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Intra State Transactions of Goods & Services in proposed GST Regime

 (1) For Intra State Transactions GST will have two concurrent components

    o   Central GST levied and collected by the Centre    

    o   State GST levied and collected by the States

(2)  It will apply to all taxable supplies of goods or services (as against manufacture, sale or provision of service) made for a consideration except –

    o   Exempted goods or services – common list for CGST & SGST

    o   Goods or services outside the purview of GST

    o   Transactions below threshold limits

(3)  The State Government will be entitled to charge SGST on taxable supplies of GOODS and/or SERVICES. As per the present Tax regime the State Governments are not entitled to levy Taxes on Provision of Services, however in GST regime they will be entitled to tax Intra State Supply of Services as well. Hence in this way the tax base for State Government will get broadened.

(4)  The Central Government will be entitled to charge CGST on taxable supplies of GOODS and/or SERVICES. As per the present Tax regime the Central Government is not entitled to levy Taxes on intra state sales of Goods, however in GST regime they will be entitled to tax Intra State Supply of Goods as well. Hence in this way the tax base for Centre Government will get broadened.

(5)  The Central GST and State GST are to be paid to the accounts of the Centre and the States separately.

(6)  It would have to be ensured that account-heads for all services and goods would have indication whether it relates to Central GST or State GST (with identification of the State to whom the tax is to be credited).

(7) Since the Central GST and State GST are to be treated separately, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST. The same principle will be applicable for the State GST.

(8) If the seller (who have supplied the goods/services in intra state) have purchased the goods/services in the course of interstate transaction, then it will be allowed to take the Input Tax Credit (ITC) of IGST paid. Such IGST credit can be utilised for payment of CGST & SGST both.

(9)  IGST model permits cross-utilization of credit of IGST, CGST & SGST for paying IGST unlike intra-State supply where the CGST/SGST credit can be utilized only for paying CGST/SGST respectively.

(10) IGST credit can be utilized for payment of IGST, CGST and SGST in sequence by importing dealer for supplies made by him.

(11) No CGST & SGST will be charged in inter branch supply/transfer of goods/services within the same state.

(12) Illustrations of Intra State Transactions of Goods :-

    a.     For eg. M/s A (Taxable in Haryana) purchase goods/services from M/s B (Based in Haryana) for basic sale price of Rs. 100/-. And further supply the same to Mr. C (In Haryana) after adding Rs. 10/- as its profit. We presume the SGST and CGST rate is 10% each.

We have to calculate the tax liability of M/s A.

Particulars

Amount (in Rs.)

Transaction from M/s B to M/s A

 

Basic Price of Goods/ Services from M/s B to M/s A

100

Add :- CGST @ 10%

10

Add :- SGST @ 10%

10

Total Invoice Value

120

 

 

SGST and CGST both to be charged on Basic Sale Value itself.

 

Here ITC of Rs. 10/- of SGST and Rs. 10/- Of CGST will be available to M/s A

 

 

 

Transaction from M/s A to Mr. C

 

Basic Price of Goods/ services from M/s A to Mr. C

110

Add :- CGST @ 10%

11

Add :- SGST @ 10%

11

Total Invoice Value

132

 

 

M/s A will discharge its liability as follows :-

 

SGST liability

11

By way of input of SGST

10

By way of direct payment to the State

1

 

 

CGST liability

11

By way of input of CGST

10

By way of direct payment to the Centre

1

 

 

Total revenue to Central Govt.

11

Total revenue to State Govt.

11

Total Cost to Mr. C (Consumer)

132

 

b. For eg. M/s A (Taxable in Haryana) purchase goods/services from M/s B (Based in Delhi) for basic sale price of Rs. 100/-. And further supply the same to Mr. C (In Haryana) after adding Rs. 10/- as its profit. We presume the SGST and CGST rate is 10% each. And IGST rate is 20 %. Also the Additional tax @1% is applicable in Delhi on IGST sale.

We have to calculate the tax liability of M/s A.

Particulars

Amount (in Rs.)

Transaction from M/s B to M/s A

 

 

 

Basic Sale of Goods from M/s B to M/s A

100

Add :- IGST @ 20%

20

Total Invoice Value

120

 

 

Here ITC of Rs. 20/- of IGST will be available to M/s A

 

 

 

Transaction from M/s A to Mr. C

 

 

 

Basic Sale of Goods from M/s A to Mr. C

110

Add :- CGST @ 10%

11

Add :- SGST @ 10%

11

Total Invoice Value

132

 

 

M/s A will discharge its liability as follows :-

 

CGST liability

11

By way of input of IGST ( Firstly to be utilised for Central levy)

11

By way of direct payment to the Centre

0

SGST liability

11

By way of input of SGST (Balance of IGST (20-11)

9

By way of direct payment to the State

2

 

 

Total revenue to Central Govt.

11

Total revenue to State Govt.

11

Total Cost to Mr. C (Consumer)

132

 

Disclaimer: Though full efforts have been made to compile this article correctly, yet we are not responsible / liable for any loss or damage caused to anyone due to any mistake / error / omissions in the above and contrary views/ opinions are welcomed.