Liability of the Tax Payers

SECTION : Overview of Goods and Service Tax (GST)

  • Lesson Objectives

    On completion of this lesson, you will be able to understand:

    ·     Liability based on Turnover

    ·     Aggregate Turnover

    ·    Classification of Goods & Services

    ·    Treatment of Imports & Exports

    ·     Commodities kept outside GST.


    Please go through the Third Video of the Chapter I.

    Liability of the Tax Payer


    Liability of the Tax Payer

    Under the GST regime, tax is payable by the taxable person on the supply of goods and/or services.

    ·        Liability to pay tax arises when the taxable person crosses the threshold exemption, i.e. Rs. 20 lakhs (Rs. 10 lakhs for Special Category States).

    ·        Tax payers with an aggregate turnover in a financial year up to Rs. 20 lakhs would be exempt from tax. All taxpayers eligible for threshold exemption will have the option of paying tax with input tax credit (ITC) benefits.

    ·        In certain specified cases where the taxable person is liable to pay GST even though he has not crossed the threshold limit. Tax payers making inter-State supplies or paying tax on reverse charge basis shall not be eligible for threshold exemption.


    Aggregate Turnover

    “Aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-state supplies of persons having the same Permanent Account Number, to be computed on all India basis and excludes central tax, state tax, Union Territory Tax, integrated tax and cess.


    Aggregate turnover shall be computed on all India basis.


    Composition scheme under GST

    Small taxpayers with an aggregate turnover in a financial year up to Rs. 1 crore (Rs. 75 lakhs special category states) shall be eligible for composition levy.

    ·        Under the scheme, a taxpayer shall pay tax as a percentage of his turnover during the year without the benefit of ITC.

    ·        The floor rate of tax for CGST and SGST shall not be less than [1% in total].

    ·        A tax payer opting for composition levy shall not collect any tax from his customers.

    ·        Tax payers making inter- state supplies or paying tax on reverse charge basis shall not be eligible for composition scheme.

    ·        The composition scheme will be optional.


    Classification of goods and services under GST regime

    HSN (Harmonized System of Nomenclature) code shall be used for classifying the goods under the GST regime.

    ·        Taxpayers whose turnover is below Rs. 1.5 crores are not required to mention HSN Code in their invoices.

    ·        Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall use 2 digit code and

    ·        The taxpayers whose turnover is Rs. 5 crores and above shall use 4 digit code.

    ·        Services will be classified as per the Services Accounting Code (SAC)


    Tax on Imports

    Imports of Goods and Services will be treated as inter-state supplies and IGST will be levied on import of goods and services into the country.

    ·        The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed.

    ·        Full and complete set-off will be available on the GST paid on import on goods and services.


    Treatment of Exports

    Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or services, however credit of input tax credit will be available and same will be available as refund to the exporters.


    The commodities proposed to be kept outside the purview of GST

    Alcohol for human consumption, Petroleum Products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel &Electricity are exempted from GST.


    The existing taxation system (VAT & Central Excise) will continue in respect of the above commodities.


    Status of Tobacco and Tobacco products under the GST regime

    Tobacco and tobacco products would be subject to GST.

     In addition, the Centre would have the power to levy Central Excise duty on these products.


    No GST on Actionable Claims and Land and Completed Buildings.

    GST Law specifically provides that actionable claims other than lottery, betting, gambling will not attract GST.


    Land and Completed Buildings also will not attract GST.


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