Frequently Asked Questions (FAQ) on GST

Frequently Asked Questions (FAQ) on GST

Frequently Asked Questions (FAQ) on GST

==> Central board of excise & customs New Delhi


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Levy of and Exemption from Tax


Q 1. Where is the power to levy GST derived from?
Ans. Article 246A of the Constitution, which was introduced
by the Constitution (101st Amendment) Act, 2016
confers concurrent powers to both parliament and state
legislatures to make laws with respect to GST. However,
-clause 2 of Article 246A read with Article 269A provides
exclusive power to the Parliament to legislate with respect
to inter-state trade or commerce.


Q 2. What is the taxable event under GST?
Ans. Supply of goods and/or services. CGST & SGST will be
levied on intra-state supplies while IGST will be levied on
inter-state supplies. The charging section is section 7 (1)
of CGST/SGST Act and Section 4(1) of the IGST Act.


Q 3. Is the reverse charge mechanism applicable
only to services?
Ans. No, reverse charge applies to supplies of both goods
and services.


Q 4. What will be the implications in case of
purchase of goods from unregistered dealers?
Ans. The receiver of goods will not be able to get
ITC. Further, the recipients who are registered under
composition schemes would be liable to pay tax under
reverse charge.

Q 5. In respect of exchange of goods, namely gold
watch for restaurant services will the transaction be
taxable as two different supplies or will it be taxable
only in the hands of the main supplier?
Ans. No. In the above case the transaction of supply of
watch from consumer to the restaurant will not be an
independent supply as the same is not in the course of
business. It is a consideration for a supply made by the
restaurant to him. The same will be a taxable supply by
the restaurant.


Q 6. Whether supplies made without consideration
will also come within the purview of Supply under
Ans. Yes only those cases which are specified under
Schedule I to the Model GST Law.


Q 7. Who can notify a transaction to be supply of
goods and/or services?
Ans. Central Government or State Government on the
recommendation of the GST Council can notify a transaction
to be the supply of goods and/or services.


Q 8. Will a taxable person be eligible to opt for
composition scheme only for one out of 3 business
Ans. No, composition scheme would become applicable
for all the business verticals/registrations which are
separately held by the person with same PAN

Q 9. Can composition scheme be availed if the
taxable person effects inter-State supplies?
Ans. No, composition scheme is applicable subject to the
condition that the taxable person does not affect interstate


Q 10. Can the taxable person under composition
scheme claim input tax credit?
Ans. No, taxable person under composition scheme is not
eligible to claim input tax credit.


Q 11. Can the customer who buys from a taxable
person who is under the composition scheme claim
composition tax as input tax credit?
Ans. No, customer who buys goods from taxable person
who is under composition scheme is not eligible for
composition input tax credit because a composition scheme
supplier cannot issue a tax invoice


Q 12. Can composition tax be collected from
Ans. No, the taxable person under composition scheme is
restricted from collecting tax. It means that a composition
scheme supplier cannot issue a tax invoice.


Q 13. What is the threshold for opting to pay tax
under the composition scheme?
Ans. The threshold for composition scheme is Rs. 50 Lakhs
of aggregate turnover in financial year.


Q 14. How to compute ‘aggregate turnover’ to
determine eligibility for composition scheme?
Ans. The methodology to compute aggregate turnover is
given in Section 2(6). Accordingly, ‘aggregate turnover’
means ‘Value of all supplies (taxable and non-taxable
supplies + Exempt supplies + Exports) and it excludesTaxes
levied under CGST Act, SGST Act and IGST Act, Value of
inward supplies + Value of supplies taxable under reverse
charge of a person having the same PAN.


Q 15. What are the penal consequences if a taxable
person violates the condition and is not eligible for
payment of tax under the Composition scheme?
Ans. Taxable person who was not eligible for the
composition scheme would be liable to pay tax, interest and
in addition he shall also be liable to a penalty equivalent to
the amount of tax payable. (Section 8 (3) of the MGL).


Q 16. What is the minimum rate of tax prescribed
for composition scheme?
Ans. 1%


Q 17. When exemption from whole of tax collected
on goods and/or services has been granted
unconditionally, can taxable person pay tax?
Ans. No, the taxable person providing such goods or
services shall not collect the tax on such goods or services.


Q 18. What is remission of tax/duty?
Ans. It means relieving the tax payer from the obligation
to pay taxon goods when they are lost or destroyed due
to any natural causes. Remission is subject to conditions
stipulated under the law and rules made thereunder.


Q 19. Whether remission is allowed under GST law?
Ans. Yes, proposed section 11 of Model GST law permits
remission of tax on supply of goods.


Q 20. Whether remission is allowed for goods lost or
destroyed before supply?
Ans. Remission of tax will apply only when tax is payable
as per law i.e. taxable event should have happened and tax
is required to be paid as per law. Under GST Law, levy is
applicable upon supply of goods. Where goods are lost or
destroyed before supply, taxable event does not occur in
order to pay tax. Accordingly, question of remission of tax
does not rise.


Q 21. Whether remission is allowed on goods lost or
destroyed for all reasons?
Ans. No, on plain reading of the language of proposed
Section 11, remission is allowed only for those cases where
supply of goods is found to be deficient in quantity due to
natural causes.


Q 22. Does the model GST Law empower the
competent government to exempt supplies from the
levy of GST?
Ans. Yes. Under Section 10 of the Model GST Law, the
Central or the State Government, on the recommendation
of the GST council can exempt the supplies from the levy of
GST either generally or subject to conditions.


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