermediary in case of intermediary as the place of supplies location of supplier as the place of supplies location of supplier that is India it will not become export of service but basically these service are provided to foreign tourist which means foreign exchange will be coming to India due to that reason they have given exemption separately so what is the exemption Indian tour operator providing tour operator service to a foreign tourist in relation to the tour conducted wholly outside India what if the tour is conducted in India then entirely it will be taxable what if the tourist partly in India partly outside India that is the next point then proportionate to the number of days the tour conducted outside India it will be Exempted Services provided by tour operator to a foreign tourist in relation to tour conducted partly in India partly outside India exemption is with respect to that part of the tour which is conducted outside India and how to compute that total consideration into number of days the tour is outside India divided by total number of days for example one lak is the consideration number of days tour conducted outside India is six out of the total number of days of 10 days now 1 lakh into 6 by 10 that is 60,000 or or 50% of the total consideration whichever is lower is only Exempted so the exemption maximum exemption is only 50% so therefore total consideration into 50% whichever is lower will be taken suppose number of days of T conductor outside India is 4 days so 1 lakh into 4 by 10 40,000 40,000 or 50,000 whichever is lower 40,000 is only Exempted now suppose while calculating the number of days suppose if the time spent outside India is more than or equals to 12 hours you count it as full day for example 3 days 9 hours will be counted as 3.5 days if it is less than 12 hours it will be considered as half day so therefore 3 days 3 days 8 hours considered as 3.5 days 3 days 16 hours will be considered as 4 days then fourth Point Services provided by an intermediary where location of both supplier and recipient of goods is out outside India so what is this fourth point there is a seller of goods outside India buyer of goods outside India you are a intermediary a commission agent who is located in India connecting the seller and buyer outside India as you are acting as a commission agent you will be receiving some commission that commission will be Exempted again why we call it as exemption why won't it become export of service again the same story intermediary Services the place of Supply will be location of supplier where the intermediary is located India then it will not become export of service but as you provide the services to people outside India so it will be bringing foreign exchange currency due to that reason they have given this exemption okay so what is this fourth Point here intermediary located in India connecting seller outside India buyer outside India for which you get a commission that commission will be Exempted now what is the difference between first point and the last point in the first point supplier of service outside India recipient of service outside India the entire activity is Exempted fourth point is seller of goods outside India buyer of goods outside India we are not talking about about the goods here we talking about the intermediary service who is in India that intermediary service is Exempted the next miscellaneous Exempted Services transfer of going concern as a whole or independent part thereof example slum sale or entire sale of business as Lock Stock Barrel or transfer of business no need to pay GST on the sale consideration then supply of service associated with Transit cargo to Nepal and Bhutan so Nepal and Bhutan are landlocked countries any Goods which are to be imported to Nepal and Bhutan will be imported into India because of the mou that India is having with Nepal and Bhutan and thereafter the goods will be taken from India to Nepal and Bhutan and for this movement of goods if you provide any services so Transit cargo services like loading unloading transportation service to these Goods the money received will be Exempted so that is the supply of service associated with Transit cargo to Nepal and Bhutan both to and from covered in the exemption as per cbac circular and if the car container returns empty that is you are collecting money not only for taking the vehicle but also returning empty now for that also you will collect some charges even that charges is also Exempted suppose while returning if you carry the goods and for that if you collect some charges that charges will be taxable that charges is not Exempted only going from India to outside India that Nepal and Bhutan is Exempted and return empty it will come for that you will collect some charges that is Exempted but while returning when they load some goods and they are bringing it for that you collect some charges that charges will be taxable that is not Exempted then service by way of collecting or providing news by independent journalist independent journalists will be working with any newspaper or news channel so they will be getting money from the newspapers or News Channel they will not be Associated permanently they are not like employees they're like Freelancers that money owned by independent journalist will be Exempted same way money owned by PTI and un PTI and un are News broadcasting agencies so these people will collect the news and they will be disseminating the news to the newspapers and news channels so these people will collect money so for example you want to give some news and that should come in all the newspapers go to PTR un you pay some money to them it is like a Press Club so they will be releasing the news to all the newspapers and news channels so the money collected by them will be Exempted then service of public libraries by way of lending of books so there are lot of public libraries so wherein Public Library means it is access accessible to General Public any person can go to that library and if they are providing books on rental basis and for which they collect some lending charges that lending charges is Exempted what if it is a private Library if it is a private library then the money collected will be taxable what if the private library is operated by education institution then in that case it will be coming under education institution exemption Services provided by education institution to its students faculty and stuff there it will be coming then Services by an organizer there is a organizer who is organizing a business exhibition where the business exhibition is held held outside India I am organizing a business exhibition you are my recipient you are in India I'm also in India but where the exhibition is held outside India it will indirectly encourage exports due to that reason this service exhibition service is Exempted what if the exhibition is held in India we don't have any exemption with respect to that then number six Services by way of public conveniences such as provision of facilities of bathroom washroom Laboratories urinal or toilet so for this public toilets one rupe 2 rupees collected now and now 5 rupees they are collecting so that is also Exempted no GST on that service by of asking to Road or bridge on payment of toll charges this what I told you toll charges are basically Exempted there is no GST on the toll charges other than by way of annuity so toll charges is nothing but recovery of expenses so they will invest in laying down the road and they will recover it from the people who are using that road but there is toll charges by of annity so when the government is using that road so they will be paying annually some charges to this person Builder so that annuity previously was Exempted and now they have removed it so therefore toll charges by annity is taxable then overloading charges at toll plazas is also Exempted sometimes what will happen big big vehicles and all will go in the tollgates so for which there will be some extra charges collected overloading charges that overloading charges is also Exempted then higher toll charges because of not having a functional fast tag fast tag would have been expired or there is no balance in the fast track then in that case what will happen so we have to pay by cash when we pay by cash they will be collecting double charges so the double charges is also toll charges only that is also Exempted then Services by performance artist there is a performance artist who is a performance artist one who performs before the audience is known as performance artist in forar classical art form of music or dance or theater where the amount charged is up to 150,000 so in what genre they need to do either in folk or classical and what is the art form either music dance or theater theater means stage shows okay and how much should be the consideration for performance it should not exceed 150,000 however if they are acting as a brand ambassador even if the amount does not exceed 150,000 entirely it will be taxable then Services by way of training or coaching in recreational activities relating to arts arts or culture should be by an individual so there is a arts training center or a culture Training Center like some martial arts or dance or Kum Fu Etc and all or culture like imparting V sub or any language it should be by an individual then only it will be Exempted if it is sports coaching centers that Sports coaching Center should be registered as a trust the sports academy should be registered as a charitable Trust then the money collected by them will be Exempted then satellite launch Services supplied by any person any person previously they have given so these also an amendment previously they have given anx Corporation ISRO and new space India limited like that but now it can be any person mainly because they wanted to attract this Elan musk into India to bring his SpaceX business here so that you know some Revenue will be generated for Indian government so that's why they are telling satellite lach service provided by any person so it can be private or anyone that will be Exempted then these are the various exemptions that we have with respect to GST and so we have completed this look into time of Supply also we have completed we'll take a break and then we will start with place of Supply okay meanwhile on exemptions if you have any any doubts online students just post it I'll explain after break okay I'll start so related to exemptions there are three queries any Services provided to government entity will be taxable no it's not taxable there are six five activities we saw now that is Exempted and remaining activities will be taxable that water supply Public Health sanitation Conservancy so that that is applicable for government Authority government Authority includes government entity also so that is Exempted and remaining activities anything will be taxable and next one in RTP for May 24 question number six rent paid to residential dwelling taken for running an office for providing DSA Services okay owner unregistered in answer they have considered this under RCM but it is fcm right sir that's what I said in the last class also there is a confusion right now that renting of residential property for commercial purpose whether it is fcm or RCM there is a confusion so yesterday I gave you one table so in that I said that so it is fcm because it should not be RCM so maybe it is a mistake in RTP but I will check that once anyhow I will post one video on RTP discussion in this YouTube channel that you can refer okay then and some more students have requested me to do McQ Marathon as well yes that is also I'm planning so but that I'm planning in April April first week like that so reason being I want to complete this revision might5 first and then I will do that okay I will let you know I will inform you so that uh we can do it like online live itself McQ Marathon some 100 mcqs we can see top mcqs and we can practice that okay then next uh sir if a body corporate AVS passenger transportation service for specific spefic journey and does not take vehicle on rent is it Exempted or is it covered under contract Carriage so actually for a specific Journey they are telling specific Journey means it will come under contract Carriage if it is on a predetermined schedule on a predetermined route means it will be coming under contract Carriage other than H but if it coming under specific Voyage or specific Journey means it will be contract Carriage on higher and it will be taxable it it be AC or non-ac will be taxable okay then kindly tell the name of this book it's already there in the description you please check dear it's there in the description of this video fine so now we are moving on to place of Supply this a very very important chapter as I told you in the beginning itself so place of Supply is divided into two so total four sections we have for place of Supply that is section 10 and 11 in case of goods 12 12 and 13 in case of services what is the purpose of place of Supply mainly to determine whether a transaction is inate Supply or Interstate Supply or import or export that depends upon the place of Supply so here place of Supply four sections section 10 deals with place of supplying case of goods domestic transaction 11 deals with place of supplying case of goods International transaction International transaction means Import and Export then place of Supply in case of services so 12 and 13 we have 12 is applicable if both supplier and recipient are located in India 13 is applicable if any one in India and the other outside India now what if both supplier and recipient are located outside India whether place of Supply is applicable not applicable because just now we have seen when both supplier and recipient are located outside India all the services are Exempted so if both supplier and recipient located in India place of Supply cannot be determined and it is Exempted now we are looking into section 10 in case of section 10 section 10 is applicable when in case of goods domestic transactions so you try to remember this along with the Clause so 101a when which situation will be applicable 101a Supply involves movement of goods 101b Bill to ship to transactions 101 C Supply does not involve movement of goods 101d assembly or installation at site 101e supply of goods on board during the Journey of a convenance okay on board in a convenance so that is 101e total five situations we have 101a Supply involves movement of goods what will be taken as the place of Supply ending point of the goods will be taken as the place of Supply if it is B2B transaction there is an amendment here B2B transaction ending point will be taken as place of Supply B to C transaction location of recipient in the record of supplier otherwise location of supplier so this is an amendment please see this Supply involves movement of goods if it is B2B we will take ending point if it is B to C then we will take location of recipient in the records of the supplier otherwise we will be taking location of supplier and 101b Bill to ship to transactions Bill to ship to transactions it is like on the instructions of my third person the goods are delivered to the recipient so you are the recipient you place the order and you are asking me to deliver the goods to a third person now in that case I will raise invo to you you are my billing address the third person will be the shipping address so in case of Bill to ship to Transaction what will be the place of Supply it's not the ending point of the goods but the billing address will be taken as the place of supply and let it be B2B or b2c answer is same there is no change in that whereas 101 C Supply does not involve movement of goods Supply does not involve movement of goods we need to take location of goods at the time of delivery and suppose if it is B2B suppose if it is B to C same way location of recipient in the records of supplier otherwise it will be location of supplier that will be taken example so there is a person who owns a ship and that ship is located in the Mumbai Port now this person who is located in Tamil Nadu is selling the ship by way of transfer of documents to the title say this Mr a is located in Tamil Nadu whereas Mr B is located in carala and Mr a is registered person whereas Mr B is unregistered person and there is a ship which is located there is a ship which is located in Maharashtra okay now Mr a transfers the document of title trans transfers transfer documents of ship to Mr B for which Mr B pays the consideration pays the consideration and where the ship is located the ship is located in Maharashtra now in that case whether it is 101a or 101 C 101c the place of Supply will be determined under Section 101 C why Supply does not involve movement of goods where the goods are located the goods are located in that place only so when Supply does not involve mement of goods what will be taken as the place of Supply in this case section 101 C before Amendment we used to take Maharashtra as the place of Supply location of goods at the time of delivery so location of goods is where Maharashtra but now the position has changed as it is a b2c transaction as it is a b2c transaction we need to take location of recipient in the records of the supplier what is the location of recipient in the records of supplier that is Kerala will be taken as the place of Supply okay now what if what if Mr B is registered what if Mr B is registered then what will happen still the same section but it will become B2 B 101 C it will become B2 B and in case of B2 be location of goods at the time of delivery what is the location of goods location of goods that is Maharashtra will be taken now what if Mr B what if Mr B is unregistered unregistered and his details not available with Mr a so what if Mr B is unregistered B Toc transaction and his details are not available with Mr a then section 101 c as per section 101 C it is B to C location of recipient not available in the records of supplier so location of supplier will be taken what is the location of supplier Tamil will be taken so like this the position will change previously it was only one answer what is that answer so location of goods that is Maharashtra but now because of change in the provision so they can change this way then next one 101a so three points we have seen 101 a supply involves mement of goods ending point will be taken for B2B and for B to C location of recipient in the records of supplier otherwise location of supplier and 101b remember B for Bill to ship to transactions billing address will be taken as the place of Supply 101c Supply does not involve movement of goods so we need to take place of Supply as a location of goods at the time of delivery in case of B to B in case of B to C location of recipent the recards of supplier otherwise location of supplier 101d goods are assembled or installed at site so in that case we will take location where the goods are assembled or installed and supply of goods on board in a conveyance so starting point of the goods will be taken as place of supply then section 11 in case of import of goods location of importer not location where the goods are imported but location of importer will be taken in case of export of goods location outside India will be taken as the place of Supply now in case of conflict between 101 A or B or C versus 101 D or E which section will prevail 101 D or E will only Prevail for example you are asking me to install a machine in your branch in a State now I'm taking the goods to the different state and I'm doing the installation and I raised invoice to you in this state I am located in Tamil Nadu you are also located in Tamil Nadu you ask me to install it in Karnataka now in this case I will take the goods to Karnataka I will install it there and I will raise invoice to you logically it's a bill to ship to transaction why Bill to ship to transaction you are my billing address but I'm delivering the goods in a different location so it's a bill to ship to transaction if you apply Bill to ship to transaction your billing address so billing address will be taken as your address will be taken as a place of Supply but actually 101b should not be applied here why this is a specific provision for installation or assembly at side as it is installation or assembly at side we need to take location where it is installed where is it installed Karnataka it is installed so Karnataka only will be taken as the place of Supply it's not inate supply it will become Interstate Supply remember prefer specific provision over General provision that's what I have given in the note in case of conflict between 101 a b or c over 101 D or 101e then 101 D or E shall Prevail because specific provision prevails over General provisions and then one more point you need to remember if you are determining the place of Supply under Section 13 so place of Supply under Section 13 when we will determine Services when either supplier is in India or recipient in India and the other outside India one in India and the other outside India then in that case section 13 will come already we learned that wherever section 13 is applicable and if the place of Supply is in India it will be deemed Interstate Supply and it will be chargeable to igst now we are moving on to section 12 and 13 so 10 and 11 this is what you need to remember then in case of 12 and3 so easily try to remember this 12 and3 first general Provisions so situation wise you need to remember General Provisions so General Provisions when it is applicable in the absence of specific provisions General Provisions will be applicable so nature of service General Provisions so if it is section 12 B2B location of recipient B to C location of recipient in the records of supplier otherwise location of supplier so that is the general provision whereas in case of 30 always it is location of recipient in the records of supplier because we don't have the category of B2B and b2c so therefore it is location of recipient in the records of supplier in the absence of that location of supplier will be taken so literally whatever is there as B to C here that will be the provision in case of 13 so this is General Provisions so majority of the cases where there is no specific Provisions General Provisions only will be applicable then second one is service in relation to immobile property including accommodation services like renting or accommodation or construction service architect Services real estate broker service all these are service in relation to immobile property in case of 12 check whether property is in India yes then location of property is the place of Supply if property is outside India what will be taken as place of Supply location of recipient whereas in case of 13 always it is location of immobile property wherever the property is located then next third Performance Based service in relation to individuals examples of Performance Based service in relation to individuals is what so for example I'm taking classes this is an example of Performance Based service in relation to IND individual then personal grooming or training or performance evaluation or supply of food so means recipient is individual that is the meaning of Performance Based service in relation to individuals if it is section 12 section 12 divide into three that is is it related to food and beverages outdoor cing Beauty treatment Etc then we need to take location where service are actually performed food and beauty related in case of food and beauty related performance location suppose if it is training and performance appraisal in case of training and performance appraisal we need to check whether it is B2B or b2c if it is B2B we need to take location of recipient if it is b2c location where service are actually performed and in all other services it will be General Provisions so three points you need to remember for Performance Based service in relation to individual related to food and Beauty it will be location where the service is performed relating to training and performance appraisal B2B location of recipient b2c location where service are actually performed and all other services it will be General Provisions whereas section 13 you see so physical presence of the recipient required location where service are actually performed physical presence of the recipient not required then we will be taking the general Provisions then next one Performance Based service in relation to Goods so for this in case of section 12 we don't have any provision so therefore the general Provisions will be applicable whereas in case of section 13 divide it into two physical presence of the goods required physical presence of the goods not required if physical presence of the goods required location where it is actually performed but we have four exceptions in case of these four exceptions it is not location where service are actually performed but we will be going by the location of recipient what are those four exceptions if goods are temporarily imported for carrying out repairs or any other process and it is exported after repairs or process without being put to use then it is not location where service actually performed but location of recipient will be taken as place of Supply Second exception if we are doing some testing or process on the pharmaceutical products which are being imported then also location of recipient will be taken what is the difference between first exception and the second exception in the first exception after the process the goods should have been exported without put to use but in the second exception that like those goods that medicines will get destroyed the pharmaceutical medicines will get destroyed so that will not be exported even then location of recipient will be taken as place of Supply then third exception that is in case of repair maintenance or overall in relation to aircraft or aircraft Parts which are used for business purpose of the recipient then last Point related to ships in case of repairs maintenance and overall in relation to ships or its parts which are used for the business purpose of the recipient so these are the four exceptions and in case of these four exceptions we need to take location of recipient as place of Supply this is exception to So Physical presence of the goods required performance location will be taken whereas if physical presence of the goods are not required what will be taken as a place of Supply location of goods will be taken as place of Supply then event related services in case of event related there are two things admission to an event organizing an event so look into section 12 for admission to an event location where the event is held no more discussion there location where the event is held but for organizing an event we need to check B2B or b2c B2B location of recipient B Toc location where the event is held what if the event is held outside India then location of recipient will be taken as place of Supply but for Section 13 we don't have any confusion like this Let It Be admission to an event or organizing an event always location where the event is held will be taken as place of Supply then transportation of good services in case of Transportation of good Services there is an amendment now which says that in case of 12 it will be B2B location of recipient B to C starting point of the goods previously we had different different Provisions India to outside India ending point otherwise starting point like that no no confusion always it will be transportation of goods B2B like location of recipient B Toc starting point of the goods whereas in case of section 13 previously we had specific provision now they have omitted it and therefore General Provisions will be applicable then transportation of passengers transportation of passengers so literally same for 12 and 13 so if you sorry literally same for 12 and 13 and moreover for 12 Goods point and passenger point also same You observe here transportation of goods transportation of passengers B2B location of recipient B2B location of recipient b2z starting point of goods b2z starting point of Passenger okay and here in case of 13 we don't have B2B b2c classification so always it will be starting point of the passenger now if You observe where and all you can see B2B b2c classification just quickly go through that table you can see B2B b2c classification only in few places correct that two in 12 in 13 we don't have B2B b2c classification 12 and 13 only we get confused that's why I'm telling you so in case of 13 we don't have B2B b2c so therefore in 12 only we have B2B b2c the two where and all we have just check training and performance appraisal that is one place then organizing an event that is another place then transportation of goods or passengers together so you remember t t only in three places we will have B2B b2c classification what is a t t for training and performance appraisal o for organ organizing an event t for transportation of goods or passengers in that case only we have B2B b2c and B2B will be location of recipient b2z will be respective provision so what you need to do you remember only b2z provision because you know where and all B2B will come and in that place location of recipient so when you are remembering don't remember B2B b2c classification you remember only b2c provision and B2B will come in which place come on respond only three places training and performance apprisal organizing and even transportation of goods or passengers B2B will be location of recipient okay then so therefore what you need to remember in case of training and performance appraisal location where the service are actually performed organizing an event location where the event is held if the event is out held outside India location of recipient transportation of goods starting point of goods transportation of Passenger starting point of Passenger then next services on board a conveyance so in case of goods on board a convenance what we have taken starting point of goods in case of service on boarding a convenance it is the starting point of the conveyance goods sold on board a conveyance starting point of the goods Services provided on board a conveyance starting point of the service we don't know so starting point of the conveyance where the conveyance starts that will be taken again it is common between both goods and sorry both 12 and 13 starting point of the convence starting point of the conance then in case of IDR services so in case of 12 it will be General Provisions we don't have any specific provision in case of 13 it will be location of recipient then Banking and other Financial Services see if you look into this oid Banking and other Financial Service intermediary services and hiring of a means of Transport in all these places for 12 we don't have any specific provision so General Provisions is only applicable okay so what are the cases where in 12 we don't have specific Provisions oid banking intermediary and hiring of means of Transport okay only 13 we have so in all these places 12 will be General provisions and ID what is a specific provision for 13 location of recipient then Banking and other Financial Services what is a specific provision if the service is provided to account holders location of supplier otherwise it will be General Provisions that is very very important if the service is provided to account holders then only it will be location of supplier otherwise General Provisions will be applicable whereas for intermediary Services always it is location of supplier and next we have hiring of a means of Transport for hiring of a means of Transport divide it into two vessels or aircrafts always General Provisions any other vehicle any other vehicle up to one month will be location of supplier and Beyond one month will be so General Provisions okay so here you need to know one point three places location of supplier will be coming as the place of Supply what are the three places where location of supplier is place of Supply remember RBI remember RBI R renting renting of what renting of what other than aircraft or vessel up to a period of 30 days okay so here we will be taking taking what is the place of Supply location of supplier and then b b for what Banking and other Financial Service to account holders I for what intermediary services in these three places it will be location of supplier I have given that below I have given that below you need to just write the short forms so B2B B to C you remember it as T training and performance appraisal organizing an event transportation of Goods or passengers so in these three cases only B2B b2c classification will come then location of supplier will be taken as place of Supply in three cases what is that RB i r for renting of other than aircraft Orel up period of 30 days B for banking services only to account holders I for intermediary Services then next telecommunication service including broadband and dth and AD advertisement services to government in these two places for 13 we don't have any specific provision it is General provision for 12 only we have the specific Provisions clear so what are those two telecommunication including broadband and dth advertisement service to government in case of telecommunication services including broadband and dth so check section 12 if it is a fixed line location where the equipment is installed if it is mobile check whether it is postpaid or prepaid if it is postpaid we will be taking taking billing address if it is prepaid so prepaid is it online recharge yes then location of recipient and the records of supplier otherwise it is location of the dealer so where he is located so in case of prepaid Dealer address if it is online recharge General Provisions advertisement service to government so each state where the advertisement is provided that will be taken as the place of Supply now you need to remember this like this only and the short forms to some extent it will help you here what is that B2B b2c classification only in three places and location of supplier will be taken as place of Supply in three places that is banking like renting other than aircraft or Vel up period of 30 days banking service to account holders and intermediary service basically what is a intermediary service intermediary Services means there is a main activity and I am facilitating or arranging that main activity then my service will be called as intermediary service like commission agent or broker Etc will be called as intermediary now bpos will not come under intermediaries because the moment it is outsourced it's a continuing activity that will not come under intermediary intermediary is like onetime activity I'm just connecting the seller and buyer I'm just connecting the supplier and recipient my job is done so that is only called as intermediary Services that's what I have given below you see meaning of intermediary an intermediary is someone who arranges or facilitates the transportation the supply of goods or services or Securities between two or more persons where in two of them transact in the supply of goods or services the main Supply and if one in arranging or facilitating the said main Supply therefore outsourced activities do not fall under intermediary Services okay so this is about section 12 and section 13 then there are few places between 12 and 13 there is no change in the provision what are those search and tell me in case of organizing sorry admission to an event both cases it is same location where the event is held just check and then in case of Transportation of goods not passengers transportation of goods sorry transportation of passengers it is starting point of the passenger starting point of the passenger correct of course B2B b2c difference is there but the provision will be same so admission to an event also 12 or 13 the provision is same what is that location where the event is held transportation of passengers also it is starting point of the passenger starting point of the passenger services on board a convs there also we have starting point of the conveyance okay then we have igst rules related to this place of Supply first rule three we need to see so we have these rules rules not tested in the old syllabus so in Old syllabus not even one question they have asked on these rules so I don't know whether it will be asked in future or not but it's an untapped area and if at all they want to make a question out of it they can definitely make it is there in the syllabus so first you need to know when which rule is applicable and what is this rules about basically these rules is about apportionment somewhere in intermediate overhead chapter you would have learned the apportionment on some basis now base of apportionment electricity means on the basis of mission hours or lighting Etc you will abortion like that some basis of apportionment we have why it will happen like this where in the contract price will be a single price and we will be providing the place of Supply in more than one state now the contract price needs to be apportioned between the states for that what is the base of apportionment first rule three when rule three is applicable advertisement service to government so in case of advertisement service to government can you please refer and tell me what is the Prov so each state where the advertisement is provided now advertisement service to government there is a single contract and the total contract amount how we need to abortion so for that they have given different basis of apportionment if the advertisement is on the train you take the length of the track and divide it between the states for example there is a train which is starting in one state and going into another state through two other states now as this train is going through three four states now see the length of the track back in each state and you take that as a base of apportionment between each state suppose if it is on the train tickets you see how many stations are there in each state and you take that as a ratio for apportionment suppose if it is television channel TV channel you take the entire amount and you divide it between the so channels based on viewership data so you take number of viewers published by BRC of each channel in each state or Union territory and thereafter again you divided between the states based on population census so in case of TV channel there are two ways of apportionment primary apportionment is between the channels based on viewership data from where we will get the viewership data BRC broadcast audience research Council last week of the last quarter they would have published that data and you take that and you apportion it thereafter if the channel is being telecasted in more than one state then you divide it based on the population census then next suppose if it is advertisement on internet then the advertisement on internet deemed to be provided all over the country so because advertisement once it is in Internet so we cannot restrict it to any state so deem to be across the country and based on the Internet subscribers data you need to apportion across the country in all states then next if it is through SMS so for SMS we need to take try Telecom subscriber data again last quarter last week data should be taken for the purpose of apportionment so Five Points you remember in case of train length of track in case of train tickets number of stations in each state in case of TV so based on channel viewership data and thereafter population data and then we have you know internet across the country and if it is SMS so Telecom subscriber data so last quarter last week and thereafter population apart from this any other mode of ad advertisement it is the expenditure ratio you just remember the ratio in the question itself all data will be given you need to just remember the ratio and you apply that ratio and arrive at the answer you will not find difficulty in doing it but what you need to know is which case which basis of apportionment will be taken is what you need to know apart from this for any other case of advertisement service to government it will be expenditure ratio then look into to next one that is in case of immobile Property Services any service in relation to immovable property what will be taken as the place of Supply in case of 12 as well as 13 location of that immobile property correct or not what if the immobile property is in more than one state that's where this rule four and Rule eight will be applicable rule four is in the context of section 12 rule 8 is in the context of section 13 three points only they have given first if it is accommodation Services you see number of nights stayed in each state as the base of apportionment for example a package tour under that package tour three nights in Kerala two nights in Tamil Nadu One Night in Andra Pradesh then in that case 3 is to 2 is to one ratio you divide the total contract price so that is a base of apportionment so in case of accommodation number of nights stayed in each state suppose if it is accommodation in a house boat so next house boat what happens is that so starting point one state ending point another state number of hours in each state should be taken as a base of abortion men apart from that any other service in Rel to immobile property take the carpet area floor area or carpet area and do the apportionment for example I got a maintenance contract in relation to three buildings belonging to one person now in this case these three buildings are in three different states each building will have a square feet so I will take the square feet ratio for the purpose of apportionment so what are the three points number one accommodation Services number of night stayed in each property so each state number of nights stayed in each state house boat number of covers in each state any other service in relation to immobile property area of the immobile property in each state then rule 519 is applicable in the context of Event Services in case of organizing an event section 12 location of event will be taken as place of Supply whereas section 13 also location of event will be taken as place of Supply what if the event is in more than one state then this rule five and N will be applicable what they are telling is one simple ratio expenditure ratio to conduct the event in different states some expenditure will be incurred now you take expenditure ratio this is like a revenue recognition standard here how we will recognize our revenue is based on our expenditure okay so therefore you take the revenue recognize it based on your expenditure see the expenditure of each state for the event and divide in that ratio then next rule six rule six is applicable in case of telecommunication Services the two fixed line services in case of t communication fixed line just check the provision what will be taken as a place of Supply location where the equipment is installed or the circuit is install what if I'm providing a leas line service connecting multiple circuit points so multiple States then in that case what should be taken number of circuit points in each state should be taken as the base of apportionment next rule seven is applicable in case of Performance Based service in relation to individual and performance based service in relation to Goods but this is applicable in the context of section 13 again check the provision in case of Performance Based service in relation to individual what will be taken as a place of Supply section 13 section 13 Performance Based service in relation to individual if physical presence of the individual required location where service are actually performed correct now what if the service is performed in more than one state now you say simple expenditure ratio now I'm providing Services of fitness training to one actor and I'm located outside India the actor is located in India now I need to go to each and every shooting spot I need to provide the fitness Services now in that case I need to take my expenditure ratio and recognize my Revenue simple you understood so that is with respect to Performance Based service in relation to individual again you check the provision in case of Performance Based service in relation to Goods section 13 what will be taken as a place of Supply location where service are actually performed correct now what if you know that is in more than one state location where service actually perform is more than one state then if it is same Goods you divide it equally example I got a AMC contract in relation to AMC to computers located in different states now I need to take equal ratio because it is all states computers only now so I will divide equally between the states and I will recognize my contract Revenue suppose if it is different Goods in and Pradesh it is computers in Tamil Nadu it is air conditioners in Karnataka it will be some other Goods now these are different Goods means different Goods means different value will be there so take the invoice value of these goods and you apportion your contract Revenue that is this so therefore if it is supplies Services supplied on the same Goods equal ratio if it is Services supplied on different Goods invoice value ratio suppose if it is Services supplied to individuals then you will be taking Gap ratio that is expenditure ratio so that is about this rules related information again I'm repeating we need to remember only the basis of apportionment that will be sufficient and then we have some circulars related to place of supply and the first circular is related to what should be taken as the meaning of export of services so it so happens that I enter into contract with a person located outside India to provide the services so there is ABC private limited where is that ABC private limited located in India and X PLC is located in Germany xlc is located in Germany now ABC private limited entered into contract with xlc to provide some Services contract to provide services against a consideration against consideration of $5,000 against the consideration of $5,000 but what happens here is that ABC private limited could not provide all the services to xlc Germany so therefore what ABC private limited is doing they approached Mr Z who is in Germany to provide some services to xlc so there is another contract which is entered by ABC private Limited in India contract okay to receive Services contract to receive services against a consideration of $2,000 and ABC private limited is asking Zed to provide the services to X PLC and ABC private limited also provided some services to xlc now xlc is making the payment what they are doing is that they are making a payment of so $3,000 to ABC private limited and they are paying an amount of $2,000 to Mr Zed why $2,000 to Mr Zed ABC private limited is only asking xlc to do that so $22,000 anyhow they need to pay to Mr Zed ABC private limited should pay $2,000 to Mr Zed so ABC private limited is asking their recipient to pay $2,000 directly to Mr Z and remit remaining $3,000 to them now the question is what will be taken as the value of export of service what will be taken as value of export of service so the value of export of service will be $5,000 or $3,000 logically speaking they got only $3,000 but the contract is for $5,000 for which the circular says value of export of service will be $5,000 and then value of import of service so as ABC private limited is receiving services from Mr Zed there is value of import of service that import of service is $3,000 sorry $2,000 on this $2,000 they need to pay igst under RCM so whenever there is import of service GST is payable under RCM now so you take export of service as $5,000 but there is a import of service to the extent of $2,000 on the $2,000 you pay GST under RCM so that is this circular about in case of export of services exporter of services outsources a portion of service contract to another person located outside India so ABC private limited outsources the contract to Mr Zen who is located outside India what would be the tax treatment of the set portion of contract in the hands of the exporter there may be instances where full consideration is not received $5,000 not received only $3,000 is received by the export in India for which it is clarified that supplier of service located in India that is ABC private limited would be liable to pay igst on reverse charge basis on the import of services on that portion of the service which has been provided by supplier located outside India to recipient in India who supplier located outside India Mr Zed to ABC private limited some Services were provided not $2,000 on the $2,000 they need to pay GST under RCM so that GST whatever they have paid under RCM they can take as itz and what will be taken as a value of export of service full value will be taken as a value of export of service then next one in case of cargo handling Services basically cargo handling Services means once the goods are imported that imported goods will be kept in one place so that is called as custodian's place so this custodian will be responsible for the imported goods so for which custodian will be collecting some custodian charges so these charges are for cargo handling services so here the confusion came as to whether it is renting of immobile Property Service or Professional Services for which CB is giving a clarification it's not renting of immob property because the basic objective here is not storage or warehousing the objective here is handling the cargo therefore it will come under General provisions and location of recipient will be taken as the place of Supply so in case of cargo handling service place of Supply should be determined based on General provisions and not in terms of immobile Property Services then another case we are importing a prototype so that prototype is like a sample and that sample is hardware and the hardware will work on a software now we do the software testing so to check whether this Hardware functions in connection with the software or not we are doing testing now whether it should be treated as Performance Based service in relation to Goods or it should be tra as software testing services because if it is Performance Based service in relation to Goods we have a specific provision if it is software testing General provision will be applicable even though a part is imported or a prototype is imported the basic objective here is not doing anything on the prototype to do the testing on the software so therefore it should be treated like software testing service only and general pro ions will be applied so place of supply of software are designed by the supplier located in the taxable territory to service recipient located in non- taxable territory by using sample prototype Hardware or test kits is a composite Supply where testing is ancillary and general Provisions will be applied then next cutting and polishing of diamonds so we are importing raw diamonds and on that raw diamonds we are doing that some cutting and polishing work and once the cutting and polishing is done done so thereafter these diamonds are being exported without put to use can we apply the exception number one imported goods for carrying out repairs or process and it is exported without being put to use so can we get exception one where location of recipient is a place of Supply yes so that's what they are telling in case of cutting and polishing activity on unpolished diamonds which are temporarily imported into India and not put to any use in India the place of Supply will be as per General provisions why it is as per General Provisions because of exception one exception one so Goods imported into India for carrying out any repairs or process and exported without being put to use then there is one like two circulars which they have added now so this is an amendment place of supply for services with respect to advertising sector now listen what happens is that usually we will be taking some Holdings on rental basis is for the purpose of advertisement somewhere on the road sides and all if you see big big hings and all will be taken on rent for advertisement purpose whether it will be coming under renting of immobile Property Service or advertisement service if it is advertisement service we don't have any specific provision unless advertisement service to government advertisement service to government only we have specific provision but normal advertisement service we don't have any specific provision so General provision will come whereas if it is renting of immob property if you if you take holding as immovable property then renting of holding will come under renting of immovable property then we need to take service in relation to immobile property so that's where the confusion came and they are giving a clarification if sale of space or sale of right to use the space on holding or structure of the vendor to client or advertising for display of the advertisement so mainly the activity is sale of space for advertisement means already I have one hoding I'm advertising company I have one hoding in that hoding plain sticker is there white sticker and in that I have mentioned contact so and so number if you want to advertise here like that I have put one number now you called me and I am giving you that space for advertisement now it will come under renting of immovable property so therefore we will take location of immovable property as the place of supply of course the property is in India location of immovable property if the properties outside India we will be taking location of recipient suppose it is like already you know I have that and you don't want me to you know just give it on rent you want me to do the designing activity on that so you are telling me what is that you want wanted me to advertise I will take care of that and I will put it as a advertisement means you don't want it on a rental basis it is like for one day or two days you tell the information that I need to do the designing and I will put it there means here it is not merely sale of space for advertisement mainly I'm providing you the advertisement Services vend are providing advertisement services on the holding or structure owned or taken on rent by him then in that case so General Provisions because primarily here it is what designing the advertisement designing the advertisements will come under advertisement Services okay so advertisement service we don't have any specific provision so therefore General Provisions will be applicable another circular you see this is in case of co-working spaces in co-working spaces what will happen lot of co-working spaces are there in cities workafella and regas like that lot of places are there and in this co-working spaces I'm taking a room on rental basis and I pay some 5,000 or 10,000 rupees so main objective here is renting of immobile property so it will be treated as service in relation to immobile property location of immobile properties place of Supply but if you expect any other service also from that like they wanted you to provide the server space they want to provide you internet or networking Etc like security firewall internet server access Etc means the predominant objective there is not just renting of the place so even other activities are also involved then in that case you need to determine as per General Provisions see there place of supply for renting of space for its own servers and other Computing Hardwares with basic infrastructure additional services are provided by the suppl what are those additional Services relating to hosting and it infrastructure service like networking connectivity backup facility firewall services or survivance monitoring the survival service then it is not just renting of immobile property so therefore we need to apply General provisions and location of recipient if B2B b2c location of recipent in the records of supplier otherwise location of supplier whereas no additional service provided just place is given you keep your computer and you do the working so then in that case it will be like renting of immobile property location of immobile property will be taken as place of Supply so these are two latest circulars which they have added and as it is amendment definitely it is important that can be tested then next one section 13 subsection 6 and 13 subsection 7 like that one provision is there which is overriding the other provisions of section 13 what is that four activities please concentrate service in relation to IM property all these are in the context of 13 all these are in the context of 13 so in case of service in relation to immobile property what will be taken as a place of Supply location of immobile property will be taken as place of Supply Performance Based service in relation to Goods location where service are actually pered Performance Based service in relation to individual location where service are actually performed organizing an event location where the event is H correct now what if this is fully in India then place of Supply India what if it is fully outside India place of Supply outside India but the confusion comes when it is partly in India partly outside India section 13 subsection 6 says WI a single contract if these four Services place of Supply partly India partly outside India you deem it as entirely in India and tax it even that part which is provided outside India also the place of Supply deemed to be in India suppose if you make a separate contract separate contract when you make accordingly you will take only when it is a single contract the place of Supply is deemed to be in India suppose if it is provided wholly in India place of Supply India if it is provided holy outside India place of Supply outside India provided partly in India partly outside India wi single contract then the place of supply Place deemed to be in India then next we have section 14 so section 10 place of Supply domestic transactions section Goods place of Supply in case of goods Import and Export is section 11 place of Supply in case of service where both supplier and recipient of service located in India section 12 place of supply and case of service when either supplier or recipient in India and the other outside India section 13 now one more section is there four 14 is there and 14a is there so 14a is a newly added section 14 and 14a 14 is applicable in case of oid services now listen oid Services imported by n who will pay GST supplier outside India will pay GST correct or not but these suppliers outside India will be difficult to be identified by the Indian government for which they are telling if those suppliers outside India are connected through the intermediaries like hosting so Play store app store or any Windows Marketplace Etc then these intermediaries located outside India are primarily liable to pay GST example there is a game developer the game developer is located outside India Play Store is also located outside India now you are N You are downloading the online game and you are playing that game you spend some money now in that case who is liable to pay GST it's a oid service online gaming is oid service now it's a oid service liability to pay GST is on the supplier where is the supplier located outside India so but that supplier and you are connected through Play Store so they're asking Play Store to pay the GST and why because it is easy to zero in the intermediaries because we have few intermediaries only lot of suppliers so intermediaries having the liability here in case of import of IDR services so please concentrate in case of import of ID Services by non taxable online recipient where is the supplier located outside India where is the recipient located India and that is n and place of Supply is what under Section 13 for w year service what is the place of Supply location of recipient what is the location of recipient in India so it will become import of service yes as the recipient is n it will be taxable under fcm so who is liable to pay GST check here whether there involves a intermediary no there is no intermediary means directly are downloading the game from the game developer and like a APK file or exe file You are downloading to your laptop or mobile and you are installing it and using it because in Android mobiles and all lot of APK files we can download and install some websites and all banned you cannot access it so they will create apps these apps also not available in the play store so you can download the APK file and you can install it you guys will not be knowing it so lot of people will be knowing about it you guys are like you don't know anything other than studies so therefore you know that APK file can be installed into the system okay so therefore like that from the game developer himself You are downloading the game now in that case there is no intermediary involved so logically who will pay GST the original supplier only shall pay GST suppose if there involves a intermediary but that intermediary is outside India or in India that intermediary is in India then again original supplier only shall pay GST got it suppose if the intermediaries outside India yes yes then check whether intermediary satisfies any one of the following conditions then intermediary will pay if intermediary is not satisfying all these conditions then original supplier will pay so primary liability is on intermediary primary liabilities on intermediary so for that where the intermediary should be India or outside India outside India and any one condition should be satisfied what is that one condition invoice is raised by the intermedi so in case of Play Store App Store they will only raise invoice they will only raise invoice and payment col or payment collected by intermediary even if they are not raising invoice they will collect because Ina purchases suppose payment also they are not collecting invoice also they are not raising delivery is also not authorized by them terms and conditions are also not fixed by them sir when it will happen sir Netflix it will happen I have seen this Netflix app when you download if you want to activate by paying some money you cannot do inapp purchases you need to go to their website and create a username password and you need to make the payment in their website and then you will get the access in the app so in this case payment is not collected by intermediary invoice not collected invoice not raised by intermediary terms and conditions not fixed by intermediary and delivery is not authorized by intermediary correct or not so now in this case who will pay GST the supplier original supplier only will pay GST so if any one condition is satisfied also intermediary will pay so what are the conditions invoice raised by intermediary or payment collected by intermediary or delivery authorized by intermediary or terms and conditions fixed by intermediary any one condition satisfied intermediary shall pay all the conditions not satisfied so original supplier shall pay GST now wherever this intermediary or supplier is liable to pay GST do they have a physical presence in India if they have a physical presence in India then they will register and pay GST but the type of registration available to them is a simplified registration what if they don't have physical presence in the taxable territory that is in India then do they have a representative in India yes then that representative will apply for registration and pay GST what if they neither have a physical pres nor they have a representative in India then they have two options either they can appoint a representative that representative will register and pay GST or they can continue outside India itself and still they can register and pay GST it is not mandatory that they need to appoint a representative in India but in case of e-commerce operator you right there however in case of eCommerce operator however in case of EO if nether having physical presence neither having physical presence nor representative neither having physical presence nor representative in India however in case of EO if neither having physical presence nor representative in India they shall they shall not may they shall appoint a representative appoint a representative so for ID Supply or intermediary not mandatory to appoint a representative but in case of e-commerce operator if they don't have a physical presence or not having a representative in India they should appoint a representative in India then look into one more section section 14a in case of section 14a is applicable for online money gaming supplier it's a very very important because it's an amendment definitely this will be tested in exam so online money gaming is online money gaming coming under ID Services no online money gaming will not come under ID services in case of online money gaming it is import of goods but customs duty not applicable igst only applicable already we discussed now listen carefully there is online money gaming supplier located outside India and if it is imported by any person in India not n imported by any person in India the liability to pay GST is on the online money gaming supplier outside India is it clear or not sir in case of import of online money gaming by any person in India the liability to pay GST is on the supplier outside India don't check n or other than n this n other than n is only for IDR services not for online money gaming then who will pay GST the supplier outside India will pay GST do they have physical presence in India yes then they will register and pay if they don't have physical presence and have a representative that representative will register and pay if they neither have a physical presence nor a representative they shall appoint not May for ID there is option but here they shall appoint a representative that representative shall register and pay GST liability to pay GST is on supplier located outside India on import of online money gaming by any person in India such supplier have a physical presence in India yes they will apply for simplified registration and pay no they have a representative in India such representative can apply for simplif registration no then they should appoint a representative that representative should register and pay it is not optional for them they should appoint now what if they are not paying GST their website app Etc will be blocked in India if such supplier is not complying with the above information above Provisions their information website or app shall be liable to be blocked for Access then we need to go to us UK or Korea Etc and we will be able to access that okay so we can travel that without Visa passport we can travel you understood so night times and all lot of people will be traveling to many places like this Visa passport not required VPN only required okay then that is about place of Supply okay and in place of supply here I have completed this so in the YouTube my team will be putting the time stamp so you go to the time stamp for place of Supply as many number of times as you can listen you listen Okay because this is something see I did not see the book I said it was in my fingertips you know how I learned that many batches I took okay so I learned and you will also will be learning for that you need a practice so if you listen to this for three four times it will get registered in your brain and you happily do that and any number of times you want to do you do that one day before the exam don't forget to revise these two chapters exemptions and place of Supply these are the two chapters definitely you need to revise and go that is whatever I have discussed today so far exemptions and place of Supply mandatorily you need to study and go because that's very very important and we'll forget it easily that's why then value of Supply we have completed and input tax credit also completed I think composition scheme also over and we will take a break now and we will see this invoice invoice debit noes and credit notes after break yes okay we'll resume so in this place of there is one query place of Supply we discussed about uh hiring of a means of Transport I just give 30 days actually in law they use a word one month they did not use the word 30 days they use the word one month so therefore 1 month 30 days both are same so don't find any difference in that okay so actually the word used in the law is one month okay then next uh we will see refunds under GST so which is a very very important chapter so have a look into page 145 page 145 so look into this chapter refunds under GST so refunds basically there will be lot of questions on refunds that will be possible these are all the various cases where a person will be able to get refund so these are the various instances so this is just the illustrative list so first refund of igst paid on exports so whenever we are making EXP puts or zero rated supplies we have two options pay igst and get refund of that igst pay so this is the first one refund of igst paid on exports and then number two refund of unutilized ITC that is option two we can export or Supply to scz without payment of GST and we can get the refund of unutilized ITC third refund on account of deemed exports there are certain transactions which are regarded as deemed exports and in that case we will getting as refund then refund of balance in the electronic cash Ledger Whenever there is a balance excess balance in the electronic cash Ledger after utilizing our liability either we can carry forward it to the next month or we can get it as a refund that is this then refund on account of issuance of refund voucher so whenever we collect the advances on the base of Advance we will give a RIS voucher whenever the supply is cancelled so we will be giving a refund voucher and based on refund voucher whatever tax already paid on Advance we can get it as a refund that is this then refund of tax on account of wrong classification treating intrastate Supply as interstate Supply and Vic Versa if we have paid any GST so we can pay the correct tax and get the refund of wrong tax then refund on account of provisional assessment so whenever a person is unable to determine GST payable or value so then they can make an application to the officer for determining the tax and first the officer will determine the tax on a provisional basis thereafter upon final assessment either the differential amount will be payable or if there is excess amount paid on provisional assessment we will get it as a refund so to claim that refund on account of finalization of provisional assessment point seven is applicable then point eight refund on account of judgment or order so we have paid some tax under protest and we made a appeal stating that we are not required to pay tax and thereafter the court has ordered that we are not required to pay tax so we will get a refund that refund is known as refund on account of judgment or order then refund to U holder U holder is that un agencies embassies or consulate so they are basically called as uin holder unique identification number holder their outet supplies are Exempted but on their invit supplies whatever GST they have paid they can get it as a refund to claim that refund so that is option nine refund to un holder then refund of excess payment of tax refund of excess payment of tax is like by mistake we have paid instead of 1 lakh 10 lakhs as tax n lakhs paid in excess so we can get it as a refund then last refund to unregistered person that is recipient if the supplier has not issued a credit note so what happens here is that supplier will be giving a credit note for the purpose of of refunding the tax but sometimes it so happens so supplier is not refunding the full amount including the GST component example you have booked a marriage Hall and you paid 1 lakh plus GST 18% 1 lak 18,000 you paid as the booking Advance now you cancel the booking when you cancel the booking actually they need to refund 1 18,000 but instead they have refunded only 1 lakh Rupees to you 18,000 rupees they have retained when they have retained 18,000 rupees actually they should not retain they should have paid the government so whether they paid it to the government or not paid it to the government but you have bone the tax so for which you can claim the refund as a recipient so you can make an application for refund of that 18,000 so therefore if the supplier has already given credit know he would have refunded entire 1ak 18,000 that 18,000 if he has already paid also his liability will be reduced but this situation will arise when he has shifted the burden to you by way of collecting 18,000 from you but he did not refund that 18,000 now you can get that 18,000 as a refund whether your supplier has paid it to government or not paid it to government you will get it as a refund so government will recover that 18,000 from your supplier so this is known as refund claimed by unregistered recipient if the supplier has not issued any credit note so these are the various situations where a person will be getting refund so total 11 situations are there so in this 11 situ ations there are certain things which are common and certain things we have separate Provisions so that we are seeing one by one the first thing is refund in case of zero rated supplies so what are considered as zero rated supplies export of goods or services supply of goods or services to a season is known as zero rated supplies in case of zero rated supplies we have two options what is option number one pay igst and get refund of that igst and that igst we can pay utilizing our ITC and we will get the refund of gross igst or option to so don't pay any igst export it under Bond or Lut or Supply to scz under Bond or Lut don't pay any GST on outward Supply but on purchases inputs input services and capital goods you will get refund only with respect to inputs and input services but capital goods related credit you will not not get it as a refund means a capital goods credit will be still in your credit Ledger that you can set off with your some other liability okay so basically we are discussing the option one now what is option number one so we export or Supply to S upon payment of igst and we will get the gross igst as refund now you need to understand here few aspects whenever we are making zero rated supplies we will get both the options but in some scenarios we will get only one option either option one or option two sometimes we will not get the refund at all okay so let's see this what is it we are discussing zero rated supplies what are considered as zero rated supplies zero rated supplies what are considered as zero rated supplies export of goods or services export of goods or services and supply of supply of goods or services to scz to scz so these two are called as zero rated supplies in case of zero rated supplies basically we have two options so two options are available two options for claiming refund for claiming refund okay what are those two options number one pay igst on outward and get gross igst as refund this is one option whereas second option so that is outward without payment of igst under Bond or Lut under Bond or Lut and get refund of itz with respect to what inputs and input Services okay so therefore these two options are available for the purpose of claiming the refund but in some cases only one option is there what is that say here if you are exporting Goods upon payment of customs duty only option one is possible option two is not possible is it clear export of goods export of goods upon payment of customs duty sir whether exports are subject to customs duty yes exports are subject to customs duty sometimes there are some limited Goods on export of which we need to pay customs duty so export of goods upon payment of customs duty now in this case we will get only option one only option one so option two we will not be getting option two is what refund of ITC we will not get then zero rated of Exempted goods or services Exempted goods or services in case of Exempted goods or services are becoming zero rated means what Exempted goods or services are being exported or supplied to scz in that case there is no GST rate applicable to those goods and services so option one not possible what is option one pay IG and get refund of the a GST on Exempted goods and services where from I can pay GST so I cannot pay GST due to the reason zero rated of Exempted goods or services means what export of Exempted goods or services or supply of Exempted goods or services to SC only option two what is only option two means that is refund of ITC option and there are some notified goods or services notified goods or services in case of this notified goods are services like pan Masala tobacco products or some essential oils Etc okay notified goods and services that is pan Masala pan Masala then tobacco products tobacco products Etc they have notified some Goods in case of these notified Goods neither option one nor option two neither option one nor option two means literally we will not get any refund so option one or option two both options we will not be getting then one more case we have that is sir I am exporting the goods upon payment of customs duty option one not possible but basically they are Exempted Goods under GST but they are dyable Goods under customs in that case also neither option one nor option two you will not get both the refunds so what is that see this export of goods export of Exempted Goods under GST export of Exempted Goods under GST but upon payment of but upon payment of customs duty but upon payment of customs duty then also neither option one nor option two neither option one nor nor option two so both the options are not possible in that case example rice rice is actually Exempted rice sold in wholesale packages is Exempted under GST but on export of that race we need to pay customs duty so in that case as we pay customs duty on export we will not get option two why we will not get option two that's what we have seen here we will not get option two when you are exporting Goods upon payment of customs duty so option two not possible okay option one also not possible why option one also not possible because they are Exempted Goods as it is Exempted Goods under GST there is no rate of GST so option one also not possible which means export of Exempted Goods under GST but upon payment of customs duty neither option one nor option two same way there are some notified goods or services like pan Masala tobacco products essential oils Etc there also you will get neither option one or option two but in other cases that is export of goods upon payment of custom duty only Goods then it will be only option one zero rated supply of Exempted goods or services only option two these are some intricate points which you need to keep in mind as to when which option will be applicable then so we are discussing first refund in case of zero rated supplies first exports exporter May Supply Goods or service or both subject to such conditions and safeguards on payment of igst and claim refund of such tax pay in that suppose if it is Goods Goods exported so we will be filing a shipping bill that shipping Bill itself will be taken as a refund application there is no separate refund application in that case whereas in all other cases we need to file a separate refund application rfd1 RFD one is the refund application so remember export of goods upon payment of igst what will be taken as the refund application the shipping Bill filed itself will be taken as a refund application in all other cases all other cases means export of goods under Bond or export of service on payment of GST or under Bond of so it will be a refund application rfd1 whereas this rfd1 when we are filing refund processed by GST officer refund by GST officer whereas when we claim the when we file the shipping bill that refund is by Customs officer that refund is processed by Customs officer then government notifies certain Goods with respect to which refund cannot be claimed on export what are those goods that's what I said neither option one nor option two there are some notified Goods so what are those notified Goods like pan Masala tobacco products essential oils other than those of citrus fruit these are some examples of notified Goods right now so this is an amendment please remember that in case of some notified goods or services right now they have given only notified Goods but service also they can notify in future right now only notified goods are there with respect to these Goods neither option one nor option two this amendment has been made in section 16 itself wi Finance act 2021 but that was made applicable with effect from 2023 so therefore this can be tested then next in case when we pay igst on export of goods who who will process the refund application shipping bill is the refund application so who will process the refund application customs office so Customs officer will verify whether these goods are really exported based on the document filed by the person in charge so person in charge of the conven will be filing export manifest in case of vessel and Export report in case of vehicle and departure manifest in case of aircraft in that they will mention what are the goods which are present in the vehicle or vessel or aircraft based on that Customs off eer will come to know whether the goods are really exported and based on our 3B Customs offer will come to know whether we have paid igst so then the Customs officer will process the refund so such application shall be deemed to have been file only when the person in charge of the convence so duly files a export manifest in case of Vel departure manifest in case of aircraft export report in case of vehicle also the applicant should have filed the return because when he will pay tax only in 3B he will pay tax so he should have filed 3B and the igst should have been paid in full that in case of supplies to SC who will process the refund application GST officer only will process the refund application but in that case we need to get a certificate from the scz officer that these goods are supplied for the authorized operations of the scz then only we will be able to get the refund so therefore there is a special economic zone authorized officer or specified officer this specified officer or authorized officer will endorse on the invoice that these goods or services are supp for scz operations only therefore based on that authorization or endorsement only we will be able to claim the refund that is this thus proof of receipt as evidenced by the officer is a prerequisite for filing refund claim then in case of export of Exempted goods or services how many options we have both the options or only one option only one option which option option two what is it option to refund of ITC that's the point I have given so whenever you are making Exempted Goods export of Exempted Goods or supply of Exempted Goods to SZ or export of Exempted services or supply of Exempted services to SZ you will have only one option what is that one option refund of unutilized itz refund of unutilized ITC so whereas if the goods are taxable if the service are taxable you have both the options and one more point you need to remember is that in case of export of Exempted Goods or supply of EX exemp Goods to scz generally option two is export or Supply to scz without payment of igst and get refund of unutilized ITC but under Bond or Lut we should have executed but in case of Exempted Goods Bond or Lut not required no bond or UT so there is a relaxation so this can be tested in McQ in McQ they will be giving state which of the following statements are correct in the context of refund so they will be giving multiple statements that they will be testing so Bond or Lut not required in case of export of Exempted goods for claiming refund we will think that the statement is wrong no the statement is correct so refund to claim the refund in case of export of Exempted Goods not necessary that we need to execute a bond or UT then but in case of Exempted Services whether we need to execute Bond or UT yes taxable definitely we need to execute Bond or Lut then looking to the next one so first situation means what the first situation so is related to export or Supply to scz on payment of igst that we are getting as a refund there what are the integrities we have completed now we are moving on to the second case what is the second case refund of unutilized ITC when we will get this refund of unutilized ITC in two cases we will get refund of unutilized itcc number one zero rated supplies number two inverted tax structure what is in tax structure the rate of GST on outward supplies is less than the rate of GST on Inver supplies then also we will be getting the refund how much is the refund in case of you know zero rated supplies so case one maximum refund in case of export okay export or Supply to scz and case two maximum refund in case of inverted tax structure so two cases we will get the refund of ITC what are the two cases export including Supply to scz okay including Supply to scz export as well as Supply toz in both these cases we will get the refund of unutilized ITC whereas the second one is refund on account of inverted tax structure in case of zero rated what is the refund formula so in case of zero rated the refund formula is net itz into zero rated turnover divided by adjusted total turnover so let's see this with the help of some numbers so I have some inputs and I have some input services and even I have some capital goods using this inputs input services and capital goods I'm making some finished goods and in these finished goods so few finished goods are exported and few finished goods are sold in India now now what is the value of these inputs which is purchased say inputs is 1 lakh plus 12% GST whereas input Services is 50,000+ 18% GST whereas in case of capital goods it is 2 lakhs plus 12% GST now in this case what is the total ATZ that we have the total ATZ that we have to total ITC that we have is 1 lakh into 12% 12,000 plus 50,000 into 18% 9,000 plus 2 lakh into 12% that is 24,000 so the total itz if you see 12 + 9 + 24,000 that is 45,000 is the total ITC whereas I'm exporting the goods and the value of this exported Goods is 20 lakhs and the value of this domestically sold Goods is 10 lakhs and on this 10 lakhs there will be definitely GST that is payable on this 20 lakhs I have two options so I'm going for under Bond or uty under Bond or Lut whereas this will be excluding GST at 12% now in this case what is the maximum refund that we will be getting the maximum refund will be the maximum refund will be net ITC what will be taken as net ITC the refund formula is net ITC into Z rated divided by total turnover adjusted total turnover what is the net itz net itz is not 45,000 net itz should be only with respect to inputs and input services that is 12,000 + 9,000 12,000 + 9,000 will be taken as so 20 1 ,000 into zero rated turnover what is zero rated turnover 20 lakhs divided by adjusted total turnover that is 20 + 10 30 lakhs will be taken as adjusted total turnover 21,000 into 20 by 30 so what is that 21,000 into 21 20 by 30 14,000 is the maximum refund but we need to check the actual refund also this is the last step which we usually Miss in the exam what is that last step check check whether they have that much of balance in ITC to claim the refund if you see 10 lakhs into 12% what is 10 lakhs into 12% 1 lakh 120,000 okay so even though they are eligible for a maximum refund of 14,000 but the actual refund will be zero why actual refund will be zero because they don't have balance in ITC how they don't have balance in itz simple the total balance in itz before claiming this refund was 45,000 and they have made some domestic sales on domestic sales the liability will be 10 lakhs into 12% 1 lak 120,000 for 1 lak 12,000 this 45,000 would have been utilized so means they don't have any balance in ITC so no balance in ITC as there is no balance in ITC refund will be zero so but what we will do we will write the answer as refund as 14,000 rupees and we end up losing entire marks so the last step you need to do what is that last step check whether they have sufficient balance in the ITC if they don't have sufficient balance in the ITC they will not be able to get the any refund suppose if they don't have that much of liability suppose if their liability is hardly some 12,000 rupees then 45,000 minus 12,000 they have enough amount in the ITC so definitely they will be getting this refund of 14,000 rupees so always remember the refund formula is subject to the condition that there is sufficient balance in the it otherwise we will not get the refund so this is one point you need to keep in mind then another Point while taking the net ITC we should not take the ITC on capital goods we should take the ITC only on inputs and input services so that is this formula net itz into zero rated turnover divided by adjusted total turnover so net ITC means itz Avail not not total ITC it is only eligible matched ITC which means in this net ITC whether blocked ATC will come no whether itz for non- bus purpose will come no whether itz for Exempted supplies will come no so only net eligible PCH ITC should be taken that two on inputs and input Services during the relevant period so during the relevant period means whatever is the purchases made during the month or the period for which we are claiming the refund so opening balance of ITC should not be taken so in the question they will be giving some opening balance of ITC don't take that opening balance of ITC so see water all purchase inputs and input Services during the relevant period that only should be taken minus ITC refund under rule 894 a4b what is this ITC refund under 894 a4b that is on account of deemed exports so in case of deemed exports like how in zero rated supplies we have two options in case of deemed exports also we have two options so first we will try to understand what are considered as deemed exports so this discussion is related to zero rated supplies now we will see deemed exports what are considered as deemed exports there are three transactions which are considered as deemed exports supply of goods only Goods supply of services we don't have in deemed exports only supply of goods we have under deemed exports so deemed exports three points that is number one sale of goods to Advance authorization holder who is an advanc authorization holder advanc authorization is a license which is given under foreign trade policy by directorate General of foreign trade for the purpose of importing the goods without payment of customs duty or locally procuring the goods without payment of GST in turn that imported goods or locally procured Goods should be used for exported goods mainly to encourage the exporters they will be giving this license under that license either they can import the goods without payment of customs duty or locally they can procure without payment of GST so when you make sales to them it will be called as deemed export for you okay you are making sales to them so for you it will be called as deemed export deemed export sale for them deemed export purchase okay next number two sale of goods sale of goods to epcg holder export promotion export promotion motion capital goods scheme epcg scheme holder so again like how Advan authorization is for procurement of raw material without payment of customs duty or without payment of GST same way for procurement of capital goods without payment of customs duty or without payment of GST there is another license that will be given under foreign trade policy by dgft that is called as epcg license dto Advance authorization is for raw material and epcg is for capital goods either they can import without payment of Duty or locally procure capital goods without payment of GST so when you make sale of capital goods to them for you it will be traded as deemed export sale and for them it is Trad as deemed export purchase and the third transaction will be sale of goods to eou sale of goods to export oriented unit is called as again deemed exports so the eou is export oriented unit so which has the option of either importing Goods without payment of customs duty or locally procuring the goods without payment of GST so this eou export oriented units if they want to locally procure and they purchase from you for you it will be treated as deemed export sale for them it will be treated as deemed export purchase so these are the three deemed exports in case of these deemed exports what are the various options options available so for a person who is making deemed exports two options available two options available so what is the first option under the first option so supplier supplier will not collect GST from the recipient and supplier pays GST and they will be able to get the refund okay so what happens here is that there is a supplier there is a supplier and the recipient is the there recipient is there I'm talking about option one in option one what happens supplier will make the deemed export to the recipient supplier will make deemed export to recipient and the recipient will pay only the sale price there won't be any GST there won't be any GST only the sale price now to government the supplier will pay the GST will pay P the GST how the GST will be paid either by utilizing his ITC as well as from the cash ledger so pay GST so this GST can be through electronic credit Ledger and electronic cash ledger so they will be making payment thereafter so from government they will be claiming the refund okay who will be claiming refund supplier will be claiming refund but this refund will be given into their bank account so what is the advantage of this option to them so whatever ITC they have using that ITC they can pay the liability and the entire amount will come into their bank account so as a refund so credit ledger balance will be converted into cash that is Advantage so in case of option one who is claiming refund supplier is claiming refund whereas option two is there option two is like there is a supplier who is making deemed Expos to the recipient and in this case so what happens supplier when he makes deemed export to the recipient the supplier recovers both sale price plus GST means from the supplier point of view it will be like a normal sale there won't be any difference and the supplier will pay GST to government and as supplier is paying the GST definitely this GST can be paid through electronic credit Ledger as well as electronic cash Ledger now what happens is that the recipient will first Avail ITC Avail ITC and after availing ITC from the government they will get the refund of ITC who recipient will get refund of ITC into their bank account now what is the advantage of this to the recipient recipient will have ITC that will be converted into Cash means it is literally into their bank account one more Advantage is also there to the recipient even though it is blocked ITC even though it is blocked ITC this is a cbic circular even though it is blocked ITC they can Avail ITC that is the advantage to the recipient and what is the difference between this refund of ITC versus refund of ITC that they have in case of zero rated supplies even in case of zero rated supplies they will get the refund of ITC with respect to inputs and input Services what is the difference between this ITC refund versus this ITC refund because this is where generally we will be breaking our head and we will not understand so please try to understand the differences here so that you will remember it forever so in case of refund of ITC under zero rated Supply that refund is BAS based on a formula what is that formula net ITC into zero rated divided by adjusted total turnover even though those purchases are fully used in export also even though those purchases are fully used in export also you will get refund only as per formula so I have made some purchases fully used in export full refund you will not be getting you will get the refund as per formula into into zero rated divided by adjusted total turnover only whereas if you want full refund you made some raw material which is exclusively used in export in that case you should go for deemed export refund only so therefore here the advantage is no formula how much ever you have made as purchase fully when you have exported so therefore you will be getting full GST paid as itz and that itz refund you will get there won't be any formula this is the first difference that you have so in case of zero rated ITC refund refund is based on a formula here you will get entire amount of ATC as a refund so there is no formula Etc and all second difference in case of zero R in case of zero R what happens is that if it is a blocked ATC or Inver Supply used for you know Exempted supplies Etc and all you will not be able to get that as itz first of all you cannot take the itz mainly blocked itz you cannot take as itz where in the previous case itz an account of zero rated supplies but in this case even though it is a blocked ATZ you can take it as ITC and thereafter you can claim as a refund so that is the advantage we have here and then in the previous case we will get ITC refund only with respect to inputs and input services but in this case we will get the ITC refund even with respect to capital goods anything but only condition is that all these things should be in turn used for the purpose of export okay so here we will get the refund only with respect to inputs and capital goods not input service because for deemed export we don't have Services we have only Goods so means either inputs or capital goods so in this case it will be refund of itz with respect to inputs and input Services here we will get refund of itz with respect to inputs and capital goods because deemed export means only Goods so therefore you need to decide either you need to go for this or that based on the comparison Okay so how to do that comparison for that I'm just explaining you through an illustration so what happens is that I have made some purchases so there is a person ABC private limited this ABC private limited is basically an exporter is exporter and they are having even and this AA epcg and all they have now they are making some procurement that procurement is of raw material X using this raw material X so this raw material X is fully used in fgx raw material X is fully used in fgx and then they are making some procurement of raw material White and this raw material Y is used both in FG Y and FG Z so in that partly it is exported and partly it is sold in India so then what they are doing is that using this raw material why they have got FG Y which is exported and FG g z which is sold in India domestic sales and fgx is fully exported there is no change in that now thereafter they have got some raw material p and using that raw material P they made FG Z and that f gz is completely sold in domestic market so used for domestic sales fgz now this is the story now in this case 1 lakh + 12% then 50,000 + 18% and 150,000 plus 12% This Is How They have and if you see export value of this fgx is 5 lakhs and Export value of this fgy is 10 lakhs and this fgz domestic sales is 20 lakhs so this is how they have got the data now here suppose if I'm not going for deemed export refund so fully I'm going for refund of ITC so there are two alternatives for me deemed export also I can claim or refund of it also I can claim I want to go for refund of itz option fully refund of ITC so I don't want to go for partly deemed export and partly refund of ITC I want to go for fully refund of ITC on account of or with respect to zero rated supplies refund of itz with respect to zero rated supplies what is the formula for refund of itz with respect to zero rated supplies net itz into Zer rated divided by adjusted total adjusted total so net itz if you take itz with respect to all three inputs so the moment if we go for this refund of zero rate ITC on account of zero supplies actually in a way I have an advantage what is the advantage you know even though it is exclusively used for domestic exclusively used for export are commonly used for export and domestic full itz I will be getting as a refund in the formula so therefore net it will be 1 lakh into 12% how much 1 lakh into 12% net ITC 12,000 plus 50,000 into 18% what is 50,000 into 18% 9,000 plus so 150 into 12% 150 into 12% is 18,000 so 12,000 + 9,000 + 18,000 that is 39,000 net rate 39,000 and what will be the maximum refund that we will be getting for that we need to get zero rated how much will be taken as zero rated here the Zer rated is 10 + 5 so export is zero rated now and we are not claiming any deemed export refund so therefore 10 + 5 that will be 15 lakhs will be taken as zero rated and what will be taken as the adjust total the adjusted total will be equals to so total that is 5 + 10 + 20 that is 35 lakhs will be taken as adjusted total and if you see the formula maximum refund how much is the maximum refund that you will be getting net ITC net ITC is 39,000 into 0 rated 15 divided by adjusted total 35 39,000 into 15 by 35 see that 16,000 714 will be taken as the refund so this is the maximum refund that you will be getting if you go for only refund of ITC with respect to zero rated supplies now suppose if I go for refund of ITC with respect to zero rated plus deemed export if I go for both then what will happen refund of refund on account of deemed export refund on account of deemed export what is the refund on account of deemed export so in this question on which case we will get the refund on account of deemed export supplier collected the GST from us so option two so when deemed export we call as purchased Goods fully used in export purchased Goods fully used in export is called as deemed export purchased Goods fully used in export means only raw material X in fgx that is the only case we call it as deemed export purchase why because a purchase Goods fully used for export then only we will call it as deemed export procurement so here y material X is only deemed export procurement so therefore how much is the refund that you will be getting so with respect to raw material X how much is that so 12,000 we will get as a refund correct Plus in addition to that we can also go for refund of itz with respect to zero rated we can also go for refund of itz with respect to zero rated we can do this also zero rated supplies and refund of it with respect to zero rated supplies what is the formula come on I am only speaking here net ITC into Z rated divided by total adjusted total and what is the net ITC as per the previous as per the previous years how much is the net ITC 39,000 but in this 39,000 already you claimed a refund of 12,000 so take out the 12,000 39,000 minus 12,000 how much 39,000 minus 12,000 27,000 and thereafter zero rated what is it zero rated so how much is the total previously already we computed 15 lakhs but in this 15 lakhs already we have made a export on which we claimed a refund already how much is the refund we claimed and we claimed export refund so 5 lakhs so therefore it will be 10 lakhs Again adjusted total turnover what was the previous adjusted total turnover that is 35 lakhs from the 35 lakhs you take out 5 lakhs why you should take out 5 lakhs because this fgx related already we claimed as a refund so 5 lakhs if you are excluding so that will be coming to 30 lakhs then what will be the maximum refund so the maximum refund will be equals to so 27,000 into numerator 10 denominator 30 27,000 into 10 by 30 that will be 9,000 so therefore how much is the maximum refund you will be getting so total refund the total refund that you will get will be already 12,000 you got plus now 9,000 that will be 21,000 i j we are getting more money so 16, 714 only you will get there and here you are getting 21,000 so mainly to get more refund only they created a provision like this you got it so this net ITC in three places we are reducing so in three places we are reducing the effect minus 12,000 why minus 12,000 because already refund claim y - 5 lakhs already refund claim y - 5 lakh already refund claim in three places we need to nullify the effect correct or not where and all we need to nullify the effect one is net ITC that's why you see there in net ITC minus ITC refund under 89 4 a4b You Got It Again numerator numerator is what Z rated in zero rated also we need to take out this effect so zero rated minus minus on which refund is already claimed under 89 4 a4b supplies in respect of which refund is claimed under 4 a4b again in denominator also we should take out what is the denominator adjusted total turnover here also minus supplies on which refund is claimed under 894 a4b what is the supplies under 894a 4B deemed export only on which already we have claimed ITC refund so see there what is refund under 894 a4b when purchases of a registered person making zero rated supplies who is the registered person making zero rated supplies here so this ABC private limited is making zero rated supplies their purchases is deemed export correct or not their purchases purchase of a registered person making zero rated supplies are treated as deemed export they can claim refund of GST paid ITC Avail whatever ITC Avail fully they can get it as a refund on such Inver Supply called as deemed export refund and such refund of ITC should be excluded while Computing refund of unutilized ITC on account of zero rated Supply that's why this 12,000 whatever we already got as a refund that we excluded from this place even its effect its effect of turnover is also excluded okay that is about this adjustment don't forget this year I took lot of pain in explaining this then next so zero rated net itz understood the formula what should be taken as net itz inputs and input services Min us ITC refund already claimed under 894 a4b then zero rated turnover what is zero rated turnover zero rated supply of goods plus zero rated supply of services what will be taken as zero rated supply of goods so in the numerator whether export of goods upon payment of igst will come or without payment of igst will come without payment of igst because on payment of igst already we are claiming refund so therefore without payment of igst now sir I have one doubt sir in these two options can I choose any option yes with respect to each transaction you can choose either option one or option two not necessary that option one excis in the beginning of the financial year will be applicable throughout the financial year we don't have any such point in case of zero rated as well as deemed export we saw two options for zero rated two options for deemed export with respect to each invoice the supplier can choose any of the option that they can follow suppose if you are exporting on payment of IGS that should not come in the numerator so therefore you should take only value of zero rated supplies made without payment of igst minus supplies in respect of which refund is claimed under 894 a4b or we need to compare with what 1.5 times the value of such Goods domestically supplied by same or similarly placed supplier whichever is lower so why they have created this comparison mainly because we are claiming some refund and we can inflate the export turnover mainly to get more refund for example refund of ITC on account of zero rated on account of zero rated so what is the formula net itz into zero rated turnover divided by adjusted total turnover correct and in this my original is say 25,000 into 10 / 30 10 divid by 30 for example I'm telling you 25,000 into 10 by 30 how much I will get as refund 25,000 into 10 by 30 8,333 I will get as Refund Now what I doing I'm inflating the export turnover if zero rated in inflated to inflated to so 25 lakhs then what will happen refund refund equals to 25,000 into numerator is now 25 accordingly denominator also will increase numerator increased by 15 means denominator also will increased by 15 so 30 + 15 45 so numerator denominator increased by same constant sir so therefore the result also will be same no that is stupid mathematics so it is not multiplication it is addition so therefore 25,000 into 25 Divided 45 how much 1,889 so generally garment will loot us but here we are looting the government by inflating this to 25 lakhs so this is possible that's why they are telling darling you can do this way so you compare with 1 .5 times the domestic value of these Goods whichever is lower only we will be giving you so therefore this 10 lakhs is the original value of these Goods but this 10 lakhs is the export value but what is its domestic sale value this export goods usually exports will be at a higher cost and the domestic value will be at a lower cost what is its domestic value similar domestic value similar domestic value similar domestic value is 7 lakhs similar domestic value is 7 lakhs then in that case what is it they are telling so zero rated supply of goods so Zer rated equals to Z rated equals to so what is the value declared what is the value declared 10 lakhs or 1.5 times similar value 1.5 time similar value whichever is lower so what is the value declared here the value declared here is 10 lakhs or 1.5 * similar value 7 lakhs into 1.5 what is 7 lakhs into 1.5 10.5 lakhs whichever is lower so that is 10 lakhs only should be taken as the value what if it similar value is 6 lakhs 6 lakhs into 1 fine n lakhs so therefore 10 lakhs or N9 lakhs whichever is lower n lakhs Only should be taken that's why they have given this is the meaning of zero rated Goods now one more point also they are telling that is either you take the value declared what is the meaning of value declared again you take either fob value or the transaction value whichever is lower so therefore the meaning of zero rated Goods so the meaning of zero r Goods will be three three terms okay value of zero rated goods equals to so fob value where is this fob value available in shipping Bill where is this fob value available it is available in shipping bill or transaction value where is this transaction value available invoice yeah invoice transaction value in invoice sir whatever is a transaction value in invoice it's a is the fov value no sir may or may not be the transaction value can be X Factory price the price prevailing in your factory or fob price price prevailing in your port or CIF price price prevailing in his Port so therefore anything can be transaction value so the transaction value can be either X Factory price either X Factory price or or it can be fob price or it can be CIF price what is FOB price the price prevailing at the exporter sport is known as fob price CIF price is the price prevailing at the importers Port means fob Price Plus Insurance Plus fright will be taken as the CIF price so anything can be taken as transaction value in the invoice domestic value out of these three whichever is lower will be taken lower of so either you will take fob value in the shipping bill or transaction value in invoice or 1.5 times the similar domestic value lower of these three will be taken as the zero rated Goods it's already there here you can see so first you need to take value of zero rated supplies made without payment of igst minus supply of in respect of which refund is already claimed or 1.5 times the value of such Goods domestically supplied by same or similar supplier which whichever is lower again next line you see fob value in the shipping Bill or Bill of export or the invoice value whichever is lower so three terms whichever is lower then in case of services what will be taken as value of zero rated Supply in case of services I told you already in case of services only when you realize the foreign exchange proceeds you will be able to claim the refund so due to that reason first we will take what are all the payments received During the period during this period what are all the payments received but in this payments received some payments may be pertaining to the supplies which will be made in future so take out because you have not at all made Supply you may not make Supply also you may refund this Advance also that's why today it is doubtful so minus advances for which the supplies are yet to be made in future add advances received in the past period for which supplies are made in the current period at the time you reduce the advances but you are making supplies now so already payments are collected you add that so tell me what are the three things that we need to do for zero rated supply of services first payments received During the period minus advances During the period for which supplies are made in future add advances received in the past for which supplies are made in the current period so once you make this adjustment you will get zero rated supply of services and thereafter adjusted total turnover what will be taken as the adjusted total turnover so everything nonzero rated zero r ated everything will come but why Exempted supplies are excluded from the adjusted total turnover because this itz will definitely not be pertaining to Exempted turnover when my outward Supply is Exempted I cannot take ITC on in Supply due to that reason this net ITC is not for Exempted turnover that's why in denominator adjusted total turnover we need to exclude Exempted supplies minus supplies on which refund is claimed under 894 a4b so all the adjustments we have SE so this points and all are important for the purpose of solving the questions next case two the another case where we will get the refund of unutilized ITC is on account of inverted tax structure what will be taken as the refund in that case they have given one formula but you try to make it simple so total five things you need to remember so refund of ATC on account of inverted tax structure what is inverted tax structure the tax rate on outward Supply is less than the tax rate on in Supply tax rate not the tax payable tax rate so refund of ITC on account of inverted tax structure inverted tax structure what we need to do total five things we need to get first we need to know net ITC what is net ATC in case of zero rated we took net ATC as what inputs and input services but here only inputs input Services should not be taken only inputs that should be taken in net ATC and thereafter number two inverted turnover what is inverted turnover means inverted turnover means only the turnover where the rate of GST is less than the rate of GST on invert supplies that is inverted turnover then third you need to take adjusted total turnover adjusted total turnover the meaning of adjusted total turnover is same already whatever we have seen in the above formula netz into Z rated by adjusted total the same meaning no change in that then number four tax on inverted turnover tax on inverted turnover and and thereafter so ITC with respect to inputs and input Services inputs and input Services these five numbers we need to get from the question net ITC inverted turnover adjusted total turnover tax on inverter turnover and ITC with respect to inputs and input Services these five numbers once we get from the question so the refund is very simple refund equals to 1 into 2x3 - 1 into 4X 5 logic and all go to hell so don't remember now not possible also don't break your head so maybe if it is regular batch I would have explained you the logic so you remember this way it is easy for you five numbers you need to know what are the five numbers net ITC number two inverted turnover number three ijust total turnover number four ITC that is tax on inverted turnover number five ITC on inputs and input Services then 1 into 2x3 minus 1 into 4X 5 if you are getting this that will be the refund formula okay that is what I have given but net itz is itz availed only on inputs but not on capital goods or input services and meaning of adjusted told or no is same as above then next refund of ITC not available in the following cases so what is the first case you will know that export of goods upon payment of customs duty that's what we have seen now option two is not applicable in some cases what is a case where option two is not applicable option two not applicable only option one export of goods upon payment of customs duty export of goods upon payment of custom duty only option one that's what I have given export of goods upon payment of custom duty you will not get refund of ITC then second case even in case of some notified service vises so no refund of unutilized ITC in case of supply of construction of complex or building are part thereof and the amount charged from recipient includes value of land or undivided share of land so in that case entire consideration has been received before the issuance of completion certificate this will be chargeable to GST and what will be the rate of GST basically the rate of GST is 1.5% or 7.5% and on supplies the rate of GST is 18% 28% Etc and all so they are telling so you will treat it as export like inverted you will treat like inverted and you will claim any refund and all no B you will not get refund that's what they are trying to convey okay and then if entire consideration has been received after issuance of completion certificate or first occupation whichever is earlier so then it will be coming under which category so excluded from Supply excluded from Supply but for the purpose of ITC it will be trade as Exempted but when you are exporting it means you are undertaking a project outside India so then it may become zero rated and you may claim the refund of ITC in that case so that's what they conveyed here then next third refund is also there Merchant exports now another confusion here sir what is deemed export what is Merchant export please try to understand listen here sir I'm having Advanced authorization sir I'm having epcg license sir I'm having EV you sir when you make sale to me for you it is deemed export either you will claim refund or I will claim refund correct or not deemed expor refund again I'm repeating I'm having AA I'm having epcg I'm having eou when you sell to me for you it is deemed export either as a supplier you will claim refund or as a recipient I will claim refund what if I don't have AA what if I don't have epcg or I am not a eou but I am an exporter I procure the goods from you now in this case I'm called as a merchant exporter I'm procuring goods from you and I am exporting it but I will not get the deemed export refund so then is there any alternative available for me yes they created alternative for me what is that I will procure from you at1 % GST rate means you will sell to me at what rate .1% means for you it will be inverted correct or not your purchases will definitely be more than .1% only so when your sales to me is at 0.1% this transaction will be like a inverted tax structure for you so you will claim the refund of ITC now how much I paid on purchases .1% this .1% I will take as itz and I will export the goods with without payment of GST under Bond or UT and this. 1% I will get as a refund you understood what is the time limit within which I need to export it I need to export it within 90 days from the date of purchase see this Merchant export means export through third parties sale of goods to such third party by A supplier so you are supplying it to me so it will be taxable at .1% cgst 05 sgst 05 .1% such supplier making Supply to such third party can claim refund of unutilized it under inverted tax structure so you can claim refund under inverted tax structure such third party can Avail it I'm the third party I can Avail it at the rate of .1% GST paid on invit Supply and I should export the goods what is the time limit with should export the goods within 90 days from the date of purchase invoice under which option I need to export the goods under Bond or Duty without payment of igst then deemed exports discussion already we have seen what are the options available Etc then fourth one refund on account of wrong classification what is this treating inate supplyers Interstate Supply I have paid some GST wrong GST now I need to pay the correct GST and thereafter I will get the refund of wrong GST whatever I have paid for example I should pay cgst sgst but I paid igst now I have to pay cgst sgst and get refund of that igst and in this case whether I have to pay any interest or penalty Etc no because there is revenue neutral there is no loss to the government now so it's a revenue neutral exercise wrong classification inate Supply subsequently held to be Interstate Supply and vice versa sir subsequently held means how it will be known either you may identify that or Department May identify mean meaning of subsequently held means either identified by the taxpayer or by the tax officer then refund of wrong tax upon payment of correct tax so first you pay the igst and then you will get the refund of cgst sgst or you pay cgst sgst and get refund of igst and refund application same rfd1 within two years from the date of payment of wrong tax or correct tax first you pay the correct tax then only you will get refund So within two years from the date of payment of correct tax then suppose if the supplier has rectified this mistake by giving a credit note first I treated it as interstate Supply I gave a credit note cancelling this again I gave a invoice for inate Supply now in this case whether refund will be applicable no because I have rectified already so refund of wrong tax paid not available if the taxpayer has made tax adjustments through issuance of credit note under Section 34 then next next one refund to U holder who is a u holder specified agencies of un like UNESCO UNICEF Etc and Embassy or consulate located in India so basically these people are called as U holder and their outward supplies will be Exempted so they are not required to pay any GST on their out supplies but they are making some procurement Imports they are making some import of goods so because these people will be like liking to drink quar only what they will not drink because they are foreigners so when they are foreigners definitely they will not like Indian Brands and all so foreign Brands only they will be preferring so therefore goods are being imported and not only liquor but also many Goods many things like bread cheese whatever what not they will not buy anything Indian they will buy everything foreign only because these people are foreigners foreigners only coming and working in embassies consulates and all because our people will be located in day Embassy their country so whereas they will be here in our embassies or consulates so therefore import of goods will be done on import of goods there will be sometimes customs duty along with igst that igst they can get it as a refund then second local procurement sometimes they will be making so these local procurements whatever GST they paid both goods and services whatever GST they pay to the supplier the supplier will pay GST to government from government they will get the refund but why import of service is not there import of goods is there local procurement of goods and service is there but why not import of service because import of service chargeable to GST under RCM they need to compulsorily register but their outw supply is fully Exempted so they are Exempted from registration section 23 overwrites section 24 consequently they will not pay GST on import of services igst not payable on import of services as section 23 overrate section 24 now these U holders is getting refund now so that refund what is the refund application the regular refund application is rfd1 but in case of export of goods upon payment of customs duty refund application is shipping Bill and in case of refund of U holder the refund application is rfd1 along with the statement of Inver supplies in gstr 11 and U of the recipient should be mentioned in the tax invoice because in gstr1 when we create the invoice so we have to put it under B2B not B to C so even though uan holders are not registered persons but whenever we are making sale to un holders in gstr1 it should be classified under B2B supplies means U should be mentioned in the invoice then only they will be able to get the refund suppose if U is not mentioned in the invoice then the refund will be available if the copy of invoice is attested by the authorized representative of the applicant and once they make refund application in rfd1 an acknowledgement will be given in RFD 2 and invit Supply should have been received against a valid tax invoice and the refund application shall be filed within two years from the last date of the quarter in which supplyer was received which means they will go for refund not on a monthly basis but on a quarterly basis from the quarter end within two years refund not allowed with respect to single tax invoice where the value is less than 5,000 suppose if they make a purchases which is of less than 5,000 like 4,999 like that then in that case whatever GST paid they cannot take no refund so instead what they should do they should ask the supplier to accumulate and get a invoice more than 5,000 then only they will be getting refund and the refund order will be passed in RFD 6 within 60 days from the date of application of refund now we have some procedural aspects in this procedural aspects first you need to remember few forms rfd1 what is the purpose of this rfd1 refund application RFD 2 is known as acknowledgement RFD 3 is known as deficiency Memo rfd1 application RFD 2 acknowledgement RFD 3 deficiency memo RFD 4 will be provisional refund in which case sir whenever we are making zero rated supplies So within 7 Days 90% of our refund claim we will get it as a refund on provisional basis Prim of AC without processing the refund application so because of encouraging the exporters they are giving this provisional refund how much will be the provisional refund 90% of the refund claim what is the time limit within which it will be given within 7 days it will be given so that is known as provisional refund which is in RFD 4 RFD 5 is known as payment order once the refund is sanctioned then to your bank account they need to release that is called as payment order RFD 5 then RFD 6 is final refund order so for payment of the difference 10% or for sanctioning the refund so they will be using RFD 6 that is final refund order then one more form you need to remember rfd1 rfd1 is application for refund by U and holder now looking into the procedural aspects first point in this procedural aspects everything is important for McQ purpose so all these procedural aspects will be tested for McQ purpose only okay see the first one application for refund what is the refund application rfd1 but in case of refund to U holder it is rfd1 and in case of refund of igst paid on export of goods it will be shipping Bill and whenever you are making application for refund that application for refund other authentication is mandatory then once you make application you will get a acknowledgement what is the time limit within which you will get acknowledgement within 15 days in that acknowledgement you will have the date on which you made the application and acknowledgement or deficiency memo you should get within 15 days if the application is proper you will get acknowledgement if there are some deficiencies in the application you will get a deficiency memo so either within 15 days RFD 2 or RFD 3 then time limit for filing refund claim what is the time limit within which you need to make refund claim 2 years from the relevant date but see there while Computing the two years the time period from the date of deficiency memo till the time you make a revised application so that time limit will be excluded so that your overall time limit of two years will be intact so what does it mean it means that the relevant date the relevant date for refund application is relevant date is say 10 8 2023 is the relevant date what is the time limit within which we need to make refund application 2 years so rfd1 rfd1 filed rfd1 filed on say 5 8 2025 is it within 2 years yes within 2 years we file rfd1 thereafter within so you got a deficiency memo RFD 3 okay RFD 3 is the deficiency memo on RFD 3 you got on 25 8 2025 okay sorry 20 20 20 15 days exactly 15 days 28 2024 you got the deficiency memo when you got the deficiency memo again you have rectified the refund application and you need to file the new refund application rfd1 so but this is revised revised rfd1 file immediately the next day say 228 2025 you filed but if you see from 108 2023 to 228 2025 it is beyond 2 years it is Beyond two years so whether this refund application is valid or invalid now we need to take the total time period what is the total time period 108 2023 to 28 to8 2025 2 years plus how many how many days extra 12 days correct 2 years 12 days minus what is the period from original refund application to deficiency memo what is the period 15 days you exclude this 15 days minus 15 days now what is the period here 1 year H 11 months and 27 days which is less than 2 years therefore revised rfd1 is valid is valid so this is how you need to check so first you need to take the overall time limit from the relevant date till the time you file the revised refund application and see the total time minus you exclude the period from the date on which you fil the refund application original refund application till the date you got the deficiency memo you take out that period once you take out that period you will get the effective period is that effective period within two years or not you check if it is within two years then the revised refund application you have filed will be valid that is the meaning of that so while Computing 2year period period from the date of filing refund claim till the date of communication of deficiency shall be excluded then time limit of two years is not applicable only in one case this time limit is not applicable refund of balance in the cash Ledger because that is your money to give refund to you why the time limit will be applicable so in case of refund of balance in cash Ledger this two years time limit not applicable then provisional refund is possible to what extent provisional refund is possible 90% of the refund claim in which case only in case of zero rated Supply highlight the that provisional refund is only in case of zero rated supplies and the provisional refund order will be passed in RFD 4 within 7 days from the date of acknowledgement and payment order shall be issued in RFD 5 okay so what is the time limit within which we will be getting refund here within 7 days from the date of acknowledgement and one payment order will be passed what is that payment order in RFD 5 and final refund order is passed in RFD 6 and the payment order shall be issued in RFD 5 so therefore three forms RFD 4 provisional refund order RFD 5 payment order RFD 6 final refund order what is the time limit within which RFD 6 will be passed within 60 days okay this RFD 6 will be passed within 60 days from application within 60 days from application but provisional refund order is within 7 days from the date of acknowledgement then payment order issued in RFD 5 needs to be revalidated if refund not dispersed in the same Financial year so they need to revalidate that payment order in case of unregistered person date of issuance of letter of cancellation so is the date of receipt of services by the applicant so from that day two years will be counted then withholding of refund what is this withholding of refund sometimes by mistake sorry not by mistake sometimes there is a order which is pending against a person and the person has to pay some amount and the same way some refund is also due to him now whenever the recovery starts whatever is the pending amount that he need to pay to the government that will be adjusted from the refund that is to be paid to that person so that's why Whenever there is a outstanding demand order the refund will not be released it will be withheld so if there is any outstanding demand against a person to whom refund is payable then such proper officer can pass an order for withholding the refund where proper officer or commissioner is satisfied that refund is no longer liable to be withheld he may pass an order for release of withheld refund in prescribed form first prop proper officer should release the withheld refund and then only pass the refund sanction order and next one this is a very important area refund subject to unjust enrichment many times they have given short note questions on this what is the meaning of refund subject to unjust enrichment I need to prove that I have not transferred the burden of tax to the next person so refund subject to unjust enrichment means one person should not be enriched at the cost of others means I will recover the GST also from the next person and I will claim the refund also that's a double benefit I should not enjoy this double benefit refund is subject to the condition that there is no unjust enrichment which means refund shall not be granted if the registered person fail to prove that burden is not transferred to the recipient how to prove that so either if the refund amount does not exceed 2 lakhs self declaration if the refund amount exceeds 2 lakhs certificate from a CMA already in ITC also we have come across this ITC does not exceed 2 lakhs self declaration ITC exceeds 2 lakhs certificate from CAC just like that suppose if declaration is not submitted or certificate is not submitted then the refund amount will be transferred to Consumer welfare fund if declaration or certificate not submitted refund application cannot be filed and such amount shall be credited to Consumer welfare fund but there are six cases where we don't have to file Declaration on or certificate but we will get the refund so what are those cases means these cases are exception to the doctrine of unjust enrichment so what are the exceptions number one refund of igst paid on export of goods or services and number two refund of unutilized ITC on account of zero rated and inverted tax structure so refund of ITC first one is export of goods on payment of igst number two is refund of unutilized ITC number three refund arising on account of refund voucher refund on account of wrong classification inate as interstate and refund of excess balance in the cash Ledger and finally refund claimed by the unregistered recipient because he's the recipient so you don't have to prove unjust enrichment these are the six cases no need to prove unjust enrichment we will get the refund then consumer welfare fund already we have seen if neither declaration nor certificate is given to prove unjust enrichment the money will be transferred to consumer welfare fund also any income from that fund that is out of investment of that money if you generate any income that will also be credited to that fund and a committee will be appointed for utilization of that fund and the committee should not spend more than 50% of the amount credited for publicity or consumer Awareness on GST and also ensure that minimum 25 crores is available for the purpose of consumer welfare activities so this is one provision so maybe somewhere in McQ they will be testing how much maximum can be spent for publicity and consumer awareness of GST 50% of amount credited what should be the minimum amount that should be maintained in the fund 25 crores so this is about refund under GST okay okay we'll start as we completed refund ments please look into the next segment that is segment 13 payment process so in this payment process we have two sections four sections mainly in that the two sections are 49 and 50 49 talks about what are the various ledgers which are maintained by GST Network on behalf of every registered person section 50 talks about interest computation then two more sections which previously was there in Levy that has been brought here payment Pro that is TDS and TCS these are the four section section 51 and 52 so 49 50 51 52 49 talks about various electronic rate ledgers at the End of This Book I have given this section index so please make use of the section index what section what is the talking about and what is the page number of that particular you know section where and all it is there at the end of the book you can find so that will be definitely be helpful for you so that in case any section number you are not able to recollect you refresh that so reason being in exams sometimes the provisions are directly asked on Section so they will not tell what it is so they will tell so what are the conditions or what are the situations leading to you know consequences under Section 29 like that they will give what is a 29 cancellation of registration so sometimes we don't know what is that section so that's why it is better to make not like note of what are all the sections that already I have done at the end of the book you please make use of it okay then see this section 49 which talks about various electronic credit ledgers 50 interest 51 TDS and 52 TCS first 49 subsection five already we have seen in input tax credit manner of utilization of credit that four principles we have seen igst credit no restriction Etc so now the remaining provisions of 49 is discussed here there are three ledgers which will be maintained by GST Network on behalf of every registered person those three ledgers are electronic credit electronic liability Ledger electronic credit Ledger and electronic cash Ledger electronic liability Ledger contains the details of liability from where information will go go into electronic credit Ledger whenever we file our returns gstr1 and gstr 3B electronic liability Ledger will have the information about liability electronic credit Ledger how there will be influent electronic credit Ledger the moment we take the itz how we will take itz either through gstr3b or itc1 or itc2 or itz 2A itz one is availment of itz on closing stock itz 2 is transfer of itz and account of transfer of business itc2 a transfer of itz and account of single registration is getting split into multiple registrations or refunds so sometimes we will pay excess tax so that excess tax will come as refund into the respective ledger so suppose in a particular month we have paid tax in excess one lakh for that month 60% we paid through electronic credit Ledger and 40% we paid through electronic cash Ledger that liability now one lakh we paid in excess now in that month in that month lot of liability is there but excess paid is one lakh and we need to see the ratio in which the liability is discharged in that month 60% using credit Ledger 40% using cash ledger so in the same ratio that one lakh will be given back to us into our respective lure so that money also will come into the electronic credit leure which can be used only for payment of tax dues the liability of a registered person is divided into five t i PFO t for tax dues I for interest P for penality f for fees and O for others these are the five dues of a registered person now in this the electronic credit ledger balance can be used only for payment of you know tax dues it cannot be used for payment of you know other dues then the balance in electronic cash Ledger how money will come into Cash Ledger whenever we make a deposit through payment Chalan pmt6 Chalan any TDS or TCS deducted or any refunds it will come into Cash Ledger but the balance in cash Ledger can be used for payment of tax dues as well as other dues but the balance in credit Ledger can be used only for payment of tax dues so whatever is the outflow from the credit Ledger that will be inflow into the liability Ledger whatever is the outflow from cash Ledger that will be inflow into liability Ledger and this liability Ledger will be having a prescribed form that is pmt1 is a format of liability Ledger pmt2 credit Ledger and pmt5 is the cash Ledger and the balance in electronic credit Ledger or electronic cash Ledger after payment of Interest penality or fee or any other amount we can claim as a refund now special points with respect to cash ledger so first is that what what are the various modes of deposit so so far we have seen so four forms pmt1 liability ler pmt2 credit Ledger PMT 5 cash Ledger PMT 6 deposit Chalan okay now we need to make a deposit what are the various modes of deposit total six modes of deposit we have number one so debit card credit card Internet banking nft rtgs cash deposit over the counter but over the counter cash deposit up to how much is allowed up to 10,000 rupees in a tax period tax period here is monthly and in case of composition scheme the tax period will be quarterly and even two more modes is also there UPI and IMS then when the payment is debited in the bank account but not credited in the electronic cash Ledger we need to raise a complaint to the payment Gateway through the portal and the form for that is PMT 7 then for transfer of balances between major heads and minor heads sometimes it so happens that between major heads and minor heads there will be some shifting of balance that is required for example what are the major heads and minor heads we have four major heads cgst sgst or utgst depends either one will be there sgst or utgst igst and CS these are the four major heads and for every major head we will have five minor heads t i p f so there will be a 20 cell Matrix Now by mistake we deposited in cgst sgst and we know that we have to pay igst we can shift the balances from cgst sgst tax to igst tax suppose if we have made the payment thereafter we should go only for refund before filing 3B itself you know that intra is treated as inter inter is treated as intra we can Rectify in this place Itself by Shifting the balances for that we need to file one form that is PMT 9 suppose after making the payment of tax means after filing 3B if we come to know intra is inter or inter is intra we should go only for refund so that is the advantage of PMT 9 not only between taxes from any sell to any sell we can shift the balance from cgst penalty to igst interest also we can shift there is no restriction not from tax to tax only penality head to interest or penality head to late fee tax to late fee any cell to any cell we can shift the balances for transfer of balances between major heads and minor heads in electronic cash Ledger form GST PMT 9 is notified PMT 9 has got one more purpose also that is between distinct persons distinct persons means like two registrations of the same person say for example I have a registration in Tamil Nadu I have a registration in Karnataka now I want to shift the balance from Tamil Nadu to Karnataka cash Ledger Tamil Nadu to cash Ledger you know somewhere Karnataka I want to shift the balance can I shift the balance Yes Credit Ledger we cannot shift the balances only cash leder we can shift the balance from one registration to another registration but this two registration should be belonging to the same person also one more condition they are telling that there should not be any pending liability for the transfer means I have electronic cash ledger balance in Tamil Nadu some excess balance now I need to get it as a refund and again I need to deposit in the Karnataka registration instead I can shift the balance for shifting of the balance so I have to file PMT 9 but I need to ensure that in Tamil Nadu there is no pending liability balance available in cash Ledger can be transferred between distinct person using PMT 9 however transferer should not have any liability in the liability Ledger these are the points with respect to electronic cash Ledger then credit Ledger refund from electronic credit Ledger is Possible only in two cases that is inverted tax structure and zero rated supplies already we have seen refund of itz Possible only in these two cases other cases refund is not possible and refund to original Source Ledger was the discussion I have been making whenever I pay some tax in excess by mistake only by mistake on account of you know excess payment on account of any account error Etc so and whenever there is excess payment of tax when we claim the refund that refund will come into the original Source Ledger in proportion to which it is paid that's the example I was giving one lakh I paid in that month the liability what I have discharged for that month 60% through credit Ledger 40% through cash Ledger then from the Texas amount also 60% will come into credit Ledger 40% will come into Cash Ledger then for giving refund into the credit Ledger they will be giving an order in pmt3 so total we have lot of forms in that pmt1 is for liability Ledger pmt2 is credit Ledger pmt3 pmt3 is for recredit into the electronic credit lger when there will be recredit into electronic credit Ledger first we claimed the credit thereafter we use the credit for payment of taxes but we paid the tax in excess so to get the refund of the excess tax we will be getting the money into the credit Ledger okay and pmt4 pmt4 is communication of discrepancies suppose if there is any mistake in the balances so for that we need to make a complaint to the portal that complaint to the portal is pmt4 communication of discrepancies then then pmt5 is Cash Ledger pmt6 is deposit Chalan PMT 7 complaint to the payment Gateway through the portal in case money got debited from our bank account but not credited Into Cash Ledger pm8 we don't have but PMT 9 we have that PMT 9 is for the purpose of you know transfer of balance from one cell to another cell or cash Ledger of one distinct person to another distinct person then there is one more form PMT 3A what is the purpose of this PMT 3A we claimed the refund of ITC erroneously erroneously means wrongly we claimed the refund so now this refund wrongly claimed will be recovered from us again I'm repeating ITC refund we have wrongly claimed in excess now this amount will be recovered from us so when it is recovered from us then it should be given back in the credit Ledger now because we claimed as refund from which Ledger credit Ledger means the balance in The Ledger would have come down now when it is recovered from us then again the balance in The Ledger should increase so for recredit into the electronic credit Ledger they will be using PMT 3A when the registered person claimed ER ronus refund of ITC upon payment of such refund along with interest and penalty proper officer shall pass a order in form GST PMT 3A for recredit into electronic credit Ledger then next balance in electronic credit Ledger can be used only for payment of tax but cannot be used for payment of interest penality fee and others also balance in credit leer can be used only for payment of fcm liability not RCM liability because RCM liability always should be paid out of cash Ledger okay balance in credit Ledger can be used only for payment of GST under fcm but not payment of GST and RCM that's the reason why remember this computation first you need to take gross GST payable under fcm first you need to take gross GST payable under fcm and thereafter we need to reduce input tax credit okay input tax credit we need to reduce input tax credit utilized and then you need to add GST under RCM add GST payable under RCM then you will be getting so net GST payable through electronic cash Ledger this is called as net GST payable through electronic cash ledger so this will be taken as the number okay first we need to take gross GST payable under fcm minus input tax credit utiliz then add because you cannot use it easy for payment of GST under RCM it so happens that we will be having some gross GST payable 40,000 but we have 50,000 ITC we have 50,000 ITC okay and we have RCM liability 15,000 so now when you put this 50,000 for RCM liability also the net liability will become 5,000 so you should not do that first 40 how much you can utilize 40 you can utilize and this 15,000 even though you have sufficient balance for payment of this 15,000 but 15,000 you have to pay and what is the excess balance in itz carried forward excess balance in itz carried forward is 10,000 so the 10,000 cannot be used for RCM liability that's why you remember this template first gross GST payable under fcm minus input tax credit utilized add GST payable under RCM net GST payable through electronic cash Ledger then balance available in electronic credit Ledger may be restricted for utilization by proper officer so for that purpose we have two rules Rule 886a and 86b actually one more point is also there that is related to aers of tax I have some aers of tax and for the ters of tax now I am paying so can I use credit ledger balance for for payment of aers of tax that is say this so for the month of July 2022 July 2022 I have to pay some tax okay so short payment of tax or non-p payment of tax nonpayment or short payment of tax short payment of tax so that is somewhere like 1 50,000 at the time my ITC balance was Zero I don't have had I had if I had itz balance I would have used now at the time itself so balance in itz at the time was Zero I did not have then somewhere in July 2024 I got a demand order asking me to pay that 150,000 you got it demand order demand order under Section 73 r74 okay for payment of 150,000 for payment of 150,000 in which month July 2024 and here the balance in ITC that I have is 1 lakh the balance in ATC I have 1 lakh then how this itz got created so from this July 2022 to July 2024 in this period this ITC of one lakh got created okay so this was not there at the time now the question is can we use this one lakh for payment of 150,000 yes so cbac gave a clarification what is that so net balance I have to pay how much GST payable is as per order GST payable as per order is how much 1 lh50 minus electronic credit ledger balance in ITC I can pay using ITC how much 1 lakh then what is the remaining amount the remaining amount is payable through cash leder payable through electronic cash Ledger 50,000 even though this ITC got accumulated at a later point of time I can use this itz for payment of demand order so itz can be utilized can be utilized for are of tax for are of tax sir then everyone will do this now sir yes but the twist is in a different place that different place where the twist they have kept is interest payable on gross amount 1 lh50 so here B you use itz no problem you use itz one lakh no problem which you accumulated at a later point of time congratulations all the best for you but interest interest you have to pay on what not on 50,000 1 lakh 15,000 however interest payable on Gross liability how much I used ATC 1 lakh usually when there is a delay in payment of tax interest is computed on net liability but in this case interest payable on [Music] 150,000 at 18% from this month is July 2022 July 2022 means what is the due date of 3B 20th October 2022 sorry 20th August 2022 20th August 2022 till till 20th August 2024 so till that time I need to pay interest so anyhow government is at gain they are collecting the interest on 1 lh50 that's why they are allowing us to use the balance in ITC which is accumulated at a later point of time so what is the important point that you need to learn here is that the balance in ITC can be utilized even for payment of are of tax arising out of any demand order then next whatever ITC that we have availed in credit Ledger may be restricted for utilization by a proper officer in two cases it can be restricted one is under rule 86a another is under rule 86b in 886a what they're telling this is after taking the credit Into The Ledger or before taking the credit Into The Ledger after taking the credit Into The Ledger before taking into The Ledger itself there is some restriction that is section 38 even though supplier filed gstr1 but it will come into our 2B under it not available when when it comes into our 2B as itz not available we cannot take the itz I'm not talking about that it came in be as ITC available but thereafter the ITC gets suspended for a period of one year in what cases it will be suspended see this ITC availed against an invoice issued by A supplier who is not in existence your supplier is missing we don't know where he went supplier is missing so supplier not in existence or are not doing business from the place where he has obtained registration number two recipient is missing means they could not identify us we are here only they could not identify recipient is missing so sometimes in s and all when I order he will be outside my house only sir I'm not able to find sir like that he will tell I will be telling my car is there car number also I'll tell he said no no sir there is no car sir if he turn backside it will be there one day I went back backside to him and I said turn backside I am the here only so sometimes people will find it difficult to get the address like that they are not able to identify we are here only so recipient not in existence are not doing business from the place where we have obtained registration or ITC availed without receipt of goods or ITC availed against invoice for which supplier has not pay tax to government who did not pay the idiot did not pay for that what is my problem my ITC already taken is not removed invoice or debit note against which ITC Avail is not in existence what has happened invoice is missing okay so if you maintain physical copy of the invoices this problem will happen then in that case the ITC will be disallowed for a period of one year suspended for a period of one year and thereafter after one year what will happen if it is genuine ITC it will be given back to you otherwise it will be permanently disallowed okay upon expir of one year from the date of restriction the registered person shall be able to debit input tax credit so disol subject to any other action that may be taken against that person this about 886a so what are the five cases where 86a will be coming into picture rule 86a supplier is not an existence or not doing business from the place where they have obtained registration recipient is not in existence or not doing business from the place where they have obtained registration or invoice is missing invoice or debit note is missing Goods not received but we have taken ITC supplier has not made payment of GST to government then there are some cases wherein ITC will not come in Tob itself that we have seen in section 38 what is that supplier is in newly registered business supplier has defaulted in payment of tax and the default continues supplier liability in gstr1 greater than 3B supplier has not filed 3B or supplier itz in 2B is greater than his sorry it in 3B is greater than his 2B and supplier has to pay 1% of liability through cash Ledger but he did not pay in those cases first of all itz will not come into our electronic credit Ledger okay then so I said I will connect all these points in one place that is this place only see this first we made some purchases first we made some invert supplies when we made some Inver supplies okay it should come into our electronic credit Ledger first credited itz credited to electronic credit Ledger itz credited to electronic credit Ledger thereafter we will utilize it for payment of our liability okay itz utilized for payment of liability now see what and all is happening the moment invert supplies is there it may come into b or it may not come in 2B there is one more blockage here what is that reflected in 2B reflected in GST 2B now any stage the itz may miss okay what is the stage first stage where itz will miss here here ITC may go why why it will not come in 2 B why it will not come in to be supplier not f gst1 our supplier has reported incorrect details in gstr1 correct these two reasons supplier not filed gstr1 not file gstr1 then it will not come in 2B then supplier not reported in invoice in gstr1 correct he filed gstr1 but he did not report the invoice got it or supplier reported invoice in gstr1 as b2c in instead of B2B possible then also it will not come in 2 B number four supplier reported invoice in gstr1 but incorrect details okay supplier reported supplier reported incorrect details incorrect details in gstr1 because because of this reasons itz will be missed okay now having suffered this many problems at last it came in 2B again when it comes in 2B it will be coming under two places what are the two places itz available it in not available why it is in not available because of the ction in section 38 ITC available okay why ITC not available because of section 38 section 38 what does section 38 says there are some cases now that we have seen in section 38 that is what supplier is a newly registered business or supplier some situations we have seen so because of that reasons and so here is it a temporary or permanent temporary it's not permanently itz not available right now itz not available in future we may get it under itz available so this is like a temporary exclusion temporary exclusion again it may come in future it is right now a temporary exclusion what are the cases supplier is newly registered then supplier not file gstr 3B supplier supplier liability in gstr1 in gstr1 greater than liability in gstr 3B supplier ITC in gstr 3B greater than ITC in gstr 2B next so demand notice okay supplier defaulted in payment of taxes defaulted in payment of taxes and such default continues then number six supplier paid 1% of liability sorry supplier not paid 1% of liability through electronic cash leder so these six cases ITC gone again ITC is available but it's temporary exclusion whenever it is available it will come there means if my supplier has rectified his mistake then it will come into my ITC okay sir then wherever itz is available again for taking into the electronic credit Ledger we have to do some things what is that for taking into electronic credit Ledger we have to do what is that block dat easy gone correct or not blog ITC blog ITC will be gone and non business purpose will be gone so blog ity under Section 175 then non- bus purpose under Section 171 then next minus Exempted correct used for Exempted supplies under Section 17 2 that is gone and thereafter we will be taking it into electronic rate Ledger once we take into electronic credit Ledger by the time it gets utilized why it will go at this stage why it will go here h no no that is after rization this is like reversal of ITC rule 42 rule 43 after taking the credit we do reversal now H minus reversal reversal of itz under rule 42 and 43 we need to reverse the ITC then suspension of ITC under rule 886a five cases five cases ITC will be suspended what is that not in existence supplier not identifiable recipient not identifiable invoice missing and one more case one second one second I forgot this blocked ity non- bus purpose Exempted supplies minus conditions not satisfied under section 16 section 16 some conditions are there now you have not received the goods are the time limit depreciation under income tax act so because of conditions not satisfied under section 16 after this someone take a screenshot of it and send it to Chi supp supplier not identifiable recipient not identifiable then invoice missing invoice missing then Goods not received Goods not received then one more case what is that supplier not paid GST supplier not paid GST then one more thing that because of that also it will be gone that is rule 86b you cannot use 1% of credit Ledger correct so non utilization non utilization of 1% of liability under rule 86b so 1% of my liability I cannot use use from the credit Ledger it is there in my ledger but I cannot use it because of these cases I cannot use the money for payment of my liability now at last I'm utilizing it for payment of liability after this many filters and even in Instagram also this many filters we will not use for uploading photo and after it comes into the it is utilized then again one twist is there what is that reversal of ITC if gstr 3B not filed by supplier so by September 30th of the succeeding Financial year correct reversal of ITC reversal of ITC under Section 41 r with rule 37 a for what supplier not filed gstr 3B by September 30th minus reversal of ITC reversal of ITC under section 16 r with rule 37 what is this sir 180 days 180 days we took the ITC utilized it but we have not made payment to supplier within 180 days so therefore we we need to reverse the ITC here you got it so because of this reason even after utilizing it for payment of liability the reversal may happen Okay so that is about this this many things suddenly if you see that you'll not understand anything then looking into the next one restriction on utilization of amount available in the electronic credit Ledger rule 86b to whom this rule 86b is applicable if my turnover in a month exceeds 50 lakhs then this rule 86b will be applicable what is that they are telling I have to pay 1% of my gross liability through electronic cash Ledger even though I have sufficient balance in the electronic credit ledger to pay and while Computing the turnover we should take out Exempted supplies zero rated supplies even non- taxable supplies what we have is only four taxable Exempted non- taxable zero rated zero rated should not come Exempted should not come non- taxable should not come so what is left is taxable so simply remember taxable turnover exceed 50 lakhs then Only Rule 86b will be applicable this 50 lakhs is in a month or in a year in a month and to whom it is not applicable to their family members government Department public sector undertaking local Authority and statutory body because what's the point in getting money from one pocket to another pocket new money should come so due to that reason so to them it is not applicable and three more cases also it will not be applicable such person or proprietor or Kaa or managing director or any of its two partners has paid income tax of more than one lakh in last two years means already they created a cash flow to the the government in the form of income tax so due to that reason 86b is not applicable so don't pay 1% of your liability through cash Ledger if you have sufficient balance in credit Ledger you use it no issue then second case so who here that person or its managing director or its karta or proprietor or any of its two partners has deposited income tax of greater than one lakh here deposit means it should be before deduct TDS TCS and Advanced Tax that line tax on total income including sarch charge and CES there now that that before deducting Advanced Tax TDS TCS so that if it is greater than one lakh it's okay because when you deduct Advanced Tax already you paid now means already you paid income tax of that Advanced Tax or TDS TCS so that is also your tax only now TDS TCS paid by other person so before that line so that is more than one lakh in two years both years then current year rule 86p is not applicable received a refund of unutilized ITC greater than one lakh in the preceding Financial year already you have got the refund you have got lot of accumulated ITC from that only you are getting as a refund who will get refund of ITC only two people that is zero rated supplies and inverted tax structure already they got lot of ITC so that they are getting as a cash refund again no point in making them to pay 1% through you know like cash ledger so that's why it is not applicable to them paid greater than 1% of the liability so cumulatively calculated up to the month in the current year so means already you have paid more than 1% so far therefore current month you are not required to pay anything through the cash ledger so how to calculate this simple here first you need to take in the numerator what is the total amount paid up to this month in the cash Ledger that is up to the previous month in the cash Ledger okay in the current Financial year so total amount total amount paid through cash Ledger through cash Ledger electronic cash Ledger up to previous month up to previous month in current year divided by what is your total gross liability up to current month in current year multiply with 100 if this is greater than or equals to 1% current month rule 86b not applicable rule 86b not applicable for current month for current month suppose if this is less than 1% then rule 86b applicable for current month let's put it into numbers to understand this one student is messaging you are getting ads only about Tamil Nadu government not only you everyone will get from Tamil Nadu government only because recently Tamil Nadu government has spent lot of money on YouTube advertisement even at my home also lot of ads I'm not using YouTube premium I am also conjus like you only okay so so ads and YouTube Tamil Nadu government wordss only is coming because they pumped in lot of money because this 2024 elections is so crucial so DMK government won through YouTube ads only Stalin like that so through that only they won and due to that reason they are spending it's not my problem your YouTube Problem fine so see this here from April 2024 to July 2024 from April 2024 to July 2024 gross liability gross liability is 200 lakhs and payment through payment through electronic cash Ledger is 4.5 lakhs 4.5 lakhs next for August 2024 gross liability is 50 lakhs and balance in ATZ balance in ATZ is 60 lakhs whether rule 86 be applicable for August 2024 this is how you will get a McQ question now what you need to do is that first you need to to check the percentage based on the formula what is the total amount paid through cash Ledger up to previous month in the current year 4.5 lakhs 4.5 lakhs divided by total amount total amount is what already 200 lakhs plus 50 lakhs so what is that 200 + 50 250 lakhs so 4.5 lakhs divided by 250 lakhs into 100 how much that will come to 1.8% which is greater than 1% therefore greater than or equals to 1% anything is okay therefore rule 86b not applicable for August 2024 and entire 50 lakhs entire 50 lakhs can be paid can be paid through electronic credit Ledger okay so this is how you need to apply that point so what are the cases where rule 86p is not applicable number one central government state government Department then local Authority public sector undertaking and statutory body if deposited income tax greater than one lakh by any person or its Kaa or managing director or any of it two partners more than one lakh in two preceding years and if the unutilized ITC refund is greater than one lakh in the preceding year or current year cumulatively up to the month we have already paid 1% through cash ler so that is about rule 86b so we are moving on to section 50 huh of course so when the taxable turnover in a month does not exceed 50 lakhs also it is not applicable but in this case the GST liability itself is 50 lakhs then definitely the turnover will be some in crores so turnover it's not liability turnover so GST liability in all these Place itself is in lacks then definitely turnover will be in crores only in whichever month the turnover is less than 50 lakhs for that month it is not applicable so next month again turnover goes beyond 50 lakhs that month it will be applicable simple then there is one query here one second sir instead of deficiency memo if you get rejection order in GST RFD 6 later then we filed the refund claim to rejection order time will be excluded or not for two years no it will not be excluded once they reject the refund so then again when we make the new application for refund we don't have any provision like exclusion from deficiency memo to refund application like that we don't have any any provision so because of which the time will be gone so again when you are making a new application for the new application you check the time limit is it within two years or not if it is Beyond two years the new application cannot be made okay then coming back to this section 50 interest on account of delay in payment of tax there are three situations where the interest will be applicable under Section 50 First there is a delay in filing 3B because of delay in filing 3B there is a delay in payment of tax so because of which interest will be applicable second invoice not reported in gstr1 and gstr 3B but paid in a different month so this is non-payment or short payment of tax we have to pay tax in that month we did not pay at a later point of time we paid the difference between first situation and second situation is that first situation we have shown the liability but 3B fil late in the second situation we did not show the liability we skipped it and in a later month we are showing that the liability situation three wrong availment and utilization of ATC you are not supposed to take the credit you took the credit and you have utilized that ITC so in these three situations section 50 interest will be applicable let's see the first situation delay in filing 3B interest rate is 18% from when it should be computed from the due date till the actual date of payment don't count the due date count the next date for example July month due date is 20th August while interest comput don't count 20th August you count from 21st August till the date you are making or filing the gstr 3B so from the first date after due date till the actual date of payment and it will be computed on what is it computed on the gross liability or net liability it will be computed on the net liability so on amount paid through electronic cash Ledger that is net liability it will be taken then what will be considered as the date of payment date of payment is nothing but the actual date of file in 3B then second situation two invoice not reported in gstr1 and gstr 3B of a month but paid in the other month so in this case interest will be computed at same rate 18% again same date from the first date after due date till the actual date of payment but interest is not computed on net liability interest is computed on Gross liability that's the example we saw entire 1 lh50 are oft tax 1 l50 even though we paid 1 lakh using credit Ledger and 50,000 using cash Leger but interest is computed on entire 150,000 that is gross liability and till when it will be computed what will be considered as the date of payment either actual date of filing 3B through 3B also we can pay or through drc3 also we can pay so therefore if payment is through drc3 then the date of filing such form then situation three situation three is ITC wrongly availed UND utilized suppose if you have wrongly availed ITC but but we have not utilized that ITC then we are not required to pay any interest so interest will be at the rate of 18% from the first date after utilization of ITC till the date of reversal and this computed it on ITC utilized only not on ITC Avail so interest same 18% not 24% interest in some places they are telling 24% as the interest no so as per Finance act 2023 so clearly it is mentioned that the is at the rate of not Finance act 2023 22 itself correct 22 clearly it is mentioned as 18% so in the law they use a word not exceeding 24% not exceeding 24 does not mean 24% not exceeding 24 but the rate is 18% so 18% is only correct 18% from the first date after utilization till the date of reversal now we need to compute interest on what only on itz utilized not on itz avail how to know itz utilized that month in which the balance in itz Falls below the availed itz in that month we have utilize the ITC the extent to which balance and ITC Falls below availed ITC and what will be considered as the date of utilization date of utilization is actual date of 3B or due date of 3B whichever is earlier in the month in which the balance in ITC Falls below wrongly availed ITC whichever is earlier with respect ECT to the month in which balance in ATZ Falls below wrongly availed itz and the date of reversal will be taken as the actual date of 3B so this is how interest will be computed under Section 50 and here on ITC wrongly availed and utilized so we may get a question like this that is balance in that is ITC wrongly availed ITC wrongly availed in July 2023 150,000 compute interest based on following table based on following table so here month opening balance ITC availed then it is utilized so we need to pre prepare a table like this based on the data in the question then closing balance now month say July 2023 so we have a opening balance of 1 lakh ITC availed three lakhs in this three lakhs 1 lakh 15,000 wrongly availed 1 lh50 wrongly Avail and itz utiliz this so somewhere like 2 lakhs so what is the closing balance 3 + 1 so 2 laks is the closing balance so whether we utilized right easy wrongly Avail no we have not utilized again August 2023 opening balance 2 lakhs and itz aail is 3 lakhs it is utilized 4 lakhs and balance will be 1 lakh whether we have utilized the ITC yes to what extent we have utilized 50,000 we have utilized again September 2023 opening balance 1 lakh and itz aail is 4 lakhs and it is utiliz 250,000 so what is the balance that we have 250,000 so again it has increased which means whatever we have utilized we reverse no not like that not like that that is not the meaning so when the balance comes down we utilize but again when the balance increase it does not mean we reversed okay then actually we should have reversed actually we should have reversed means for reversal there is a separate place in gstr 3B table four and there it should have been shown so October 2023 October 2023 250,000 ITC wrongly availed 1 lakh and ITC has been utilized so two 2 lakh 50,000 sorry 3 lakhs we have utilized so when 3 lakhs we have utilized so it came down to 50,000 then again 50,000 we have utilized in the month of October and in November 2023 50,000 we availed 5 lakhs and we utilized so 250,000 including 150,000 wrongly availed so whatever we have wrongly a we reverse only in this stage so 5 lh50 minus 2 lh50 3 lakh is the closing balance now in this case if you see what has happened so we have availed ATC wrongly 1 lh50 and that got utilized 50,000 utilized in August whichever month the balance in ATZ Falls below wrongly availed ATC in that month we have utilized again so total 150 we utilize 50 here because the balance came to 1 lakh again where the balance is coming down below 1 lakh 1 l50 wrongly availed balance 1 lakh means 50 utilized so now wrongly utilized wrongly availed ITC 1 lakh where it is going below one lakh again in October it is going below one lakh so here also we are utilizing 50,000 now there are two interest computation so first interest computation first interest computation is on 50,000 at what rate 18% from which date to which date this 50,000 we have utilized for which month August 20123 for August 2023 we need to take due date of 3B or actual date of 3B whichever is earlier so let's take 20th of September 20232 when are we reversing it November for November when we will file the gstr 3B 20th of December 2023 divided by 365 days so that will be 5050 000 into 18% into number of days can you calculate 29 to 2012 so in September you take 10 days October 31 days November 30 days December 20 days so how many days interest will be computed 91 divided by 365 that will be equals to 50,000 into 18% 91 by 365 2,000 244 again there is another interest that will be possible here that another interest is on again 50,000 into 18% this will be computed for October month for October month when are we filing 3B 20th of November to 20th of December 2023 divided by 365 so that will be 50,000 into 18% into number of days 20th November to 28th December means how many number of days 30 days 30 divided by 365 so what is the amount 740 these are the two interest amounts that we need to pay in this case so this is how you may get a question then there is one more point which you should be knowing that is suppose if I have the balance in the respective head that is in the respective head I don't have the balance but total against all these three heads I have sufficient balance does it mean whether I have utilized the ITC what is this situation igst wrongly availed igst wrongly availed 150,000 igst wrongly availed 150,000 okay and if you see for Jan 2023 and reversed in April 2023 now January February March if you see cgst balance balance balance cgst sgst igst and total so balance in cgst is 40,000 sgst 40,000 and igst 60,000 so we have got sorry 1 lakh so we have got 1 lakh 180,000 again February month so 30,000 30,000 and 90,000 so 1 lakh 50,000 and March month 50,000 ,000 and 60,000 how much 1 lakh 60,000 now if you see igst head alone igst head alone 150 wrongly availed so 50,000 we utilized in January because a balance in ITC under igst is 1 lakh means 50,000 we utilized again it came down to 90 means 10,000 we utilized correct again it came down to 60 means we have utilized 40,000 correct as per igst head alone if you see if you see only igst head alone if you don't see anything else only igst head alone if you see 150,000 came down to 1 lakh means 50,000 we utilized in Jan again it came down to 90 means we utilize 10,000 in FB and again it came down to 60 which means we utilized 30,000 30,000 already it came to 90 so 90 to 60 will be 30,000 we utilize 30,000 in March but if you see the toal total so total if you see every month we are maintaining 1 l50 1 lh50 we are maintaining if you see total wise now whether ITC is utilized or not utilized ITC wrongly availed is utilized or not utilized not utilized as per cbic circular ITC of igst wrongly availed wrongly availed is not utilized is not utilized as there is balance in total ITC for each month till reversed each month till reversed so means we don't have to check only the headwise you see the total if the total ITC you are maintaining that is sufficient not NE that headwise you need to see this point okay then suppose instead of cgst sgst igst I have got compensation s then in that case what will be the treatment so assuming the same scenario so whatever scenario that we see here so whatever scenario that we we see here instead of calling it as cgst sgst okay instead of calling it as cgst sgst says everything Remains the Same so 80,000 and in February 60,000 and in March 1 lakh okay now in this case the total is maintained so whether we have maintained the balance no says don't see compensation say don't see you see only igst because if the compensation s is there that should not be taken you have to see only the igst head here so that is remaining other than compensation say what is remaining other than compensation says only igst so therefore rupees 50,000 utilized utilized in j comma rupes 10,000 utilized in Feb utilized in Feb and rupees 30,000 utilized in March and entire 150,000 rever in April 2023 so accordingly we need need to compute the interest so therefore this particular amendment I have given at the end you can see last clarification on charging of Interest under section 53 that is wrong availment and utilization of ITC in case of wrong availment of igst credit and reversal thereof what is the first point they telling in the case where igst credit has been wrongly availed and subsequently reversed on a certain date but reversal should be igst only reversal should not be cgst sgst reversal should be igst only there will not be any interest liability under section 53 if during the time period starting from such availment and up to the date of reversal the balance of it in cash Ledger under the heads of igst cgst and sgst taken together so what is that the balance in itz the balance in itz under the heads of igst cgst taken together the balance of ITC in the electronic credit Ledger under the heads of igst cgst sgst taken together has never fallen below the amount of such wrongly availed ITC even if the available balance of igst credit in electronic credit Ledger individually Falls below the amount of such wrongly availed IGS credit so that is the example we have discussed so refer notes so I have discuss this one example ditto whatever I have given there that circular is there that is this example so they can definitely test this in exam it's very very important point so chances of asking is there and then another point you see credit of compensation say available in the electronic credit cash Ledger cannot be taken into account compensation say cannot be taken into account so if you have compensation say while doing the total don't take compensations says considering the balance of cash Ledger for the purpose of calculation of Interest under rule 88b in respect of wrongly availed and utilized so this also we have seen suppose if you have compensations say don't take that in the total in the total you should take only igst here we don't have cgst sgst had we have cgst sgst that we would have taken sir this circular is given in the context of igst does it mean for cgst sgst the circular is applicable or not applicable so they have not given any specific point for this you know why for igst they gave because igst credit can be utilized for payment of cgst sgst liability that's why they give but cgst sgst credit also can be Ed for payment of igst now means logically the principle laid down in this circular can be applied even for cgst sgst igst so whenever you wrongly Avail any credit cgst credit sgst credit or igst credit ensure that you are having the total column ITC which is balance maintained if you maintain the balance you don't have to pay the interest that is with respect to this okay next so this is related to the interest computation there under Section 50 subsection 3 so come back see the other aspects then look into TDS and TCS page number 126 so query here sir then in case of wrong availment of igst can we reverse cgst and sgst in the given example no igst only we need to reverse then how we should find the utilization of ITC wrongly Avail on GST compensation s is it to be checked with total balance or only ITC of compensation s only on ITC balance of compensation s we need to see we should not see the total because compensations say cannot be utilized for payment of credit of compensations say cannot be for payment of any liability now so we need to see only compensations as head then TDS and TCS under GST section 51 and 52 so TDs is basically applicable whenever we are making supplies to notified recipients who are called as the notified recipients government central government state government Union territory and local Authority government agency public sector undertaking or government entity in which government has invested greater than or equal to 51% so then they are called as notified recipients if any supply of goods or services are made to this notified recipients they will be remitting some amount in that amount they will be deducting TDS whereas when TCS will be applicable whenever we are making supplies through e-commerce operator where e-commerce operator is not liable to pay GST on the transaction means other than 95 then in that case e-commerce operator while remitting the money to the supplier he will be deducting TCS so supplier should be different from the e-commerce op operator suppose if I am the supplier I have my own e-commerce platform through which if I making supplies TCS will not be applicable and therefore only when the supplier is different from the e-commerce operator then only TCS will be applicable and e-commerce operator will deduct the TCS then next who is liable to deduct at what rate TDS who is liable to deduct notified recipients what is a rate at which they will be directing TDS 2% and TCS e-commerce operator and and what is the rate of GS rate of TCS 1% and non applicability so TDS these are the cases where TDs is not applicable already November 23 exam they have asked a question four marks question on this what are the cases where TDs is not applicable like that supplier is an unregistered person logically because whatever TDS that is being deducted it will be made available to the supplier in their electronic cash Ledger and they can utilize for payment of their liability BAS basically when he is unregistered why he will be having a electronic cash Ledger and liability so due to that reason TDs is not applicable supplies are Exempted or non- taxable again supplier don't have any liability so there is no question of TDS that is applicable then contract value does not exceed 50,000 contract value not invoice value so total value of supplies under the contract does not exceed 250 TDS concept not applicable if the total value of supplies under the contract exceed 250 TDS applicable but TDs is not comput on the contract value TDS will be computed on the remitted amount whatever money that is being remitted by the recipient of the supplier on that then supplies between notified recipients who are the notified recipients central government state government local Authority government agency PSU or government body between them if there is any transaction PSU to government body or government body to central government like that if there is any transaction on that TDs is not applicable so supplies between notified recipients TDS not applicable and recipient liable to pay GST under RCM so then also TDS not applicable because the liability to pay GST itself is on the recipient now then what is the point in making the GST like TDS applicable to the supplier then next location of recipient and the place of Supply not in the same state it's a inate supply inate Supply chargeable to cgst sgst but the recipient is in the other state he cannot TDS for example government of Andra Pradesh is having a building in Telangana they appointed architect in Telangana to do the repair to this building so supplier architect Telangana and place of Supply location of IMM property Telangana it's a inate supply chargeable to cgst and Telangana sgst but government of Andra Pradesh is in another state they cannot deduct TDS 1% towards sgst due to that reason TDs is not applicable so what is that it's a inate supply and the recipient is located in the another state TDS not applicable these are the six cases where TDs is not applicable whereas if you see here TCS TCS is applicable in case of e-commerce operator however for TCS also there are some non applicabilities what is the first non- applicability that we know if it is a notified service under 95 TCS is not applicable here also same point if the supplier is unregistered TCS not applicable because whatever TCS that is deducted by the e-commerce operator will be made available to the supplier and the supplier can use it for payment of liability when the supplier is unregistered there is no cash Ledger due to that reason TCS not applicable supplies are Exempted or non- taxable same as the supply itself is Exempted or non- taxable there is no question of TCS then payment is not collected by e-commerce operator means payment is directly collected by the supplier so e-commerce operator cannot deduct TCS then TDs is computed on the amount remitted to the supplier by the recipient remember it's not on the contract value how much amount the remittance is made on that only TDs is computed TDS not applicable if it is a intrate supply and the recipient is in the other state then there are some special procedures applicable here so there is a supplier who is opting for composition scheme and he want to make supply of goods through e-commerce operator can he make supply of goods through e-commerce operator yes so in that S9 RCM supply of services through e-commerce operator is only the Restriction supply of goods through e-commerce operator can be made but that supplier has to ensure one thing what is that he should not make Interstate supplies can opt for composition scheme but should not make Interstate supplies also Ecommerce operator has some obligations what is that obligation they should ensure that the supplier is not making Interstate supplies so this point we discussed in composition scheme now this point is there in this chapter like they have an obligation like they should not allow the supplier to make Interstate supplies and whether TCS will be applicable or not yes even the person opting for composition scheme is also a registered person so therefore TCS will definitely be applicable and this TCS will come in their credit Ledger or cash Ledger cash ledger so they will not have credit Ledger why a person opting for composition scheme will not have credit Ledger because they cannot take ITC and their init supplies so it will anyhow go into their cash ler and they can use it for payment of their composition tax liability so 1% or 5% as the case may be so should deduct TCS and all these details should be declared in gstr 8 gstr 8 is a return to be filed by the TCS deductor that is CMP 8 cm8 is to be filed by 18th of the month following every quarter by composition scheme gstr 8 is a return filed by a person who is deducting TCS that is e-commerce operator what is the time limit for gstr 8 10th of the month following every month TDS deductor will file gstr 7 okay now another point you see there is a supplier who is unregistered and that person wanted to supply Goods through e-commerce operator kindly change it to Goods so there is a supplier who want to supply Goods through e-commerce operator before Amendment every supplier of goods through e-commerce operator was compulsorily required to get registered but now there is a relaxation if that supplier is making only inate supplies then he is required to get registered only when his aggregate turnover exceeds threshold limit so supplier is unregistered whose aggregate turnover not exceeded the threshold limit for registration however the supplier should obtain one unique enrollment number correct or not and obtaining unique enrollment number only he can make supplies through e-commerce operator now what are the obligations on this e-commerce operator e-commerce operator should ensure that the supplier has obtained the UE and then only they should allow the supplies through their platform number two e-commerce operator should not allow that supplier to make Interstate supplies TCS not applicable why TCS not applicable because that supplier is a unregistered person so not required to dedu TDs sorry TCS not required to deduct TCS and they should declare these details in gstr 8 sir when there is no TCS why they need to show no non TCS supplies like that one line is there in that they need to show in order to know that what are the turnover of these unregistered supplier which is made through e-commerce platform for purpose of computing the aggregate turnover of the supplier okay so this are with respect to this additional obligations on the e-commerce operators then looking to the next page computation and complaints so TDS under section 51 is computed on value of Supply excluding GST and whatever TDS that is deducted shall be payable to government and TDs deductor is required to file one return what is that return they need to file gstr 7 and that gstr 7 should be filed by 10th of the month following every month in addition to this this TDs deductor is also required to file a certificate that is gstr 7A and there is no time limit for this TDS certificate whereas TCS if you see TCS deductor while Computing the TCS they need to take what ever is the payment towards the contract value minus returns during the month so sales return should be excluded because in e-commerce platform there will be lot of returns so sales made during the month minus returns during the month that should be taken for computing the TCS and whatever TCS that is deducted will be payable to government and they need to submit a statement in gstr 8 TDS deductor gstr 7 TCS deductor gstr 8 what is the time limit same time limit 10th of the month following every month and TCS dor is not required to give any certificate then is there any late fee for delaying filing TDS and TCS return Yes in case of TDS return see the late fee 25 rupees per day subject to maximum th000 by government whereas in case of TCS 100 rupees per day subject to maximum 5,000 by private so government is filing this return so lesser late fee 25 rupees per day subject to maximum th000 this is under each Act means under cgst act we need to pay as well as sgst act we need to pay where as TCS late fee for delay in filing return 100 rupees per day subject to maximum 5,000 under each Act TDS operator TDs deductor is not required to file any annual return but TCS deductor is required to file annual return gstr 9B by 31st December of the succeeding Financial year and in both the cases if there is any delay in payment of TDS TCS they need to pay interest at the rate of 18% for the delay here the due date will be counted from 10th not 20th and even a general penalty can also be led which is up to 25,000 under cgst and up to 25,000 under sgst for non compliance and there is a specific penal penalty for TDS TCS default which is under 122 subsection one that is 100% of the TDS TCS involved or 10,000 whichever is higher under each Act Now whatever TDS TCS that is deducted by the notified recipient and the e-commerce operator will be made available to the supplier in their gstr 2A so TDS TCS deducted shall be reflected in 2A of the supplier which is reflected in electronic cash Ledger as the money goes into Cash Ledger they can use it for payment of any liability tax interest penality Etc and TCS return gstr 8 alone can be rectified gstr 7 cannot be rectified but gstr 8 can be rectified what is the time limit of rectification 30th November of the succeeding Financial year or date of filing and return whichever is earlier just just like time limit for availment of ITC then this is an illustration on TCS as to how TCS will work there is a supplier Mi mobiles e-commerce operator flip cart and there is a buyer so now what happens is that first Mi enters into contract with Flipkart to list their Mobile in their platform and sell it for a commission of 1,000 rupees plus GST 18% now buyer will place order with e-commerce operator and e-commerce operator will deliver the mobile and the buyer will make payment of 12,800 rupees so here invoice will be raised by Mi to e-commerce operator they will deliver the mobile along with GST 10,000 28% 12,800 so that 12,800 is collected from the buyer now e-commerce operator has got 12,800 out of this 12,800 what is that they will be deducting so first they will be remitting their TCS what is the TCS 1% 1% of what including GST or excluding GST excluding GST so 10,000 into 1% they need to pay TCS 1% of 10,00 plus they also get a commission on that commission they need to pay GST so 1,000 into 18% 180 so these two they will pay now how much will be the amount limitted 12,800 from this 12,800 they need to get the commission so minus th000 minus GST on commission 180 minus TCS 100 so the remaining amount will be remitted to the supplier that is this amount remitted so that is 11,5 20 now the supplier this 180 can be taken as ITC and this 100 rupees can be taken as TCS credit and the supplier has to pay a liability of 2,800 now on the 2,800 this 180 and 100 can be reduced so 2520 will be the net liability so this is how the TCS will be operated then one more important point you remember TCS deductor is required to register in every state so because if the supply is inate the TCS deductor has to deduct 05 CG GST point5 sgst which means supplier in Tamil Nadu recipient also Tamil Nadu but the e-commerce operator is in Karnataka now they need to remit 05 cgst and5 sgst in Tamil Nadu means they need to register in Tamil Nadu means e-commerce operators will register in every state where they have suppliers and in case when they are required to register do they required to have a physical place of business no so in R1 that is registration application part A they will mention the state where they want to register in Part B they will give their principal place of business address only that is Karnataka address only they will give but in Tamil Nadu they can get the registration this facility is given for TDS and TCS deductor so these are the points that we have with respect to payment process okay so we completed this and uh so there are two queries no fine and uh one one uh communication to you one small request that is actually now both my kids are not feeling well and I have to be there so I don't wanted to cancel this batch that's why I took for 3 days so I need one and half day and half a day for discussion of Mighty 50 so I will take a break and I will let you know which two days and in those two days I will complete the remaining portion including customs and mighty 50 is it okay done but that will not be some time long and all mostly by 23rd 24th like that just a gap of some five six days thereafter I will do this okay sorry for the inconvenience even for YouTube also and uh so remaining chapters whatever we have plus Customs we have some petty topics only in this plus Customs we have and then Mighty 50 questions that Mighty 50 questions I will give you as to what are those questions a PDF I will make it available to you you can take a print of it if you don't have the Sol workbook if you have the Sol work book it will be from the Sol work book only otherwise if you don't have you can take a print of it so that also we will be covering just two more days is required I'll cover there okay fine so now we will proceed to the next area that is returns under GST okay see this so returns under GST so first we have what are the various returns and what is the due date of filing each and every return we need to know then the late fee computation we need to know and then qrm scheme but qrm scheme interest computation is a longtime pending question that can be tested so first we will see about qrm what is qrm quarterly return monthly payment so to whom this qrm will be applicable to a person whose aggregate turnover in the previous year does not exceed 5 crores to them qrm scheme will be applicable and as they are required to file the Returns on a quarterly basis so what is the due date of the quarterly return gstr1 usual time limit is what 11th of the month following every month whereas in case of qrm it is 13th of the month following every quarter then gstr 2 3B due date usual due date is what 20th of the month following every month but under qmp gstr 3B due date is 24th of the month following every quarter in case of States other than gmca and States below that for remaining States it will be 24th but for G MCA G for Gujarat in India map you see the middle States Gujarat madha Pradesh chatis gar and Andra Pradesh and States below that states below that is what Maharashtra Karnataka Kerala Tamil Nadu puducheri Goa etc for these places even tangana also it will be 22nd for the states Above gmca So Northeastern states North States Etc it will be 24th okay so gstr1 will be filed on a quarterly basis by 13th of the month following every quarter and gstr 3B on a quarterly basis by 22nd or 24th of the month following every quarter and they have to pay tax on a monthly basis even though returns they file on a quarterly basis but tax they have to pay on a monthly basis they have two methods fixed sum method and self assessment method this fixed sum method or self assessment method they can choose for every month like in the quarter first month FSM second month Sam they can choose and all two months they can choose FSM all two months they can choose so they can choose anything but they have to pay tax by when they have to pay 25th of the month following every month for the first and second month of the quarter why not third month anyhow for all these three months they will be filing gstr 3B in the gstr 3B they will be paying the liability of the third month also so first month and second month liability they have to pay by when 25th of the month following every month monthly payment of tax through pmt6 using fixed some method or self assessment method by 25th of next month for two months in a quarter and with respect to their B2B supplies so with respect to B2 supplies as they are filing Returns on a quarterly basis their recipients will take ITC also on a quarterly basis to avoid that they have been given a facility to file on a monthly basis the invoice details so that invoice details they will be showing which invoice details B2B or b2c B2B invoice details they will be showing in one facility what is the name of the facility invoice Furnishing Facility by when they need to file that facility for the first month and second month in the quarter by 13th of the next month what about third month anyhow for all these three months they will be filing a gstr one so in that GST one they can show the details okay B2B invoices may be furnished on a monthly basis through invoice Furnishing facility and these details will be reflected in 2 a and 2B of the recipient and qrm scheme is basically GST Wise It's not like in composition scheme all in allout all the registrations of a person should be under composition scheme or all the registration should be under normal scheme not like that so qrm is GST and wise means each and every registration of a person they can choose whether to go for qrm or to continue in the normal monthly returns itself qrm is gstn wise and distinct person have the option to Avail the scheme for one or more GST then some additional points related to this what is the time frame for opting in qrm so remember a for after B for before one is a is one is 1 month two is 2 months so 1 month before start of the quar one month after start of the quarter and two months before start of the quarter for example April to June what is the start of the quarter April 1st 1 month after April 1st means April 30th 2 months before April 1st that is 1 February so that is the time limit by which they need to opt so 1 month after commencement of the quarter 2 months before commencement of the quarter they should decide for opting into qrm what is a condition for optain last return must have been furnished on the date of exercising the option because if you have monthly returns pending you cannot go for qrm all those monthly returns should have been filed then only you can go for quarterly returns then gstr1 are availing if facility is qrm mandatory or optional qrm itself is optional but in that qmp if is another option you understood qrm itself is optional in the that whether you want to file the invoice details B2B invoice details or not is again an option so you can decide for either filing gstr1 and showing all the invoice in gstr1 or you can file for the first month and second month invoice Furnishing facility for showing your B2B supplies the scheme provides the if facility for first two months to furnish the details of outward Supply till the 13th of the succeeding month and the facility is optional and whatever details which are furnished using IF facility need not to be required to be refurnished in gstr1 because already we showed this details it will be carried forward in gstr1 what is the disadvantage of not going for if all these details again we need to enter in gstr1 then next there is a restriction here maximum 50 lakhs worth of invoices only can be shown 50 lakhs value not tax 50 lakhs value of invoices can be shown in if because the logic is 50 lakhs in one month on an average they are doing so we have five crores if you cross five crores you cannot go for qrm now five cres five crores is for one year so divided by 12 months so 46.67 they rounded off to 50 but they are taking the assumption that the turnor will be evenly spread throughout the year why it will be evenly spread it may change but they gave this exception the details of outward supplies shall not exceed the value of 50 lakhs in each month on non opting of this facility details of outward Supply to be reported in gstr1 and payment method what are the two payment methods that are there fixed some method and self assessment method in fixed some method we will be taking you know like last quarter gstr 3B in that last quarter gstr 3B we will be taking so into 35% why last quarter 3 means that is for 3 months 3 months divided by 3 33.33 rounded off to 35 means this month first month in this quarter you pay 35% of the liability of last quarter and second month also pay 35% what about third month anyhow you pay the actual liability so 35% of the previous quarter gross liability or net liability net liability not gross liability net liability you need to discharge as your liability under fixed some method for the first month and second month in the current quarter suppose if you go for self assessment method you calculate how much is your actual liability and you can make the payment sir I'm under fixed some method previously I was not under qrm I was under normal then monthly 3B liability is there 100% of that 3B liability monthly 3B liability I will pay for this month assumption is what whatever was your liability of previous month that will be taken sir what if my previous month liability zero then zero it is advantage to go for FSM really it's an advantage to go for FSM because previous month into 100% our previous quarter into 35% is zero so we don't have to pay anything under fixed some method means beginning of the registration when you go for qrm it's really advantageous but this Advantage we cannot enjoy for more quarters first quarter only again first quarter some actual liability will be there now that will be taken as the president for the second quarter so 35% of the tax liability in cash paid in the preceding quarter if it is quarterly filer of gstr 3B whereas monthly filing of gstr 3B 100% of tax liability in cash paid in the last month of the preceding quarter whereas in case of self assessment method so I told you normally we need to compute actual liability how much is our gross liability how much is our itz that much we need to pay then sir we we can go for self assessment method how much of money we want we can put it now sir the disadvantage is that if there is any difference in the liability because of self assessment method you opted and you paid some 10,000 but your actual liability is 15,000 this difference 5,000 is there now on that 5,000 you need to pay interest had it been fixed some method under fixed some method it is 10,000 you pay 10,000 but your actual liability is 15,000 on that 5,000 we don't have to pay interest that is the advantage of fixer some method if you follow what Chi says no interest if you follow something on your own interest you have to pay you understood or not what is the CH is telling you take previous liability into 35% or into 100% that only you take so government is telling something you follow that if you follow that no need to pay any interest on the difference amount if you follow something on your own you pay the interest no other go that is this any change in the manner of filing gstr 3B no the manner of declaring the tax on outward and inward supplies are same but the tax paid in the first two months would now be offset along with the third month liability so that is the only change then compulsory opt out so when the aggregate turnover exceeds 5 crores in any quarter because what is the limit for qrm five cres now first quarter three cres yeah second quarter 3 cres so 3 + 3 is what six crores means you crossed five crores so third quarter you cannot go for qrm you need to file on a monthly basis only Levy of late fees yes late fee will be applicable for delay in filing returns so here also there is returns now gstr1 and gstr3b that is only considered as returns if is not considered as return for delay in filing if there is no late fee only for this gstr1 and gstr3b the late fee will be applicable now looking to this interest computation interest computation only very very important that can be tested so first we will see under fixed some method under fixed some method we need to pay interest at the rate of 18% perom from 26th of the month till the date of payment if there is a delaying payment of any tax pertaining to the first month and second month for example so July to September July to September we are under qrm and for the month of July for the month of August and for the month of September we need to pay some taxes and during April to June during April to June we were under qrm and during this April to June in our gstr 3B in our gstr 3B net liability came to 1 lakh net liability 1 lakh so July month how much is the FSM liability that I have to pay 35,000 I have to pay and again August month I have to pay FSM liability 35,000 and this 35,000 I have to pay by when I have to pay by 25th of August correct if I pay it late which which one I pay Late July month if I pay late then I have to pay interest from when I have to pay interest 26th August I have to pay interest at what rate usual rate of interest 18% till the actual date of payment same way August month 35,000 by when I should pay I should pay by 25th of September if there is any delay beyond the 25th September then I have to pay the interest so please check the first point for the first two months for the first two months if there is any delay in payment so we need to compute the interest at 18% from 26th of the next month till the actual date of payment and this point is common whether it is fixed some method or it is self assessment method with respect to first month or second month of the quarter if the tax is not paid by 25th of next month we need to compute interest R 18% from 26th of next month till the date of payment this is common between FSM and Sam now thereafter we need to assertain what is our actual liability so we need to check what is our Act ual liability the actual liability of July month is 40,000 and 45,000 and 50,000 now this 40 + 45 + 50 so differential amount if any for July to September by when we need to pay suppose if you are in Tamil Nadu what is the due date of gstr 3B gstr 3B due date is 22nd of October correct so now what is the difference amount that you need to pay 40 + 45 + 50 minus 35 and 35 already which we paid sir 35,000 35,000 already you paid so now the differential amount only you need to pay so what is the differential amount you need to pay by so that is 50 plus here 10,000 60 plus here 5,000 difference so what is the difference amount so the difference amount if you see 5,000 and here 10,000 and here entire 50,000 that should be paid so 65,000 you need to pay by 22 October suppose if 3B file late if 3B fil late then on the 65,000 we need to pay interest at what rate 18% till the actual date of filing 3B see the third Point see the third point so if 3B for the quarter is filed late interest atate 18% peram from 23rd or 25th of the month following the quarter till the date of filing 3B on the net liability mentioned in 3B so therefore this is the net liability 65,000 so the 65,000 is the net liability and that we need to pay interest because of filing 3B late now there is a 5,000 rupees difference for the first month this 5,000 rupees pertains to which month July month we should have paid it by when 25th August but this 5,000 when are we paying 22nd October whether we need to pay any interest no because this is which method fixed some method again August month difference amount 10,000 rupees this 10,000 we should have paid by when 25th of September but when are we actually paying it 22nd October are we required to pay any interest on the difference amount no because we are following fixed some method that's why in case of differential tax that is actual tax minus tax already paid with respect to first month and second month of the quarter we don't have to pay any interest under fix set some method but this is the place where in self assessment method there is a difference what is it they telling suppose if the same situation is related to self assessment method then you tell me what will happen so 35,000 first interest same first interest same last interest also same what is the first interest 35,000 and 35,000 if you are not paying by 25th of next month then you need to pay interest correct then last interest what is it last interest 65,000 if you are not paying by 22nd of October then also you need to pay interest but the middle interest is only different what is that difference amount on the difference amount also we need to pay interest which difference amount 5,000 and 10,000 5,000 pertains to which month July month by when we should have paid 25th of August but when are we paying 22nd of October even though we paid it by due date of 3B we need to pay the interest at what rate 18% from which date to which date from 26th of August till the date of 22nd October we are filing 3B you B it so on the difference amount we need to pay interest interest at 18% perom from 26th of next month till the date of payment under which method this interest is applicable self assessment method be careful in the question they can definitely test it related to the interest computation so this is about qrm quarterly return monthly payment then looking to the next one time time limits for various returns so first return is gstr1 so gstr1 what is the due date who will be filing gstr1 every registered person what does it contains outward Supply details and what is the time limit if it is monthly gstr1 11th of the next month if it is quarterly gstr1 13th of the month following every quarter okay then iff what is the time limit for if first two months of the quarter we need to file this if by 13th of the next month 13th of the month following every month then two one series okay two series gstr two we will not file we will get it so we don't have to bother about time limit but three series only one we have 3B 3B when we are required to file 3B so every registered person is required to file 3B that contains the details of output tax input tax n GST payable interest late fee Etc and this gstr3b is a summary return that contains Consolidated details of everything but gstr1 contains invoice details 3B when we should file time limit time limit so in case of monthly 20th of the month following every month in case of quarterly 22nd or 24th of the month following every month so what are the notified States for which 202 will be applicable underline g m c a g m c a and below gmca and below that is Gujarat madha Pradesh chisar Andhra Pradesh and Below States so for them notified States it will be 22nd for other states it will be 24th then next next series is gstr 4 gstr 4 who will file a person opting for composition scheme and it's an annual return what is the time limit for filing this annual return by a person opting for composition scheme 30th April of the succeeding Financial year whereas CMP 8 is also a return which is filed by a person opting for composition scheme which is a quarterly return by 18th of the month following every quarter then next series is gstr 5 gstr 5 who will file nrtp non-resident taxable person who is coming from outside India to India who is not having any fixed place of business in India and that gstr 5 what is the time limit so basically nrtp will not not get a permanent registration temporary registration so 13th of the month following every month or 7 days from expiry of registration whichever is earlier that is the time limit by which they need to file then 5A 5A will be by a oid or supplier located outside India they need to get registration now in India they need to file gstr 5A is like gstr 3B 20th of the month following every month that's a regular time limit so this is by oid supplier then G gstr 6 gstr 6 we discussed in ISD input service distributor what is the time limit for that 13th of the month following every month monthly they need to distribute the credit by 13th they need to file this gstr 6 gstr 7 and 8 s is what TDS gstr 8 is TCS what is the time limit 10th of the month following every month then gstr 9 and 9B so who will be filing N9 annual return and annual return 9B is by EC Commerce operator and what is the time limit for this annual return 9 31st December of the succeeding Financial year remember gstr9 is required to be filed by a person whose aggregate turnover during the financial year exceeds 2 crores gstr9 mandatory gstr9 mandatory if aggregate turnover during a financial year exceeds 2 crores if aggregate turnover in a financial year exceeds 2 crores gstr 9 is mandatory otherwise it is optional whereas 9C you see 9C was previously an audit statement and now it's a self-certified Reconciliation statement to whom 9C is applicable if they aggregate turnover in a financial year exceeds 5 crores so then 9C will be applicable and time limit is same for all n series the time limit is 31st December of the succeeding Financial year then the next one is gstr 10 gstr 10 you know is a final return who will be filing this final return person whose registration is to be cancelled so what is the time limit of this final return 3 months from the date of cancellation or order of cancellation whichever is later not earlier whichever is later so this later points alone please highlight and remember here because usually whichever is earlier is by default we will remember we will know but lat is the place where we get confused so somewhere while preparing so you write somewhere in the book or some sticky note and past it which and all places we will take whichever is later so that point you keep in mind so that you will not get confused sitting in the exam Hall okay because sitting in the exam Hall all kind of doubts we will be getting sometimes Direct Tax and all we will learn in indirect tax exam yes trust me promise many students told me that sir I did not remember anything of DT in DT exam sir but in ID exam everything I learned in DT I'm able to recollect sir too much pressure it will happen like that okay so ID will not remember that's why so many times you need to revise and this kind of small small points and all you need to write and keep okay sometimes it will be like maximum two lakhs minimum two lakhs this confusion and all will come okay then so it is whichever is later moreover here three months from the date of cancellation but order of cancellation don't add three months order of cancellation a is date of cancellation plus 3 months B is order of cancellation whichever is later sir what is the difference between this date of cancellation is the effective date of cancellation order of cancellation is the date on which we got the order to our hand but in that order they will mention the effective date because they would have suspended our registration back words so that date will be given as the effective date of cancellation from that date effective date plus 3 months or order of cancellation whichever is later is the time limit for filing final return and final return will be filed by a person whose registration is cancelled gstr1 is to be filed by U holder U Holder will claim Refund Now refund of what their invit supplies so all the invit supplies details they will be showing in gstr 11 at the time of filing refund claim how they will file the refund claim on a quarterly basis so quarterly basis two years from the end of the quarter they will file now at the time of filing refund claim they will be filing gstr L then looking to the next one sequential filing of return so these are some special points okay and uh one one query here sir annual return for composition scheme is gstr 9A R gstr 4 initially 9A initially 9A for few years thereafter 9A they have scrap in the place of 9A they have brought in gstr 4 so don't worry if you write gstr 9 also that won't be a wrong answer so gstr 9 are four but the APT one is at present gstr 4 but anywhere if you are coming across gstr 9A that was the annual return for that particular Financial year and therefore that is now scra at present what is that unit remember gstr 4 by 30th April of the succeeding Financial year then special points on return sequential filing of returns so first we need to file gstr1 of this month then only you can file 3B without filing gstr1 you cannot file 3B of that month same way without filing 3B of the previous month you cannot file the gst1 of the second month and then same way 3B gstr1 like this there is a sequential filing of returns two points you need to remember without filing gstr one of the current month they cannot file 3B of the current month then without filing gstr 3B of the previous month we cannot file the gstr 1 of the current month then second Point government on the recommendations of the council may allow to file gstr1 even if gstr1 is not filed for prior periods yes they have given from time to time they will be coming out with this called as ameny scheme so wherein if you have not filed any returns and all don't worry we will give you one shutter we will open the shutter and you can file all those returns and all now so that you can escape from cancellation of registration from time to time this aminy scheme is given so that provision is this then third in the following cases this already we discussed section 38 what are the cases where even though supplier files gstr1 but it will come under ITC Tob as ITC not available then 88c and 88d also already we made a discussion related to this then looking to the next one who are not required to file gstr1 or gstr3b remember tonic T Square tonic T Square t for TDS TCS deductor why because they will be filing gstr 7 and gstr 8 so one and 3 be not applicable to them Ohr supplier because they will be filing gstr 5 a so that's why 1 R 3B not applicable then n nrtp they will be filing gstr 5 so due to that reason one R 3B not applicable I input service distributor because they will be filing gstr 6 that's why it will not be applicable see composition scheme because they will be filing CMP 8 so that's why gstr 103b not applicable so remember tonic in the tonic T Square they are not required to file so gstr1 or 3B who are not required to file annual return remember CAG tonic okay only one t not two T's only one t CAG tonic CAG that is persons whose books of accounts are subject to audit by controller and auditor general they are not required to file annual return Then T sir TCS deductor is required to file annual return gstr 9B but TDS deductor not required to file so TDS deductor o same oid supplier n non-resident taxable person I same input service distributor but see composition scheme they will file annual return so it is casual taxable person from this discussion you tell me what is the return that will be filed by a casual taxable person who is a casual taxable person who come from another state to this state who is not having any physical place of business in this state what is the return that he will be filing gstr one and 3B so somewhere you write down a casual taxable person is required to file gstr1 and gstr 3B casual taxable person is required to file casual taxable person required to file required to file gst1 gst1 and gstr 3B they required to file this only nrtp not required and Casual taxable person are they required to file annual return no they are not required to file annual return then then we are moving on to late fee for delay in filing returns late fee purely for McQ okay now for one Mark if at all McQ comes it will be for one mark But sir should I remember this for one Mark no to leave that one Mark also okay so we'll make a effort maybe if the McQ is easy one Mark you will get now we will learn here if it is not coming okay if it is coming but it is so easy then outside when you come out of the exam Hall your friend will be telling hey you know what late we came this much only is the answer and you will feel guilty I have not return this so this guilt should not be there that's the reason why you learn this so late fee for for delay in filing return return what is that gstr1 and gstr 3B mostly gstr1 and 3B only will be tested or annual return we be tested so these two you remember try to remember gstr1 and 3B what is the late fee if it is nil return 10 Rupees per day if it is other than nil return 25 rupees per day all this late fees under one act cgst act the same amount is payable under sgst act but we don't have any late fee under IG so 10 Rupees per day and 25 rupees per day which case 10 Rupees per day nil return other than nil return 25 rupees per day subject to maximum if it is nil return maximum 250 rupees suppose if the delay is 30 days 30 days into 10 300 but the maximum is only 250 whereas in case of other than nil return there is a maximum late fee how much is that maximum if your turnover during previous year exceeds 5 crores 5,000 if your turnover during previous year exceeds 1.5 but does not exceed 5 crores 2,500 if your turnover during previous year exceeds one does not exceed 1.5 crores 1,000 so slab you remember 5,000 2,500,000 when 5,000 if you're agregate or not during previous year exceeds 5 crores if it exceeds 2 1.5 but does not exceed 5 2,500 if it does not exceed 1.5 crores 1,000 then next gstr 5 gstr 5A and six for all these three it is same nil return 10 Rupees per day other than nil return 100 uh 25 rupees per day maximum same 5,000 no change in that so n return 10 Rupees per day other than nil return 25 rupees per day subject to maximum 5,000 gstr 7 and 8 already we learned for 7 it is what 25 rupees per day subject to maximum 1,000 for gstr 8 100 rupees per day subject to maximum 5,000 then gstr 4 to whom gstr 4 is applicable concentrate to whom it is applicable person opting for composition scheme person opting for composition scheme what should be the maximum turnover during previous year 1 Point does not exceed 1.5 crores if does not exceed 1.5 crores what is the maximum late fee for gstr1 gstr 3 be 1,000 correct copy paste so if it is nil return 10 Rupees per day subject to maximum 250 if it is other than nil return 25 rupees per day subject to maximum th000 why sir maximum th000 because they turnover during previous year does not exceed 1.5 crores then gstr 9 9B 9 C for annual return so there is a late fee what is the late fee see three slabs are there first you see per day late fee if your turnover exceeds 20 crores if if your turnover exceeds 20 crores 100 rupees per day if it exceeds five but does not exceed 20 half 50 rupees per day if your turnover does not exceed 5 crores then it will be half of that 25 rupees per day okay here so per day late for you to remember more than 20 crores previous year how much 100 more than five but does not exceed 20 half 50 does not exceed 5 crores 25 this is per day late fee maximum late fee first case 25% 25% of what turnover next two cases 0.2% of turnover okay this is the late fee and all these late fees is under cgst act and respective late fee payable under sgst act also but the late fee under igst Act is not applicable if the late fee under cgst sgst is paid then then there are some returns which can be filed through SMS what are they nil return it should be a nil return what is a nil return all the fields in the return should be nil then only it will be called as a nil return and gstr1 gstr 3B and CMP 8 these three returns we can file through SMS but all the entries in the return should be nil then first return who will be filing this first return so immediately after our registration so the first return that we file we should mention not only the details of the month for which we are filing the returns even for the period before the date of registration for example you say take liable to register liable to register is 25th sorry 20th of March 2023 and we applied for registration applied for registration and we got the registration certificate that registration certificate we got on 14th of April 2023 now what is the first return that we will be filing we'll be filing first return for April 2023 correct first return we will file for April 2023 because 14th April only we got registration now first return for April 2023 this first return for April 2023 should not only contain the details of April 2023 but also March details from the date you are liable to get registered till the date you got registration certificate even those transactions also it should be included because you need to pay GST on those transactions also so every registered person who has made outw supplies in the period between the date he is liable to register 20th March till the date registration has been granted 4 14 April these details should be included in the first return it which is furnished by him after Grant of registration then if you are required to file returns but you have not filed any returns then what will happen you will get a notice that is in gstr 3A so that notice in gstr 3A once you get within 15 days of notice you need to file return sir what will happen if you are not filing returns within this 15 days that will lead to best judgment assessment under Section 62 got it so write there if returns not file if returns not filed within 15 days after notice within 15 days after notice comma best judgement assessment shall be initiated shall be initiated under Section 62 so this is the consequence of not filing the return within 15 days of notice first you miss the due date you will get a Noti is in gstr 3A and after 3A within 15 days you should file the return otherwise they will pass a best judgment assessment order then see the next page rectification of returns so there is no concept of Revision in returns in G GST there is only rectification of returns what are the returns that can be rectified gstr1 gstr 3B and gstr 8 but rectification should not be on account of scrutiny audit in investigation or enforcement activities and what is the time limit for rectification 30th November of next financial year or date of filing and return whichever is earlier in five places the time limit is same what are those five places time limit for availment of ITC time limit for issuance of credit note and time limit for rectification of gstr 1 time limit for rectification of gstr 3B and time limit for rectification of gstr a in these five cases the time limit is common 30th November of the succeeding Financial year or date of filing annual return whichever is earlier and then how the detail should be reported in gstr1 outward Supply details in gstr1 whether we need to show invoice wise or we need to show consol dated details say this first we need to check is it B2B or B to C B2B always invoice wise details we need to upload correct whereas if it is b2c b2c Interstate inate you see inate always Consolidated so remember the first point B2B always invoice wise B to C inate always Consolidated B Toc Interstate B Toc Interstate if the invoice value exceed 250,00 ,000 per invoice invoice wise if the invoice value does not exceed 250,000 per invoice then statewise consolidation needs to be done got it then next one section 48 so role of GST practitioner so there is a concept of GST practitioner which was not much tested in the last attempts any attempts and therefore we may not get if at all we get this question we will get what are the activities that can be performed by by a GST practitioner these are the only activities which can be done by them so they can make application for registration they can file the returns and they can file the intimation for opting into composition scheme or withdrawal from composition scheme they can make a application for refund and sorry they can make payment of tax and they can act as a authorized representative and they can furnish information for generation of EV bill that is data entry they can do and they can enter the details of it4 what is it4 Goods sent on job work and received from job work and they can make application for Amendment or cancellation of unique enrollment number so usually transporter Warehouse keeper and supplier of goods through e-commerce operator these three people will be obtaining unique enrollment number right there so transporter Warehouse keep keeper and supplier of goods through e-commerce operator who and all will get unique enrollment number transporter even though not registered okay number two Warehouse keeper even though not registered Warehouse keeper also even though not registered number three supplier of goods through e-commerce operator supplier of goods through e-commerce operator these three people even though not registered they will be making you know like application for Unique enrollment number that application can be done by GST practitioner so what are the eight activities which can be done by GST practitioner come on they can make application for registration they can file returns and they can make payment of tax or apply for refund and they can file intimation for entry into composition scheme or exit from composition scheme and thereafter they can act as a authorized representative they can do data entry for Ev Bill and they can furnish the details of goods sent on job work received from job work they can make application for enrollment unique enrollment number or amendment to Unique enrollment number then what are the eligibility conditions they should be citizen of India because foreigners and all should not come and become GST practitioners okay so we create a exclusivity Indian they should be and person of sound mind and not aded as insolvent director disqualifications all these are so citizen of India person of sound mind not aded as insolvent not convicted for an offense Beyond 2 years means up to two years if he is imprisoned okay he can become GST practitioner but he should not be convicted of an offense with imprisonment not less than two years not less than two years means what greater than two years this is the eligibility condition four conditions plus he should also possess certain educational qualification here basically they have given some list of educational qualifications like they should be having degree any degree or they should having uh you know this CA CMA final or CS final they should have completed like that but previously any degree was there but now an amendment they have made so related degree they should have related degree means so it should be like Commerce higher auditing business administration Etc so related to Commerce so then only they can become a GST practitioner previously can a Engineering Graduate become GST practitioner yes but now an engineering graduate cannot become a GST practitioner so that's the amendment that they have made then responsibility for correctness of particulars so GST practitioner is filing returns in this returns there is a mistake now who is ill responsible the registered person not the GST practitioner the responsibility for filing of returns or any incorrect particulars in the returns lies with the registered person so GST practitioner should exercise due d agents while filing the returns in and he should make it available to the registered person he should get a approval from the registered person through SMS or mail and the registered person should check whether the details mentioned in the return is correct and only after his approval the GST practitioner should file the return and if there is no approval given by the registered person deemed approval that GST practitioner can file the registered person before confirming should ensure the fact mentioned in the written are true and correct however failure to respond to the request for confirmation shall be treated as deemed confirmation and GST practitioner shall prepare all statements with due diligence and AIX their digital signature if they are found guilty of misconduct their enrollment will be cancelled but there is no prosecution on them imprisonment and all not applicable just their enrollment will be cancelled so because these are the activities they can do for this and all we cannot send them for imprisonment so due to that reason so there is no imprisonment on them so this is about returns that we have completed okay segment 14 and segment uh 13 related to returns payment process already we have discussed in part three so now we are moving on to segment 15 that is accounts and Records aable so as per section 35 so here 35 36 talks about accounts and Records 35 says that what are the various accounts and Records required to be maintained by registered person and 36 talks about what is the period for which that accounts and Records should be maintained so what are the various accounts and Records to maintained by registered person remember this keyword I formats I for invit suppli invit suppli all purchase details along with the details of the suppliers name and address and details of the supplier along with the relevant documents like tax invoice debit nodes and credit nodes so that is invit supplies number to foreign trade that is Import and Export of goods so import of goods along with the details of Bill of entries export of goods along with details of shipping bills and outward supplies so outward supplies so along with the details of the name and address and other details of the recipient with the details of invoices debit notes and credit notes RCM purchase out of the invit supplies what are the purchase on which GST payable under RCM if r m for manufacturer and production related records but this is applicable only in case of a manufacturer not by a Trader or service provider then advances received paid or adjusted so advances received from the customers and Advance paid to the suppliers and adjustment of advances for the purpose of payment of liability and tax details input tax and output tax and stock of goods along with the details of the place where that stock is stored so these are the various accounts and Records to be maintained by registered person as per section 35 where these accounts and Records where these accounts and Records will be Main maintain so these accounts and Records will be maintained in the principal place of business pertaining to all place of business whereas in every additional place of business we need to maintain the accounts and Records pertaining to that additional place of business whereas in case of the tax details and stock of goods it is not required for person opting for composition scheme so this tax details as well as stock of goods not required for person opting for composition scheme so they need to maintain I fora so as per section 35 the above record will maintained by every registered person in principal place of business and Records pertaining to additional place of business in each and every additional place of business whereas what is this period for which these accounts and Records to be maintained as per section 36 normal cases 72 months that is 6 years but in law you write exam you write 72 months so 72 months from the due date of Furnishing and return for a particular Financial year for example if the financial year is 2223 so 2223 due date of Furnishing all is 31st December 20 23 31st December 2023 6 years 24 25 26 27 28 29 so till that time they need to maintain the accounts and Records pertaining to this previous year or financial year 2223 suppose in that particular Financial year we went for appeal then in that case one year from the outcome of the appeal or six years from the due date of Furnishing Al return whichever is later not whichever is earlier whichever is later so 72 months from the D of finding annual return or one year from the disposal of appeal proceedings whichever is later and every transporter or Warehouse keeper even though not registered should obtain a unique enrollment number generally GST is applicable only to a registered person so all these accounts and Records also applicable to a registered person but if there is a warehouse keeper or a transporter even though they are their aggregate are not exceeding threshold limit they need to get a unique enrollment number and they need to maintain necessary records related to their business so these about accounts and Records 35 36 and then 37 38 39 40 41 42 and 43 we don't have then 44 45 46 47 so we have seen in returns so then we have seen section 49 50 51 and 52 that is TDS TCS so that is in payment process and then 53 onwards so till 59 so that we have 58 we have seen in refunds chapter so this EV bill is also a connecting area this EV bill is not given any section but it is given through the rule EV bill is a document which is to be given by the supplier or recipient or any other person who is causing movement of the goods so this EV Bill contains the details of the goods which are to be transported along with the details of the vehicle so basically Whenever there is a movement of goods EV bill is required whereas EV bill is not applicable in case of Exempted goods and it is not applicable even if the value of goods does not exceed 50,000 Rupees but while determining the value of the goods you need to take GST including GST but excluding the Exempted Supply suppose if a document contains both taxable supplies and Exempted supplies take out the Exempted supplies and see the taxable supplies and add GST if that exceeds 50,000 Rupees then only EV bill is applicable if it is less than or equals to 50,000 EV Bill not applicable however in case of goods sent on job work and in case of handicraft Goods even if the value does not exceed 50,000 Rupees definitely EV bill is required and EV bill has two parts Part A contains the invoice details and Part B contains the vehicle details so part A contains GST details of supplier recipient document number and reason for transportation whereas Part B comprised of Transport details and what is the validity of the EV bill so EV Bill once generated will be having a validity of one day for every 200 km or part thereof in case of over dimensional cargo or multi mode Transportation where one leg of the journey is by Vel then it will be one for every 20 kilm are part thereof for example if the distance is 480 km so 480 km means a validity will be taken as 3 days so first 200 km 1 day next 200 km one day and remaining 80 km it will be one day so like that the validity will be counted and the validity will be starting from Midnight of the day in which e bill is generated so it will be counted from the midnight in which EV bill is generated for example so today morning the EV bill is generated today midnight to tomorrow midnight is one day and there after next day midnight is another day so like that validity is counted so validity will expire by midnight and within 8 hours from the expiry of its validity the EV bill can be extended if the transportation or the movement is not completed within that time suppose if the validity is over and still the goods are being moved so then it is as good as the goods are transported without EV bill and the consequences will be arising so see we have some FAQs on EV bill so when EV bill is not required if that all we transport the goods through non-motorized vehicle bullet card horse card Etc EV will not required if the goods are transported between the Customs places that is between the airport port or land custom station or container flight station Inland container Depot or Customs Warehouse so between those places because the goods are under the supervision of Customs officer so that do not require EV that is second point and third point and fourth Point Transit car go to Nepal and bhan Nepal and Bhutan landlocked countries goods are originally unloaded in India and thereafter from India to Nepal and bhan it will be going so that do not require EV and movement of goods for Ministry of Defense so that do not Ministry of Defense Goods in whichever mode it is transported EV will not requir and empty cargo containers are being transported because there is no Goods inside the container but the container itself can be taken as Goods but that do not require a b then consign or transporting goods to or from between the place of business and a wave Bridge so first the L will go to the W bridge to take the like weight of the lry so that lry do not contain Goods so therefore EV will not required now again the lry will return to the factory and the goods will be taken into the lry now the lry will go to the W bridge for the purpose of taking the weight of the lry with Goods now as the goods are there inside the L if the movement is within 20 km EV Bill not required if the movement is beyond 20 km EV bill is required then Goods being transported by rail where the coner of the goods is the central government state government or local Authority so this is point number eight this also do not require aable the difference between fifth point and eighth point is that in the fifth point it belongs to Ministry of Defense whereas in the eighth point it belongs to government but only real whereas here it can be by any mode then next one Goods specified as Exempted from the eable requirement in the respective States so that also will be taken and there are some Goods which are given in these rules so that is transportation of certain specified Goods LPG for Supply to household and non-domestic Exempted category customer so that is basically that red color cylinders Transportation do not require aable this is other than dealer of cylinder suppose if the dealer of cylinder is transporting let it be red color or the blue color that definitely require evil but a consumer is taking the cylinder from the location of the dealer to his house so then that do not require EV Bill kosin oil sold under public distribution system then Coastal baggage and then natural or cultured pearls or any jewelry are silver or articles precious articles so that do not require but imitation jewelry that is not jewelry that requires EV Bill and used personal hous old effects so whether EV bill is required for movement of goods is not for Supply so even though the movement is under Supply or without Supply EV bill is required if it is under Supply tax invoice plus EV Bill if it is without Supply delivery CH plus EV Bill whether the 50,000 limit is for taxable Goods or Exempted Goods so it is for taxable Goods if there is Exempted as well as taxable take out Exempted Goods and check the value while Computing invoice value whether GST to be included or not yes GST needs to be included who will generate the evill generally EV bill will be generated by the registered person who is causing the movement of the goods if the supplier is registered and he's causing movement of the goods supplier will be generating PARTA of the EV bill so he will enter the part details suppose if the supplier is unregistered the recipient is registered the recipient is causing movement of the goods the recipient will enter the party details if both suppl recipient are unregistered the transporter will enter the party details alternate L either supplier or recipient can enroll as citizen of India and they can enter the party details and so whether transporter is required to generate EV Bill even if the value of each Consignment does not exceed 50,000 Rupees yes so generally there are 10 consigners who are sending the Consignments through the transporter and each Consignment value does not exceed 50,000 so suppliers will not be generating EV bill but all these EV bills cumulatively if you see it exceeds 50,000 Rupees because these 10 Consignments transported in a single lry the lry value exceeds more than 50,000 with respect to all the Consignments now this transporter for each Consignment separately he need to prepare EV plus all these Consignment a Consolidated EV bill will be generated so transporter should generate EV bill so ewb 1 with respect to each Consignment and cwb2 Consolidated EV individually for each Consignment even the value is less than or equals 50,000 in aggregate it exceeds 50,000 due to that reason then blocking of evility if we are not filing gstr1 gstr 3B or cm8 for consecutive two quarters then EV bill will be blocked so but EV bill will be blocked only with respect to outward movement of goods so that is for if a person has not filed returns for their inward movement if a person has not filed returns with respect to their inward movement there is no issue so EV bill can be generated with respect to the outward movement only EV bill is not possible and that EV Bill cannot be generated by transporter supplier recipient or any other person so EV Bill generation facility is blocked only with respect to outward movement of goods by registered person who has not filed returns as above however EV bill can be generated in respect of invert supplies and other points in case of Bill to ship to transactions so I'm delivering the goods to a third person and I'm raising invoice to the recipient in that case one eable is sufficient even though they involves two supplies and multi vehicle updation is possible avable up to some distance in one vehicle there after another vehicle multiv vehicle updation is possible then once the part A details are entered the part B that is vehicle details needs to be entered within 15 days so Part B should be updated within 15 days from updation of part A EV bill should be accepted by the recipient within 72 hours of generation or delivery whichever is earlier and Part B who can update either by the supplier or recipient or by the transporter whomever knows a vehicle number they will be updating the part B details and movement of goods if it is taxable Goods under Supply then tax invoice plus EV Bill if is without Supply delivery chall plus EV it is Exempted Goods so ta bill under Supply bill of supply and without Supply delivery chall EV is not required in that case so these are the provisions with respect to accounts and records and EV bill so refunds under GST already we have discussed and the next area that we have is assessment and audit in this assessment and audit the first few areas is related to interest computation which we have come across in many places first section 50 subsection one interest talks about interest on account of delay in payment of tax or short payment of tax so that rate of interest is 18% paranam and it will be computed from the first date after due date so the due date depends upon the due date of gstr 3B and first day after due date till the date of payment of GST whereas section 50 subsection three interest is on account of wrong availment and utilization of ITC the interest rate is 18% per anom it is first day after utilization till the date of payment pay of GST what will be considered as a date of payment of GST date of filing 3B or date of uh you know making payment through drc3 that will be taken whereas section 60 interest is talking about provisional assessment so usually when a person is unable to determine what is the value or the rate of GST that person can make an application for provisional assessment wherein the officer will ask the person to provisionally pay some amount and thereafter upon finalization some differential amount will be either payable or it will be refundable to that person suppose if the differential amount is payable then what will be the rate of interest 18% perom and in this case the interest will be computed as usual from the first date after due date pertaining to the month in which the provisional assessment is resorted so first day after the due date of the month for Which tax is provisional assess till the date of payment of the differential amount whereas section 16 is in case of non-payment of consideration to the supplier within 180 days from the date of invoice so so much of the it aail needs to be reversed along with interest 18% from the date of first date after utilization of itz till the date of addition of that itz to the liability if you don't have and that is reversal so if you don't have the balance in ITC then you will make the payment so then 17 red withth rule 42 that is we need to compute the provisional D1 and D2 which we are doing monthly basis plus final D1 and D2 needs to be computed if the final D1 D2 is more than the provisional D1 and D2 so which is already reversed that differential amount we need to reverse in itz and again interest will be at the rate of 18% perom from the first day first April of the suceeding financial year means we need to do this comparison at the end of the financial year so first April of the succeeding Financial year till the payment of such difference whereas next one is section 17 red with Section 43 this is reversal of itz pertaining to capital goods so in case of capital goods what will happen is that we will be availing the ITC initially and thereafter we will reverse over a period of 160 months so now in this case the rate will be 18% from the first date after availment of itz till the date of addition of the proportionate itz whereas section 56 interest on account of you know delay in refund usually refund should be granted within 60 days from the date we make application for refund if the refund is not granted within 60 days from 61st day the interest will be computed at the rate of 6% perom till the date of refund whereas section 56 there is another refund which is arising on account of any assessment order or appelate order Etc then that is Court will be granting the refund the interest rate will be 9% per again same time limit 60% date from the date of application till the actual date of refund so here due dat refers to due date of 3B usually 20th of the month following every month will be taken suppose if there is any delay in filing 3B then the interest will be payable on net liability provided the liability is reported in 3B suppose if the liability is not reported in 3B it is pertaining to one month which is paid in the other month so then in that case the interest will be computed on the gross liability then assessment under GST basically we have so section 59 onwards covered under this so 59 60 59 talks about self assessment 60 provisional assessment so up to 59 that is 58 is refunds chapter so 59 self assessment 60 provisional assessment 61 scrutiny assessment then 62 and 63 best judgment assessment and 64 summary assessment so here what happens is that so whenever a person is able to compute GST payable then it will be called a self assessment whenever the person is unable to compute how much is a GST that he need to pay he will request the officer to compute that is called as provisional assessment whereas scrutiny assessment is whenever the self assessment is completed and the return return is filed the officer will be taking up the return return for scrutiny and if everything is Fin and find like everything is perfect so then the assessment is completed otherwise so the officer will initiate any one of the you know actions like either audit or recovery Etc whereas then section 62 and 63 talks about best judgment assessment in that two best judgment assessments are there number one with respect to non-filers of return a person is required to file returns but he did not file the return in that case so best judgment assessment will be initiated under Section 62 whereas in case an unregistered person who crossed the thresold limit but he not got registered or he's making Interstate supplies or covered under 24 but not got registered so there is unregistered person who is having some liability but he did not pay the liability to initiate recovery so they will be passing assessment order under Section 63 so then 64 talks about summary assessment so in case when a person is aiding the GST and the proper officer identified that and delay in passing the you know like order the person may escape from payment of GST then they will invoke summary assessment order under Section 64 basically assessment order is for the purpose of computing the GST payable that is about assessment assessment thereafter the recovery order will be given under Section 73 and 74 this assessment order is also in a way for the purpose of recovery only and Recovery order also separately 73 and 74 that we have so now in this case let's see about section 59 self assessment so status of the person is a registered person and by registered person note is not applicable and situation every registered person has to assess the tax payable and they will furnish the return what is the time limit for return the due rate of return will be taken officer to take any prior permission not applicable withdrawal of order not applicable and there are no consequences whereas if you see provisional assessment section 16 so it is not on the registered person it is on the taxable person taxable person means a person who is liable to get registered or you know who is already registered will be coming under a taxable person so who will do this provision assessment it is done by the proper officer and any notice will be given no because this person is only making application so there is no question of notice situation when provision assessment will come come into picture when the taxable person is unable to determine what is the value of goods or services or the G GST that is payable in that case provision assessment will come so what is the time limit so for the provisional assessment order should be passed within a period of 90 days from the date of receipt of such request so once we make application for provision assessment within 90 days the provision assessment order should be passed and thereafter once the provisional assessment order is passed So within four years so 6 months plus 6 months plus 4 years the final assessment order should be passed so two time limits you need to remember first we make application so within 990 days they will pass a pro assessment order so after passing provisional assessment order the final assessment order should be passed within 6 months it can be extended for a further period of 6 months and further four years so by the commissioner from the provision assessment order off user to take any permission no withdrawal of order no consequences what will happen so calculate the final assessment amount and the provisional assessment amount and suppose if it is positive means what final assessment amount is greater than the provisional assessment amount the differential amount is payable along with interest at the rate of 18% from from the first date after due date of the month for which we resorted for the provision assessment till the actual date of payment suppose if it is negative what do negative means the final assessment amount is less than the provision assessment amount so when it is negative so what will happen so then we will get the interest refund first we'll get the refund suppose if the refund is not paid within 60 days then from 61st 60 days from the date of application then from 61st day the interest will be payable to us then in case of scrutiny assessment scrutiny assessment will come whenever there is a self assessment so a self assess return return will be taken up for scrutiny as per section 61 by the proper officer and the proper officer will give notice if there is any discrepancy so mainly scrutin assessment is in order to verify the correctness of the return proper offer May examine the return and seek explanations so time limit they have not given any time limit but literally we need to connect the time limit to 73 and 74 because there is a time limit to give the notice for the purpose of recovery so so the recovery order under 73 needs to be passed within 3 years from the due date of Furnishing and return whereas 74 needs to be passed within 5 Years From the due date of Furnishing and return so this three years and five years is the time limit for doing the recovery so due to that reason here when they complete when they take up the return for scrutiny they should complete it within that time otherwise recovery cannot be made so logically the order under Section 7374 before that so they need to complete the scrutiny assessment officer to take any permission no withdrawal of order no consequences if they explanation is not obtained within 30 days or extended period so what happens is that first they will be giving a notice and thereafter they need to seek the explanation the explanation that is reply should be given within 30 days suppose if the reply is not given 30 within 30 days or the registered person fails to take corrective measures so the proper officer May conduct audit or initiate any recovery so audit can be either special audit or departmental audit departmental audit under Section 65 or special audit under Section 66 or they can ini initiate search so under Section 67 and they can also if they have sufficient evidences then they can initiate recovery under 73 and 74 okay so then in case of best judgment assessment section 62 when is it applicable so there is a registered person and that person has not filed the returns registered person failed to furnish the return within 13 days from the gstr 3 a notice a notice will be given under gstr 3A so if the returns are not filed and after the notice under 3A the return should be filed within 15 days otherwise they will initiate best judgment assessment and the best judgment assessment is done by the proper officer and the time limit for best judgment assessment is 5 Years From the due date of fishing annual return for the relevant Financial year within a period of 5 Years From the date of 31st December of the financial year for Furnishing the annual return to which the tax paid pertains so simply remember 5 Years From the due date of filing anual return for the relevant Financial year and there is no permission to be taken by the officer withdrawal of order yes there is a facility of withdrawal of order when so as we have not filed the return within 15 days so the officer initiated best judgment assessment and they pass a best judgment assessment order once the best judment assessment order is passed within 60 days previously it was 30 days within 60 days now that's an amendment within 60 days from the assessment order best judgment assessment order if you can file the returns so what will happen so whatever is the best judgment assessment order that will be withdrawn and as per your return only you will be liable to pay so within this 60 days but it can be extended for a further period of 60 days so with the late fee of 100 rupees per day such order shall be deemed to have been withdrawn however interest is payable here 100 rupees per day here it is for the purpose of this section section 62 but the regular late fee is also payable what is that regular late fee so whether within 60 days or Beyond 60 days as there is a delay in filing return so we need to pay the regular late fee okay that is this point so please keep in mind so regular late fee regular late fee regular late fee for delay in filing returns regular late fee for delay in filing returns under Section 47 so there is one section 47 which talks about the late Fe you can refer that section 47 in the book that's it book it is there so we have discussed in the returns chapter so regular lat for delay in filing returns under Section 47 is payable is payable whether such return is filed such return is filed within 60 days or Beyond 60 days within 60 days or Beyond 60 days Beyond 60 days when you are filing within 60 days or Beyond 60 days you need to pay the regular late fee the regular late fee under Section 47 but this is late late fee under Section 62 what is that late fee under 62 suppose if you are not filing returns after best judgment assessment order within 60 days then for everyday delay you need to pay 100 rupees now this is apart from that regular late fee okay so then interest is also payable naturally because there is a delay in filing returns means there is a delay in payment of tax so interest is payable so if you feel like best judgment assment order you don't have to pay so then there is a option available to that person in in case of section 62 that is best judgment assessment on account on non-filers of return where is whereas there is another best judgment assessment under Section 63 this is on the unregistered person where a taxable person failed to obtain registration or his registration got canceled but still there is some pending liability so in that case proper officer will do the assessment and an opportunity of being heard a notice will be given before passing the best judgment assessment order the time limit for this best judgment assessment order is also same So within 5 Years From the due date of Furnishing all for the relevant Financial year and officer to take any permission no and withdrawal of order also we don't have any withdrawal of order so whatever withdrawal of order that we have seen in case of previous section 62 is not applicable in this case so consequences either pay as per the assessment order or if you are not satisfied go for the appeal if not satisfied with respect to appeal order then you can prefer an appeal whereas in case of summary assessment section 64 so this is also like income escaping assessment so what will happen proper officer will come into the premises and they will be checking that or they will check the goods in the trans it and they came to know that the goods are liable for confiscation and the person has contraen and there is a evation he need to pay and he has reasonable evidence to believe that delay in passing assessment order the person may escape from payment of GST so as per section 64 on the taxable person the proper officer there is no opportunity of being heard everywhere there is opportunity of being heard notice will be given but there is only case where without notice they will pass directly the assessment order what is the situation the proper officer has evidenced that taxable person has incurred a liability and the proper officer has sufficient grounds to believe that so delay in passing an assessment order May adversely affect the revenue this two points you need to write so usually section 64 as a theory question they will be asking the proper officer has evidenced that the taxable person has incurred a liability and proper officer has sufficient grounds to believe that so delay in passing an assessment order May adversely affect the interest of the revenue so then they will pass a summary assessment order and there is not time limit for summary assessment order but the person who is passing the summary assessment order the officer to take the permission of the additional join commissioner because without notice they are passing an order due to that reason withdrawal of order yes so either pay that is in case when the order is erance so they can withdraw the order or upon request of the person to proceed under the regular assessment also the order can be withdrawn so pay as per the assessment order or if the order is erronous proper officer May withdraw such order and follow the procedure under 7374 the regular demand and recovery procedure then this is about assessment under GST then audit under GST so here it is up to section 64 summary assessment then 65 and 66 is audit under GST so in this section 65 and 66 section 65 talks about department prodct and section 66 talks about special audit and previously we had statutory audit under Section 35 subsection 5 that is now omitted so which is not applicable so gstr 9 and 9 C 9C was previously an audit report and now 9C is just a self-certified Reconciliation statement which is required to be filed by every registered person whose aggregate turnover in a financial year exceeds 5 crores and this department audit section 65 is conducted by the commissioner or any other officer authorized by him so but section 66 uh special audit will be conducted by c CMA professional who is nominated by the commissioner so when this audit is conducted Department audit usually based on some frequency they will be conducting whereas that is whenever they have reasons to believe that there is some Aviation so immediately they will do the department audit where special audit will be conducted so whenever there are some discrepancies in the valuation or the ITC value of Supply or the ITC then time period of audit Department audit should be completed within 3 months and it can be extended for a further period of 6 months whereas special audit should be completed within a period of 90 days plus it can be extended for a further period of 90 days and audit report should be submitted to in case of Department audit the report will be submitted to the registered person as well as to the superior that is commissioner within 30 days from conclusion of audit whereas in case of special audit so that audit report will be given only to the jurisdictional ACDC and expenses of audit who will wear the expenses for audit so in case of special audit the report will not be given to the registered person keep that in mind and expenses will be always Bor by the department and scope of audit in Department audit everything can be verified whereas in special audit the scope is restricted only for valuation and ITC and notice notice is not there in case of special audit just a direction to get audited is issued but in case of Department audit 15 days prior notice working days prior notice will be given before commencement of the audit what if already audit is completed under any other law or under another section then this section will be applicable so it's not that if audit is complete under any other law this audit is not applicable so this audit will also be applicable and can the audit be done for a part of the Year yes it can be done for a part of the for example we made registration only in the month of July July to March is not even a year so but for July to March can the audit be conducted as for part of the Year also audit can be conducted now we are moving on to the next one that is segment 18 segment 18 is a very very important area in the segment 18 so we will learn about search seizure offenses and penalities so first the search and seizure we will see so search and seizure basically in two situations the search and seizure me will happen Situation Number One proper officer will come into the premises of the registered person and they will be checking the goods and if there is any Goods that are liable for confiscation or any documents containing the details of the goods liable for confiscation or any things so that is liable for confiscation all those things will be seized and thereafter a confiscation order will be passed so this is section 67 section 67 talks about the seizure and section 130 talks about the confiscation so these two are connected section 67 read with Section 130 so seizure and confiscation of goods from the place of business section 67 read with Section 130 whereas another situation is seizure of goods during the transit so when the goods are taken like from one place to another place during the transit so the seizure search can be conducted by the proper officer and that power to conduct search is given in section 68 and what if the goods are transported without valid document then the penalty and other Provisions are given under section 129 so total four sections are connected in search and seizure that is section 67 read with 130 and section 68 read with 129 so first we will see situation one so inspection was carried out here search or inspection is interchangeably used in GST law so inspection was carried out at the business premises of the taxable person or taxable person taxable person means either registered person or the person Li able to get registered transporter or Warehouse operator sir can any other premises also be searched yes any other premises also can be searched so any other premises any premises suppose if the department is having doubt that so in any premises the goods are stored or the goods are kept or the documents are kept so they can do the search with respect to any premises if any unaccounted goods are found that goods are liable for confiscation now as per section 67 so the proper officer will seize the goods so seizure from the place of business what they will seize either Goods documents everything will be seized and after that they have two options option number one pay the appropriate tax and penalty so seizure has happened so now the person that is from whose premises the goods and the records were seized so he has to pay some tax so either pay the tax plus applicable penality so the tax with respect to those goods penality under Section 122 subsection one whenever a person is dealing in Goods liable for confiscation so he need to pay penalty under 122 subsection one and that penalty will be 100% of the tax evaded or 10,000 whichever is higher so that penalty is required to be payable so pay appropriate amount and get it released that is pay applicable tax and penalty under 122 subsection one good shall be released and all proceedings in this respect shall be deemed to be concluded again as and when those goods are sold are we required to pay any GST no first of all these goods are not brought into the recards so therefore whenever you are selling those goods really in future we don't have to pay any GST because already the tax has been discharged on those goods whereas option to furnish security and get the provisional release suppose if you don't have money to pay the tax so but you need the goods what you can do is that you can furnish the bond and the security sufficient security so that the goods will be released provisionally and whenever we sell those goods so we realize the money at that time we will pay the tax and penality the proceedings are not concluded because this is only the provisional release of goods provisional release of goods by executing a bond covering the value now suppose if the person has not exercised both the options so he did not pay the tax and penalty or executed the bond then a confiscation order will be passed but they have not given what is the time limit within which the confiscation order will be passed so a confiscation order will be passed by the department so whenever the confiscation order is passed what will happen so far The Possession only is with the department now the confiscation order is passed mean the ownership also will go to the department now once the confiscation order is passed till the person on whom the confiscation order is passed is having an option to pay the fine along with tax and penalty a fine can also be payable so that fine is known as Redemption fine upon payment of that fine the goods will be released what is the time limit within which he need to pay that fine three months so confiscation order plus Redemption option so option to redeem Goods by paying fine within 3 months so what and all he need to pay tax and penalty payable along with Redemption fine suppose if he is not paying the fine also within 3 months what will happen so then the confiscation order is invoked so that the goods will be ownership also will be transferred to the department the department will sell those goods realize the money and that money they will keep in their pocket so which means it will not be given to the owner of that Goods if the option is not opted confiscated Goods shall be disposed of and enter amount retained by Department okay entire amount entire amount retained retained by department so it will not be given to the person and suppose if the Redemption option is excised how much is the Redemption F there is no concrete or absolute amount of redemption F so it depends Redemption fine in case of goods so what is a Maxum Redemption F market value of the goods minus tax chargeable there on so whatever is a market value of the goods minus tax chargeable so that much can be the maximum redion f for goods now in this process even the conveyance which contains a Goods which are loaded in the business premises there is a lry in the business premises where the goods are loaded so on that conven so the Redemption fine is payable so what is redemption f for release of the conveyance tax payable on the goods transported there on so Redemption F maximum Redemption f for release of the goods is market value of the goods minus tax payable thereon whereas for release of conveyence tax payable thereon will be taken then situation two situation two is seizure of goods during the transit so when the goods were during the transit the goods were seized and because the goods are not carrying proper e bill or proper documentation so as per section 68 conveyance carrying the goods are intercepted by the proper officer for inspection in transit if the transporter was found transporting or storing such Goods which are removed in contravention of the provisions of the ACT such goods and conveyance are liable for confiscation both goods and conveyance are liable for confiscation so basically this is seizure during the transit and here what happen section 129 immediately after the seizure they will be giving a notice for levying the penality so first a notice will be given Within 7 Days of verification of conveyance notice for what leving the penality after notice within 7 days so a penality order will be passed first seizure order within 7 days notice and after 7 days from the notice a penality order will be passed penalty order under 129 to pay the penalty within 7 Days of service of notice after giving opportunity of being heard so once the penalty order is passed within 15 days of receipt of penalty order we need to pay the penalty for release of goods otherwise the goods will be disposed of by the department okay so upon payment of penalty within 15 days of receipt of order all the proceedings in this respect shall be deemed to be concluded and the set period of 15 days shall be reduced in case of perishable Goods now so in the previous case we need to pay tax and penalty but here only the penalty is payable we don't have to pay the tax and what is the penalty that is payable it depends when the owner of goods is coming forward to claim release or owner is not coming forward to claim release if the owner owner is not claiming forward to claim release then who is coming forward transporter is coming forward to claim release when the owner is coming forward what will be the penality suppose if it is taxable Goods the penalty will be 200% of tax payable and if it is Exempted Goods so it will be 2% of value of 25,000 whichever is lower so this is the penalty payable under CGS ta so the same amount of penalty remember late fee provisions and penalty Provisions will be so common for cgst and sgst so whatever is the late fee and penality that we compute for cgst that will be applicable for sgst also but in question they will be usually asking so and so section of cgst act then we need to write only one penality okay and suppose if they are asking penality payable so now you compute both under cgst act as well as under sgst act and you show the amount okay so this is penality under CGS 200% of tax payable for taxable Goods Exempted good 2% of the value of goods or 25,000 whichever is lower whereas what is the penalty for release of the conveyance for release of the conveyance a penalty will be Penal PTY payable for release of goods are one lakh whichever is lower so therefore in two places the penalty comes as whichever is lower so in the Exempted Goods the maximum penality is 25,000 whereas in case of release of conveyence the maximum penality is only 1 lakh suppose if the owner is not coming forward what is the penality for taxable Goods the penalty will be 200% of tax or 50% of the value whichever is higher not whichever is lower whichever is higher so 200% of tax or 50% of value whichever is higher so usually 200 50% of value is only higher now sometimes when the compensation is also involved so the 200% of tax may be higher for example cgst you take 14% And compensation say somewhere like uh know 18% you take so then definitely it will be like more than 50% of the value so due to that reason so 200% of tax or 50% of the value whichever is higher will be taken whereas in case of Exempted Goods so 2% here it will be 5% of the value of goods or 25,000 whichever is lower for release of convenance also same so penalty payable for release of goods are 1 lakh whichever is lower so therefore the maximum penalty for release of conveyence is 1 lakh so this is about the penalty in case of section 129 now what is the time limit within which this penalty is payable again are we required to pay any that any tax under 129 no in case of situation two no tax is payable only the penalty is payable and the penalty payable for release of goods and Cony separately we need to pay that if it is not paid within 15 days what will happen so rule 144 says that there will be recovery of penalty by sale of goods or conveyance detained or ceased so what first they will dispose of by way of auction and they will realize the money but in case of perishable Goods at 15 days can be reduced where the person transporting any Goods or the owner of such Goods fail to pay the amount of penalty under 129 that is within 15 days from the date of reip of copy of order the proper officer shall proceed for sale or disposal of the goods are convey through auction and the set period of 15 days may be reduced in case of perishable or hazardous Goods now they are realizing some money what is that money that is by selling that so can it be entirely retained by Department no because in the previous case they pass a confiscation order here they did not pass a confiscation order so therefore whenever they realize the proceeds whenever 15 days we have not made the payment of penalty they will dispose it of by auction and first it will be adjusted towards the recovery process that is while conducting auctions some expenses will be incurred so for that then the payment of penalty Under 12 9 so the balance amount will be given to the electronic cash Ledger of the owner of the goods if they are registered otherwise it will be credited to their bank account suppose if the person is not known then the balance of the sale proceeds cannnot be so paid within 6 months so they will wait for 6 months and within that 6 months if no one is coming forward to claim that amount so then it will be transferred to the consumer welfare fund so this is about this four section section 67 read with Section 130 section 68 read with section 29 let's see the next aspect that is types of offenses and the penality in case of those offenses so when it comes to offenses and the penalities so in this chapter we need to understand four aspects number one what are the various offenses and that leads to penalities and number two what are the offenses that leads to imprisonment number three what are the offenses that leads to arrest and finally what are the offenses so which are compoundable compounding of offenses one concept is that there wherein so if you pay some compounding fee so you will get immunity from the prosecution that is imprisonment so that is known as compounding of offenses so all these are connected so first we will see so what are the four aspects what are the offenses that leads to penalities and second what are the offenses that leads to imprisonment and then what are the offenses that leads to arrest and then finally offenses which are compoundable so this offense and penalities very very important area because so we have lot of amendments related to this offense and penalities topics okay okay so let's see types of offenses and that leads to penality first we have 122 subsection one bio discredits TFT so these are the list of offenses that you need to remember and these offenses so full form I have given below so what is that biod discredit TFT B for books of accounts default books of accounts default means not maintaining books of accounts or maintaining false books of accounts or fake books of accounts that is known as books of accounts default I for invoice default invoice default means I'm issuing invoice without Supply or I am supplying without invoice or I am making I'm giving incorrect invoice so that is called as invoice default so books of accounts default non-maintenance or false or fake books of accounts and invoice default Supply without invoice so I'm making Supply without invoice or Supply with incorrect invoice or invoice without Supply or for obstructing an officer from doing Duty so an officer is coming into our prises for the purpose of you know inspection or any search Etc so we stop the officer from doing his d duties then D for dealing in Goods liable for confiscation so I am actually storing the goods which are liable for confiscation selling the goods or buying the goods so this is known as dealing in Goods liable for confiscation means unaccounted Goods if I am involved in any transaction related to unaccounted Goods or Goods without any invoice then it is called as dealing in Goods liable for confiscation then input service distributor default which means that I'm not supposed to take the credit but I took the credit and I distributed the credit to my branches or I distributed the credit in excess of the credit availment that is known as ISD default or Supply with GST of another person so therefore I am raising the invoice in someone's name and I collected the GST from my customer so that is going to supply with GST of another person and in C so bio discredits so B for books of account default I for invoice default and O for obstr officer from doing Duty D is D for dealing in Goods liable for confiscation I for input service distributor D for Supply with GST of another person then credit C in that c we have collected an amount as tax and not paid within 3 months collected tax not paid within 3 months remember there are two aspects here collected tax not paid within three months so which means that I'm supposed to collect tax I collected the tax and they did not pay within three months so this is one aspect the other aspect is collected an amount as tax I'm not supposed to collect the tax but I have collected the tax and not paid within 3 months that is known as collected an amount as tax so representing as taxs I collected some amount then R for registration default registration default non-registration you are liable to get registered but you have not got registered or giving false information for registration so you're giving some false information like fake documents Etc and all for the purpose of registration or forged documents then e for erronous refund you are not supposed to get the refund but you claim the refund erroneously or wrongly then D for disposal of goods while detention or seizure is operational so there is a detention order or seizure order that has been given with respect to a p and which means that so that Goods actually should not be dealt with so seizure means automatically the position is taken by the department whereas detention means the goods will be still in the same place and you should not be like touching those goods or you should not be dealing with those goods you should not be selling those goods that is known as detention or seizure is in operation now you try to break the seal and you try to S uh sell those goods so then in that case so the goods are in the Department's place and you have bodged into their place and you have taken those Goods so and you have sold it so this is known as disposal of goods while detention or seizure is operational and ITC default you are not supposed to take the input tax credit but you have taken the input tax credit fake credits then tampering with material evidence say department has got some material evidence like some documents or daies or Etc so which contains a sensitive information or tax evation information you try to Tamper those documents or tamper the pend drives Etc so that the evidence is destroyed so that is known as tampering matal dividends and suppression of turnover so you have cross the turnover but if you cross the turnover so lot of Provisions are attracting so due to that reason you try to suppress your turnover that is biod discredits then TFT t for TDS TCS default f for failure to supply information or supplying false information or documents then t for transport related default so these are known as transport related default means what transporting goods without valid documents okay so these are the various offenses under C 122 subsection 1 and these offenses if committed by any taxable person taxable person means either registered person or a person liable to get registered and the penalty will be 100% of the amount involved in the offense that is tax or ITC or tdscs as the case may be or 10,000 rupees whichever is higher that will be taken as the penalty so it should be already I told you the penalties should be computed separately for zgs and separately for sgst 1221a so 1221a is a person who is beneficiary so means he is not a person involved in the offense but he is a beneficiary to the offense and he retains the benefit also of the offense two aspect at whose instance at whose instance the offense is committed and who is retaining the benefit out of that offense then that person on that person so this is on any person who is beneficiary means here basically at whose instance the offense is committed and he is benefiting out of that offense okay so what are those offenses I I you know Tri I invoice default ITC default and ISD default say for example a person who created some fake registrations and using this fake registrations some invoices are raised to the recipients and the recipients enjoy the ITC based on that so now on the supply registrations there will be penalty under 122 subsection one whereas the under invoice default because because of invoice without Supply so therefore on invoice default one to subsection one on the suppliers there will be you know like penal it whereas on the recipient who aail the ITC without proper document so that is called as ITC default so on recipients only also there will be penality but on the person at whose instance this offense is committed who is a mastermind Behind These offenses so on that person the penalty will be Leed under 122 subsection 1A it is not the benefit that he has retained the total amount involved in the offense that is tax evaded or it availed or passed on so that will be taken not the amount retained for example 500 crores worth of fraud is involved tax is involved but out of that 500 cres 50 crores is the benefit that he derived so not 50 crores entire 500 cres will be taken as the penalty amount 1221a then 1221b this is a newly added provision so this penality is on e-commerce operator so e-commerce operator already is covered under 122 subsection 1 under TDS TCS default TCS default is there but there is another penalty also here 1221b what is that e-commerce operator is allowing a unreg supplier to make supplies through their platform so unregistered supplier to make Interstate supplies basically Interstate supplies are allowed but interstate supplies or allowing a person opting for composition scheme to make Interstate supplies or failure to furnish the correct details in gstr 8 suppose if it is related to TCS so then it is already covered under 122 subsection one that is TCS TDS default okay whereas if the e-commerce operator is allowing unregistered person to make Interstate supplies or a person opting for compostion scheme to make Interstate supplies or the e-commerce operator not giving proper details in gstr a then the penalty will be 10,000 rupees or a tax involved whichever is higher so this is a newly added penalty and they can connect this with TDS TCS the existing penalty also then 122 subsection 2 this 122 subsection 2 penalty is on the registered person so this is not on any person b as 1221 is on the taxable person 1221a is on any person 121b is on e-commerce operator whereas 122 subsection 2 is on registered person 122 subsection 2 will come into the picture only when there is 7374 as per 73 Whenever there is short payment non-p payment wrong availment of itz wrong utilization of itz or erus refund so five cases short payment of GST non- payment of GST wrong availment of ITC wrong utilization of ITC erronous refund on account of you know fraud collusion Etc that is you have intention to evade then in that case the recovery will be initiated under Section 7 before whereas if there is no fraud and all other than fraud that is error then there is no intention to Avid then the recovery will be initiated under Section 73 suppose if the recovery is initiated under Section 73 so it is like a softer provision than 74 then in that case the penalty will be as per 122 subsection 2 where in it says 10% of the tax involved or 10,000 rupees whichever is higher that should be taken 10% of the tax tax or it or refund or 10,000 whichever is higher should be taken whereas if it is on account of fraud so means the demand and Recovery is initiated under Section 74 so there is a intention to evit in that case the penalty will be 10,000 rupees or 100% of the tax or ITC whichever is higher will be taken so 73 10% of tax or ITC or 10,000 whichever is higher 74 100% of the tax are ITC or 10,000 whichever is higher and these both penalties is on registered person and what are the reasons for which 122 subsection 2 comes so 122 subsection one also gets attracted so for that reason one circular has been given which says that 122 subsection 1 and 122 subsection 2 are mutually exclusive so only when there is demand and Recovery under 122 subsection 2 that is 7374 so only when a person is required to pay the tax or itz and along with that if penality is Livi that is 7374 the moment 7374 is invoked so then automatically the penalty will be under 122 subsection 2 so 122 subsection 1 will not be applicable suppose if recovery is not initiated 7374 then for recovering only the penality means there is no tax or itz due by the person so just the penality is payable for that reason 122 subsection 1 will be applicable so remember 122 subsection 1 and 122 subsection 2 are mutually exclusive then 122 subsection 3 so this is again on any person basically 120 subsection 3 is not on the main character but it is on the supporting character so a person who is not the main culprit in the offense but he's assisting in that case 120 subsection 3 will come offenses where the person is not directly involved in any avation but may be partly to the avation then what is the difference between 122 subsection 1A versus 122 subsection 3 in 122 subsection 1 a at whose instance the offense is committed and they retain the benefit of the offense but 120 subsection 3 is they are not retaining any benefit of the offense they are just a party to the offense so in that case or a person has been issued sum mons to appear before the officer but he did not appear before the officer or a person has been asked to produce the documents but he did not produce the documents so then 122 subsection 3 penalty will be there which is up to 25,000 rupees up to 25,000 rupes means any amount can be livid so the maximum amount is 25,000 rupees whereas in this case we don't have up to always it will be the standard penalty then3 123 is on a person who is required to furnish the information written under section 150 as per section 150 so whenever department is asking a person so to furnish the information written about a particular person if he is not Furnishing that information return so then a notice will be given to that person to furnish the information even after notice also if he has not furnish the details so within 90 days from the date of the notice then the penalty will be livid under 123 so first 150 empowers the jurisdictional commissioner or officer authorized by him to seek notified person from filing information return if they are not filing information return return a notice will be given after notice within 90 days if they are not Furnishing the information return then the penalty will be 100 rupees per day subject to maximum 5,000 rupees whereas 124 penalty is there this 124 penalty is on any person required to furnish any information under Section 151 fails to do so so there is a person who is required to furnish some information under Section 151 what is this information under 151 versus information written under 150 so basically 150 is about a particular person but 151 is about the data say for example I want to know the bank detail like I want to know the name of the persons whose credits in the bank has exceeded more than 40 lakhs so exceeded 40 lakhs so I need the data of those people then it will be information under 151 I want to know the bank statement of a particular person that is information written under section 150 so both cases we need to submit some information whereas in 150 there is a timeline so that is standard time is there notice is there within 90 days if you are not giving then only the penalty will come into the picture whereas in case of 15 51 so 151 the time will be given by the officer itself so empowers the jurisdiction commissioner to call for information from any person relating to any matter dealt with the connection with this act and normal cases it will be up to 10,000 rupees up to 10,000 rupees if it is a continuing offense continuing offense means repeated offense then 100 rupees per day for the failure period subject to maximum 25,000 but here always it will be 100 rupes per day subject to maximum 5,000 rupees then 152 152 is any information obtained under Section 50 and 151 cannot be used without giving the opportunity of being Hur to the person concern so usually I will tell a standard example that is like say a department has got the bank statement of a person and in that bank statement the credits is more than 40 lakhs now just like the department cannot ask the person so to register because that 40 lakhs may be more than 40 lakhs may be exempt a turnover also so due to that reason so the department cannot question him by telling that the person is not registered so they cannot invoke any action so first an opportunity being Hur should be given so they should give a notice asking for the person so that we got an information stating that your credits is more than one more than 40 lakhs and you have not registered so we wanted to know the reason why you have not registered so based on that notice and based on the reply so then only they can initiate any penel action on that person okay so that is this 152 information obtained under 150 and 151 cannot be used without giving an opportunity of being Hur to the person concern then 125 we have a general penalty and the general penalties is always up to 25,000 rupees again all these penalties are under cgst act the same amount of penalties payable under sgst act but we don't have any penalty Provisions under IG act penalty Provisions or late Fe Provisions we don't have under igst act now this General penalty is applicable in the case where there is no specific penalty that is prescribed and 126 talks about the general disciplines relating to penality no penality for minor offenses what is a minor offense if the amount of tax or ITC involved in the offense is less than 5,000 rupees then it is known as minor offense so in case of minor offense there is no penality so on second case suppose if the offense is easily rectifiable and made without a fraudulent intent or gross negligence then also there is no penalty no penalty in two cases if it is a minor offense that is less than 5,000 rupes not equal to 5,000 rupes less than 5,000 rupes or the offense is committed without fraudulent intent and it is easily rectifiable then also penalty may not be Leed but here the power to wave of the penality is not applicable in all the sections only those sections where we have up to an amount as penality in that case only the officer is having power to wave off the penalty what are those cases that is where we have up to like amount so 122 subsection 3 so this this place 126 will be applicable again General penalty also up to 25,000 there also it is applicable 124 also up to 10,000 here also this section will be applicable so applicable in case of 122 subsection 3 124 and 125 then 127 only for living penality a notice to be given and that notice will be given under 127 where proper officer is of the view that the person is liable to pay penalty and the same is not covered under any of the other proceedings so any of the proceedings means like so suppose if there is a demand and recovery so they will be anyhow giving an order and if there is assessment order already order is there apart from that just to recover the penality how the notice and Order can be passed that is under Section 127 he may leave penalty after giving a reasonable opportunity of being hurt then 128 128 versus 126 126 is waiver power to wave of the penality on the officer whereas 128 power wave of penalty on the government so government May by notification wave in full or part any penalty referred to in 122 subsection 122 all sections 123 125 or any late fee except 124 all the penalties can be waved off by the government even the late fee which is livid under Section 47 for delay in filing returns also can be waved off and 133 this is on the officer who is engaged with respect to certain duties under GST law either the government officer or the person who is working in the GST portal so officer engaged under this act willfully discloses any information or contents of any return otherwise than in execution of his duties suppose if he sharing that information taxpayers information in the return is a sensitive information if that is disclosed with any other person so then in that case on the officer the penalty will be up to 25,000 rupees or imprisonment up to 6 months or both unless the officer is required to disclose that information in execution of his duties it's okay otherwise this penalty will be applicable so up to 25,000 or 6 months are fine 6 months that is up to 25,000 is a fine or imprisonment of 6 months or both can be livid so these are the various offenses that leads to penalities and then we have offenses that leads to you know imprisonment and offenses that leads to arrest okay so first we will see what are the offenses that leads to imprisonment so that is the next aspect we need to see you can see that in the next page imprisonment section 132 so page 164 it's amended area so previously lot of offenses were covered under imprisonment but now it is only ICB I bid okay so what is that I I for invoice default what are the invoice default two invoice defaults are there Supply without invoice invoice without Supply so both these offenses are covered here and C C there are two C's actually collected amount as tax collected tax not paid within 3 months but collected tax not paid within 3 months is not an offense for imprisonment but collected an amount as tax representing has tax you collected some amount and not paid within 3 months so that is an offense for imprisonment if for erronous refund you are not supposed to you know get the refund but you claim the refund so er owners refund then b b for books of accounts default again I I for itz default and D there are two DS dealing in Goods liable for confiscation disposal while detention or seizur is operational so disposal while detention or seizur is operational is not an offense for imprisonment but dealing in Goods liable for confiscation is an offense for imprisonment so therefore whatever short forms that we remember in biod discredit TFT the same short forms IC bid I for invoice default C for collected amount ta tax not paid within three months B for books of accounts sorry e for erronous refund B for books of accounts default I for ITC default and C for so that is uh D for dealing in Goods liable for confiscation so in these offenses plus abuting to commit or attempting to commit these offenses aiting means supporting these offenses or attempt to commit these offenses you are trying to commit these offens so in this case the imprisonment will be applicable under Section 132 and the imprisonment will be for a particular period and here what we have seen so far is when the imprisonment will be attracted and see this not collected tax but not paid within three months is not an offense for imprisonment but collected an amount as tax but not paid within 3 months is an offense for imprisonment now what you need to remember is that the imprisonment schedule the imprisonment schedule is very simple so first we need to see what is the tax involved tax or ITC involved in that particular impris like offense so if it is greater than one CR then up to one year if it is greater than two crores then it is up to three years if it is greater than five crores then it is up to five years that is in case of first time imprisonment okay so first you need to remember 1 125 135 1 125 135 1 125 1 CR 2 CR 5 CR 135 1 CR three one year three year and five year okay so you need to remember this way one 2 5 and 135 so this 1 125 is crores okay then this 135 is years one year 3 years and five years okay but this is the maximum imprisonment so there is a minimum imprisonment up to one year up to 3 years up to 5 years but in all these cases there is a minimum imprisonment of 6 months plus all these plus fine so we have to pay fine also and that fine will be imposed by the court which is passing the imprisonment order but in this one one CR point there is one important Point what is that this one CR provision is applicable only in case of invoice default that to which invoice default so invoice without Supply only in that case invoice without Supply okay previously this was not applicable now they have amended so more than one CR is applicable only in one case which case invoice default that to which invoice default so invoice issues invoice without Supply that is greater than one CR but all other offenses so it will be applicable for more than two crores more than five crores only so other offenses but in that other offenses also books of accounts default will be up to 6 months or fine or both so here other offenses what are these other offenses sir whether these other offenses includes invoice default also yes invoice default both invoice default that is Supply without invoice or invoice without Supply okay so in these both cases in these other offenses what and all will come IC bid IC bid minus B because for books of accounts default always the standard imprisonment is there if it is first time see if it is subsequent imprisonment it's no doubt so it is up to 5 years plus fine 5 years plus fine and the minimum imprisonment will be 6 months so confusion will not come at all so in all the case of IC bid in all the case of IC bid okay in all the case of IC bid it will be subsequent imprisonment given means up to 5 years plus fine and the minum imprisonment for 6 months there is no other provision whereas when it is first time offense only so there is a difference in the provision what is it you need to remember first you need to check books of accounts default if it is a books of accounts default up to 6 months or fine or both that will be taken as the imprisonment and if it is other offenses okay in that other offenses only if it is more than two crores or more than five crores then only imprisonment will be applicable up to 3 years up to 5 years plus F minimum 6 months but more than one CR only one offense that invoice default in that invoice default also not supply without invoice invoice without Supply so Supply without invoice is normal Supply without invoice is usual and that is okay but invoice without Supply means because of this the other person will enjoy the itz so due to that reason invoice without Supply more than one CR itself imprisonment will be attracted up to one year and fine so this table you need to remember how to remember this three simple Point books of accounts default always up to 6 months plus fine 6 months or fine or both then so greater than one CR up to one year but only in case of invoice that to invoice without supplying all other offenses only greater than 2 crores so greater than 2 crores so up to 3 years greater than 5 crores up to 5 years subsequent imprisonment always up to 5 years plus fine so this is about the imprisonment table now when there will be arrest remember arrest will be applicable in case of only three offenses so there is IC bid which comes under imprisonment so just because there is imprisonment it does not mean there is arrest so because the person will be taken into the custody that is is known as Arrest after the person is taken into custody he will be produced before the magistrate and the magistrate or Court will be passing the imprisonment order so there is a difference between arrest and imprisonment a person can be imprisoned even without the arrest but arrest means a person is taken into the custody that is known as Arrest okay so what are the non bable offenses so the non-bailable offenses and arrest Provisions we are discussing together so remember iic so what is the third aspect we are discussing first aspect we have seen what are the offenses that leads to penalities and the second aspect that we have seen is what are the offenses that leads to imprisonment now the third aspect we are discussing what are the offenses which are leading to arrest so iic what is that iic invoice default ITC default and collected an amount as tax and not paid within 3 months iic in the case of this iic suppose if the amount exceeds 2 crores then only arrest will be there so if it exceeds two crores then only arrest will be there otherwise there is no arrest okay again so but there is something called as cognizable and non-cognizable cognizable means a person can be arrested without a warrant that is known as cognizable non-cognizable means a person can be arrested so with warrant that is non-cognizable cognizable means without warrant also we can arrest the person non-cognizable means warrant is required okay and all offenses which are cognizable are non-available offenses mean the person who is arrested should be produced before the magistrate and he cannot be released on bail whereas non-cognizable offenses are bailable offenses warrant is required to arrest and those arresting officer can grant the bail so therefore always remember n c plus b and c plus NB non-cognizable plus bailable and cognizable plus non-bailable okay so now what are the offenses which are cognizable cognizable are severe offenses so this iic greater than 5 crores is cognizable plus non bailable and arrest can be made of course arrest can be made once it crosses 2 crores and inform the ground of arrest and produce before the magistrate within 24 hours okay whereas what is the imprisonment as the amount exceeds 5 CR definitely the imprisonment will be up to 5 years and fine minimum 6 months whereas if the amount exceeds 2 CR but does not exceed 5 CR it is non-cognizable plus bailable arrest can be made and ACDC can give the bail so bail can be given suppose if the person who is arrested is not submitting any bail application then in that case then forward to the custody of the magistrate and as the amount exceeds 2 crores the imprisonment will be up to 3 years and fine what about other offenses in case of other offenses there is no arrest so arrest will not be there arrest cannot be made and all these are called as non-cognizable and bailable but that is something called a stupidity because in law they gave it like that so once arrest is not there when arrest itself is not there what is the need of calling it as bailable non bailable and all so but in exam also you need to write this no other go okay so logically Forest is not there so bability does not arise but in the law it is given that when arrest cannot be made those offens are called as non-cognizable plus bailable so that's a drafting error which is made in the law so when we interpret two different sections we will be getting like this so non-cognizable plus bailable okay and all other all other offenses so arrest cannot be made so what are the offenses that leads to arrest I invoice default ITC default collect amount of STX not paid within 3 months if it is greater than two crores arrest can be made and if it is exceeding 2 crores but does not exceed 5 crores it is non-cognizable plus bailable if it exceeds 5 crores it is cognizable plus non available so then the last area that we are going to see is offenses and that lead to compounding of offenses so what is this compounding of offenses compounding means granting immunity from prosecution so whenever there is a imprisonment the imprisonment order will be passed by the court and thereafter before passing the imprisonment order so we can request the officer to Grant immunity from prosecution so that the officer will withdraw the case from the court and so that there won't be imprisonment that will be passed but the moment imprisonment order is passed the case cannot be withdrawn so we cannot get the compounding of offenses so basically compounding means granting immunity from prosecution upon payment of a compounding fee by the offending person and what is that compounding fee that compounding fee will be ranging between 25% to 100% of the tax involved okay so 25% 25% to 100% of the tax involved so that will be the compounding fee and this compounding fee is as prescribed by the officer and and that will be ranging between 25% of the tax involved to 100% of the tax involved in this in addition to this compounding fee such person should pay tax interest and applicable penalties also so anyhow tax interest penalties payable apart from that compounding Fe is also payable and there is restriction on first time compounding so what are the cases number one invoice without Supply invoice without Supply first time itself you cannot go for compounding invoice without Supply invoice without Supply not at all possible first time compounding not possible but Supply without invoice yes Supply without invoice compounding is possible but invoice without Supply not possible because that is regarded as a severe offense and that's that's what I told you even in imprisonment also invoice without Supply is regarded as severe offence that's why more than one CR itself there is an imprisonment up to one year plus fine and then prosecution order is passed that also I told you once the prosecution order is passed once the imprisonment order is passed and thereafter they cannot Grant any immunity from prosecution and restriction on subsequent compounding all these offenses are you know compounding subsequently not possible which means that compounding can be get given to a person only one time during his lifetime so only once during his lifetime he will get the compounding of offenses subsequent compounding is not at all possible in in respect of any offense first time compounding itself is not possible with respect to invoice without Supply or prosecution order is passed and some special points in this regard compounding is possible if prosecution is not initiated or during the prosecution also but the prosecution order should not be completed okay after initiation of prosecution say already in the court the case is there and during the time also we can pay the compounding fee and upon payment of the compounding fee all proceedings stands Abed means the officer who filed the case will withdraw the case upon collection of this compounding fee so that is about compounding of offenses under Section 138 so these are the provisions that we have and related to this compounding of offenses there are some additional amendments also which I have given at the end end of the that's it book you can see that so we have some additional uh you know Provisions relating to compounding fee so for compounding fee they have notified so little you know extra amounts like uh 25% to 100% in that 25 to 100 is a bigger region so in that they have created some Provisions so you can see here compounding fee notified for various offenses so what are the offenses that leads to compounding first imprisonment we will see if you see imprisonment that is IC bid okay so in case of invoice default that to which default Supply without invoice or invoice without Supply invoice without Supply is not at all possible for compounding so therefore only Supply without invoice okay so then ITC default then collected an amount as tax and then eron as refund iic okay in these four cases in these four cases that is definitely invoice without Supply not possible for first time compounding itself so Supply without invoice and then next in ITC default collect amount as STX not paid Within 3 months and eron as refund in this case what is that they're telling if the amount involved in the offense exceeds 2 crores then up to 60% of the amount of tax evaded or it wrongly availed or refund or 40% of such amount okay whichever is higher so for example up to 60% so Department took 30% so 30 or 40 whichever is higher 40 okay suppose if the department has taken 50 so 50 or 40 whichever is higher so 50 so which means you just remember the range what is the range 40% to 60% 40% to 60% so 40% to 60% any amount can be fixed by the officer actually the general provision says 25 to 100 in the 25 to 100 in case of these offenses 40 to 60 if the amount is exceeding 2 crores because exceeding two crores only there is imprisonment now exceeding one CR there is imprisonment only in one case that is in uh invoice without Supply and that is not possible for compounding then suppose if it exceeds 5 crores then it will be 50 to 75% so 50% to 75% 50% to 75% will be taken in this case then books of accounts default and dealing in Goods liable for confiscation so in these two cases okay so BD books of accounts default and dealing in Goods liable for confiscation always it will be 25% of the tax involved then attempt to commit a rabbiting commission so then also it will be the same %. so easily you can remember so what is that so there is ice bid in that ice bid for B and D what is that books of accounts default and dealing in Goods liable for confiscation 25% whatever may be the amount more than two two crores or more than five crores 25% of the tax involved will be taken as a compounding fee in other cases in the remaining offenses wherever compounding is possible so if it is exceeding 2 crores then it will be 40 to 60% if it exceeds 5 crores 50 to 75% will be taken have however where the offense committed by the person falls under more than one category say for example he's doing ITC default as well as books of accounts default then in that case what will be taken so then the compounding amount shall be the amount determined for which higher compounding amount has been prescribed so therefore you go by with the higher compounding amount what is that 50 to 75 or 40 to 60 only will be taken so this 25% will not be applicable means along with this iic and BD also is there so then whatever comp compounding fee for IAC that will only be taken this BD related compounding fee will not be taken that is what they have given so this is one Amendment related to compounding of offenses so we have completed so offenses and penalties search and seizure so then the next area that you can see segment 19 segment 19 demand and Recovery under GST so basically demand and Recovery will be applicable so there are two sections two important sections 73 and 74 apart from the other sections are also there but 7374 are repeatedly asked sections so 7374 demand and Recovery will be applicable in five situations there is non-p payment of GST that is you not have paid any GST or short payment of GST you have to pay some GST but you paid less an amount or wrong availment of itz so basically just we have availed the itz but we have not reversed for the purpose of making us to reverse also they can do that that is the meaning of wrong availment or wrong utilization so you have wrongly availed the ITC and you have utiliz is that so for payment so basically this wrong availment or wrong utilization should be understood as wrong availment and wrong utilization because mere availment will not have any offense so availment and utilization for payment of our liability or error as refund so these are the cases for which 7374 will be applicable so a show cause notice will be given and what is the reason for that so it can be on account of fraud pollustion willful misstatement suppression of facts or contravention of provision with an intent to avoid payment of tax so fraud collusion willful misstatement suppression of Acts or contravention with an intent to Aid so there is a intention to a that should be present then 74 will be applicable if there is no intention to Aid that is only error so means there is no intention to aade so 73 will be applicable what is the time limit for issuance of show cause notice so the show cause notice to be given first order time limit we will see in case of 73 the order should be passed within 3 years from the due date of Furnishing annual return for a particular Financial year for example if the financial year is 2023 24 for the financial year 2023 24 the due date of filing annual return is 31st December 2024 from 31st December 2024 the order should be given within 3 years so within three years the order should be passed if it is under Section 73 so order under Section 73 so that should be by what is the 3112 2024 now so 25 26 27 so 31st 12 2027 is the time limit by which order should be passed under Section 73 and what is the time limit within which the notice to be given from the order time there is a notice that should be given at least 3 months before okay so noce under Section 73 so notice under Section 73 should be given Max by so 39 2027 so between this notice and the order there should be a minimum gap of 3 months so this we need to maintain so if this is the financial year for which you know the order needs to be passed the order should be passed by 31st December 2027 and the notice to be given on or before 39 2027 so this is how we need to understand if it is 73 suppose if it is 74 so then what will happen same Financial year 2023 24 if this is the financial year and then for this financial year what is the due date of filing annual return 31st December 2024 and from there within 5 years the order should be passed so order should be passed within 5 years so which means 31st December 2024 25 26 27 2829 so by 31st December 2029 the order should be passed order under section order under Section 74 should be passed by 31st December 2029 and the notice should be given at least 6 months before so therefore from the order date to the notice date there should be a minimum gap of 6 months that needs to be maintained so therefore the notice show cause notice or notice should be given by 36 2029 so this is notice under Section notice under Section 74 should be given by 36 2029 because there should be a minimum gap of 6 months so this is in case of 73 and 74 time limit for order and time limit for notice but remember it is on account of non-p payment short payment or wrong availment and utilization of itz but in case of eron as refund this three years or five years will be counted from the date of refund okay so it is not from the due date of filing return it is from the date of refund you can see here time limit for passing order 5 year from the due date of filing an return for Relevant Financial year whereas in case of erance refund 5 Years From the date of refund and wherever 5 years comes for 74 in case of 73 it will be 3 years and the notice in case of 73 there should be at least 3 months before so the gap of 3 months should be maintained whereas in case of 74 at least a gap of 6 months should be maintained whether a supplementary notice can be given yes both in case of 73 and 74 supplementary notice can be given supplementary notice is for the purpose of you know giving a additional annexure to the regular notice so that for these years like for example already for one particular Financial year notice has been given for subsequent Financial year also the same mistake is committed same grounds okay it should not be different grounds so same mistake is committed then rather than giving a new notice for the subsequent year for the notice which was already given for the previous year an annexure will be given so that for these two periods that for these two Financial years a single order can be passed so that is objective so the same grounds if it is same grounds a supplementary notice can be given and what should be the amount mentioned in the order the amount mentioned in the order is tip tax interest and penality and what is the penality 122 subsection 2 penality so in case of 73 the penalty will be 10,000 rupes or or 10% of the tax or itz or refund whichever is higher whereas in case of 74 it will be 10,000 rupees or tax or itz or refund whichever is or 10,000 whichever is higher so 100% of tax here it is 10% of tax that's the difference and this is penalty under 120 subsection two and here we have some discount with respect to payment of penalty what is that discount suppose if it is 73 penalty you take so this is the penalty but if you pay this penalty before show cost notice then in that case you don't have to pay any penality suppose if you pay this like tax and interest if you pay the tax and interest before show cost notice then penalty is not payable so completely it is waved off if you pay the tax and interest within 30 days after showa notice also so within 30 days after showa notice also you don't have to pay the penalty suppose if you make the payment Beyond 30 days from the show cost notice you need to pay the regular penalty so tax interest and the regular penalty whatever is the regular penalty that will be payable so this is in case of 73 whereas in case of 74 if you pay the tax and interest before showa notice you need to pay 15% of the original penalty if the original penalty is 1 lakh 1 lakh into 15% 15,000 you need to pay so the remaining 85,000 will be waved off suppose if it is paid after showca notice but before order so notice is given but before order if you are making the payment so then you need to pay that is within 30 days within 30 days from showa notice if you are making the payment so tax you need to pay interest also you need to pay but penalty 25% for example 1 L means 25,000 you need to pay and remaining 755,000 will be waved off suppose if you miss that also and thereafter Within 30 days from the order if you are making the payment so tax you need to pay interest you need to pay and the penalty will be 50% of the you know total penalty so 1 L is the total penalty means 50% that is 50,000 unit and remaining 50% will be waved off suppose Beyond 30 days from the order if you are making payment you need to pay tax interest and regular penalty whatever is a regular penalty that will be payable so you need to remember this timeline so that the question can be framed based on this and then there is one more order called a 76 order so this is 73 and 74 order whereas 76 order is there remember 76 order will come into the picture only when amount is collected as tax by representing as tax we are collecting some amount so not just the tax collected okay so amount collected as tax amount collected as tax but not paid then only 76 will be applicable and there is no time limit for giving the show cause notice notice can be given any time even after 3 years four years five years 10 years also notice can be given but whenever the notice is given from the date within one year the order should be be passed but there is a time limit for giving the order and notice in case of 7374 but in case of 76 the advantage for the Department is that there is no time limit for giving notice even after 30 years or 40 Years also they can give the notice and whenever they give the notice from there within one year they need to pass the order and this is amount collected as tax and not paid within 3 months so therefore the penalty will be 100% of tax or 10,000 whichever is higher 122 subsection one and here one more important point is that interest usually interest will be computed from the first date after due date till the actual date of payment but in this case the interest will be computed from the date of collection so whenever it is collected till the date of payment so for that period for example so somewhere 15th March it is collected so from 15th March till the date you are depositing that money with the government so the interest will be computed and whatever money that is deposited with the government so it will be transferred to the person who Bond the incidence of the tax so who B the incidence of the tax we unnecessarily collected GST from One customer now so to that person it will be paid suppose if they are unable to identify that person so then the amount will be transfer to Consumer welfare fund that is this and then what is the time limit so there are three orders 73 order 74 order and 76 order once the order is passed what is the time limit within which we need to make the payment as per the order that is tax interest and penalty Whatever It Is So within three months from the date of the order we need to make the payment of tax interest and penality so or we need to go for appeal if we are neither going for appeal nor we are making the payment as per the order so then the recovery will be initiated as per section 78 within 3 months from the date date of order otherwise recovery shall be initiated as per section 78 or we can go for appeal also when we go for appeal also we will pay the pre- deposit so when we pay the predeposit the recovery will not be made okay so that's what within 3 months either we need to pay or we need to go for appeal then is there any installment facility available yes there is a maximum installment of 24 months that is available so under Section 80 so whatever is the amount as per the order we can request for payment by installment but it is not no cost installment so means there is the total amount that we need to pass for the the order will be principal and thereafter when they give emis so there will be interest on that so maximum 24 emis they can be giving then there is one Amendment here that is whenever you make the payment so before the order date or before the notice as the case may be so you need to intimate them so where a person makes payment of the amount under 738 or 748 or 1291 shall intimate the proper officer of such payment so we need to intimate that we have made the payment under drc3 proper officer issue intimation instead of order in DRC 5 concluding the proceeding so this step we need to do otherwise they will pass the order and Recovery Also may get attracted then other Provisions so we have section 75 so 75 talks about the general Provisions relating to you know determination of tax as per the order so in that already three orders we have seen 73 74 and 76 stay granted by the court or GST at for the particular issue the stay has been granted by the court or GST so during that period they cannot pass the order so therefore the time limit of 3 years and 5 years will be extended for further period 3 years 5 years and one year will be one year in case of 76 can be extended for a further period say for example stay granted for 6 months usual time limit 3 years now it will be 3 years 6 months 5 year 6 months one year 6 months like that we need to take okay such period shall be excluded from the rate of notice or order due date then next notice issued under Section 74 not sustainable in the code so they have given a notice under 74 invoke Bing fraud but in the court we went and we said that there is no fraud involved in this case now in that case the same notice will be converted into 73 notice when the same notice is converted into 73 notice then whatever amount that they can recover as per 73 that only can be recovered suppose if that notice is given that is notice which is under 74 so they have given a notice under 74 which is not sustainable in the court of law and that notice under 74 is given within the time limit under 73 what is the time limit 73 so that is 2 years 99 months how 2 years 9 months 3 years minus 3 months 2 years 9 months from the due date of annual return then whatever notice given under 74 is within the time limit under 73 so can the recovery be made yes that amount can be recovered so using that notice itself suppose the notice is given under 74 is not within the time limit under 73 so beyond 2 years and 9 months from the due date of annual return then the recovery cannot be made as per the amount in that notice so means the same 74 notice can be trade as 73 notice and if it is within the time limit the recovery can be made okay and then one more point so whenever the matter is remanded by fresh adjudication that is why went to the court stating that it is not fraud and the court is telling yes it is not fraud and the matter will be remanded back for fresh adjudication for redetermination so why redetermination if the notice is given within the time limit 74 notice given within the time limit of 73 the redetermination may be made that redetermination period should be taken as what so after redetermination from the date the matter is remanded back for fresh adjudication within 2 years the tax should be redetermined and the order should be passed under 75 when the matter remanded back for fresh adjudication by the court or GST at demand order shall be passed within two years from the date of communication of directions and then suppose if the notice is given for multiple Financial years under 74 now with respect to those financial years for which the time limit under 73 is fulfilled that amount only can be recovered say Last 5 Years to recover last 5 years tax amount they gave a notice under 74 but as per 73 we can recover the tax only for last three years so that three years amount only can be recovered so if the charges of fraud is not proved if the notice was issued under 74 for multiple financial and such demand order is not sustainable in the court then with respect to those financial years for which the time limit under 73 is satisfied redetermination can be made and Order passed under Section 75 then proper officer shall grant adjournment for maximum of three times so three times is the maximum adjournment that is possible and interest is payable say in the order they have not specified that we need to pay the interest in interest is a statutory liability whether it is mentioned in the order or not mentioned in the order we need to make the payment of interest and then amount mentioned in the order should not exceed the amount in the notice if the notice is given for 10 lakhs we cannot pass the order for 20 lakhs so order can be for less than or equals to 10 lakhs only so amount in the order cannot exceed the amount of the notice sir penality not specified in the order so whether it is payable no interest only even if not specified in the order we need to pay but p it only specified in the order we need to pay otherwise we are not required to pay then in case of self assessed tax what is called as self assessed tax self assessed tax means so which is reported in gstr1 but not paid in gstr 3B that is known as self assessed tax so then in that case we have rule 88 C and which says that they will be giving intimation and they will do the recovery so due to that reason direct recovery is there there is no separate notities so you refer to 88c so with respect to this you can refer to rule 88c so as per rule 88c what does it says intimation will be given and thereafter if you are not making the payment so direct recovery will be made that direct recovery is in terms of section 79 then suppose if there is a similar issue which is pending in the high court or tribunal so till the time the judgment is coming during that time order cannot be passed so for that issue so that period also will be excluded suppose three months the order is pending like the issue is pending in the court of law so order cannot be passed so therefore the order time limit will be extended by 3 months similar issue pending in some other proceedings in G St or high court or Supreme Court such period shall be excluded from the due date of the order then these Provisions are given in 75 so then 76 we have seen and 77 tax wrongfully collected and paid so treating intrastate as interstate and vice versa we have made the payment so we can pay the correct tax and get the refund so we have discussed this refund Provisions in so refund segment and what we are trying to understand here is that there is no interest and penality so just you pay the correct tax and get the refund of the wrong tax then 79 talks about Direct recovery and what are the provisions for recovery so recovery of tax and here recovery of tax so they have given various options for Recovery of tax so first what they will do first they will deduct from any money owed from the government so this is known as withholding of refund suppose we are required to get some refund from the government from that refund they will be withholding that amount that is know as deduction from any amount W from the government and sale of goods under the control of proper officer suppose if goods are seized by the proper officer he will sell off those goods by way of auction and whatever money realized that will be adjusted towards the tax dues garnishing proceedings that is recovery from a third person so from the bank account or from the tenant or from the datar ETC they will try to recover the money and sale of movable or immovable property attachment proceedings so they will attach the property and they will sell it off as are of land Revenue by The Collector so collector how they will recover the are of land Revenue by making announcement Etc in that locality like that or as fine imposed by the magistrate so magistrate fine if it is not able to paid so arrest will be made so that and or through Shing so these are the various modes of recovery and there is one point you should know that penality for self assessed tax not recovered to 73 see basically self assessed tax they can do direct recovery under 79 suppose if they invoke direct recovery under 79 what will be the penalty they there is a circular which says that the penalty will be up to 25,000 General penalty will be applicable suppose if they invoke 73 so in that case the penalty will be as per 73 so penalty for self assess the tax not recovered to 73 not recovered through 73 is up to 25,000 as per cbic circular then section 81 section 81 talks about transfer of property to be void in some cases any amount has become due from a person that is order has been passed after the order has been passed he creates a charge or transfer the property so he tries to mortgage the property pledge the property or he tries to transfer that property to some other person so that Mage or pledge or transfer will be void so that will not be considered as valid in favor of any other person with the intention of defrauding the Garment Revenue such charge or transfer shall be void suppose if the charge or transfer is for adequate consideration and a person who is purchasing it has purchased it in good faith and without any notice or pendency of the proceedings then that transfer will be considered as valid okay such charge of transfer shall not be voed if it is made for adequate consideration in good faith and without notice of pendency of the proceedings under this act or suppose if the person has got the order and he's telling to the officer that sir I need to sell this property then only I can pay the dues so or with the previous permission of the proper officer and tax to be first charge on the property what does it mean tax to be first charge on the property means save as otherwise provided in IBC so that is usually IBC law will prevail like insolvency and bankruptcy code will prevail apart from that suppose if there is any company which is going to liquidation Etc and all so so whenever they realize the asset the first payment will be paid towards that statutory dues in that statutory dues so indirect tax GST is also a statutory due and then provisional attachment to protect the revenue basically in section 81 only when the amount has become due from a person thereafter if he transfers that is wi suppose if the notice is given and the order is not at passed During the period if he transfers any asset so that is not wiid now so then if he transfers then what is the relief available to the department that's where 83 will come provisional attachment to protect the interest of the revenue so that is whenever so proceedings are started so whenever there is a proceeding that is notice or any proceeding that has started and the department is having a doubt that he can transfer the asset so department will attach the property so provisionally so they will pass a order for provisional attachment but that provisional attachment will be maximum for a period of one year means within one year they need to complete the proceedings and pass the order after order anyhow if you transfer that will be you know like void so provision attachment of property including bank account after initiation of any proceedings under assessment or inspection search seizure arrest or demand and recovery for a period of one year from the date of order of provisional attachment okay and there is one amendment in this case rule 159 says that suppose if they attach any immovable like any cars or Motor Vehicles Etc then the revenue or any property the revenue Authority or transport Authority or such Authority who has placed income on the movable or immovable property on the order of the commissioner shall remove such encumberance on the written instruction from the commissioner to the effect or expiry of the period of one year that is provision attachment the moment provision attachment is passed on that asset there will be an encumberance so which means that so we cannot make the sale so due to that reason the moment one year is over the provision attachment order cease to exist now so then the officer should release that encumbrance on the property that is this then section 84 continuation and validation of certain recovery proceedings what does it says suppose if they have passed an order and on that order we went for an appeal order is for five lakhs and we went for appeal and appellate Authority enhanced it to 7 lakhs so generally appelate Authority cannot enhance it to more than amount in the order so five lakhs if they want to enhance it to 7 lakhs for that extra two lakhs they should give us an opportunity of being heard but the Appellate Authority cannot give the notice the commissioner will be directed to give the notice for the Texas amount commissioner Shall Serve a notice for such amount and appeal order shall be passed on such enhanced amount without adjudication order for the excess amount okay so therefore appeal order will be passed for that enhanced amount 7 lakhs there won't be any adjudication order just the commissioner will give a notice for the 2 lakh rupees okay so that is this without adjudication order for excess amount and other proceedings means any proceedings it can be under IBC also and next there is a CB circular related to difference between 1221 and 122 subsection 2 so three situations are given clarification number one so Mr Amar so I just converted that into example for understanding Mr Amar is a supplier Mr balaj is recipient Amar is Raising invoice on baji okay without supply of goods just the invoice without supply of goods there is no supply of goods which means Amar is not having a liability first of all because he just raised the invoice and there is no Supply means there is no liability on am when there is no liability on RAR recovery under 7374 cannot be initiated on am so due to that reason the penality will be under 122 sub section one as there is no 7374 demand and Recovery under 7374 cannot be initiated because there is no liability consequently penality Under 12 subsection one invoice default okay then clarification two now what about Mr Balaji based on the invoice which is given by Amar there is no supply of goods Balaji availed the itz and he set off with his liability because he set off with his liability his liability has come down means there is like suppose if this fake it is not taken his liability he would have paid for example 10 lakhs is a liability and the fake it is 2 lakhs so instead of paying 10 lakhs he will pay 8 lakhs so then 2 lakhs is a short payment of tax now he need to pay the two lakhs so as he is required to pay the 2 lakhs they will be doing demand and Recovery because it is availed and utilized for payment of liability so he need to pay that because of this there's a short payment of tax so the demand and Recovery will be initiated on Mr Balaji as demand and Recovery initiated on Mr baji under 7374 so he has done ITC default also but penalty under 122 subsection one will not be applicable in that case so penality not avable under 122 subsection 1 as 7374 is initiated okay on Mr Balaji then see the clarification three Mr Amar is Raising invoice without Supply to Mr Balaji first of all Amar is not having any liability due to that reason no recovery under 7374 but penality under 122 subsection 1 that is invoice default then what Mr Balaji did he also raised invoice to Mr Charan and without making Supply means he got a fake itz and he made a fake liability liability also not real ITC also not real so therefore there is no recovery on Mr Balaji because the liability what he has is not a real liability and it what he has taken is also not the correct itz so in that case there is no liability on Mr baji to pay to government but he committed two offenses what are the two offenses invoice default and itz default so for that two times you need to pay the penalty so two times penalty is payable one for invoice default one for ITC default now what Mr Charan has done he took the ITC and he set off with his regular liability so because of that there is a short payment of tax so there is a demand and recovery on Charan because he need to make the payment of tax as he is required to pay the tax Charan is required to pay the tax so due to that reason there won't be any recovery from Charan or not there is recovery under from Charan so due to that reason 7374 applicable so 122 subsection one ITC default will not be applicable in that case so that's where from these three examples what what you can remember is that so section 122 subsection 1 and 122 subsection 2 are mutually exclusive so that is about this demand and Recovery we are moving on to segment 24 which talks about exemptions from customs duty firstly section 25 which says that so government is having power to Grant the exemption so as per section 25 central government by notification in the official G exempt goods from payment of customs duty either unconditionally or subject to certain conditions and these exemptions we don't have the specific exemptions like this product is Exempted or not from import or export like that we don't have but they have given broadly certain exemptions in that the first area that we have is with respect to section 13 23 subsection one and two and then 22 so what is this all about so section 13 talks about no Duty on pil forage so whenever the goods are imported and that goods are pilfered piler refers to petty theft in that case we don't have to pay the customs duty then section 23 subsection one is applicable when the goods are destroyed so because of any accident on account of natural causes Etc so then in that case so when the goods are destroyed or abandoned so we will be getting remission of Duty remission of Duty means first we need to pay the duty and we need to Pro to the satisfaction of the officer that the goods are destroyed so then thereafter they will be giving us the refund that is with respect to 23 subsection 1 when the goods are destroyed but when the goods are not according to the specifications in that case you don't need the goods so you don't have to pay the duty so then it will be called as relinquishment of title to the goods so you will be giving away the title to the department so therefore you don't have to pay the customs duty that is known as relinquishment of title to the goods and then section 22 is applicable in the situation when the goods are damaged not destroyed but the goods are damaged which means that there is a reduction in the value of the goods so on account of the damage then proportionately to the value of the damaged goods you need to pay the customs duty so for example 100% goods mean whatever is a custom duty payable after damage the goods capacity or value will not be 100% it will be reduced so proportionately will pay the custom duty that is known as abatement so basically when which section will be applicable when 13 is applicable when the goods are pfed and when section 23 subsection one is applicable goods are lost destroyed or abandoned when 23 subsection 2 is applicable goods are not conforming to the specifications and when section 22 is applicable damage or dation to the goods dation is reduction in u value on account of a flux of time so whenever the goods are like evaporation or whenever there is a reduction in the quality of the goods so that is called as deterioration to the goods so therefore when the goods are pilfered section 13 and what is the title No Duty on pilfered Goods what is the advantage because of this you don't have to pay Duty then T section 23 subsection one when the goods are lost destroyed or abandoned so you will have remission of Duty what is the benefit first you need to pay the duty prove that the goods are destroyed then you will get the refund so then in case when the goods are not conforming to the specifications relinquishment of title to the goods means you don't have to pay the duty at all so you give away the title to the department so whenever there is damage or detoriation of the goods section 22 abatement so what does the abatement says abatement is like so you will pay the duty proportionately based on the value of the damaged goods so that is the benefit so in case of section 13 customs duty not payable by the Importer but payable by the custodian the imported goods will be under the control of a person called as custodian or Port trust authorities so that particular custodian will pay the custom duty because he is responsible for that Goods so importer is not required to pay what if the goods are restored so custodian identifies the person who has stolen that goods and the goods are restored in that case so the customs duty will be payable by the Importer and thereafter the remission of Duty will be given to the custodian then whether applicable in case of warehoused goods no so then when the Pate should have happened Pate should have happened so after unloading the goods after unloading the goods that is at the time or after unloading the goods if the and thereafter so before the order for clearance okay so see the stage at which the pil forage should have happened so the goods are in the transit so after the goods are unloaded in the port or airport and before order for clearance what clearance either before clearance for home consumption or before clearance for warehousing at this stage if the goods are pilfered then only section 13 benefit will be applicable so that's why in case of weos good section 13 benefit will not be applicable whereas if you see section 23 subsection one remission of Duty what is the benefit first you need to pay the customs duty and prove to the officer that the goods are destroyed and then you will get the refund with respect to that whether applicable in case of warehoused goods yes so which means you can claim the remission of Duty even after the order for clearance and before actual clearance if you see here first the goods are unloaded in the port or airport thereafter order for clearance and thereafter clearance for home consumption or it may be cleared for warehouse and thereafter it may be cleared from the warehouse for home consumption now at this stage before actual clearance if the goods are lost or destroyed we will get remission of Duty means whether the remission of Duty is applicable even before order for clearance yes so the remission is applicable before order for clearance so if you see section 23 subsection 1 and section 22 is applicable at this stage also is applicable at this stage at this stage also okay so at this this particular stage also we will get so anytime before actual clearance after unloading and before actual clearance that is about remission of Duty then if you see 23 subsection to relinquishment of title what is the benefit we don't have to pay the customs duty in this case and relinquishment remember not possible with respect to prohibited Goods any prohibited goods are illegal Goods that you have imported and thereafter they have identified that Goods now you cannot say I will relinquish the title not possible so therefore prohibited Goods you cannot relinquish the title until you have to pay the duty and you need to face the consequences with respect to the goods whether applicable in case of warehoused goods no so it is not applicable in case of Vost Goods because relinquishment should have done before order for clearance so after unloading the goods and before order for clearance if the owner does not want to take delivery of the goods relinquishment of title to be done under section 23 subsection 2 okay so that is this case but suppose if the goods are deposited in the warehouse at the time if you feel like the goods are not according to the specification that is you file the bill of entry and you have taken the goods to the warehouse and warehous you have observed that the goods are not according to specifications in that case the section 23 subsection 2 is not there but in warehousing Provisions one provisor is there that is provisor to section 68 so as for that provisor to section 68 relinquishment of title is possible that's what I have given but relinquishment is possible under provision to section 68 in case of Warehouse Goods that's a different provision then so that is with respect to relinquishment of title then 22 abatement so in case of abatement what is the benit customs duty payable at the discount in proportion to the value of the damaged goods So based on the value of damaged goods we need to pay the customs duty so if you see the value of the goods imported so value of goods imported value of goods imported is say somewhere 8 lakhs 8 lakhs is the value of the goods imported and customs duty payable on above customs duty payable on above is somewhere like 3 lakh 25,000 is the custom duty payable and above now what happened to the value of the goods imported after damage so value of goods after damage value of goods after damage value of goods after damage came down to 5 lakhs if value of goods after damage is 5 lakhs how much is the customs duty payable on above so that is how the abatement is computed so the proportionate customs will be payable how to calculate that simple so first for 8 lakhs it is 325,000 for 5 lakhs it will be how much so what we need to do we need to take 5 lakhs okay into 325,000 divided by 8 lakhs okay for 8 lakhs it is 3 lakh 25 so 5 lakhs how much is the proportionate amount so that will come to so 5 lakhs into 325,000 divided by 8 lakhs so that comes to 2 lak 3,125 is the customs duty payable and above so therefore what is the abatement that we have got see this is not abatement this is the customs duty payable based on the damaged value of the goods so what is the abatement 325,000 minus 2H 3,125 will be taken as the abatement okay so that difference will come to 1 lakh 12,875 is taken as abatement so this is how proportionately the abatement will be computed so we need to take customs duty equals to Value after damage into original custom duty divided by value before damage so that's how we need to compute whether it is applicable in case of Warehouse Goods yes in case of damage but not in case of deteriation when the deterioration should have happened before or at the time of unloading the deterioration should have happened so deterioration only before or at the time of unloading of the goods so in case of Warehouse Goods if it is detated we will not get any benefit so that is with respect to this section so remember before the goods are unloaded in the port or airport if the goods are lost in transit first of all there is no Levy so we don't have to pay any customs duties that is based on the Supreme Court case and after the goods are unloaded and before order for clearance all the four sections are applicable 13 23 subsection 1 23 subsection 2 and section 22 whereas after order for clearance and before actual clearance only two sections are applicable that will be remission of Duty section 23 subsection one and abatement that is Warehouse Goods only two points and remission of Duty and abatement apart from the relinquishment of title is there but that's in a different section so that is provisor to section 68 then we have section 21 which talks about der Jet samam and Float samam which refers to whenever the goods are thrown into the sea that is called as Jet Jet Sam and those goods which are thrown into the sea will continue to float that will be called as float Sam and der refers to the damaged parts of the ship and that is whenever the ship got derailed so there will be some damaged parts of the ship that is called as wreck so all Goods deric so Goods derail like ship derailed and the goods are falling into the water then Jet Sam Goods thrown into the water to save the ship from sinking float s those goods which are thrown into the water will continue to float and wck refers to damage parts of the ship if these goods are brought into the shore okay so brought into or coming into India shall be dealt if dealt as if these goods are imported by the person into India unless the goods are Exempted Goods as if they were imported into India unless Pro to the satisfaction of the officer that they are entitled to be admitted dutyfree that is about section 21 then section 20 talks about re-importation of goods so in this regard there are two notifications notification 45 2017 and notification 60 2018 what does notification 45 2017 says first person is importing the goods whenever he Imports the goods he will pay the customer Duty on those goods so those goods are exported so whenever the goods are exported thereafter it is subsequently re imported so the first import then export and thereafter reimport import export reimport import export reimport okay first there is a import and therea there is a export and thereafter there is a reimport in case of import customer duty is payable in case of export what is that person doing is he claiming any incentive at the time of export yes he is claiming incentive at the time of export so at the time of reimport so he should pay only that incentive what he claimed at the time of export that is sufficient he don't have to pay any customs duty on this re-importation same way at the time of export if the goods are exported for repairs and thereafter it is reimported at the time of reimport that person is required to pay a customs duty on fair value of the repairs carried outside India plus fright and insurance both ways so from India to outside India outside India to India that should be taken as a value for payment of customs duty if export for repairs upon reimport the customs duty will be payable how much is the custom duty payable fair value of repairs so why they use the word fair value of the repairs if the goods are sent outside India for repairs it may be covered under warranty when it is covered under warranty so we don't have to pay any amount towards that but even then we need to take what could be the value if it is not covered under warranty that should be taken plus fright and insurance both way should be added that should be taken as a value for payment of custom duty suppose at the time of export so import and at the time of export suppose if it is happening that we are not neither claiming any incentive nor it is exported for repairs but normally it exported and it is reimported are we required to pay any customs duty on reimport no we don't have to pay any customs duty on reimport so that is based on this notification 45 2017 but they gave one condition what is that condition from the export to reimport what is the time limit within which the good should be reimported 3 years and it can be extended for a further period of two years so that is this and we have some notes in this regard even igst will be payable on the same value not only the customs duty but also igst is also payable on fair value of repairs plus fright Insurance both ways suppose if export is subject to export duty at the time of export if you are paying export Duty upon reimport whatever custom duty we paid at the time of export we will be getting it as a refund so that is refund under Section 26 so that is this point if export is subject to export Duty then upon re-importation we will get the refund of customs duty paid at the time of export as per section 26 if the goods are exported under Duty exemption or any Duty remission schemes Etc then in that case the time limit for importation is one year plus it will be extended for a further period of one year and if the goods are exported or not subject to any incentive so at the time of export we did not claim any incentive or exemption and not exported for repairs then upon reimport the custom duty is not at all payable in that case and the fifth point is that exported goods and imported goods must be same and the ownership should not have been changed so the ownership should remain the same and Concession under this notification is not applicable to 100% e why because anyhow Imports by 100% e we don't have to pay customs duty also unit in free trade zone also we don't have to pay customs duty on import and public or private Warehouse we don't have to pay customs duty when we keep the goods in the public or private warehouse and tobacco and petroleum products so these are some notified Goods on which so the concession under this notification is not applicable and then in case the goods are taken outside India for exhibition purposes so this point we have seen in GST that upon bringing it back within 6 months from the rate of export on reimport customy not payable why because at the time when it is taken outside IND for exhibition we have not claimed any incentive nor it is exported for repairs at the time when it is imported back we don't have to pay customs duty with respect to this Goods so that is in case of notification 45 2017 then we have notification 60 2018 what does it says so here the first is export so first we are making export and those goods are imported and then it will be re-exported so then in that case what are the concessions that are available so so at the time of export from export to import it should be within a prescribed time limit what is the time limit in case the goods are exported for reprocessing or that is whenever the goods are exported why is it coming back so is it because of remaking refining or reprocessing because of the manufacturing defects then it should come back to India within one year suppose if it is for repairing or reconditioning it should be coming back to India within a period of 3 years in case of notified Goods it will be 7 years so there are some notified Goods we don't have to remember what are those notified Goods in case of that notified Goods it will be 7 years in case of other than notified Goods it will be 3 years and 10 years in case of Nepal and Bhutan this is the time limit within which the exported good should be imported so for what purpose either repairs are reconditioning and from the time it is imported it should be re-exported after doing it repairs reprocessing or refining reconditioning Etc it should be re-exported what is the time limit for that 6 months plus it can be extended for a further period of 6 months and here some conditions are there so what is the benefit first of all here at the time of export to import and they can again reexport here you are making import now on this import custom duty is not payable and the condition is that import goods and reexport goods should be same and importer at the time of importation executes a bond so that is with respect to this so notification 60 2018 export then import and then reexport now see this suppose if there is any loss of imported goods during such operation that is from the time we exported to the imported are again from the time we imported to the re-exported if there is any process loss at this stage so this process loss is okay and we don't have any restriction under this notification that's what it says if any loss of imported goods is noticed during such operation that loss shall be Exempted from whole of the customer Duty subject to satisfaction of ACDC even if the quantity reexport reimported is short or low as long as the nature and variety is same okay so then next we have this 21 already we discussed 24 denaturing mutilation of goods if you see here section 20 which talks about concession with respect to re-importation 21 deric jet samam float Sam and 22 talks about abatement 23 relinquishment of title and uh remission of Duty and 13 is a different section no Duty on pilfered goods and 24 talks about denaturing and mutilation of goods in case of denaturing and mutilation of goods what happens is that so first of all when the goods are imported which has high rate of customs duty and low rate of customs duty depending upon the the purpose for which it is being imported so if a imported goods having twin purpose and depending upon the purpose if the rate of Duty is applicable so now when you denature the goods you will make it unfit for the other purpose so that the applicable customs duty you will be paying so owner of the goods will make request for denaturing that is diluting the chemicals and mutilation breaking a missionary same way when you import the missionary say you have to pay High customs duty when the parts of the missioner is imported you need to pay low custom duty but you don't need the missionary but you need the parts of the missionary you can break down the missionary into parts and only the parts can be taken and the remaining structure Etc will be so scrapped then in that case accordingly the custom duty will be payable central government make make rules regarding the same duty is payable as if the goods are imported in the denatured or mutilated form that is about section 24 so these are the various exemptions that we have the next segment that we are going to discuss is valuation under Customs so valuation under Customs is very very important chapter for practical like exam purpose so lot of practical questions will be based on this chapter so basically this valuation under Customs is only one section that is section 14 and in the section 14 we have assessible value so basically Customs we have specific Duty method and AD method specific Duty method means when customs duty is payable based on the units of measurement like when you are importing the goods so per kg or per pintal or per square feet like that when we pay custom duty that is known as specific Duty method ad method means when the customer dut is payable as a percentage of some value that will be called as ad method in this ad method again we we have two that is called as you know like uh ad method tariff value and transaction value tariff value means what will happen so the value will be determined by the cbic with respect to some notified Goods so we'll go with that value only even if the transaction value is ascertainable and the value transaction value is more or less than the Tariff value but we go by tariff value only if the goods are notified for tariff value if the Tariff value is not applicable then we will go for transaction value so what will be the transaction value the price involved in the transaction will be taken that is basically this so what is the ass value in case of import that is transaction value is nothing but the CIF price CIF price refers to cost insurance and fright so usually we need to know certain prices differences here x Factory price X Factory price refers to the price prevailing at the factory gate of the exporter is known as X Factory price then FAS free alongside price free alongside price means the price prevailing at the you know like Port so that is of the exporter so but it is not including loading charges so usually what we will do is that we will be taking X Factory price to that X Factory price so there are few prices which we need to understand depending upon whatever price that is given in the question we can be taking so X Factory price so X Factory price is one price and then free alongside price free alongside free alongside FAS FAS price is there and then free on board price free on board free on board that is f price so free on board price is there then cost insurance cost insurance and fright CIF CIF price is also there now how we will be getting free alongside price to the X Factory price you add to the X Factory price you need to add so fright from Factory gate of the exporter to the load portter Port so fright fright from Factory fright from Factory to load port to loading to loading port or airport so that will be called as free alongside price now to this free alongside price if you are adding you know to this free alongside price if you are adding loading charges so there will be some loading charges that will be incurred so in the portter airport so that loading charges in the loading portter airport loading not unloading loading charges that will be called as free on board price then to this free on board price if you are adding okay fright and insurance from where to where exporter portter airport to importers portter airport so that will be called as so CIF price fright and insurance so we need to add fright and insurance fright and insurance fright and insurance stents from exporters port or airport exporters port or airport to importer port to importer port or airport then it will be called as CIF price so basically CIF price will be taken as the ass value so that ass value is nothing but fob Price Plus Insurance Plus fright fob price we need to take fob price given plus certain adjustments need to make to the fob price that adjustments is given below so then we will be getting the revised fob price so to this revised fob price we need to add insurance and fright Insurance ascertainable then we will take actuals ascertainable means so it is like so at the time of UT the import is aware of whatever is the insurance charges that is actually payable by him sometimes when the container is shared between the importers so he don't know what is the proportionate insurance that he need to pay till the time the consolidation agent or the logistics operators is giving him the receipt for the purpose of insurance payment and fright payment so that is called as ascertainable not ass attainable so therefore if it is ascertainable actuals will be taken if the insurance is not sustainable say the Importer don't know as to how much is the insurance that he is payable because the container is shared between to importers so then it will be 1.25% of fob what fob revised fob will be taken as the insurance fright in case of right divide into two ass stainable not ass stainable not ass stainable very simple it will be 20% of fob which fob revised fob will be taken suppose if it isable if it is air fright we need to compare between actual air fright or 20% of fob whichever is lower will be taken because air fright is restricted to 20% of fob suppose if it is other fright that we will be taking actuals and basically this fright shall include handling charges so this handling charges is not at the place of import so this handling charges so this fright shall include handling charges not at the place of import so means unloading charges in the place of input should not be taken even this fright will include ship de charges which is payable by the shipping company whenever they anchor the ship at outer space that ship demr charges will be included and light rage and bar charges for bringing the goods from the ship to the shore so that is light rage and bar charges that will also be included but remember demor charges will not be included there are two two Dem charges ship Dem charges and Dem charges ship Dem charges payable with the shipping company for anchoring the ship at outer space that will be included in the Fright whereas demate charges is payable by the Importer when the goods are not cleared within the time limit so that deor charges will not be included in the Fright okay so this should be taken and what are the adjustments that we need to make to the fob price the first adjustment is with respect to commission so commission is broadly divided into two buying commission and selling commission so buying commission is paid by the Importer to his agent where a selling commission is paid by the exporter to his agent so whenever the Importer is paying commission to his agent that will not be included in the value of imported goods whereas whenever the exporter is paying the commission to his agent that will also not included but when exporter's agent importer is paying it's a indirect consideration to the exporter so that commission to be included so selling commission commission to exporter's agent paid by the exporter so when it is paid by the exporter it will not be included but when it is paid by the Importer it's indirect consideration so it should be included in the value the other name for selling commission is local agents commission so basically this commission is payable by the importers agent so importer to the exporters agent where the exporter agent will be in India so that's why the commission is also known as local agents commission and then second inclusion is that usually importer will be sending some material moles and Di or any capital goods to the exporter for use in the manufactur of finished goods which are to be imported so whenever which is imported here so the exporter will not charge for the free of cost material which is given by the Importer so therefore the goods will be only for the conversion charges but as we need to Value the value of the imported goods so we need to take so whatever is the expend like whatever is the amount charg by the exporter plus free of cost material sent by the Importer to exporter should also be included in the value so material sent by the Importer to exporter including capital goods are intangibles these are included in the value either at the actual cost or at the apportioned cost if it is capital goods we need to apportion it used in the manufacturer of imported goods apart from that any other expenses which is recovered by the exporter from the Importer suppose if it is before import definitely it should be included in the value like design charges Etc if it is after import so now we need to check whether it is as a condition of sale of imported goods or otherwise if it is as a condition of sale of imported goods like installation charges even though it is incur after import it should be included in the value suppose if it is customization charges based on importers request it is to be excluded from the value and remember these intangibles should be procured from outside India if these intangibles are procured in India that will not be included so these intangibles whatever intangible is there this should be procured this should be procured outside India then only it will be included if these intangibles are procured in India then it will not be included so these are the adjustments we need to make to the fob price and we get the revised fob price and next we have rules so in which case the transaction value will not be applicable generally transaction value only will be taken in case of import that is CIF price but some cases the transaction value will not be applicable if the Importer and the exporter are related or price is not the so consideration price must be the so consideration if is a price is not so consideration transaction value not applicable unrelated persons what if they are related then also transaction value not applicable unconditional sale so there should not be any condition specified by the exporter to the Importer for this goods and unrestricted sell there should not be any restrictions if there is any restrictions it will not be applicable also one more case whenever the proper officer is of the opinion that the value declared by the Importer is not correct based on the comparable Imports then also the proper officer can reject the value import declared by the Importer in these cases transaction value not applicable so Customs officer shall not have any doubt about the truth and accuracy of declared value if he has a doubt he will reject suppose if the value is rejected by him or in these cases so transaction value not applicable we determine the value as per you know rule four so rule three says Ass value equals to transaction value if these conditions are satisfied otherwise ass value equals to value of identical Goods will be taken so first T that is transaction value if not I that is identical Goods t i s DCR you remember this t i s d c t for transaction value if not transaction value of ident iCal Goods if not similar Goods if not deductive value if not computed value finally residual value will be taken so what does The Identical Goods say identical Goods means that Goods also imported goods having the same physical features and characteristics and produced in the same country so we are importing goods from one country means identical Goods also produced in the same country and whatever Goods that we are importing so is manufactured by one manufacturer The Identical Goods should also be manufactured by the same manufacturer preferably not compulsory preferably not compulsory so then it will be called as identical Goods imported goods having the same physical features and characteristics and quality imported from the same country imported from the same manufacturer preferably then we will call it as identical Goods so that identical Goods we need to take and we need to make some adjustments what are the adjustments we need to make adjustment with respect to difference in the quantity for example if we are importing 1,000 units but the identical goods are 2,000 units had if they imported th000 units what could be the difference in the price so that adjustment we need to make and difference in the transportation cost we are importing to one port but the identical goods are imported to other Port had the identical Goods be imported to our Port what would be the extra Transportation cost that we need to add then difference in the commercial level of importation we are importing from 1% say manufacturer level but the identical goods are imported from the wholesaler level had the goods are imported from manufacturer level what could be the price that adjustment we need to make so these are the three adjustments we need to make to The Identical goods and thereafter if we have multiple identical Goods we need to take lowest of the identical Goods available lowest of such value shall be considered and Rule five we will be taking ass value similar Goods so first T transaction value identical Goods then your similar Goods so in case of similar Goods what is similar Goods similar goods are also imported goods and these are commercially interchangeable for example you are importing a refrigerator so that refrigerator is a double door refrigerator a single door refrigerator can be taken as commercially interchangeable that is a meaning so commercially interchangeable but it should also be produced in the same country produced by the same manufacturer preferably but not compulsory now in this case four adjustments we need to make first adjustment with respect to quantity adjustment with respect to Transportation cost ad adjustment with respect to commercial level of importation what is the extra adjustment that we need to make the extra adjustment is difference in the materials and Engineering work so if the single door refrigerator to be converted to double door refrigerator what is the extra cost that usually what is the price difference between single door and double door that difference we will be adding that is the meaning of difference in materials and Engineering work and if we get more than one value we will take lowest of such values when the similar Goods or identical Goods is not possible then rule six says we can interchange between deductive value and computered value either we can follow deductive value first and then computer value or computer value first and then we can go for deductive value so what does deductive value says rule seven ass value equals to deductive value deductive value means you take the price prevailing in India and reduce post importation expenses what is the selling price in India immediately after importation you take that and reduce all post export post importation expenses you will including the customs duty so you will get the price at the time of import okay so first you need to take selling price so minus all post importation expens including custom duty you will get the price prevailing at the time of import then computed value is you take the cost of production and you add all the cost including the profit margin and up to the place of importation so then it will be called as ass value that is computed value so computed value what we will do we'll take the cost of production profit and general expenses fright and insurance whatever we have seen so then we'll get the value at the time of import deductive value is reverse so we'll take the selling price of the imported goods or identical goods sold to unrelated buyers in India minus post importation expenses including custom duty we get the deductive value and Rule n says Ass value is based on residual value that is whenever the above is not possible Customs officer will determine the value based on the principles of valuation and that will be called as best judge value or residual value as per rule 9 now in this regard we need to understand one important aspect so that whenever they have given X Factory price in the question so when the X Factory price is given in the question say for example the X Factory price X Factory price X Factory price is somewhere like $1,000 X Factory price is ,000 and fright from Fright from Factory fright from Factory to airport or fight from Factory to load port to load Port okay so that is somewhere like $200 and loading charges loading charges is $100 then fright from outside India to India fright fright from outside India outside India to India is not a stainable outside India to India is not ascertainable not available insurance insurance also not available so when Insurance also not available then how to determine the C price so we will be thinking that so we need to take first X Factory price so we will take X Factory price and that X Factory price so $1,000 we will be taking no doubt and add fright add fright plus loading charges plus loading charges this will be called as fob price so what is the fob price 200 and 100 fob price will be $300 uh that is $1,300 fob price will be ,300 and this fob itself is the revised fob because we don't have any adjustments thereafter now to this revised fob we need to add fright and insurance so how much we need to add as fright usually when fright is not suable we'll take 20% of fob so what is the 20% of fob 1,300 ,300 into 20% so 1,300 into 20% so that will be $260 will be taken but remember from this we need to reduce from this Freight of $260 we need to reduce you know whatever is already considered in fob so this 200 plus 100 why because as per ICI study material they're telling whenever you are taking 20% that % is from the factory gate of the exporter to the importer's place due to that reason so this 2000 which is already considered in fob we need to reduce minus already considered in fob already included in fob how much is a freight already included in fob so that will be like uh $300 okay so already included in fob 200 + 100 so that will be $300 it will be reduced okay so then the fright will be negative yes of course the freight will be negative so 260 minus 300 so the 40 needs to be reduced because the maximum is 20% when the Fright is not suable the moment when you take 20% the 20% is all inclusive the 20% is inclusive of fright and fright from so exporter's Factory to the importer's place so therefore the $40 needs to be reduced because it will be minus so 260 20% of fob minus already considered in fob 300 so the remaining needs to be reduced so therefore 40 we will do the reduction and then insurance we need to take so how much will be the insurance insurance will be 1.25% of fob so 1,300 into 1.25% so 1,300 into 1.25% that will be 14625 will be taken now this will be the assessible value so what is ass value 1,300 - 40 + 14. 625 so that will come to 1,274 625 will be taken as the ass value in this case so this is how we need to compute suppose in the same question what if in the same question what if the ass value is somewhere like $10,000 okay so that is X Factory price is somewhere like $5,000 then what will happen so then accordingly X Factory price X Factory price will be 5 ,000 now and then fright and loading charges we will be taking fright and thereafter we will take loading charges and how much will be the Fright the Fright will be taken as 200 100 exactly the 20000 will be taken so this 5,300 will be taken as fob price and that fob price will be revised fob price so 5,300 now we need to add fright so how much will be the fight 20% of fob so $5,300 into 20% so that comes to 5,300 into 20% comes to 1,60 1,60 minus already in fob already in fob how much is already in fob $300 is already in fob so the difference will be added here so 1,60 minus 300 that will be $760 will be added so don't add 1,60 add only 760 and thereafter insurance so insurance will be as usual 1.25% of fob so 5,300 into 1.25% so 5,300 into 1.25% will come to $ 59.62 five so if you add this this will be called as ass value so how much 5,300 + 760 + 59.62 5 so that will be 6,000 6,119 625 so this is how we will be taking now suppose what if it is like so what is the extra point that we have only the X Factory price is given now a slight change we will be taking so that slight change will be like what if it is air fright and the actual air fright is also given as somewhere like $1,000 so we have the actual air fright that actual air fright is $1,000 then what will happen in that case so air fright air fright is $1,000 air fright is $1000 from exporters Port exporters Airport it is not Port exporters Airport to India to importers airport to importers airport so then what will happen in this case so in this case what we need to do is that we need to determine as to how much should be taken as the X Factory price so say 5,000 is the xfactory price no change in that so X Factory price X Factory price will be $5,000 and add fright no doubt so that will be the same fright up to airport okay then loading charges that will also be same so fright will be $200 loading charges will be $100 so revised OB will be $5,300 so this is FOB price revised now what we need to do with respect to Fright fright air fright will be compared with actual or 20% of fob so add air fright so remember this is important so air fright what we need to do take actuals what is the actuals so actuals will be 1,000 not only 1,000 plus 200 plus 100 why 200 and 100 so because when you are comparing 20% the 20% is from the Factory gate of the exporter to the importer's place so therefore everything you take from the factory gate to the Importer that is so 1,000 plus 200 + 100 so that will be coming to 1,300 or 20% of fob what is 20% of fob 20% of fob already we computed 20% of fob comes to 1060 so 1,60 1,60 whichever is lower whichever is lower which is lower that is $160 and to this $1,060 minus already in fob how much is already considered in fob already in fob so already in fob is $300 that needs to be reduced so then the remaining should be added as the air fright that is 1060 minus 300 so that will be 760 sir suppose if the actual Air flight is somewhere like $500 what you would have done so if the actual airl is $500 500 + 300 + 100 so that will be 900 900 or 1,60 whichever is lower 900 then also already considering fbb we will reduce what is already considered fob 300 then also we would have reduced that so then what will be the so amount 760 that we have taken then finally we will be taking insurance so insurance will be same insurance will be 1.25% of fob so that is 1,60 1,000 sorry what is the fob price here 5,300 so 5,300 into 5,300 into 1.25% so that will be same that is$ 59.62 5 so you need to add this so how much it comes to same $ 6,119 625 will be taken as the ass value okay so this how we need to calculate even if air fright is given so these are the multiple combinations which are possible so please be careful with respect to this kind of patients that can be tested in exam now we are moving on to valuation in case of exports so what should be taken as a value in case of exports so basically fob price should be taken as the ass value in case of export and we don't have to make any adjustments to this so just whatever is the fob price given in the question you take that and we have some customs valuation rules in case of export so that is Rule three says we need to take transaction value but this transaction value may be rejected by the officer so if the officer is not satisfied that the declared value is genuine and even if it is related party transaction transaction value may be acceptable and ass value equals to suppose if it is transaction value rejected then what will happen we'll take the value of like kind and quality what does that mean just like identical Goods so they imported goods they exported Goods same physical features characters Etc produced in the same country and exported to the like produced in the same country in India produced by the same person preferably and not compulsory and we need to make adjustment same three adjustments difference with respect to the quantity difference with respect to the transportation cost difference in commercial level of exportation suppose if multiple comparable transactions are found lowest of such value will be taken then rule five talks about computed value in computed value we will take cost of production plus profit and general expenses so that's why we will be getting computed value and suppose if that that is also not available then based on the best judgment assment that is residual value Customs officer will determine the value So based on the principles of valuation and that will be taken that is with respect to this exportation then we have valuation in case of import of secondhand Goods so whenever you are importing the secondhand Goods in form a the overseas chartered engineer should certify as to how much is the value of the secondhand Goods if he has given the certificate that will be taken as a value whether the report of overseas Charter engineer is submitted in form a yes then that will only be taken as a value suppose if that information or that certificate is not available then we need to get the valuation done through a chartered engineer impaneled in the Customs houses in India so that chartered engineer certificate will be produced in Form B but that will not be taken as a value so there will be a comparison between value declared by the Importer and value as per the report of the chared engineer and the depreciated value of the goods these three things will be compared so on comparison of these three things so what will happen so if there is any doubt with respect to the value declared so no there is no doubt so then the value declared will be taken means these three more or less it is the same so value declared will be taken suppose if there is any doubt so then a notice will be given to the Importer and he need to give the explanation after explanation offer is satisfied yes then value declared will be taken otherwise officer will determine the value as per rules so that is about the valuation in case of Import and Export including the secondhand Goods baggage page number 199 segment 29 baggage baggage refers to passengers luggage and we have certain concessions with respect to baggage and in remaining cases wherever it is dyable we need to pay baggage Duty 38.5% on the baggage so let's try to understand the rate of Duty on baggage suppose if the concessions are over that is after taking out the concessions we have certain concessions on baggage after taking out the concessions what is the rate of Duty on baggage on baggage if we have three articles if we have three articles that is firearms firearms catridges catridges of firearms catridges of firearms greater than 50 catridges of firearms greater than 50 the number three cigarettes cigarettes exceeding 100 comma cigars exceeding 25 and tobacco exceeding 125 G in these three cases the baggage Duty will be you know 110% the baggage duty is 110% what are the three articles Firearms catridges of firearms exceeding 50 cigarettes exceeding 100 cigars exceeding 25 tobacco exceeding 125 G all other Goods all other Goods all other Goods the baggage Duty will be 38.5% 38.5% will be the baggage Duty on other Goods so if cigarettes is up to 100 can we apply 38.5% yes if the cigars is up to 25 can we apply 38.5% yes if the tobacco is up to 125 G we can apply 38.5% if the quantity exceeds that on that excess quantity only 110% % same way catridges up to 50 38.5% if the catridges is exceeding 50 on that excess quantity only we will be applying 110% Firearms always it will be 110% so this is including social welfare search charge we don't have to add any social welfare surcharge on the top of that this is including social welfare surcharge so this is the rates of Duty on baggage so generally students get confused with respect to that that's why first I have given this rates then then we will move on to concessions with respect to baggage the first concession that we have with respect to baggage is personal effects used personal effects whatever may be the value of used personal effects you are not required to pay baggage Duty on what is the meaning of used personal effects which is used by the like which is for use by the person to meet his day-to-day Necessities is known as used personal effects so whatever may be the value of those used personal effects we don't have to pay so that is the first concession we have you can see below in the note used person effects and travel sers irrespective of value is freely allowed used person effects okay your dress Cosmetics or whatever perfume bottles everything which you are using what about travel sers when you visit a particular country as a memory of visit of that particular country you buy something and come for example people who go to Paris will definitely buy that iil Tower model okay and they will be bringing it and they will keep it in their house to show off that they went to Paris so this will be known as travel sers so whatever may be the value but for that 1020 and all if you are bringing that is not called as travel sers so one or two as a memory of visit 1020 if you are bringing you will become a dealer of travel sers and therefore you are required to pay customs duty on that so used personal effects and travel sers sir what about personal effects so whether smartphones and all will come under personal effects yes if it is used if it is used means throw the Box fully and then bring the phone and so two phones usually they are allowing two phones they are allowing but otherwise with box and all you are bringing so definitely that will be counted so therefore people who go abroad to bring the iPhones and all so yes they can bring but they should not carry any box and all so just the phone they should be bringing okay and two phones is allowed for that 1020 phones and all if they are bringing they will not get this concession used person effects that's the reason why all new goods and all when they are bringing for giving gift to India they will remove the tag they will remove the sticker they will perfume bottle and all they will open and spray and they will bring so that it will be counted under used personal effects then personal effects means things required for satisfying daily Necessities but does not include jewelry jewelry will not be considered as personal effect at all means it's like you know jewelry even though you are wearing it but even then it is not considered as personal effect you need to pay the baggage Duty on that then how sir what we can do with respect to that at the time when you are leaving itself you need to declare how much jewelry you are taking and after declaring that if the same jewelry you are bringing because at the time of Declaration they will take the scanning of this jewelry and all at the time when you are coming back if the same jewelry you are wearing so you produce that and they will see the scanned images of that if it is the same jewelry you are not required to pay any baggage Duty otherwise you will end up paying the baggage Duty on that usually what happens so these girls and all in India gets exported to abroad so in the name of marriage and when they are exported abroad so these girls and all will be wearing lot of jewelry and they because what to do so parents want only son-in-law to be a foreign son-in-law only they don't want Indian son-in-laws and all so therefore they will export their product and when they export them so that girl will go there and she will not get accustomed because there the lifestyle is completely different they have to work like pigs and all morning to night and only weekends that weekends also this idiot will be sitting and playing pubg so then that that girl will return when she is returning she will bring the jewelry along with her whether she is required to pay the baggage duty of course yes if at the time of taking it if she has not given any declaration then baggage duty is payable because jewelry will not be coming under personal effects then what about alcohol sir will alcohol come under personal effect that is not necessity so therefore it will not be coming under personal effects so that is the first concession the second concession is laptop a passenger of 18 years and above one laptop computer is alow is laptop coming under personal effect no laptop is not a necessity that's why laptop will not come under personal effect however if a person is 18 years and above one laptop is allowed suppose two laptops we are bringing one laptop will be Exempted another laptop will become dyable what if one laptop and one tab is brought any one we need to show the other one will be coming under Duty able then the third elevance what we have is the general free elevance what is the general free elevance if they are coming from Nepal Bhutan Myanmar The Two by Air route 15,000 rupees is the general free elevance don't see anything the person is coming from Nepal Bhutan Myanmar and the two they are coming by air then it will be 15,000 that is other than land route air means air water or train okay not train air or water water so land route it will be nil air or water it will be 15,000 rupees is the general relevance suppose if they are coming from other than Nepal Bhutan and Myanmar if there are tourist of foreign origin the general relevance is 15,000 if there are other cases 50,000 so what are the four points you need to remember in general relevance first divide it into two passenger coming from Nepal Bhutan Myanmar coming by land route zero other cases 15,000 then other than Nepal Bhutan Myanmar again divide into two tourist of foreign origin 15,000 other cases it will be 50,000 and for infants there is no General prance that is child not more than 2 years of age is called as infant otherwise in the name of infant 50,000 Rupees worth of Articles we will be bringing okay so therefore child not more than 2 years of age there is no General relevance everything will be dyable sir what about diapers Etc and all that will come under personal effects so therefore it will be anyhow Exempted then jewelry allowance is there next allowance is jewelry allance first allance we saw used personal effects second laptop third General freance next look to four jewelry Elance so but this jewelry elevance is available only if they stay abroad for more than one year just like that if they go and come this allowance will not be given so their staying abroad should be more than one year and how much they can bring gold if they are male passenger 20 G with a value cap of 50,000 female passenger 40 Gams with a value cap of 1 lakh so this jewelry is purchased abroad not taken from India if the jewelry is taken from India anyhow they would have given the Declaration when the same jewelry they are bringing they are not required to pay baggage Duty then this is for what this is for the jewelry which is purchased there okay and mail it is 20 G subject to a value cap of 50,000 means what suppose if the value of this jewelry like say 25 g 25 G Mr X Mr X 25 G with a tariff value 25 G with a tariff value of so 1 lakh so 25 G with a tariff value of 1 lakh how much will be allowed 20 G will be allowed so how to calculate this 20 G simple first 1 lakh is for 25 G so how much it is for 20 G 80,000 or 50,000 whichever is lower whichever is lower so how much will be the Elance 50 50,000 therefore what will be the dyable value Duty will be what 50,000 on that we need to pay 38.5% is it clear suppose if it is 25 G Mr y 25 G with a tariff value with a tariff value of 55,000 because for different quality of gold the rate will differ now so if it is 18 karat 22 karat 22 24 Karat the rates will differ that's why 25 G with a tariff value of 55,000 so how to calculate this take 55,000 divided by 25 g into 20 G how much it comes to 44,000 or 50,000 whichever is lower whichever is lower that is 44,000 we will get so therefore Duty we need to pay on what 55us 44 that is 11,000 into 38.5% not always 50,000 is the Elance 20 G subject to a maximum of 50,000 which means first you need to see based on weight then based on value whichever is lower will be the allance that is available this is for male passenger here for female passenger how much will be the allance double 40 G with a value cap of 1 lakh for female passenger it will be 40 G with a value cap of one lakh this much is only allowed not beyond that and why sir they are giving this only so because only Indians have fancy towards the jewelry and people who are coming from abroad will not be having so but some basic jewelry they will be wearing that's why this much is only considered as basic jewelry for the purpose of Customs then next looking to the next point the free allowance of one passenger cannot be pulled with the free allowance of any other passenger for example husband and wife going abroad each one carry one laptop and they are buying one gaming laptop for their son and they're bringing that gaming laptop to India and the laptop value is 90,000 so husband is eligible for 50,000 allance wife is eligible for 50,000 allance some of these two will be one lakh but we will get only 50,000 as El which means 90 minus 50 so remaining 40 will be dyable why not it can be pulled because we have a condition that the free elevance of one passenger cannot be pulled with the other passenger then the general free elevance is not applicable in case of six Goods so whatever that 50,000 limit we saw a general 50,000 15,000 that is not applicable in case of three the first three which is related to 110% Duty what are the first three related to 110% Duty Firearms catridges of firearms exceeding 50 cigarettes exceeding 100 cigars exceeding 25 tobacco exceeding 125 G then number four alcoholic liquor in excess of 2 L means up to 2 L can we claim General freance yes then gold or silver in any form other than ornaments means like gold bars gold biscuits Etc we cannot claim General fance then for ornaments can we claim General free elevance yes then LCD LED plasma TV we cannot claim General free elevance so tell me what are the six articles for which we cannot claim General fance Firearms then catridges exceeding 50 up to 50 can we claim General fance yes cigarettes exceeding 100 cigars exceeding 25 tobacco exceeding 125 up to that can we claim General fance yes alcoholic liquor in excess of 2 L up to 2 L can we claim General relevance yes then gold or silver any form other than ornaments for ornaments can we claim general f element yes then LED LCD plasma TV and for the first three what is the rate of Duty 110% for the next three what is the rate of Duty 38.5% then what are the other entitlements to a passenger who is transferring his residents to India whenever a person is transferring his residence to India then apart from the used personal effects even he can bring the household articles also and depends if his stay abroad is 3 months to 6 months 0 to three nothing 3 months to 6 months last is what six now so he can bring 60,000 rupees worth of Articles household articles what is that household articles so mix Ginder then utensils gas stove refrigerator all those things okay so c 3 to 6 60 ,000 worth of Articles 6 months to one year 1 lakh worth of Articles minimum one year in the preceding two years 2 lakhs worth of Articles minimum stay of two years or more than up to 5 lakhs this much worth of household articles can be brought this is in addition to General freance addition to jewelary Elance and what are the ineligible articles annexure one is ineligible under this even annexure two articles also ineligible whatever really they need that they have kept under eligible color TV video home theater system dishwasher refrigerator above 300 L up to 300 L yes you know what is refrigerator up to 300 lit single door single door refrigerator deep freezer video camera cinematograph film of 35 mm and above gold or silver anyhow covered under an exure one so what articles can be brought Mixie grinder iron box Kettle sandwich maker understood plate cup saucer okay these things only can be brought so these articles cannot be brought under this El then see the other points all the above Provisions are equally applicable to unaccompanied baggage what is an unaccompanied baggage I told you already the baggage which comes within 1 month after his arrival or before his arrival either before or after but what is the time limit you see the time limits there 1 month after passenger's arrival 2 months before passengers arrival easily you can remember a for after B for before alphabet a is first alphabet alphabet B is second alphabet so 1 month after arrival two months before arrival okay so what is called as unaccompanied baggage the baggage which comes within 1 month after passengers arrival 2 months before passengers arrival is known as unaccompanied baggage for that also baggage Provisions are applicable but not unaccompanied baggage one time accompanied baggage another time back came for that one allowance 50,000 again I'm bringing something sir for that no for one visit only one time you understood or not so you decide between unaccompanied and accompanied then member of crew people who work in the aircraft ships and all if they are in service they can bring Petty gifts up to 1,500 for personal or family use they are not getting 50,000 allowance if they get 50,000 allowance half of the articles in India will be brought by them only so they are not eligible for General elevance only 1,500 chocolates Cosmetics which cosmetic come for 1,500 so therefore some petty things can be brought for 1,500 rupees only but when they complete their contract gets over and they come now at that time are they eligible for the general relance yes then passenger carrying non dyable and non prohibited articles shall walk through green Channel suppose if they are carrying any dyable articles they need to walk through the red Channel and they need to make a true and full declaration regarding the contents of the baggage then there is a concept called as temporary Detention of baggage that is when you are importing some dyable articles you don't know about the baggage provision say you went to abroad and you purchase one Sony LED TV and you brought that to India because people who go to this Dubai KU and all they'll be bringing that LED TV for their home so you brought that LED TV and now there is no General relevance full we need to pay 38.5% but if you pay 38.5% so the price is more or less the price in India so therefore what you can do in that case is you can keep it there at the time when you are returning you take that and you return it there and you don't have to pay any baggage Duty that is known as temporary Detention of baggage where the baggage of a passenger contains any article which is dyable or the import of which is prohibited and in respect of which a true declaration has been made the proper officer May at the request of the pass passenger detain such Goods for the purpose of being return to him on his leaving India and if for any reason the passenger is not able to collect the article the article may be written to him through any other passenger or through CER or cargo sent to him then next remember one important point in this only if you make a declaration then only this temporary Detention of baggage is applicable for example you brought a bag full of gold biscuits and you walk through the green Channel as if you did not bring any dyable articles you walk through the green Channel and officer identified and he is asking you to pay the customs duty and you are telling okay temporary detention next time when I return I will take and go no because you did not make true declaration see there only when a person has made True declaration this temporary Det of baggage provision will be applicable otherwise not then already we discussed what is the customs duty rates applicable on baggage so with this we completed baggage Provisions okay warehousing under Customs so basically warehousing Provisions deals with import of goods that can be deposited in the warehouse without payment of customs duty and again at a later point of time we can clear it from the warehouse upon payment of customs duty so let's have a overview into this particular warehousing provisions you can see here first as and when the goods are imported that imported goods will be under the custody of custodian for a period of 30 days so 30 days it will be under the control of custodian and within 30 days either we need to present the bill of entry for home consumption or Bill of entry for warehousing within this 30 days if it is not presented either the goods will be deposited in the warehouse by the Customs officer or it can be disposed of by way of auction now in this 30 days period we are filing a bill of entry for warehousing or inbound bill of Entry when we are presenting the bill of entry for warehousing we also needs to to you know execute a bond so goods are cleared without payment of customs duty but a bond needs to be executed now from this particular port or airport so we will be taking the goods to either public Warehouse or private Warehouse or special Warehouse what is a public Warehouse public Warehouse is a warehouse where the goods belonging to any person can be deposited in that warehouse so store Goods belonging to any person whereas private Warehouse means only Goods belong to the warehouse keeper can be deposited in that warehouse that is called as private Warehouse so store Goods belonging to license holder whereas special warehous means store notified Goods belonging to any person so one of such notified Goods already we have seen in stores that is stores will be coming under notified Goods apart from that there are other notified Goods but the notified Goods list we don't have to remember for exam purpose but remember notified Goods will be kept in a special Warehouse how public and private Warehouse will be different for example I'm having a warehouse so and my goods only can be deposited in that warehouse that is called as a private Warehouse I'm having a warehouse my goods also can be deposited some other person Goods also can be deposited that is public Warehouse now how public and private Warehouse is different from the special Warehouse special wouse will be under the physical control of the Customs Department which means Customs officer will be present in the special warehouse and it will be operated based on Customs lock and key whereas private Warehouse or public Warehouse it will not be under the physical control of the Customs officer it will be records based control which means the Customs officer will not be present but the warehouse keyboard need to follow certain guidelines as specified by the regulations in this regard so that is about the private wos or public wouse records based control but special warehous physical control but all these three warehouses are licensed by the Customs Department only so commissioner or principal commissioner will give the licenses with respect to these Warehouse based on certain licensing conditions now as the goods are deposited into the warehouse so these Goods how many days it can be in the warehouse so these Goods can be in the warehouse for an unlimited period of time so in this Warehouse even manufacturing and other operations are permitted in this Warehouse so we can carry out the manufacturing for example we can import the raw material or we can import the goods in unassembled or disassembled form and we can do the assembly also inside the warehouse so manufacturing operations are permitted inside the warehouse and here what happens is that if the goods are imported by 100% eou so export oriented unit ehtp electronic Hardware Technology Park STP software technology park or private wos where the wosing operations are permitted they can keep the goods till the time they are clearing it for home consumption and there is no interest also that they need to pay suppose if it is any other Warehouse in that case they can deposit the goods maximum for a period of one year and this one year can be extend for a further period sometimes the one year can be reduced in case of perishable Goods also but as per the law the maximum period is up to one year and in this there is a interest free period also that is 90 days so which means both these things should be counted from the warehousing order so from the warehousing order it can be deposited for a period of one year in that also 90 days is the interest free period from 91st day we need to compute the interest at the rate of 15 % perom remember the interest rate under Customs is 15% perom and it is not 18% perom and from wouse for what purpose it can be cleared either it can be cleared to another Warehouse or it can be cleared to the importer's place or it can be exported suppose if it is cleared to another Warehouse what reason maybe this particular Warehouse where we have deposited the goods they have canceled the license with respect to this Warehouse then we will remove the goods from this Warehouse to another Warehouse in that case what are the formalities we are not required to file any new bill of Entry because already we file in bond bill of Entry only when it we clear it for home consumption we need to file X Bond bill of Entry so we don't have to file any bill of Entry but just a transfer request we need to make and again no need to execute a new Bond already the bond that was executed at the time of deposit of goods in the first Warehouse that itself will be sufficient so no bill of Entry but a transfer request to be made customs duty not payable and the bond will be retained suppose if the goods are taken for importer's place so what will happen so that is for home consumption X Bond bill of needs to be filed and the custom duty is payable and the bond whatever is executed will be released upon payment of customs duty and here there is one like two cases two Supreme Court cases casam ran case and SBC sugars Case by Supreme Court which says that if the goods are not cleared within the permissible warehousing period on expir of the warehousing period the goods are deemed to have been removed for the purpose of collection of customs duty so usually we will take the relevant date for determination of rate of Duty on the date of xon Bill of Entry but suppose if what happen the wosing period is over and thereafter we are filing the X Bond bill of Entry the date on which wosing period got over on that date whatever is the rate of Duty that should be taken not the date on which X Bond bill of Entry is filed but usually we will take the rate of Duty prevailing on the X Bond bill of Entry so this is because of the casam ran case and SBC sugars case they are telling that if the goods are deposited in a warehouse and the permissible warehousing pred is expired on expir of the warehousing period the goods are deemed to have been removed and we need to do the computation of custom duty and collection will arise so that is this Goods to be improperly cleared on expir of warehousing period and then for clearance to the importers Place X Bond bill of entry for home consumption needs to be filed cleared upon payment of custom duty and bond executed will be released or the goods can be taken to export from the warehouse when the goods are taken from our export we don't have to pay customs duty because Goods did not cross the Customs barrier so we don't have to pay customs duty on the import and whenever we are exporting we need to file a shipping Bill or Bill of export that formality is only to be done so no bill of Entry but a shipping bill needs to be filed custom duty not payable and the bond will be released because the goods are no more in the warehouse then when the when the goods are in the warehouse so owner of the goods is having certain rights what are those rights number one so owner can inspect the goods so he can check with respect to those goods at time to time and he can sort or inspect the goods or sorting of the goods and showing them for sale but the warehous keeper so has to put certain restrictions to ensure that the goods are not damaged even the Importer should the owner of the goods should exercise care and caution to prevent the loss deterioration or damage because if there is any damage or loss at the warehouse stage then in that case we will be claiming remission of Duty or abatement so that is loss of Revenue to the government so that's why this caution needs to be exercised by the owner of the goods and see some more points in this regard so come back to page 220 imported goods can be deposited without payment of customs duty in a customs Warehouse basically that is licensed by the Customs department so the types of warehouses if you see it we will have public Warehouse private warehouse and special Warehouse so section 57 58 and 58 a and in public wouse goods belonging to any person can be deposited but in a private wouse only Goods belonging to license C can be deposited only notified Goods can be deposited in special Warehouse which will be under Customs log if Warehouse license is canel yes there is a possibility of cancellation of license so if the licensing regulations are not met so then the warehouse keeper so has to surrender his license like his license will be cancelled suppose on account of breach of conditions by the license holder Goods deposited in such Warehouse should be transferred to another Warehouse or it should be cleared for home consumption or it should be exported within 7 Days within 7 days from the date on which cancellation order is served so any of these three things should be done either it should be transferred to another wos or cleared for home consumption or it can be even exported and at the time when we deposit the goods the wos we need to execute a bond that is called as warehousing Bond and that warehousing bond is three times the customs duty payable on such Goods so we need to execute so warehousing bond is required for deposit which is of two types Consignment Bond and general Bond so Consignment Bond will be three times the duty payable at the time of deposit General Bond as specified by the officer upon execution of the bond the proper officer will pass a wosing order of course in bond bill of Entry needs to be filed and warehousing order will be passed and what is the warehousing period one year from the date of warehousing order considering the nature of goods it may be reduced or enhanced and this period is not applicable to eou ehp STP and where where the manufacturing operations are permitted and interest free period is 90 days and thereafter at the rate of 15% paranam from 91st day after the date of a closing order till the date of actual clearance and payment of customs duty we need to pay the Customs uh Duty along with the interest that is applicable but remember interest computation don't apply casaman case for interest computation we need to take till the date we are actually removing the goods and paying the customs duty but the cas case is only for determining the rate of Duty but when we actually file the xon bill of entry and clear and pay the duty until that point of time interest computation needs to be made so be careful with respect to this and Manufacturing and other operations are permitted in the warehouse and Duty not payable on such Warehouse Goods if processed goods are exported so we have imported some raw material we process some goods and we have exported that Goods now on the imported material we don't have to pay any customs duty however there will be some waste and scrap which will arise during the manufacturing stage so what is the treatment of that Wast and scrap so that Wast and scrap if it is destroyed we don't have to pay customs duty otherwise if the Wast and scrap is cleared for home consumption then we need to pay customs duty as if Wast and scrap is imported at the rate applicable to the WT and scrap however Customs payable on waste and scrap at the applicable rate to waste and scrap arising out of manufacturer if such waste and scrap is not destroyed within the warehouse then in case of volatile Goods so we will be able to claim the remission so custom duty not payable on the quantity lost on account of a operation or other causes so that is with respect to volatility for example whiskey is imported and we have kept it in a barrel and that whiskey imported one barrel is some, L and at the time of actual removal only 970 L is there now on the 30 L we don't have to pay customs duty that is what section 70 says so in case of volatile volatile Goods we have some allowance that is available so these are the provisions that we have with respect to warehousing and next we have so segment 31 page 223 refunds under Customs so in this refunds under Customs so basically we have three sections which talks about the refund section 26 which is refund of export Duty and 26a refund of import Duty and section 27 so normally when we pay customs duty in excess so when section 26 is applicable section 26 we have seen already in the context of section 20 whenever the export is happening on export we are paying the customs duty and those exported goods are being important so then at the time of import of that particular Goods so whatever custom duty we paid at the time of export that we will get as a refund so Goods exported on payment of Duty and imported otherwise than as a resell which means that it will be like rejections or returns only so it should not be resale like I'm selling to B outside India and B sell to C and from C I should not buy that is not allowed here so I'm selling to b means B should return the goods or B should reject the goods then the section 26 will be applicable so here 100% of the custom duty paid at the time of export we will get as a refund and what is the time limit within which the exported good should be reimported 6 months and it can be extended for a further period of 6 months so basically it is one year so Goods should be imported within one year from the date of export so from the dat of export the good should be imported within one year so one year usually is applicable in which case so when we are exporting and when we are importing so usually in case of uh remaking reprocessing refining so there only it is possible export goods will be reimported within one year and refund is subject to unjust enrichment actually this is not applicable refund subject to unjust enrichment is not applicable in case of section 26 so this is not applicable you just omit that and how much refund we will get 100% of the customs duty paid on export we will get what is the time limit 6 months from the date of order of Home consumption so 6 months from the order for home consumption we will get the uh now we can make the application so after the date the goods are exported the goods are imported now so from the time it is imported we can make application within 6 months and Export to import the time limit will be one year and here customs duty not payable on reimport on account of section 20 yes that's what you have seen whenever the exported goods are imported for the purpose of repairs remaking reprocessing we have that notification which says that we don't have to pay customs duty so that will be applicable so these are the various Provisions like various points related to section 26 now looking into 26a 26a is applicable in a scenario where the imported goods are defective but we don't know that it is defective at the time when we are clearing it for home consumption and after clearing it for home consumption we came to know that the goods are defective then in that case is there any relief so basically if you see that section 1322 23 subsection 1 23 subsection 2 is before the time of clearance but what if we have cleared and thereafter we came to know that the goods are defective then in that case 26a will be applicable so first imported goods are either exported or destroyed or relinquishment of title so basically so we have relinquishment of title abandoned means we are relinquishing the title with respect to that so exported destroyed or abandoned so that is we relinquish the title as they are not confirming to the specifications or defects so what is the time limit for application so we need to make application within 6 months from the L export order so in case if the imported goods are exported or if the goods are destroyed from there within 6 months and suppose if the goods are abandoned that is relinquish the title from there within 6 months we need to make application for refund of custom duty paid on import how much is the refund you will get 100% of custom duty paid on import and the goods must be exported destroyed or abandoned within 30 days or it can be extended for a further period of 3 months from the date it is imported cleared for home consumption and it should not be used and we should not claim Duty drawback so if you claim Duty drawback already you are enjoying the benefit imported goods reported you are getting the duty drawback then you will not get the customs duty refund in case of 26a so remember section 74 subsection one duty drawback and 26a are mutually exclusive and then so here we have relinquishment of title that we come across in three different places so what are the three different places where we come across relinquishment of title so relinquishment of title we have under section 23 subsection 2 so in section 23 subsection 2 we have relinquishment of title again provisor to section 68 provisor to section 68 also we have relinquishment of title again in this place we have come across relinquishment of title that is section 26a so when this relinquishment of title under 23 subsection 2 so at which stage we need to make before the order for home consumption or warehousing before the order for clearance before the order before the order order for clearance before the order for clearance okay whereas when the relinquishment of title under provisor to section 68 warehoused Goods with respect to warehoused Goods we can claim the relinquishment of title under provis to section 68 whereas 26a that is after actual clearance after clearance after clearance within 30 days plus 3 months within 30 days plus 3 month months so this is the time limit by which we need to claim the relinquishment of title so that is what it is given here then section 27 talks about customs duty paid in excess so whenever customs duty is paid in excess by mistake so in that case we will get the refund what is the time limit for application of refund So within one year from the relevant date what is the relevant date depending upon the situation so whenever you we pay the customs duty from there within one year if the refund is on account of judgment decree or order one year from the r of judgment decree or order if the refund is on account of special order one year from the date of special order like that so one year from the relevant date usually the date of payment and what is the amount of refund 100% of the custom duty paid on import or export we will get as a refund other points refund amount should be equal to or more than 100 rupees and here refund is subject to unest enrichment means we need to prove that so we have not transferred the burden to the next person and refund application within one year is not applicable if the duty is paid under protest so there is no time limit so the duty is paid under protest protest means you don't want the you don't want to pay the customs but you want the goods so you pay the customs duty and under protest you get the goods and thereafter you make a appeal stating that you are not willing to pay the customs duty because this is not the customs duty that you need to pay so that is called as payment of Duty under protest in that case the refund there is no time limit so even Beyond one year also you can make the application so once you make application for refund within three months they need to Grant the refund in case of GST it will be 60 days whereas in case of Customs 3 months they need to Grant refund from the date we make application if the refund is not granted within 3 months from the date of application then interest will be you know receivable by the Importer or exporter at the rate of 6% perom here the interest rate is same 6% perom so for the period Beyond 3 months there it is 60 days and the interest rate is same 6% only here it is 3 months and the interest rate is 6% per anom so this is about the provisions like important points related to refunds so with this we have completed Customs all the portions and now we are moving on to foreign trade policy segment 32 so this foreign trade policy is actually you know previously it was guaranteed area but now as they have reduced the weightage of the Customs to 20 marks I don't think so they will be asking a question on foreign trade policy for like definitely so may or may not be asked but there are some standard areas which are very very important in foreign trade policy you need to focus on that particular areas and this particular lecture you please quickly have a look into this revision lecture plus whichever areas I'm telling as important those areas you Mark and you please revise those areas two three times so that if at all the question comes in exam also you'll be able to write okay so first of all what is foreign trade policy foreign trade policy refers to the set of guidelines which is given by the directorate general of foreign trade this directorate general of foreign trade is an authority which is under Ministry of Commerce and Industry Ministry of Commerce and industry has been delegated with the power with respect to regulating the Imports and encouraging the exports so for regulating the Imports and encouraging the exports one law has been created that is foreign trade regulation and development act 1992 under that foreign trade regulation and development act the job of regulating Imports and encouraging exports is given to the ministry of Commerce and Industry so that Ministry of Commerce and Industry delegated that power to dgft director general of foreign trade and the dgft will come out with a policy for the purpose of doing this so that is called as foreign trade policy and they will implement this foreign trade policy through their Regional authorities who are located across the country so that is about this foreign trade policy is about then what is the difference between foreign trade policy and Customs act foreign trade policy talks about the brain of the international trade what to import and what to export where Customs act talks about the procedures valuation how to import and how to export so what to import what to export is in FTP how to import and how to export is in customers act and this foreign trade policy current foreign trade policy is with effect from 14 2023 and for current foreign trade policy there is no Sunset clause which means usually every foreign trade policy is for a period of 5 years but the current foreign trade policy we don't have any end date so till the time it is withdrawn or it is amended so this foreign trade policy will be existing so current FTP shall continue to be operation unless otherwise specified or amended and so these provisions of foreign trade policies are governed under foreign trade regulation and development act and I told you so it is controlled by dgft and Regional authorities so basically what are the contents of foreign trade policy we have the basic policy plus export incentives so what is the policy with respect to import of certain Goods whether it is prohibited restricted Etc and what are the various export incentives then we have Handbook of procedures which is not there in syllabus so then that is what are the procedures to be followed then what are the forms and standard input output norms and harmonized system of coding that is inter Indian trade classification so for what product what is the policy Etc so this point number two to point number five is not there for us only the basic policy and Export incentives is applicable in that the basic aspects of FTP that we are trying to understand so imports and exports are classified into four in case of FTP that is prohibited which means you cannot import that or you cannot export that it's called as prohibited restricted means you can import it or export it but you need a license to import or export that license is called as authorization and number three so that is called as reserved for St which means only State Trading Enterprises can import those goods or export those goods for example food products can be imported only by Food Corporation of India petrol and other fuel product can be imported by IO or omgc that is called as reserved for State Trading Enterprises and finally freely importable and freely exportable which means that you can import it or export it without any license not that freely importable means no need to pay Duty so here we don't bother about the custom duty we are talking about the policy so therefore freely importable freely exportable means you can import it or export it without any license that is called as freely importable and exportable and then authorization refers to the license so generally whenever the restricted goods are there those restricted Goods can be imported only under an authorization so this authorization we need to obtain from directorate General of oriented this is like a license required and either through dgft or through Regional authorities we will be getting authorization is not a right when we make an application if they are not granting it does not mean it is a right and we should get it and dgft or Regional Authority May refuse to Grant or renew and license under old FTP continue to be valid in the new FTP also and restricted Goods imported are subject to actual user condition actual user means only the person who is importing should use those goods he should not be transferring those goods to any other person but dgft is having power to dispense the condition so which means they can allow these Goods to be sold to any other person also so actual user condition may be dispensed with and every importer and exporter is required to obtain a import export code from dgft and that is a 10 digit permanent account number your permanent account number itself will be notified as the IEC but we need to make application for that and specific provision in FTP shall Prevail over the general Provisions that we know and we have some trade facilitations under foreign trade policy so these are the various trade facilitations that they have come Indian government has given to the importers and exporters what are those trade facilitations so now whenever you get a question so Write a brief note on trade facilitations under FTP so any few points you remember and you need to write that the first trade facilitation is they have appointed a National Committee on trade facilitation so this is a interministerial body so for the purpose of you know like single clearance single point clearance with respect to all the formalities so this interministerial body has been created and uh they have four pillars so transparency technology simplification of procedures and risk-based assessment and infrastructure so these are the four pillars of this National Committee on trade facilitation so transparency you know so all the procedures will be transparent and there are no hidden cost Etc associated with this technology everything will be online and simplification of procedures and risk-based assessment so not that everyone will be assessed only based on risk criteria so the assessments needs to be done that is that then free passage of export Consignments so whenever the goods are being taken for export so generally we should not be putting much restriction on export and unless there are doubts that these goods are hazardous or prohibited Goods they can do the examination Consignment meant for export shall not be withheld or delayed for any reason by any agency of Central or state government in case of any doubt Authority may ask for an undertaking from exporter and release such Consignment no seizure of export related stock that's what no seizure as to disrupt the manufacturing activity but in exceptional cases So based on Prime of AC irregularities they can seize for a maximum of 7 days unless irregularities are substant iated so because export should not be restricted so that's the reason why so they have relaxed these conditions then they created something called as authorized economic operator program so this authorized economic operator so it is like they are Partners in the nation building so to enable the business involved in international trade to reap the benefits what are the various benefits that are given to this authorized economic operator so the government will notify certain exporters as authorized economic operators so to them certain privileges are given so you mark this as important so what are the various benefits that are given to the authorized economic operator remember the key word preferential BS preferential so preferential bets preferential BS so this authorized economic operator will get a preferential B what is that preferential bet first preferential Customs treatment in terms of reduced examination so there won't be much examination they will get a preferential treatment with respect to reduced examination and fostter processing and clearance of cargo number two so not only in India even at the time of export so Indian will have some agreement with the foreign countries so with those countries where India is having some trade agreement so there they get the Border clearance privileges so these exporters will get the Border clearance privileges in mutual recognition agreement partner countries that is b e for no enhanced Port delivery so even in the ports also whatever benefits that they need like all the people will be able to assist them that is called as enhanced Port delivery and D is deferred payment of custom duty in procedures we have learned that deferred payment of custom duty rather than paying custom duty immediately we can pay customs duty at a frequent intervals that is deferred payment of custom duty facility is also given to them and finally self certification generally they need to produce a country of origin certificate so this country of origin certificate they need to get from Indian government but with respect to that self-certification they can do not only this lot of documents they can do self-certification so this is with respect to benefits given to them so remember preferential bets so these are the various benefits given to authorized economic operator it can be asked as a short note question then other measures so we have a single window system to facilitate export of perishable agricultural produce because whenever the agricultural produce needs to be exported there is only a small gestation time so within that time the agricultural produce needs to be exported so therefore in the form of formalities it should not be delayed so therefore they have established a single window clearance so that Authority has given the clearance which means that the goods agricultural produce can be exported NAD Bandu so this NAD Bandu is like mentoring the exporters so they will be mentoring the new entrepreneurs who has like started the business of exporting so then issue of e so now IEC is made online and dgft online customer portal is there so 24 by7 whatever peries we have we can get it solved there and online facility for e- registration membership certificate rcmc refers to registration come membership certificate generally if you're an exporter you need to get this membership certificate from the relevant export Council so for example if you are an Onan Merchant exporter so then there will be Onan Merchant exporters Association will be there in that Association you need take a like a membership same way if you are a gold Merchant so there will be export house for gold so in that place you need to get a membership otherwise you will not get the benefits under foreign trade policy the online facility for E certificate of origin I told you generally in the other country we need to that is exporter needs to produce the certificate of origin so the Importer will be asking us to get that so that is now made online online facility to file quality control and trade disputes so then Bank realization certificate to prove that the export proceeds are realized so we need to get a bank realization certificate that also can be made available online these are other measures then they have set up certain towns for export Excellence so like central government will be taking so investment in the towns where there has export potential even if the state government is not spending money in those towns but the central government will be spending money for the purpose of enhancing the exports so selected towns producing Goods of 750 crores or more may be notified as town of export excellence in case of handloom handicrafts Agriculture and fishery sector so that will be 150 crores so common service providers in these areas shall be entitled for authorization and other epcg like various incentives also will be given to them then there is something called a status holder certification so the stat status holder certification is again an important area so depending upon the export performance so they will be given as star status so what is that export performance so the star status will be like one star two star three star four star and five star to achieve the one star status they should have a export performance of $3 million and in case of two star remember so remember this 315 50 200 800 okay so what is that you need to remember you need to remember one mobile number what is that mobile number 31550 31550 2800 so $3 million one star $15 million two star $50 million three star 2 and 800 four star and five star so this is the export performance so and so basically the star status is to encourage the exporters by recognizing their achievement and they will be eligible for certain benefits also so what are the various benefits to the status holders so you remember with a keyword wipes Made in India Exempted so these are the various benefits to status holders wipes Made in India Exempted w w refers to Warehouse so a two star and above except one star except one star two star and above can have their own warehouse and then I I for input output nms usually exporters so need to obtain input output NS for their industry so then only they will get the license to import the restricted Goods so that input output NS will be fixed on priority within 60 days and then we have p p for preferential treatment and priority and handling which is already there for the authorized economic operator the same privilege is given to them then e for exports free of cost except gems and gems and gold jewelry so there won't be any cost associated with respect to the exports then yes self declaration with respect to authorization and custom clearances this we have already seen even for authorized economic operator then Made in India so Made in India self certification for three star and above so three star and above can certify that these Goods Are Made in India and Exempted from Furnishing Bank guarantee and compulsory negotiation of documents so Made in India Exempted so these are the benefits to status holders you need to remember this wipes Made in India Exempted W for wosing license two star and above then I for input input output nms on priority within 60 days and P for preferential treatment and priority handling e for so exports free of cost and S for self declaration with respect to authorization and custom clearances Made in India certification for three star and above and Exempted from Furnishing Bank guarantee what is this renegotiation of documents so basically negotiation of documents means that so they need to uh go to the bank and they need to Discount that uh Bank gu or other things so that they are Exempted from doing that is this so how to compute the export performance usually this export performance we have a $3 million5 and $50 million Etc so this will be based on current and previous Three Financial years but in case of gems and juary sector it will be current and previous two years but otherwise it will be current and previous three years will be taken so four years cumulative exports is only this3 million5 million and we need to achieve this in all the three preceding Financial years so then only for the fourth year we will be able to get for example last 3 years so export performance we need to count so that export performance is 3 million 15 million depending upon that in the fourth year they will be able to get so means three times they need to achieve the $3 million only then fourth year they will be getting that is the meaning of that three times they need to achieve 3 million then they will get one star three times they need to achieve $15 million then they will get two star and in case of gems and jewelry sector it will be two preceding years then Grant of double weightage that is if they're making 100 rupees as export so it will be counted as 200 in case of msmes so micro small and medium Enterprises manufacturing units having ISO or Bas certification or Northeastern states unit in Northeastern State sikim jamu and Kashmir and ladak and exports of fruits and vegetables only till the time they are achieving the one star status they will be given this double weightage and then so these are the two area which are very very important if you see what are the benefits to authorized economic operators and what are the benefits to status holders and when they will be called as status holders so this benefits to status holders already they have given in RTP May 24 so due to that reason there is a chance of asking this question as a theory question then next specific provision relating to Import and Export here you should be making it very simple what is that suppose if it is restricted it is requiring authorization if it is freely importable it do not require you know authorization freely importable freely exportable do not require authorization restricted means it requires authorization this is the general provision whereas wherever there is a deviation even though it is freely importable but it requires authorization even though it is restricted but do not require authorization so this is where you need to remember exceptions you need to remember the general Provisions you don't have to make any remembrance related to this for example you are importing or exporting samples say you are importing samples and import of defense items seeds bees and new drugs we don't know whether it is generally freely importable or freely exportable but you are importing it as a samples so that requires authorization then other Goods freely importable even if they are restricted so generally those goods are restricted but when you are importing it as samples you don't need any license but with respect to four Goods always license is required what are the defense items seeds bees and drugs so requires authorization then whenever you are exporting some Goods those goods are generally restricted Goods it requires authorization those goods are freely exportable Goods that do not require authorization so this you don't have to remember so this is based on the general Provisions so this whatever is there this is General this is General so there is nothing to remember but this part is there now import part so that import part you need to remember so what is that you need to remember in this import part generally goods are freely import ortable or restricted you leave it but when you are importing samples okay let it be freely importable or restricted four Goods as import as samples you always need authorization what are they so that is defense items seeds bees and new drugs that requires authorization other Goods not require authorization so don't see what is the type of goods whether it is generally restricted Goods or freely importable Goods that is not required then up to what extent we can bring the samples without payment of customs duty up to three lakhs we can import the samples without payment P of customs duty okay then that is this dutyfree import of samples up to three lakhs without payment of customs duty so this also you need to remember so you just put a tick and that only we need to remember more then import or export of gifts so first we will see import of gifts with respect to import of gifts so if like again don't see what is the type of the product whether it is freely importable product or restricted product you don't see you are getting something as a gift suppose if it is through postar career including e-commerce only few goods can be coming as gift other Goods should not come as gifts in post or career or e-commerce so only two goods that is Rocky and life-saving medicin can only come through post or career as gift as gift other Goods should not come as a gift if it is coming as gift it will be prohibited they will not allow you to do the clearances so they will retain that Goods okay so does but Rocky life- saving medicines you can bring it as post or career as gift and do not require any authorization does not require any authorization and customs duty payable on gifts imported of course we have to pay the custom duty only thing it do not require authorization see it may be originally restricted or originally freely importable that is irrelevant you are getting some Goods as gift first in which mod it is coming as so post or CER or e-commerce only Rocky and life- saving medicines is allowed do not require authorization all other Goods prohibited and even though it do not require authorization but customs duty you need to pay but for customs duty also they have given a relaxation if the customs duty is up to 100 rupees on Rocky that is Exempted we don't have to pay the customs duty whereas if you are importing to other modes authorization not required even though those goods are restricted Goods because you don't know whether it is a restricted product or not when they are sending so that do not require authorization but it should be coming through other modes other modes means what so like a commercial regular cargo it should be coming it should not come as CER or post so this you need to remember then when it comes to export of gifts simple so if the product is restrict definitely that requires authorization General If the product is freely exportable that do not require authorization normal that is General but even though it is freely exportable but if the value of goods exceeds 5 lakhs so then that requires authorization because freely exportable only do not require authorization but why you are exporting it as gifts more than five lakhs so the foreign exchange will get affected so therefore that requires authorization that is the exception remaining is General point you don't have to remember so then next one passenger baggage passenger baggage so it is fully based on the general provision only we don't have to remember if it is restricted Goods that requires authorization freely importable Goods authorization not required restricted Goods authorization required freely exportable Goods authorization not required but what you need to remember is even though it is restricted Goods even though it is restricted Goods okay even though it is restricted Goods but if it is household goods and personal effects drawings p patterns designs and other notified Goods then do not require authorization that alone you need to remember so bagage general rule so if it is restricted Goods bring brought as baggage requires authorization if freely importable Goods brought as baggage do not require authorization same way at the time of export also but we have one exception that exception you need to remember what is that generally these goods are restricted Goods but the restricted Goods is Al household goods and personal effects drawings patterns and other notified goods for export in baggage so that do not authorization then import of secondhand Goods you are importing some secondhand Goods what are those secondhand Goods if it is capital goods or other than capital goods see capital goods even though firstand when it is imported it requires license or do not require license that is relevant but we have a separate provision related to import of secondhand capital goods what is that so you are importing some secondhand capital goods so it's firstand don't bother now what are those second hand capital goods if it is air conditioners G generator sets AC generator desktop refurbished or reconditioned spares of laptops or notified electronic Goods okay now they have changed the list so air conditioners generator sets desktop refurbished or reconditioned parts of laptops or desktops and notified electronic items require authorization even though it's firstand do not require authorization other capital goods so do not require authorization but they have given if it is reconditioned spars Rec conditioned or refurbished spars so at least 80% of the original life should be there for this reconditioned or refurbished spars because in the name of waste like recondition spares Wast and scrap should not be imported into India that's why they're telling at least 80% of the original life of the spare should be there so only two points these Goods requires authorization other Goods do not require authorization other than capital goods that is remaining Goods remaining Goods so requires authorization definitely so then what about if it is import for the purpose of repairs or refurbishing or reconditioning authorization not required again we don't have to follow what is the regular policy when it is imported in first hand so for second hand entirely you need to remember the separate Provisions with respect to this also one more point if the capital goods are used in a project abroad for at least one year so that can be imported into India without any license any Goods even these Goods AC's generator sets Etc so if it is used in a project abroad for one year so we don't have to execute any license without authorization it can be imported even if that goods are otherwise restricted then prototypes prototypes means what prototypes means generally it is like a product which is developed so a specimen of the product or a model of the product so new or secondhand prototypes or secondhand samples may be imported without an authorization so we don't need any authorization okay so provided that it is under actual user condition and the person who is importing is engaged in production or having industrial license and he files a self declaration that he is not going to sell it but it is just a prototype okay so that do not require an authorization then metallic Wast and scrap always requires authorization because that is harmful for the no environment so import of any form of metallic waste crap will be subject to the condition that it will not contain hazardous toxic waste radioactive so it is condition that suppose if it contains hazardous toxic waste or radioac contaminated Wast and scrap then in that case it is prohibited it is prohibited so other Wast and scrap is allowed so if Wast and scrap contains hazards toxic waste or radioactive contaminated waste or scrap containing radioactive material or types of arms ammunition shells Etc so then it is prohibited remaining Wast and scrap is allowed but that requires authorization so Wast and scrap always require authorization always require authorization then next import for export so this is General import for export if it is freely exportable do not require authorization restricted for export requires authorization okay so restricted generally freely exportable first it is freely importable here then it is freely exportable on import authorization not required on export also authorization not required okay then so freely importable and restricted for export so freely importable so authorization not required for import if exported in the same or substantially same form for export also we don't require any authorization if it is exported in the same or substantially same form so what you need to remember if it is freely importable and it is exported whether at the time of export the Restriction is there or not don't bother if the imported goods are exported in the same or substantially same form you don't need authorization then next one restricted for import at the time of import it is restricted definitely authorization required simple so it is General so only this point you need to remember and this is General why it is General suppose if it is freely import restricted for import once it is restricted for import definitely authorization is required for import restricted for Import and Export authorization required for Import and Export also then next one you are importing some Goods or you are locally purchasing some goods and you are exporting it for repairs or quality improvement or upgradation so if it is restricted Goods require authorization freely importable Goods authorization not required so that's a general rule you don't have to remember that so these are the points so whichever points I have marked as stick that alone you remember and then finally we have export promotion schemes so the various export promotion schemes or export incentives that we have is first advanc authorization and dutyfree import authorization and let's see what is the purpose of this this is basically for the purpose of procurement of goods that is raw material without payment of customer Duty that is why we have Advance authorization Duty for import authorization that is you are an exporter you can procure the raw material without payment of customers Duty then next we have something called as epcg so this RTP is there then epcg like how AA and dfia is for import of raw material or procurement of raw material without payment of custom duty epcg is for procurement of capital goods without payment of customer Duty and then suppose if you have some local taxes so to give you the relief of the local taxes that refund of the local taxes they have created a scheme called as RTE scheme rebate of Duties and taxes on exported Goods scheme and thereafter we are having uh you know export promotion Zone schemes that is eou ehtp STP and btp what are the various incentives available to them and finally deemed exports so deemed exports means there are some goods and which are sold to some people in India but it will be considered as exports for the purpose of FTP and we are eligible for certain incentives so let's try to understand first what are the various deemed exports that we have so the objective of deemed exports is that Indian manufacturers are treated on par with the foreign suppliers to promote the Mak India initiative that is rather than say you are an exporter rather than you are purchasing from a person outside India you purchase from me so therefore you will be saving the foreign exchange outflow when you save the foreign exchange outflow it is equal to earning the foreign exchange so the theory is simple foreign exchange saved is foreign exchange earned and the consideration ation so for me either the consideration can be in Indian rupees or it can be in foreign currency so that is okay so basically you are importing rather than you importing you purchase from me for me it is considered as deemed export so what are the various deemed exports under foreign trade policy first so you are Advanced authorization holder means you are exporter you can import the goods without payment of custom duty rather than importing without payment of custom duty you can purchase from me without payment of GST for me it is deemed export this is are already in GST number two Supply Goods to eou ehtp STP and btp say you are eou ehtp STP and btp you can import Goods without payment of rather than importing you can procure from me without payment of GST so that's why for me it is St as deemed exports and then epcg so you are epcg holder means you can import the capital goods without payment of custom duty rather than importing the capital goods you purchase from me without payment of GST so these three are trats even deemed exports under GST that is sale to AA sale to epcg holder or sale to eou ehtp STP and B TP and then there are some projects which are called as projects uh International competitive bidding projects or projects financed by International competitive bidding so notified projects financed by agencies notified by Department of Economic Affairs and international competitive bidding project so total five projects you need to remember so any projects which are international competitive bidding projects which means a bid can be placed by any person across the globe so International competitive buing project or the projects which are financed by Ministry of uh Department of Economic Affairs and then Mega Power projects nuclear projects or projects financed by un or International organizations so to them if you are making Supply that is also called as deemed exports so suppose if I'm making supplies to these people for me it is called as deemed exports what are the various incentives or benefits in case of deemed export number one for making the sale I can import without payment of customs duty under Advance authorization or for making the sale I can import the goods whenever I'm selling to these people whatever custom duty I pay on import I will get as a Duty drwb back these are the two incentives so Advance authorization so I can import the goods to make sale to these people without payment of Duty or I can import the goods on payment of customer Duty then I can sell it to them and I will get the duty drawback even refund of terminal excise duty suppose locally if I procure anything to make the goods on that locally procurement if there is any excise Ry burden that also will be refunded to me so that is the benefits in case of deemed exports and conditions for deemed export Supply shall be made directly to the entities listed above third party shall not be third party supply shall not be on their behalf that is on these people's behalf if I'm making supplies to some other person that will not be counted as deemed exports in all cases Supply shall be made directly to the designated projects or agencies and subcontractors May however make supplies to the main contractor instead of supplying directly say for example I'm the main contractor and I'm appointing one subcontractor subcontractor can make Supply to me for subcontractor also it will be Trad as deemed exports and supply of domestically manufactured goods by Indian subcontractor or to any Indian or foreign main contractor directly at the designated project she'll also be eligible for deemed export benefit either they can supply to me or they can supply directly to the know site so then also for them the subcontractor it will be treated as deemed exports so these are the various deemed exports and the benefits in case of deemed exports now if you see Advan authorization and dutyfree import authorization for what purpose these two licenses are for the purpose of procurement of goods import of goods without payment of C Duty or local procurement without payment of GST and why we have two licenses so if you see first point Advance authorization whatever license that we have got it is non-transferable means only the person who is having the license can import the goods whereas dfia is transferable after they complete the export obligation export obligation means when you are getting a benefit you also have a obligation to achieve the exports so both these licenses have a export obligation so but in case of a even after export obligation gets completed you cannot transfer the license to some other person but dfia dutyfree import authorization license can be trans transer outward Supply under Advance authorization you can make physical export so including supplies to will also counted for export obligation deed export also counted for export obligation and sale to foreign goinging Velar aircraft is also counted for export obligation whereas in case of dfia only physical export is considered for export obligation how much should be the export obligation under AA so minimum value addition 15% which means if your import CIF value is 1 lakh your fob value of export should be more than or equals to 1 15,000 so minimum value addition 15 % however in case of specified Goods it can be less than 15% whereas under dfia the minimum valuation is 20% means if the CF value of import is 1 lakh the fob value of export should be 1 lak 120,000 or more than 1 lak 120,000 then eligibility who is eligible for Advance authorization an exporter who holds a AEO authorized economic operator certificate or two star and above status they both only are eligible for AA but all other exporters are not eligible for AA so who are eligible for AA authorized economic operator or status holder two star and above okay then all other exporters not eligible for AA they will get only dfia and fixation of standard input output Norms AA can be issued even if SI is not fixed but dfia will be issued only if SI is fixed so then duties that are Exempted so basically in case of Advance authorization all the duties are Exempted including the CBD sad igst and additional customs duties everything is Exempted but in case of dfia only basic customs duty is Exempted but other things we need to pay but of course igst we can take as ITC and applicability of authorization so in case of AA only manufacturer exporter or Merchant exporter tied to supporting manufacturer they only will be getting the benefit so Merchant exporter means the one who is exporting supporting manufacturer means one who manufactures okay whereas in case of dfia a merchant exporter even though not right to supporting manufacturer is eligible for dfia benefit so when available so in the case of AA imported inputs are subject to pre-import condition pre-import condition means first you import and uh you will not be paying any customs duty then you use it in the export and you need to make the export whereas dfia is like like post export basis post export basis mean first you import with with payment of Duty you export it based on export next time you can import without payment of customs duty that is basic customs duty when is it not available so AA is not available for specified export goods as well as specified inputs whereas in case of dfia no dfia shall be issued for an input which is subject to pre-import condition because for pre-import condition we have only AA and then import of tires also not eligible for dfia and finally what is the validity so in case of AA if you are making deemed exports the validity is 12 months or the project completion whichever is later in other cases 12 months from the date of issue and revalidation for further 12 months only once so 12 months plus 12 months but dfia only for 12 months and there is no further revalidation means within this period we need to Import and Export obligation period in case of AA we need to achieve 15% value addition dfia 20% AA we need to achieve within 90 days from the date of clearance of import Consignment whereas DFA we have enough time 12 months from the date of online filing then we have something called as Advance authorization for annual requirement so like yearly this much amount you can import this much value of the goods you can import like that they have given how much entitlement so you can import up to CIF value of imports of 300% of fob value of physical export or in the preceding premi year or 1 CR whichever is higher so last year export is somewhere like 2 crores so 2 crores into 300% so that is like 6 six crores or 1 CR whichever is higher so six crores worth of raw material you can import it without any payment of customs duty that is known as Advance authorization for annual requirement this will be given to any person so this will not be given only to authorized economic operator or to you know two star and above status holders this will be given for all exporters who is having a past export performance in at least preceding two Financial years so they are eligible for this okay and what is that export performance so that is what we have seen so they should be having some export they will be eligible for Advance authorization for annual requirement and fulfillment of export obligation basically the value addition is based on fob value of exports minus CF value of UTS divided by CF value of imports into 100 so that should be taken if any free of cost material is supplied by the Importer to the exporter which is used in the imported goods so then in that case so that particular material should be added to both export and imports and then we have RTP scheme so rebate of Duties and taxes on exported Goods this scheme is very simple so in order to give the relief against the local taxes which are Bor on the exported Goods so there will be this R scheme there are various local taxes like corporation tax Municipal tax Mundy tax local body tax garbage tax Etc these taxes will not be having any refund in case of GST there is a refund on export in case of customers also there is incentive but uh there are no incentives in these local taxes to give the benefit of these local taxes a percentage of fob value of your exports will be given as a incentive that will be given in the form of escript and that escript amount can be used only for payment of customs duty or if you don't have like the custom duty liability you can transfer that to any other person that is known as transfer of credit script and this transfer of credit script will be treated as Exempted for purpose of GST but for availment of ITC it will be treated as taxable so and the rebate under this scheme is not available in respect of Duties and taxes already Exempted or remitted so it will be given a percentage of fob that will be given in the question itself and this rebate is subject to condition that you need to realize the proceeds within the time limit under femma that is 9 months not that the rebate will be given only after 9 months first the rebate will be given but you should ensure that you are realizing the proceeds within 9 months and there are some ineligible supplies or categories so in this case RP scheme not possible number one export of imported goods first of all there is no local taxes on this you're importing from one country and exporting to other country there are no local taxes and exports through trans shipment same you are importing from one country and exporting to other country so there is no local taxes on these Goods export of goods subject to minimum export price fixed by the government so you're exporting at the price fixed by government so there's no element of local taxes in this so restricted goods and prohibited Goods you will not get RTP deemed exports also you will not get and supply of products manufactured by DTA units to scz so whenever we are making sale to scz also there is no R DT that will not be counted deemed exports also not counted for R dtp products manufactured by 100% e first of all there is no local taxes for goods manufactured in 100% eou even Goods which are exported under the discharge of Valu addition under aaf for aaf we will make some exports now that will not be counted for RTE purpose so this you need to remember these are some ineligible cases where you will not get RTE benefit and next we have epcg scheme so in this epcg scheme what we will do we will be importing the goods without payment of like capital goods without payment of customs duty so but we have a export obligation and import of goods capital goods even without payment of GST igst or GST compensation s so who are eligible manufacturer exporter with or without supporting manufacturers Merchant exporters who are Tred to supporting manufacturers and service providers so designated as common service providers all these three people are eligible and meaning of capital goods any Machinery equipment apparatus can be imported so either the capital goods can be procured from the global market or from the local market that can be used for any operations either manufactur mining or agriculture Etc and even restricted Goods can be imported but definitely we require approval and it can be imported in semi knockdown or completely knockdown condition and even computer systems also can be imported molds and dies also can be important but all these capital goods which are imported or under actual user condition till the export obligation is completed after the export obligation is completed Goods can be sold or transferred how much is the export obligation basically we have two types of export obligation under epcg that is specific export obligation and average export obligation what is the average export obligation we need to maintain every year exports as the average of the three preceding years and beyond that if we are making any export that will be counted toward specific export obligation how much is the achievement that we need to make six times the duty saved on capital goods for example Duty saved on capital goods is 100 lakhs 100 lakhs into six times 600 lakhs but this 600 lakhs is over and above the average export obligation so export obligation means obligation to export products covered by authorization in terms of quantity or value or both as may be prescribed or specified by Regional or competent Authority export obligation consists of two specific export obligation and average export obligation specific export obligation is over and above the average export obligation so what we need to do first we need to achieve the average export obligation excess amount will be taken towards the specific export obligation so specific export obligation is six times the duty saved on capital goods so that is in case of direct import actual Duty saved in case of domestic sourcing so the notional Duty saved on for Value average export obligation is average of the three preceding licensing years it should be achieved within the overall export obligation period what is the validity of authorization once the license is given the license is valid for 24 months means in this 24 months we can import the capital goods and we have some special points with respect to export obligation the average export obligation shall be fulfilled every Financial year till the export obligation is completed and over and above AEO will only considered for export obligation specific export oblig obligation and either it can be through export of goods either he manufactures or manufactured by the supporting manufacturer even some export of services or export through third parties also can be considered and in case of local procurement of capital goods we don't have to achieve six times we have to achieve 4.5 times and there is no change in average export obligation export under Advance authorization everything so wherever under Advance authorization then dutyfree import authorization also you need to achieve some valuation that will also be counted for ort obligation here exports made from DTA shall only be counted for calculation after fulfillment and after fulfillment of AEO and Export obligation can be fulfilled by supply of Information Technology agreement items and both physical exports as well as deemed exports both will be considered for export obligation so they have given lot of relaxations to achieve the export obligation and then we have export promotion Zone schemes so basically these are about eou ehtp STP btp units and objective is so to promote the exports all kind of businesses they can do other than trading units and majorly export of goods or service other than prohibited and they should not be making sales to DTA except the permissible limit and they need to get a know approval from the unit approval committee or Board of approval and once they get the approval it will be valid for a period of 5 years and thereafter it can be extended for a further period of 5 years by the development commissioner what are the tax implications any Goods imported by them is Exempted from payment of custom duty including igst but on import of services they need to pay GST under RCM and whenever they locally procure that is eligible for deemed exports to the supplier so supplier is having two options they will not recover any GST or they can recover the GST and the eou can claim the refund whenever they make supplies to the recipient that will be chargeable to normal GST export of goods or services is Exempted from payment of customers Duty so these are the various incentives and then other entitlements they're Exempted from Industrial licensing and even export proceeds can be will be realized in 9 months and units will be allowed to retain 100% of its export earnings through EFC exchange earners foreign currency account and they will not be required to furnish Bank guarantee and 100% FDI permitted through automatic route so these are some important points you need to remember their interunit transfer they can transfer from one unit to another unit on payment of applicable you know GST so whatever is there then who can establish any person who is having minimum investment of one CR in plant and missionary can establish in OU but Board of approval can allow for with lower investment criteria even existing DTA can be converted into eou and they need to achieve a positive net foreign exchange earnings that is income in Forex minus expenditure in Forex should be positive in that period of 5 years otherwise the next 5 years they will not be getting the extension and whenever they want to exit from the scheme they can exit from the scheme but subject to payment of applicable customs duties and GST so then if they have not achiev received any obligations they are liable to pay the penalty at the time of exit So then whenever there are certain benefits with the conditions if you are not fulfilling those conditions then that entity will be called as denied entity so in the following situations A person shall be liable to penal action so that is authorization holder violates any condition or fails to fulfill export obligation or fails to deposit the requisite period amount within the period specified and any information of particular furnished by the applicant is some sequent ly found to be untrue or incorrect in that case they will be called as denied entity list and so they once they breach this so they will their name will be kept under the denied entity list for you know a period so then in that case The Firm may be refused to Grant renewal of any license or authorization all new licenses will be blocked the firm name can be removed by concerned Regional Authority if the firm completes export obligation or pay the appropriate penality so these are the various points that we have with with respect to foreign trade policy with this we completed let's move on to the further discussion which is CMA extra topics there are two extra topics exclusively for CMA final which is not there into the discussion so far what we have made in CA final rocket division that is Duty drawback and scz Provisions so let's have a look into this Duty drawback chapter so first what is this Duty drawback all about there is an exporter that particular exporter is importing some goods and on those goods so he has paid some customs duty now those goods are being exported when the goods are being exported on import whatever customs duty is paid a percentage of the custom duty paid on import will be given as a refund and that refund is only known as Duty drawback so basically what is Duty drawback refund of customs duty okay so Duty drawback in simple words is nothing nothing but refund Duty drawback is nothing but refund okay so refund when when we will get this refund there are total three situations where we will be getting refund so this refund is paid under which law under Customs law okay so Duty drawback is nothing but the refund and when this refund will be given in three situations refund will be given when is that so we have imported some goods and these imported goods are exported so when it is export Ed so either as such without use so just remember this example you are importing a you know robot okay you are importing a robot for display in the exhibition and that you have imported from Japan and after completion of the exhibition you are exporting it back to Japan at the time of import you paid some customers dtina on the robo so that when you are exporting you will be getting the refund so as such what whatever is imported the same is exported without use okay so robot in exhibition okay so that you remember as an example so what is the example for this 74 subsection one the example for this is robot imported for exhibition so robot which is imported robot robot imported imported for exhibition robot imported for exhibition so that is an example one situation one imported goods are exported as such without use in this case the duty drawback will be given under Section 74 subsection 1 74 subsection two is what so I'm importing the goods and I'm exporting it as such after use what does it mean for example example we're importing racing cars okay so example for this is racing cars imported racing cars imported so we are importing some racing cars and we are conducting the racing in India after the RAC is being conducted so the car is being exported okay so in this case also imported goods and exported goods are same but it is exported after use but in the previous example we have not used it we have just displayed in the exhib I and it is exported so that's the difference between 74 subsection 1 and 74 subsection 2 so what's the difference 74 subsection 1 imported goods are exported as such without use 74 subsection to imported goods are exported as such after use then 75 so 75 is imported goods used in manufacturer of finished goods which are then exported okay so I'm importing some like raw material and using that raw material I made the finished product for example I'm importing the know display panels and I'm importing the storage devices and I'm making using that so some you know iPhones or some other mobile phone smartphones and I am exporting it okay so import of raw material for what purpose to manufacture the finished goods and which are then exported so example for this is import of import of parts and export of export of smartphones okay import of parts and export of smartphones so which means whatever we have imported and what we have exported is not same so imported goods are different from the exported Goods so we are basically doing some process or manufacturer so then we will be getting the benefit under Section 75 so what are the three situations imported goods are exported as such without use imported goods are exported as such after use imported goods are used in manufactur of finished goods which are then exported so we have three sections 74 subsection 1 2 and 75 now we need to understand here whenever we are getting the duty drawback so already we would have claimed some benefit called as input tax credit so what is the connection between input tax credit and Duty drawback simple you are importing some Goods on import what are the custom duties that we pay basic custom duty we pay social welfare surcharge we pay even we pay something called as igst so that igst which is paid can be taken as input tax credit so let's go back to the first example I'm importing some robot when I'm importing the robot on import of robot I pay the basic customs duty social Fair sub charge and igst that igst I would have taken as credit and at the time of export I will get the refund so then already I have taken the credit refund means it's a double benefit now so due to the reason either you claim the input tax credit benefit or Duty drawback benefit if you are claiming Duty drawback benefit you should not take ITC that is this but this is only in case of section 74 not in case of section 75 so only for the sake of 74 they have given this particular condition so why why for 74 only they have given this condition why not for 75 simple reason to know that we need to see the rate of Duty drawback how much Duty Dy drawback we will be getting if you look into the rate of Duty drawback in case of 74 subsection 1 98% of the customs duty paid on UT so total customs duties whatever we have paid total including igst in that 98% we will be getting as refund in case of 74 subsection 2 also total customs duty a percentage so that notified rates we have so that percentage we will get as a refund so in this case of 74 we get the refund of total customs duty including igst but in case of 75 we will not get like that so based on the export value fob a percentage we will get as a refund Duty drawback okay so that will not cover our igst so as igst is not covered so in case of 75 that's why in case of 75 we can take the input tax credit okay so in case of section 74 Duty drawback covers igst and GST compensations as paid on import therefore ITC cannot be Avail with respect to the same however in case of section 75 Duty drawback covers only customs duty but not igst and GST compensations say so the itz can be AA with respect to the same and we can claim the refund of itz so that we have seen in GST refunds so whenever we are exporting the goods so then whatever itz that is there that we can get as a refund now net itz into zero rated turnover divided by adjusted to turnover so there we will be able to get the refund so remember whenever you are claiming Duty drawback under Section 74 you should not take itz on the imported articles whereas in case of 75 when you're claiming Duty drawback you can claim the itz with respect to igst paid on the imported articles so this is the difference you need to remember then next so when is it admissible 74 and 75 74 already we discussed when 74 is applicable if the imported goods are exported either as it is or after use and the imported article and the exported article should be same or different it should be the same article is easily identifiable to the satisfaction of the ACDC of Customs whereas in case of 75 imported goods are used in manufacturer of finished goods which are then exported so first we will complete the discussion related to 74 and then when we are discussing 75 we can make the parallel references as to to identify the differences okay so first we will complete 74 discussion so what is the time limit so the time limit the goods must have been exported within 2 years from the date of payment of import Duty and it can be extended for a further period as approved by cbic so from the date we are importing or from the date we are paying the customer Duty from the date we are paying the custom custom duty so whenever the goods are imported those goods may be deposited in Warehouse without payment of customs duty and thereafter so from the wos we can clear on payment of Duty so the time when we pay the duty from there the export should be within two years so what is the meaning of export export means the date on which we got the let export order so remember from the time we paid the customs duty on import till the time we are exporting that is let export order the time period should be 2 years and it can be ex for a further period so that's what I have given in the foood note what is the meaning of export export goods shall be deemed to be entered for export on the date of let export order let export order is a order given by the Customs officer whenever the goods are ready for export or permitted for export okay then next see the rates so just now we have looked into the rates so what is the rate in case of 74 subsection one Whatever custom duty paid so for example you are importing some Goods on which the custom duty is 1 lakh now you are exporting those goods as such without use then how much we will get as due to draw back 98% of 1 lakh that is 98,000 we will get as a refund so the loss here is 2% and suppose if it is 74 subsection 2 in 74 subsection 2 what is happening we are using it and later on we are exporting now so because of that depending upon the period for which we have used a percentage will be reduced okay so that we will see so below this table you can see the rates so Duty drawback rates in case of 74 subsection 2 so 74 subsection 2 divided into two situations what is that suppose if you are importing Motor Vehicles so any person it can be individual or company or partnership firm or any person in case of import of Motor Vehicles by any person and goods imported by an individual for his personal and private use so two scenarios like okay they have given in the first chart first Branch two situations what is that first if you are importing Motor Vehicles any person or if you are an individual and importing some goods for personal purpose then you have to follow this chart okay what is that they're telling out of the customer Duty paid like a depreciation they will be giving a percentage deduction and remaining amount you can claim as Duty drawback how much is that percentage deduction so 4% remember 4 3 2.5 2 4 3 2.52 remember this 4 3 2.5 and 2% 4 3 2.5 and 2 for every quarter or part thereof in the first year for every quarter or part thereof in the first year okay for example you're using it for three years let's take you using it for three years and thereafter you are exporting it so first year you using now so you're using it for the first year 4% for every quarter means 4% into four quarters 16% for the first year second year 3% for every quarter so four quarters into 3% that will be 12% and then 2.5 for every quarter part there of in the third year so 2.5 into 4 that will be 10 so total 38% will be reduced so again I'm repeating 4% for each quarter in the first year so four quarters into 4% 16 and thereafter so 3% so 12 okay and thereafter 2.5 so 2.5 into 4 that will be 10 so total 38% so 100 minus 38 so what is 100us 38 62% you will be getting as a refund so means 1 lakh you are paying means on import so minus 38% so remaining 62,000 you will get as a refund if you're using it for 3 years sir whether this quarter should be calendar quarter or it should be taken as so 3 months taken as one quarter so it should not be calendar quarter we need to count it from the date we are paying customs duty till the date we are exporting that should be taken as a number of quarters okay for example so we are paying customs duty we are paying customs duty on import on 5th of May 2023 and we are exporting it we are exporting it on so 8th of November 2024 so now in this case how we will count how we will count the number of quarters or part thereof simple 55223 to 55224 one year 55223 to 55224 one year and again next we have 55224 so 5th May June July August till 5th August so one quarter then again so August September October second quarter and 5th October over so remaining 3 days so therefore total 1 year plus three quarters so again I'm repeating 55223 to 55224 one year that's the first year for that 4 into 4 16% in the second year how second year 55224 to 81224 how many quarters in this so you take three three months as one quarter so three three months as one quarter means 5 2024 to a may now may to June June to July July to August August is 3 months so that is one quarter then again August September September to October October to November again second but in November only 5ifth November is the second quarter so therefore remaining few days is there that count as third quarter so in the first year one full year second year three quarters so for one full year means 4 into 4 16% second year three quarters means 3 quarters into 3% so that will be 9% so that's how we need to count so we need to count it from the date on which we paid the customs duty till the time we are making the let export order so everywhere in GST and Customs we need to take calendar quarter but only in this Dy drawback chapter we should not take calendar quarter we should count based on the days months so three months counted as one quarter here okay so remember what is the percentage so deduction from the customs duty pay 4% for every quarter or part there of in the first year 3% for every quarter part there of in the second year and 2.5% for every quarter part thereof in the third year and 2% for every quarter or part thereof in the fourth year so this is how you need to reduce so once you are reducing this particular percentages so the remaining amount we will get as a duty drawback and Here If You observe already the time permitted is only two years now but here we are exceeding two years because of which that extension is Possible only if approved by cpic where such motor vehicles and goods imported for personal use are exported after expir of 2 years what the logic this two years if You observe here in the previous time limit the goods should have been exported within two years from the date of payment of customs duty now so therefore after 2 years then it will be allowed only if cbic extends no Duty drawback shall be allowed if those goods have been used for more than 2 years okay then next one so here what we have is other other cases all other cases so when this will be applicable this will be applicable in case of Motor Vehicles imported by any person or Goods imported by an individual for personal purpose other cases other cases means what goods imported by other than individual or Goods imported by individual not for personal purpose then it will be others so when these others will be applicable so when these others will be applicable so first Goods imported by other than individual Goods imported goods imported by other than individual other than individual not Motor Vehicles other Goods okay other than individual this is one and second one is so Goods imported by individual for other than personal purpose Goods imported goods imported by individual Goods imported by individual other than personal purpose other than for personal purpose other than for personal purpose then in that case so we will be having the second uh Branch so here what they are telling simple so they directly telling the percentages so just see how many months you have used it if you have used it for 0 to 3 months so increase it by 3 3 3 months 0 to 3 then next plus three will be 6 months so 0 to 3 then 3 to 6 then 6 to 9 9 to 12 12 to 15 15 to 18 and more than 18 okay this is the slap more than 18 you will not get more than 18 you will not get any benefit okay so 3 three months you need to increase and it starts it 95% 0 to 3 months means 95% thereafter it gets reduced by 10% up to 75% 95 85 75 therea means first three slaps 10 10% reduction thereafter next three slaps 55% reduction so 7 over now next 70 65 60 after 18 months you will not get anything okay so first you need to increase the period by 3 3 months 0 to 3 3 to 6 6 to 9 9 to 12 12 to 15 15 to 18 more than 18 zero and it starts with 95 85 75 thereafter 70 65 60 so this much percentage of what Customs Dy paid you will be getting as a refund so this is in case of 74 subsection two okay so we have seen what is the duty drawback as per the reduced rates and next mandatory prohibition so here there are few cases where you will not get Duty drawback 74 what are the if the amount of Duty drawback that you have computed is less than 50 rupees you will not get Duty drawback Duty drawback less than 50 you will not get second condition market price of the exported Goods is less than the duty drawback so you are exporting some goods and those exported Goods is having some market value so that market value of the export Goods is less than Duty drawback why it will happen so I'll give you one example say I purchased one iPhone okay I purchase one iPhone and the value of that iPhone is 1 lakh iPhone say uh this is what versions will be coming now iPhone 13 Pro Max like that I have purchased iPhone 13 Pro Max 1 lakh customs duty paid on import will be 30% say 30,000 now what I did this iPhone 13 Pro Max I gifted it to my wife but she did not use it so she don't know how to use it say she did not use it but she kept it because I gave it as a gift so she kept it and after few days so she told like I have one unused phone so you if you want to use it or you can sell it like that so she gave box piece not at all used and now I'm trying to sell it definitely its market value will be very very less even though not used even though not used because of the flex of time certain technological products or Electronics the value will come down so automatically the value has come down as the value has come down so therefore this uh value of these Goods after use so it is exported as such without use after 18 months market value of such Goods came down to 20,000 rupees whether Duty drawback is available in this case now what is the duty drawback if imported goods are exported as such without use 98% of custom duty so 30,000 into 98% is what 29,400 okay then what is the market value at the time of export the market value at the time of export is only 20,000 so as the market value at the time of export is less than the amount of Duty drawback we will not get the duty drawback in this case Okay so that's the answer for this so in this case Duty back not available so what are the two cases Duty drawback not available even though all other conditions are satisfied if the amount of Duty drawback is less than 50 rupees or if the market value of the exported Goods is less than the amount of Duty drawback then we will not get the duty drawback amount then discretionary prohibition sometimes what will happen the goods are exported and those exported goods are likely to be returned back to India so we are exporting goods from India to outside India and those exported goods are likely to be returned back to India so in that case also we will not get the duty drawback so when it is likely to get back to India let's see an example for this you are importing goods from Germany when you are importing goods from Germany so that Goods value is somewhere like 100 lakhs one CR on that 30 lakhs you have to pay as customs duty you imported the goods from Germany you paid 30 lakhs and you exported it to say Pakistan and from Pakistan when you are exporting so you will get Duty drawback how much 98% so 30 lakhs into 98% you got us Duty drawback now from Pakistan through land route you can bring it back to India without informing the customers Etc so literally you imported goods into India by just paying 2% so first you pay 30 first you pay 30% so not even 2% so 2% means say 30 lakhs now so 30 lakhs into 98% so 29h 40,000 just 60,000 so 60,000 if you see on 100 lakhs so that will be what that will be hardly some 6% 6% so that much only you have made the payment so you are getting the duty drawback here so first you pay customers Duty and you are getting as du draw back 98% so the loss is that 2% of that 30 lakhs only is the loss so that much only you are paying so you got the goods so whenever the goods are likely to be smuggled back into India central government May notify that no Duty drawback shall be admissible if any Goods which post export are likely to be smuggled back into India in that case they will prohibit this is known as discretionary prohibit IB then identity satisfaction of course the base of 74 is what the exported goods and the imported goods or imported goods and the exported Goods should be same so we need to satisfy to the ACR DC that the imported goods are only exported exporter shall establish before the proper officer that export are the one which were imported earlier so that has to be proved okay then so interest if you see if the duty dropback amount is not paid to the claimant within one month from the claim date so then interest will be at the rate of 6% perom from the date after exper of 1 month till the date of payment of du drawback so we made a duty drawback claim what is the time limit within which they should give us Duty drawback one month if not they need to pay us interest at the rate of 6% after expiry of 1 month till the date we are getting the duty drawback suppose by Miss stake we have claimed the duty drawback amount erroneously if Duty drawback is claimed erroneously then from the date we got the duty drawback amount till the date we are repaying them we need to pay the interest at 15% per as we all know that the interest rate in case of Customs is for payment to government is 15% so 15% perom from the date of payment of Duty drawback till the date of recovery of Duty drawback amount okay so this is interesting in case the amount is payable by exporter to the government this is interest in case the amount is payable by government to exporter so there is a difference so whenever we pay to government higher interest rate 15% When government is paying interest to us lower interest rate that is 6% okay then next one so this is a nonavailability of Duty drawback in case of 74 subsection 2 only this restriction is there not in case of 74 subsection 1 this only in case of 74 subsection 2 what is 74 subsection 2 if the imported goods are exported after use as such after use then in that case 74 subsection 2 what does 74 subsection 2 says that so you are importing some Goods you exporting it as such after use so but these four cases you will not get the duty drawback what are those four cases wearing apparel so you're importing apparel and you're using it and you are exporting it as you exporting it after you you will not get Dy drawback test test means so wooden boxes which are used for the purpose of storing the te is known as te chest so you're importing the wooden boxes you're using it and then you are exporting you will not get Duty drawback Expos the cinematograph film so this is not applicable at present because nowadays no one is you know importing the reals so previously what they used to do they used to import the film res they used to record it on the res and then they will be sending back that reels for outside India for washing it and again it will be reimported so this expose cinematograph films but that present it is not applicable then unexposed photograph films papers and plates and X-ray films so these X-ray films basically imported used it and then exported then also we will not get due drawback so what are the four Goods where we will not get due to drawback under 74 subsection two wearing apparel teach chest exposed cinematograph film and unexposed photographic films so this is about you know Duty drawback under Section 74 okay now we will see Duty drawback under Section 75 and we also see the comparative differences between that okay so section 75 when is it admissible when the imported goods are used in manufacturer of goods which are then exported and here if you see there is no time limit so no time limit means what the imported Goods can be manufactured and it can be exported within any time so there is no time limit in this case because if you remember in case of section 75 I told you that the imported goods are used in manufactur of finished goods which are then exported so which means that there is no condition that so the imported goods and the exported Goods should be same so because of that so there is not time limit here they will be giving Duty drawback also one more point is that the duty drawback in in case of section 75 is a percentage of fob value of exports so whatever is the fob value of exports on that fob value of exports a percentage will be given as a duty drawback so that's how it will be working so look into the rates of Duty drawback we have three different rates first we have all industry rate what is this all industry rate means it means that so whenever we are exporting some Goods so depending upon the product so there will be a notified percentage which will be given by the government so there is a notification for that in that notification we have list of goods and what is the duty drawback rate that Duty drawback rate is known as all industry rate so we need to see whichever product we are exporting and take the fob value of export on that you multiply that percentage you will be getting the all industry rate that is the amount of Duty drawback then rule six brand rate brand rate here is sometimes it so happens that so there is no notified rate for this product okay so say we are exporting a product and for that product there is no notified rate then in that case we can request the government so to prescribe a rate and that will be called as brand rate when no all industry rate is fixed in the duty drawback schedule so then it will be brand rate rule six will be applicable and Rule seven special brand rate special brand rate is whenever we we have duty drawback as per the notified rate and the amount of Duty drawback is less than 80% of the actual duties incidents then we can go for special brand rate so have a look into this that is here import of goods is 10 lakhs and on this 10 lakhs the basic customs duty is 1 lakh social welfare surcharge is 10,000 and igst is 1 33,200 now we are making an export so using this 10 worth of goods we made the fob value of exports 28 lakhs and the duty drawback notified is 3.5% of fob value of export so means how much we will be getting 28 lakhs into 3.5% is 98,000 so 98,000 divided by 1ak 10,000 so because igst is not covered under Section 75 now section 75 gives a benefit only to recover the basic customs duty and the social welfare subar not the igst so therefore 98,000 divided 1 110,000 is 89% which is greater than 80% so can we make request for special brand rate no we cannot make request for special brand rate because the duty draw back as per the all industry rate is more than 80% of the customs duty incident due to that reason we cannot go for special brand rate what if the duty drawback is 1.5% of fob value of export suppose if the duty drawback is 1.5% of fob value of export so now we need to see how much is the duty drawback amount that we will be getting so Duty drawback as per all industry rate is 28 lakhs into 1.5% that is 42,000 so 42,000 divided by 1 lakh 10,000 if you see 38.8% so this 38.8% whether it ex exceeds you know 80% or it does not exceed 80% it is less than 80% so as it is less than 80% we can definitely go for special brand rate so application can be made for special brand R okay but remember here one important Point suppose if you have already claimed the you know Duty drawback as for all industry rate suppose if you thought okay at least 42,000 we are getting so let's claim this and then go for special brand rate appliation cannot be made so that is this note however application for special brand rate cannot be made if Duty drawback is already claimed as per all industry rate under rule three so once you claim Duty drawback as per all industry rate then you cannot go for special brand rate that is an important point which you need to keep in mind okay so therefore what are the three different rates that we have in case of rule uh that is in case of section 75 all industry rate brand rate special brand rate when all industry rate so that all industry rate is normal it is generally and related to this all industry rate there is one special Point say this as per rule four central government May revise amount or rates determined under rule three why it will happen whenever a person is trying to get a more benefit than his incidents so then the all industry rate can be reduced I gave one example to understand that you can see in this uh page like later page so a person is importing some goods and the value of the imported goods is 1 lakh customs duty 12% social such 10% igst 10% so we have this 12,000 customs duty and social welfare surcharge will be 1,200 and I GST will be 20336 plus he's also making a domestic procurement so domestic procurement is 50,000 GST at 18% Now using this imported goods as well as domestic procurement he made some finished goods the value of that finished goods exported is 3 lakhs and the duty drawback notified is 7.5% of fob value which means how much will be the duty drawback that he will be getting 3 lakhs into 7.5% 22,500 that much only the benefit no igst also can be taken as credit so this 20376 can be taken as itz and on that refund can be claimed so 29376 plus 22500 so total 518765 1200 20, 376 and 50,000 into 18% so what is 50,000 into 18% 9,000 okay if you add these things the total Duty incidence is 42756 hope you understood how we got this 42576 first we have taken 12,000 then we are taking 1,200 then we are taking 20, 376 then we are adding 9,000 so if you take all these things 42576 will be taken as a total Duty incident what say the benefit is which means this person is getting a benefit which is more than the duty Insurance in that case the 7.5% of fob value is the duty drawback rate now that can be reduced to so maybe 5% or 4% as per rule four okay so that is this point as per rule four government is having power to reduce the duty drawback rate which is all industry rate notified can be reduced then there is brand rate so when brand rate will be applicable when the all IND rate is not notified for product brand rate will be applicable and the brand rate here if you see so exporter shall apply for fixation of brand rate and until fixation of brand rate exporter May request for Grant of Duty drawback on a provisional basis so provisional basis so exporter can request okay until the time brand rate is fixed and special brand rate already we discussed for that also an important point is what so exporter apply for fixation of special brand rate he is not entitled to claim air so he should not first claim air and then go for SBR so then till fixation of SBR suppose if he's not going for a directly he make request for SBR till that time can he ask for provisional Duty drawback yes so exporter May request for Grant of Duty drawback on a provisional basis okay so that is about this if you see the mandatory prohibition so this first two points are same what is the first point that is Duty drawback less than 50 you will not get any amount of Duty drawback that is common here also and the market price of the export goods is less than Duty drawback then we will not get the duty drawback amount for example you see this value of exported Goods in the Indian market is 30,000 but that 30,000 worth of goods is inflated in case of export by the exporter to get more benefits so fob value declared by the exporter is 4 lakhs and the duty drawback is 10% of fob so 4 lakhs into 10% is what 40,000 as the market value of the goods is less than the amount of Duty drawback Duty drawback will not be allowed in this case and next point is that the maximum Duty drawback is onethird of the market price of the exported Goods so when is this applicable the first point is if the market value of the exported Goods is less than Duty drawback amount we will not get Duty drawback suppose if the market value of the goods is more than the duty dropback amount we will get but in that case what is the maximum Duty dropback amount 1/3 of the market price of the goods for example export price is 1 lakh and Indian market price is 50% and Duty dropb back all industry rate is 30,000 so now 30,000 rupees so is the duty drawback but the market value is more than 30,000 so we'll get Duty drawback but what is the maximum Duty drawback 50,000 into 13 so 16,667 Rupees is only the amount of Duty drop back that the person will be getting then rule eight no Duty drawback allowed if the value of exported Goods is less than is less than the value of the imported materials used there in what does it mean for example my import value is 1 lakh my export value is 98,000 so there is a negative value addition so F value of export should be greater than the CF value of import so value of import is 1 lakh but the export value is 98 so we will not get Duty drawback okay okay then suppose if they have given a notified value addition so for example they're telling there should be a 15% value addition means your import value is 1 lakh and your export value should be 1ak 15,000 or more suppose if it is less than 1 L 155,000 then we will not get the duty drawback no Duty drawback allowed if the value of exported Goods is not more than the notified percentage of the value of imported materials used suppose sir what if it is equal so in this case first point so the division is simple here is the value addition notified or Valu addition not notified if the value addition is not notified first point what is it they telling so it should not be less than it should not be less than means equal to is also okay okay so that is FB value of export FB value of export FB value of export should be greater than or equal to CF value of UT CIF value of import this is when F value of export is greater than or equals to CF value of import this is when if the value addition is not notified value addition not notified if the value addition is not notified we need to go by this what if the value addition is notified suppose if the value addition is notified so what we need to check is that F value of export F value of export Port is greater than because it's not more than means you will not get so it should be more than not equal to more than CIF value of import CF value of import plus value addition plus value addition okay so that's what I said so if the import value is one lakh and notified value Edition is 15% therefore value of export should be 1 lakh + 15% that is more than 1 15,000 then only we will be getting the duty drawback in this case so then we have something called as discretionary prohibition this discretionary prohibition is common for both the cases what is that if the goods are exported which are likely to be smuggled back into India then we will not get the duty drawback in this case so no Duty drawback shall be admissible if any Goods which post export are likely to be smuggled back into IND India then identity satisfaction so in case of 75 no need to prove that the imported goods and the exported goods are same okay so that is the difference next one we have this interest point is common for both 74 and 75 and here if you see in case of 75 there is no separate application for Duty drawback we do shipping Bill we file the shipping bill that shipping Bill itself will be treated as claim of Duty drawback but in case of 74 we need to make a separate application for Duty drawback okay and next one so these are the points that we have with respect to duty drawback section 74 75 what are the differences and what are the points that we have seen and here this Duty drawback under 74 subsection 1 can be compared with refund under Section 26a we have something called as refund under Section 26a what is the connection between this 74 subsection 1 and section 26a first in case of 74 subsection one so we are importing the goods and those imported goods are exported as such without use how much Duty drawback we will be getting 98% of the customs duty paid we will get now but in case of section 26 A if the imported goods are exported 100% of the customs duty paid on import we will get as a refund so compared to 7 subsection one 26a is better so now we need to know what are the differences okay when we will get 26a first priority is 26a if 26a fails then only we will go for 74 subsection one situation any case when the imported goods are exported but here imported goods are defective or not conforming to the specifications then only you will get 26 benefit so remember when 26a benefit the imported goods should be defective or not according to specifications but 74 any case and so what we should do we should export it what are the alternatives for 74 subsection one either we can sell it to scz or we can sell to a foreign goinging Velar aircraft that is also treated as export only so if we are selling to a special economic zone or if we are selling to a foreign going vessel aircraft an aircraft or a vessel which is taking Goods or people from India to outside India that is known as a foreign goinging Vel or aircraft so then also it will be called as export we will get the benefit but in case of 26a 26a we should relinquish the title or destroy the goods that is alternative to export either the imported goods are defectives either exported or destroyed or you relinquish the title so relinquishing means what leaving the title okay any of these three things you should do what is the time limit 74 time limit already you know so 2 years from the date of payment of customer Duty and it can be extended by cbic but in case of 26 years that much time is not there 30 days plus 3 months from the date of clearance for home consumption so whenever the Customs officer pass the order for clearance for home consumption from the date within 30 days or it can be extended for a further period of 3 months so we need to either export or destroy or relinquish the title now once you completed that what is the time limit within which you need to make application for refund so in case of you know this Duty drawback So within 3 months from the date of export or it can be extended for a further 3 months by ACDC assistant commissioner Deputy Commissioner or 6 months by commissioner whereas here from the date we have exported or destroyed or Lish the title within 6 months we need to make application for refund here Duty drawback is 3 + 3 plus 6 but here only 6 months and is Duty dropb back applicable in case of perishable Goods yes but section 26a refund is not applicable in case of perishable Goods now once we make the application for Duty drawback or refund what is the time limit within which the duty drawback or refund should be granted so in case of Duty drawback once we make Duty drawback claim within one month from the date of application we need to get the duty drawback otherwise interest will be at the rate of 6% peran whereas in case of 26a so once we make application for refund within 3 months if they are not granting then only interest will be 6% per so in case of due drab back one month here it is 3 months also remember once you claim Duty drawback under 74 subsection one you will not get the refund under 268 okay so anything you need to claim any one of these two and with this we completed the duty drawback Provisions now we are moving on to some questions on this Duty dropback so which I have given at the end after this scz topic so you look into some questions related to this question number one so these are some past exam questions of CA CMA and all with reference to drawback on reexport of Duty paid imported goods under Section 74 answer in brief so they're asking as per 74 what is the time limit for re-exportation of such Goods as such two years plus it can be extended for a further period by cbic from the date on which we paid the customs duty on import what is the rate of d drop if the goods are exported without use 98% of the customs duty paid is the duty draw back allowed on reexport of wearing apparel without use yes see 74 subsection 2 only those notified Goods will not get Duty drawback wearing a parall teachers Expos cinematograph films or unexposed photograph films x-ray plates Etc that is for 74 subsection 2 but in case of 74 subsection one we will get Duty drw back okay but the imported goods should be exported as such without use means you import the apparel without cutting the tag Etc you export it so then you will get Dy draw back 98% if you cut the tag and if you wear it and use it and then you are exporting you will not get Duty drawback next one question number two if the duty drawback of One lakh is paid by Department to assy erroneously on 2021 so the assy Importer or exporter so has got the duty drawback erroneously and it is demanded by the department on 156 20121 and paid by the S on 118 2021 within two months from the date of demand calculate interest on duty drawback so in case of eron as Duty drawback we need to compute interest at the rate of 15% from the date we got the duty drawback till the date we are making the payment of the duty drawback amount so what is the date on which we got the duty drawback erroneously 1 May and when are we returning it to the government 11th August what is the period for which we need to pay interest so this uh May so we need to take in May 31 days so may we need to take 31 days so first may now we got so don't count that so from 2 may we take so 31 - 1 30 days in May and June 30 days July 31 days and August 11 days so total one or two days for this one or two days we will we have to pay the interest so we need to from the date on which we got the duty dra back till the date we are returning it so don't count that from date the next date to count one or two days so one lak is the duty drawback one lakh into we need to take uh 15% into 102 divided by 365 so 4,192 rupees will be taken as the interest okay then next one this is when we are paying not when we are getting the amount from the government question number three MD Jefferson exporters have exported raw iron outside India fob value of 1,000 ton of gold exported is 3 lakh rate of Duty drawback on such export is 200 per ton market price of the goods is 1 l75 000 you are required to assertain whether MD Jeffers and exporters is entitled to duty drawback and if yes what is the amount of this Duty drawback first what is the duty drawback they're telling 200 per ton how many tons exported th000 so 1,000 tons into 200 per ton will be 2 lak this is the duty drawback as per all industry rate but what is the market value of the goods only 1 lak 75,000 as the market value of the goods is less than the amount of Duty drawback we will not get Duty drawback okay we will not get the duty drawback understood then next one question number four y exported a consignment under Duty drawback claim consisting of the following items 200 pieces of pressure stals mainly made of brass at rupees 80 per piece and Duty drawback rate is 4% of fob so 4% of fob fob 16,000 so 16,000 into 4% is what 640 rupees that is the amount of Duty drawback then 20 200 kgs of brass utensils at 200 per kg okay and 24 rupees per kg is the duty drawback how many kgs 200 kgs now 200 into 24 so 4,800 will be the duty drawback then third one 200 kgs of heartware of BR at 300 per kg and Duty drawback is 17.5% of fob subject to maximum 38 rupees per kg so 60,000 into 17.5% or 38 into so 200 kgs so we need to take 17.5% of 60,000 that is 9,975 or number of kgs 38 per kg but if you see here on examination in the Dos weight of brass hardware were found to be 180 KES means what we have actually exported is only 180 kg so we need to pay we need to get the duty drawback only based on 180 kgs so 38 per kg into 190 kgs whichever is less so 7,220 we will get as Duty drawback then next one see these QR codes are the explanatory videos for this so you can solve these questions for which I have given the QR codes so that if you are not able to understand the answer you scan this QR code you will get the answer explanation for these questions but this question number five 6 7 you can take for practice then eight X limited has exported following Goods product P fob value worth 1 lakh and the rate of Duty drawback on such export of goods is 75% and product Q fob value worth 10,000 and the rate of Duty drawback on such export of goods is 1% will X limited be ented for Duty drawback so if you see the F value 10,000 10,000 into 75 no 10,000 1 lakh 1 lakh into 75% is 750 yes we will get Dy drawback second case 10,000 into 1% 100 which is also more than 50 so we will get the due drawback the Restriction is it should not be less than 50 here in both case it is more than 50 so we will get the due drawback ninth question also you can take for practice then question number and if you don't know the answer like if you are not able to understand the answer please Canan this QR code then question number 10 XY limited exported a consignment of manufactured goods a company has paid import Duty and sectoral excise duty on the components used in manufactur question number 10 XYZ Company Limited exported a consignment of manufactured goods a company has paid import Duty and Central excise duty on the components used in the manufacturer a duty dropback rate has been fixed for these Goods the ship carrying the Consignments runs into a trouble and sinks in the territorial Waters so whenever the goods are not crossing the territorial Waters the goods are not said to be exported so Customs Department refused to Grant the duty drawback for the reason that Goods did not reach their destination as a consultant of XYZ limed you are required to prepare a brief note with the reason whether the stand taken by the Customs department is correct in law so for this we have one case rajendra dying and printing Mills Case by Supreme Court wherein it is held that if the goods are not really exported we cannot claim the duty drawback so export means taking goods from India to a place outside India so if the goods are crossing the territorial Waters it is okay it is export then Duty drawback cannot be denied but the vessel in the present case has sunk within the territorial Waters it has sunk within the territorial Waters of India and therefore there is no export accordingly no Duty drawback is available so this is based on a Supreme Court decision rajendra dying and printing Mills limited okay then another question so this is for your practice yet another question you see question number 12 Mr X was erroneously refunded a sum of 20,000 in excess of actual Duty drawback on 26 2021 the same was demanded by the department on 148 and the same was return so already we saw this so this is related to what aoness Duty drawback interest at the rate of 15% okay so that computation related question then question number 13 with reference to customs and Central exess Dy drawback rules briefly State whether an exporter has already filed a Dy dropback claim under allate can file an application for special brand rate no it is not possible so already if he's going for all industry rate he cannot request for special brand rate already we saw that point then so these two questions you take for practice question number 16 measures deep business limited had imported goods during 2021 customs duty has been paid for rupees 20 lakh at the time of import these goods were used and later re-exported after 23 months of import is Mr deep business eligible for refund of custom duty paid at the time of import if so how much okay so if you see here imported goods are exported after use 23 months so is it Goods imported by individual for personal purpose no is it Motor Vehicles no other cases more than 18 months greater than 18 months whether we will get any Duty drawback no so no Duty drawback under Section 74 subsection 2 we will not get Duty drawback because we have only 18 months so because it is beyond a period of 18 months so we will not get Duty drawback then another question measures Dynamic exporters exported Goods having a fob value of 10 lakhs the all industry rate is 5% market price of the goods is 40,000 so 10 lakhs into 5% is 50,000 but the market value is less than 50,000 so we will not get the duty drawback in this case so Dynamic exporters is not entitled to get any Duty drawback in this case then other questions other two so wherever QR code is there that is for practice you try that and if you don't know the answer you scan the QR code you will be able to see the explanation video then question number 20 so this is your CMA final exam question for six marks I have given calculate the amount of due drawback allowable under Section 74 of customers act in the following cases Sur imported a motor car for his personal use and paid 5 LS as import Duty the car is re-exported after 6 months 20 days car in case of Motor Vehicle it is 100% minus 4% for every quarter or part thereof in the first year so it is first year how many quarters 6 months 20 days means three quarters so three quarters into 4% means 12% so 100 - 12 100 - 12 is what 88% so 88% of 5 lakhs that will be 440,000 you will get as Duty dropb back then second Nikita imported wearing apparel and paid 50,000 as import Duty as she did not like the apparel these are re-exported after 20 days okay so after 20 days means it is assumed that she used it and exported so we will not get Duty drawback assumed that wearing apparel are re-exported after you suppos in the question clearly it is given that it is a re-exported without use then in that case out of this 50,000 98% we will get as Duty drawback okay then next number three Hightech Limited imported 10 computer system paying customs duty of 50 lakhs due to some technical problems the computer systems were return returned to the foreign supplier after two months without using them at all without using them at all so 98% of the custom duty pay we will get as Duty drawback so 50 lakhs into 98% 49 lakhs will get as Duty drawback so it's a simple one only you need to remember that rates then question number 21 compute the interest paid payble to an exporter to an exporter means who is going to pay this interest this interest is payable by government to the exporter so then the interest rate will be 6% par in the following case of delayed payment of du drawback as per Customs act the claim was made on 30th June for 80,000 and was settled on 15th September what is the provision once the duty drawback claim is made within 1 month the duty drop back should be given 30th June now 30th June one month is what so 30th July so now Beyond 30th July you count the number of days so one day in July July one day August 31 days and September 15 days so this is the number of days for which we will be getting that is 47 days we will get the interest at what rate 6% so after one month only interest will be computed 6% on what duy drawback amount how much is the back amount 80,000 so 80,000 into 6% into 47 by 365 618 rupees remember as this attempt is June 24 there is a possibility that we may take leap year 366 days when we need to take leap year 366 days in the numerator if you are taking February month if you see here the numerator is only July September February is not coming so in February 29 days will not take so denominator we don't have to take 366 days only numerator February month comes and we take 29 days in denominator we need to take 366 days okay then number two compute the interest payable by the exporter under the Customs act 1962 in the case of recovery of 10,000 rupees paid erroneously on 3rd July 2020 demand for Recovery was issued on 5th September and exporter paid back the amount on 3rd November 2020 so he got the aoness due to draw back on 3rd July and when he made the payment 3rd November so 3rd July to third November in July you don't take third so 31 minus 3 so from 4th July you need to take so that will be 28 days in July then 31 days in August then 30 days in September 31 days in October and 3 days in November okay so he made the payment on third November now till that date so 28 + 31 + 30 + 3 123 days for this 123 days we need to compute interest rate 15% on duty drawback 10,000 so 55 rupees will be payable as the interest then this is related to refund what is the time limit for computing the refund in case of Customs one year from the relevant date what is that one year from the relevant date then list the important aspects to be born in mind while claiming Duty drawback under Section 75 so related to 75 those Provisions we need to write then list the boots which are not entitled for Duty drawback what are not ENT for Duty drawback teachest wearing apparel that is there now that one then this question number 25 times Graphics has imported a mission again uh from its holding company in Japan on 121 2021 after paying custom duty 15 lakhs for using its Factory and reexport it on 1010 you're required to advise times Graphics regard Duty drawback that will be available they are using it they're using it what is the period for which they are using it so 121 to 1010 2021 so what is the number of quarters it's only first year number of quarters if you see 1212 then number of months because it is used 74 subsection to number of months so 121 now so January to February March April May June July August September October 9 months 9 months means exactly 9 months because 12 10 is only beond 9 months so therefore 10 10 is within 9 months so 9 months up to 9 months how much is the percentage 0 to 3 3 to 6 6 to 9 it will come in the third K so 95 85 75% will be taken because that is the provision that we learn 0 to 3 3 to 6 6 to 9 so here it starts with 95 then it gets reduced by 10% thereafter it gets is reduced by 10% so 75% will be taken in this case so 15 lakhs into 75% 11 25,000 will be taken as the duty drawback amount then question number 26 what are the exceptions provid under Section 27 so this is refund subject to unjust enrichment so usually whenever we are claiming refund it is subject to the provision that so we need to ensure that we have not transferred the burden to the next person but we don't have to prove un justment in some cases so these are those cases then what is the relevant date in case of section 26a already we have seen if the goods are exported out of India from the date we got the L export order and relinquishment of title date of such relinquishment when the goods are destroyed date of such destruction so from that date we need to you know like uh from 30 days plus 3 months we need to do this and from here within 6 months we need to make the application for refund and 26a so just now we discussed 26a related Provisions so these are the questions on duty drawback and refund that we have and the last area that we have into the discussion is scz Provisions have a look into this special economic zone schem with amended sez rules first what is a special economic zone it is a separate Island within the territory of India developed by government to promote econom growth so basically in order to enhance the exports growth and economic growth so they have created a separate area called as special economic zone and the provisions related to special economic zone are contained in sez act 2005 and sez rules 2006 and the first sez that was established in India is kandla KLA and near canaport Gujarat and total we have 265 operational sezs in India at present and the highest number of sezs are in Tamil Nadu okay and what are the tax implications on scz now see this say there is a scz in Tamil Nadu and the rest of the country is called as DTA domestic tariff area so there is a special economic zone in Tamil Nadu and the rest of the country is known as domestic tariff area whenever Supply is made by scz Supply by scz say from Tamil Nadu to Andhra Pradesh Supply is made so this Supply made by scz for the person in Andra Pradesh it is treated as import so there is a SZ in Tamil Nadu which is making Supply to a person in Andra Pradesh now for the person in Andra Pradesh it will be called as import and they need to pay customs duty along with igst who the person in and Pradesh suppose if it is Supply to acz say from Maharashtra okay uh the supply is made to scz from Maharashtra the supply is made to scz then in this case it will be trated as export but customs duty not payable and for GST it is treated as zero rated Supply under GST for customs duty it is not TR as export customs duty not not payable but it will be treated as zero rated for the purpose of GST then next suppose if the goods are imported into acz we don't have to pay customs duty also if the goods are exported from acz customs duty is not payable okay so if the goods are imported into acz customs duty not payable if the goods are exported from acz also customs duty not payable so these are the tax implications Four Points you need to keep in mind then EX consumtion under income tax with respect to export income 100% of the profits for First 5 years 50% of the profits for next 5 years and 50% of the plowed back export profit for next 5 years and that is whatever export profit that is plowed back retained exemption from minimum alternate tax so M Provisions are not applicable and then what are the other incentives to SZ there is a single window clearance for state and Central approvals so we don't have to go with different different authorities single window clearance license to import is not required usually under foreign trade policy people are required to obtain the licenses for restricted Goods that is not applicable in case of scz in manufacturing sector 100% F FDI is allowed except for few sectors usually there is a restriction on foreign direct investment just like that person outside India cannot invest in India but with respect to few sectors except with respect to few sectors in all other their case 100% FDI is allow and they're eligible for meis seis and RTP Duty credit scripts this Mas and SCS is not applicable at present so this RTP Duty credit scripts which is there in FTP that will be eligible and profits earned or permitted to be repatriated freely without any dividend balancing okay so then domestic sale of V scrap and rejected goods are permitted with payment payment of applicable Duty then what is the difference between scz and eou so this may be asked as a question Supply to scz is trated as export but Supply to EO is not read as export is as deemed export Supply by them so zero rated under GST so two options we have either pay igst and get refund or don't pay igst and get refund of itz okay don't pay pay igst and get refund of igst don't pay igst and get refund of itz whereas in case of eou normal Supply and that will attract GST okay so this is the tax implication this is the tax implication then next so where it can be established SE only in designated sites but eoe anywhere minimum investment criteria is not applicable for SZ but in case of OU one CR in plant and missionary and board of approval may allow with lower investment criteria Import and Export clearance achieved within the Zone itself but here it is fast TR clearance scheme then scz approval mechanism so first there is a developer so who will submit the proposal to Central state government or submit proposal to the board of approval and suppose if it is submitted to state government they will forward the proposal to the board of approval within 45 days that board of approval will approve then the central government notifies the area of scz or they may rejected and some key amendments related to this no minimum area requirement for setting up SZ in BIO technology and health sector merger of two or more units in the same SZ of the same legal entity has been permitted SZ can allow maximum 50% of their employees to work from home and along with prior permission to temporar remove Goods such as laptops computers etc Gems and Jewelry units can take raw material outside Zone without payment of Duty and brought back within 45 days these are some amendments in SZ rules so these are the points so purely it's a theory topic maybe in mcqs it may be tested for that it is relevant so with this we completed all the topics which are applicable for CMA final exams and all the very best for your exams prepare well and do well thank you