Indirect Tax

What is blocked ITC?

Section 17(5) of the Central Goods and Services Tax (CGST) Act, 2017 outlines the scenarios under which Input Tax Credit (ITC) is blocked and not available to a taxpayer. This provision restricts the claim of ITC on certain inputs, goods, and services. The exhaustive list of cases where ITC is blocked under Section 17(5) includes:…...

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Zero rated ITC rules under GST?

The ITC rules for zero-rated supplies are as follows: Claiming ITC: Registered taxpayers making zero-rated supplies can claim a refund of the GST paid on inputs, input services, and capital goods used in the course of making such supplies. The ITC can be claimed through the electronic refund application. Export of goods or services: If…...

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Provision for section 80JJAA?

Section 80JJAA of the Income Tax Act, 1961 is a provision that allows eligible businesses to claim a deduction for additional employee cost incurred for the purpose of promoting employment. Here are the key details of this provision: Eligible Businesses: Section 80JJAA applies to Indian companies and partnership firms engaged in the manufacturing sector. Deduction…...

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What is related party as per various laws? – Companies Act, Ind AS, GST, Income Tax

As per 2(76) of Companies Act: a. a director or his relative; b. a key managerial personnel or his relative; c. a firm, in which a director, manager or his relative is a partner; d. a private company in which a director or manager or his relative is a member or director; e. a public…...

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How would you advise the client on whether to go in for Litigation or settle the matter?

I would advice the client for settlement or litigation based on what the matter is about. Does it really amount to non-compliance? Are there interpretation issues involved? I would refer other case laws with similar matter. I will see the materiality of the amount and case. I will look at the cost of litigation. There…...

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What are some recent GST council decisions?

Application for Refund by Unregistered Persons CBIC has prescribed the manner of filing of application for refund by unregistered persons, i.e., manner in which an unregistered person, who has suffered the burden of GST, but the contract has been cancelled later (e.g. Construction contract or long-term Insurance policy, where the supplier is bound by the…...

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Scope of Litigation Vs Advisory in GST in future

Being a new law, the scope for professional advice as well as litigation is vast. There are lot of avenues for tax planning under GST – which will involve the advisory function. There are several unresolved interpretation issues – this will involve the litigation function Favorite… To get access, please buy CA Interview Question Bank...

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Why e-way bill was introduced? How will you check authenticity of a particular e-way bill? What is the validity of a e-way bill? Once a way bill generated can it be revised?

If there is no barrier on transportation of goods from one place to another tax will be easily evaded, so for blocking this E-way bill was introduced. Whenever goods moved from one place to another E– Way bill will be generated, it is a proof that tax will be paid on such goods. No one…...

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How to file appeal before GST appellate tribunal and what is the pre deposit amount?

Submit application within 6 months of communication of order or decision in GST APL-03 along with relevant documents as follows:- 1. Grounds of Appeal 2. Form of verification 3. Certified copy of demand order or decision. (Within 7 days of filing of appeal) The person making an appeal before tribunal should pre-deposit full amount of…...

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Can a manufacturer of goods avail composition scheme? What are the penal consequences if a person opts for the composition scheme in violation of the conditions?

Yes, a manufacturer of goods can avail composition scheme provided he is not a manufacturer of goods notified by Govt. If a person opts for the composition scheme in violation of the conditions he shall be liable for a penalty equivalent to the amount of tax payable. Favorite… To get access, please buy CA Interview...

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Explain Section 122 (Penalties)

Section 122- Penalty for certain offences under the GST Act. Section 122. (1) Where a taxable person who––This section declares the offences that attract penalty as a consequence, apart from the requirement to pay the tax and applicable interest In other words, the first sub-section (1) prescribes 21 types of offences, any one of which, if committed, can…...

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What do you understand by ISD? Whether the excess credit distributed could be recovered from ISD by the department?

An Input Service Distributor (ISD) is a taxpayer that receives invoices for services used by its branches. It distributes the tax paid known as the Input Tax Credit (ITC), to such branches on a proportional basis by issuing ISD invoices. No. Excess credit distributed can be recovered along with interest only from the recipient and…...

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What would be input tax eligibility in cases where there is a change in the constitution of a registered person?

Where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilized in his electronic credit ledger to…...

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24. Sec 18 – ITC in special Circumstances.

Section 18 of CGST 2017 provides for availability of credit in special circumstances. Section 18(1): Subject to such conditions and restrictions as may be prescribed— a) a person who has applied for registration under this Act within thirty days from the date on which he becomes liable to registration and has been granted such registration…...

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What are the types of Refund? Is refund available on Capital goods?

Different types of refund includes refund due to zero rated supply, inverted duty structure, balance in E-cash ledger, tax wrongly collected and paid, to UN Bodies, to Tourist, Deemed Export. No, generally refund is not avaiable on capital goods. But in case of zero rated supplies with payment of output tax, refund can be availed…...

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Whether it is advisable to file LUT for Zero rated supplies or pay tax on it?

With LUT, an exporter can export goods or services without paying the taxes. This prevents a blockage of working capital. So LUT is advisable. But this is only if it does not have a significant amount of capital inputs. In that case, without LUT is better Refund of Capital Goods is not available under Rule…...

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What is in inverted duty structure? How is refund taken in case of in inverted duty structure?

Wherein the rate of tax on procurements / inward supplies is higher than the rate of tax paid on outward supplies such case fall under inverted duty structure. A registered person can claim the refund of unutilized Input tax credit on account of IDS at the end of a tax period where credit has accumulated…...

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Discuss about the RCM applicability in case of Govt Services.

Any business entity located in the taxable territory is liable to pay RCM in case of Govt Services. Exceptions to this are – a) renting of immovable property; b) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central…...

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Define Deemed Distinct Person

Deemed Distinct persons (DDP) are persons with different GSTINs belong to one legal entity (single PAN) situated within the same State or in two different States. Different GSTIN is mandatory for different states but optional for different business lines within same state. GST is applicable for supply between DDP. Transfer Pricing is also applicable Favorite…...

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What is the impact of scrapping of GST audit on professionals & litigations in future?

With the scrapping of GST Audit, the professionals will have less work in GST. This will increase the frequency of audits and scrutiny by GST authorities since the middle layer of checks through independent audit by professionals has been removed. Litigations may increase since businesses will take any favourable or twisted interpretation of law that…...

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What is the difference between zero rated, nil rated, exempt, wholly exempt, non taxable, non-supply? Discuss with the help of examples

As per Section 16 of Integrated Goods and Service Tax Act, zero-rated supplies mean: – Export of goods or services or both; or Supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. For example, export of mobile phones to Australia. Supply of goods or services…...

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What is GSTR 2A & GSTR 2B? How would you reconcile ITC as per books and returns and last date of availing credit?

GSTR-2B is a new static month-wise auto-drafted statement which is generated for every normal tax payer on the basis of information furnished by his supplier in the respective GSTR. Form GSTR 2A is a purchase-related dynamic tax return that is automatically generated for each business by the GST portal. The information is captured in GSTR…...

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Where is the power to levy GST obtained from?

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 i. e. central tax (CGST) and state tax (SGST) or union territory tax (UTGST). Favorite… To get access, please buy CA Interview Question Bank...

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Is RCM applicable only on Services? Why there is a mechanism of RCM?

No, RCM is applicable on goods too and not just on services. The reason for having Reverse Charge Mechanism is that – it was observed that many unorganised sector suppliers are either unregistered or very small business entities facing tax compliance issues and were unable to pay taxes intentionally or unintentionally. In such scenarios government…...

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What will be the GST Liability when a business is transferred? What about ITC available with you?

If a taxable person transfers his business, either wholly or partly, to another, then the taxable person (transferor) and the person to whom the business is transferred (transferee) will be liable, jointly and severally, wholly or to the extent of such transfer, to pay the GST due. If a registered taxpayer transfers his business he…...

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Few cases on circumstances whether blocked credit rules are not applicable i.e. exceptions to blocked credit

Section 17(5) of CGST Act refers to a specific provision under GST covering blocked credits or ineligible ITC. The taxpayer cannot claim ITC while paying output tax when they make purchases listed in this provision. You cannot claim ITC on vehicles purchased for passenger transportation such as- Four-wheeler motor cars or Three-wheelers or auto rickshaws…...

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What is the procedure for Registration under GST? Cases when compulsory registration is required under GST.

The GST Registration process is a simple 2-stage process. The registration form comprises 2 parts – A and B. Part A of the GST registration form includes basic information of the applicant and helps generate Temporary Reference Number (TRN), which is valid for 15 days. This TRN can be then used to fill out Part…...

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Latest amendments in GST relating to E-commerce operator, E-invoices, ITC rulings.

As per the latest notification, Zomato, Swiggy, etc. shall be responsible for charging, collecting, and paying GST at the rate of five percent on supply of “restaurant services” made by such restaurant through the e-commerce platform. The CBIC (Central Board of Indirect Taxes and Customs) has reduced the turnover limit for mandatory issuance of e-invoice…...

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What do you know about the GST applicability on notice period recovery?

The Punjab Authority of Advance Ruling (AAR) has held that the GST is not payable on notice pay recovered from outgoing employees. The CBIC issued a circular dated August 3, 2022, clarifying that the charges paid by an employee when he or she leaves without serving the mandatory notice is not taxable. A few crucial…...

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How will you recognise revenue in case sale is made on FOB basis and in case of CIF basis? Explain.

A. The recognition of revenue in case of FOB (Free on Board) and CIF (Cost, Insurance and Freight) basis is determined by the point at which the ownership of the goods is transferred to the buyer. In case of FOB (Free on Board) basis, the ownership of the goods is transferred to the buyer once…...

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