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📘 Chapter 1: GST in India – An Introduction

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1. Overview of Taxation System in India

In any Welfare State, the Government's duty is to fund development by

raising revenue — primarily through taxes.

Two main types of taxes:

Direct taxes: Imposed directly on individuals/entities (e.g., income tax).

Indirect taxes: Passed on to the final consumer (e.g., GST, VAT, excise).

> 🧠 Quote: “Taxes are the dues we pay for living in a civilized society.” – F.D.
Roosevelt

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2. Genesis of GST in India

2000: GST proposed by the then PM; committee formed.

2006: Finance Minister announces GST to roll out by April 2010.

2014: NDA Govt. introduces Constitution (122nd Amendment) Bill.

2016: It becomes Constitution (101st Amendment) Act.

2017: Parliament passes CGST, IGST, UTGST, and Compensation Cess Acts.

1 July 2017: GST officially launched in India.

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3. Concept of GST

GST = Value-added tax on supply of goods or services.

Input Tax Credit (ITC) ensures only value addition is taxed.

No cascading tax effect — tax on tax is eliminated.

> 📊 Example: Tax collected at each stage, but input taxes are credited —
consumer bears only the final GST.

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4. Need for GST in India

Previous system had:

Double taxation (e.g., software taxed as both goods and service).

Cascading due to central excise + VAT with no cross-credit.

CST was non-VATable → increased cost.

VAT excluded services → states lost revenue.

Many indirect levies (luxury tax, entry tax, etc.) not unified.

GST cures all these issues by:

Merging most indirect taxes.

Offering cross-utilization of credit.

Using destination-based taxation.

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5. Framework of GST

Dual GST model: Both Centre and States levy GST on the same supply.

Types of GST:

CGST (Centre)

SGST (State)

UTGST (Union Territories)

IGST (Inter-State)

Place of Supply determines which GST applies.

Legislations: CGST Act, SGST Acts (by States), UTGST Act, IGST Act.
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6. Benefits of GST

To the Economy:

Unified national market.

Boost to “Make in India”.

More FDI, more employment.

To Trade & Industry:

Elimination of cascading tax.

Lower tax burden.

Simplified tax structure.

To the Government:
Broader tax base.

More compliance.

Technology-enabled system.

To Consumers:

Reduced prices.

Transparency.

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7. Constitutional Provisions

GST required amendment of Constitution — key changes:

Added Article 246A: Special power to make GST laws.

Introduced GST Council (Art. 279A): For rate/policy decisions.

Deleted overlapping entries from Union and State lists.

Empowered both Centre & States to simultaneously tax supply.

📘 Chapter 2: Supply Under GST

1. Introduction to Supply

The term “supply” is the foundation of the GST framework. Unlike previous laws that taxed
manufacture, sale, or provision, GST taxes only “supply”.

All taxable events in GST (i.e., charging GST) arise from a “supply” of goods or services or
both.

2. Key Definitions (Sec. 2 of CGST Act)

Goods [Sec. 2(52)]: Every kind of movable property, excluding money and securities but
including actionable claim, growing crops, grass, and things attached to or forming part of land
which are agreed to be severed before supply.
Services [Sec. 2(102)]: Anything other than goods, money, and securities. Includes activities
relating to the use of money or its conversion for which a separate consideration is charged.

Consideration [Sec. 2(31)]: Includes payment in money or otherwise for the supply of
goods/services. Can also include non-monetary payments or payments by third parties.

Business [Sec. 2(17)]: Includes any trade, commerce, manufacture, profession, adventure, or
similar activity, whether for pecuniary benefit or not.

3. What Constitutes Supply? [Sec. 7(1)]

A supply includes the following:

1. All forms of supply such as sale, transfer, barter, exchange, license, rental, lease, or
disposal made:

For a consideration

In the course or furtherance of business

2. Import of services, whether or not in the course or furtherance of business and whether or
not for a consideration.
 3. Activities specified in Schedule I (without consideration):

Permanent transfer of business assets where ITC was claimed.

Supply between related persons or between distinct persons (e.g. branches in different states).

Supply by principal to agent and vice versa.

Import of services from a related person or establishment outside India.

4. Activities treated neither as supply of goods nor services are listed in Schedule III, e.g.:

Services by employee to employer

Sale of land or building (subject to certain conditions)

Functions performed by MPs, MLAs, constitutional posts

5. Composite and Mixed Supplies [Sec. 8]

🧩 Composite Supply:

A supply consisting of two or more taxable supplies naturally bundled and supplied in
conjunction with each other.

Tax treatment: Taxed as if it’s a supply of the principal item.

📌 Example: A package of hotel stay + breakfast. The principal supply is accommodation → taxed
accordingly.

🧩 Mixed Supply:

Two or more individual supplies made together for a single price, not naturally bundled.

Tax treatment: Taxed at the highest rate applicable to any of the items.

📌 Example: A Diwali gift box containing chocolates (18%) + perfume (28%). Whole box taxed
at 28%.

6. Key Clarifications by CBIC

Free samples without consideration: Not a supply.

Stipulated contractual penalties: May be taxable as supply of service.

Liquidated damages: Could be considered supply in specific contexts if consideration is
involved.

7. Deemed Supplies – Schedule I (Without Consideration)

1. Transfer of business assets if ITC was availed

2. Supply between related/distinct persons (e.g., same PAN in different states)

3. Principal-agent supplies

4. Import of services from related persons or own establishments abroad

8. Activities Not Treated as Supply – Schedule III

1. Services by employee to employer

 2. Services of MPs, judges, constitutional office holders

3. Duties by local authority, courts, tribunals

4. Sale of land and completed buildings

5. Actionable claims other than lottery, betting, gambling

9. Important Judicial/Practical Interpretations

Barter/exchange: Both parties may be considered suppliers.

Charitable trusts: Certain activities are exempt, but others may still fall under supply.

Gifts to employees: May be taxable if above ₹50,000.

 10. GST on Transactions Between Branches/Head Offices

Treated as supply between distinct persons under same PAN if located in different states.

GST applicable even though it’s an internal movement.

11. Circulars & Clarifications

Circulars have clarified inclusion/exclusion of various activities like:

License fee as supply

Donations tied with obligations

Penal charges

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📘 Chapter 3: Charge of GST

(As per ICAI Inter GST Module, fully covered with no omissions)

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1. Introduction

This chapter discusses the point at which GST becomes payable, known as
the levy of GST. It also explains who is liable to pay, what rates apply, and
covers the composition levy for small taxpayers.

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2. Key Definitions

Taxable Person [Sec. 2(107)]: A person who is registered or is liable to be

registered under GST.

Taxable Supply [Sec. 2(108)]: A supply of goods or services or both which is

leviable to tax under the CGST Act.

Aggregate Turnover: All taxable + exempt supplies + exports + inter-State

supplies on all India basis under a PAN, excluding inward supplies on which
tax is payable under reverse charge.

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3. Extent & Commencement [Sec. 1]

The CGST Act extends to the whole of India, including Jammu & Kashmir and
Union Territories.

Came into force on 1st July 2017.

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4. Levy and Collection of GST [Sec. 9 of CGST Act & Sec. 5 of IGST Act]

(a) Levy of GST [Sec. 9(1)]

GST is levied on all intra-State supplies of goods or services (except alcohol

for human consumption).

Levied at prescribed rates, not exceeding 20% (for CGST).

Charged on the value of supply as determined under Sec. 15.

Collected in the manner prescribed in the Act.

📌 IGST (under Sec. 5 of IGST Act) is levied on inter-State supplies, with a rate
not exceeding 40% (combined CGST + SGST equivalent).
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(b) Reverse Charge Mechanism [Sec. 9(3) & 9(4)]

Sec. 9(3): Specific goods/services notified by the Government where the

recipient is liable to pay tax instead of the supplier.

📌 Example: Legal services by an advocate, GTA services.

Sec. 9(4): Applicable when a registered person receives taxable

goods/services from an unregistered supplier — subject to notification
(currently restricted to specific cases).

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5. Exemptions from Tax [Sec. 11]

The Government can exempt goods/services either:

Generally, via notification, or

Specifically, under special conditions.

> 📌 Examples of exempt services:

Healthcare services

Educational services

Services by RBI

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6. Composition Levy [Sec. 10]

(a) Purpose:

To reduce the compliance burden for small taxpayers.

(b) Who Can Opt:

Registered person whose aggregate turnover in the preceding FY does not

exceed:

₹1.5 crore (normal states)

₹75 lakh (for special category states)

Service providers: A separate composition scheme under Notification No.

2/2019 allows services up to ₹50 lakh (tax @6%).

(c) Key Conditions:

Cannot engage in inter-State supply

Cannot supply through an e-commerce operator required to collect TCS

Must mention “composition taxable person” on every bill

Cannot collect tax from customers

Cannot claim Input Tax Credit

(d) Tax Rates under Composition:

Type of Supplier CGST Rate SGST Rate Total

Manufacturers 0.5% 0.5% 1%

Traders 0.5% 0.5% 1%

Restaurants (not alcohol) 2.5% 2.5% 5%

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7. Other Important Points

Composition taxpayers must file quarterly returns (CMP-08) and annual

return (GSTR-4).

Not allowed to issue tax invoice — must issue bill of supply.

If a person opts out or becomes ineligible, they must switch to normal

scheme and pay tax normally.

Composition scheme is optional and can be opted state-wise (i.e., different

business verticals in different states can have different status).

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8. Illustration – Reverse Charge

Suppose a registered company takes legal advice from a senior advocate.

Under Sec. 9(3), the company must pay GST on the fees charged, under
reverse charge.
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9. Latest Updates

Threshold limits and rules under composition scheme may change by

notification, so always refer to the latest statutory update.

GST Council has allowed certain service providers to opt into the scheme as
long as they don't cross ₹50 lakh turnover.

📘 Chapter 4: Place of Supply

(Essential for determining whether a transaction is intra-State or inter-State and whether

CGST/SGST or IGST applies)

1. Introduction

In GST, tax is destination-based. This means tax revenue accrues to the place where
goods/services are consumed.
To decide whether CGST+SGST or IGST applies, we need to determine the “Place of Supply”.

The supplier’s location and place of supply determine whether the supply is intra-State or inter-
State.

2. Key Definitions [IGST Act]

Location of Supplier of Services [Sec. 2(15)]

Refers to:

Registered place of business

Fixed establishment

Where both exist, establishment most directly concerned

In absence of above, usual place of residence

Location of Recipient of Services [Sec. 2(14)]

Similar rules as supplier

Place of Supply: Defined differently for goods and services

 3. Place of Supply of Goods (Other Than Imports/Exports) [Sec. 10 of IGST Act]

Situation Place of Supply

Supply involves movement of goods Location of goods at the time of delivery to recipient
No movement (e.g. installed on-site) Location of goods at time of delivery
Delivered to third party on instruction (bill to ship to) Location of third party (the one who
orders delivery)
Goods assembled or installed at site Place of installation
Goods supplied on board a vessel, aircraft, train Place where goods are taken on board
No specific category Determined as per rule interpretation

📌 Example:

A Delhi supplier sends goods to Mumbai customer = Inter-State (IGST)

Goods handed over at factory = Intra-State (CGST+SGST) if buyer is in same state

4. Place of Supply of Services (Domestic) [Sec. 12 of IGST Act]

Applicable when both supplier and recipient are in India:

Type of Service Place of Supply

General rule (B2B) Location of recipient (if registered) or address on record (if unregistered)
Services related to immovable property Location of property
Restaurant, catering, personal grooming Location where services are actually performed
Training & performance appraisal Location of recipient (if registered), else location of
performance
Admission to events Location of the event
Organisation of events B2B: Location of recipient, B2C: Event location
Transportation of goods Registered: location of recipient, else: location where handed over
Passenger transport Registered: location of recipient, else: boarding point
Services on board aircraft/vessel First scheduled departure point
Telecom, data transfer, DTH As per regulations depending on type
Banking, financial services Location of recipient on records, else supplier’s location
Insurance services Registered: recipient’s location; unregistered: address on record

5. Place of Supply for Cross-Border Services [Sec. 13 of IGST Act]

When either supplier or recipient is outside India:

Situation Place of Supply

Default Rule Location of recipient (if not available, supplier’s location)
Services related to immovable property Location of the property
Performance-based services Where services are performed
Events Where event is held
Intermediary services Location of supplier
Hiring of transportation up to one month Location of supplier
Online information and database access (OIDAR) Location of recipient

📌 OIDAR (Online services) to individuals (B2C):

Recipient is deemed located in India if any 2 of the following exist:

Billing address is in India

Credit card issued in India

IP address is Indian

Bank account used is in India

6. Special Provisions: Territorial Waters [Sec. 9 of IGST Act]

Goods or services supplied in territorial waters are deemed supplied in the coastal State/UT
nearest to the location.
 7. Inter-State vs Intra-State Supply

Inter-State supply:

Location of supplier and place of supply are in different States/UTs

Subject to IGST

Intra-State supply:

Location of supplier and place of supply are in same State/UT

Subject to CGST + SGST/UTGST

📌 Exceptions:

Supplies to or by SEZs = Inter-State (IGST)

Imports = Inter-State (IGST)

Exports = Treated as zero-rated supply

8. Illustrations

Example 1:

A service provider in Delhi renders training services to a registered recipient in Mumbai.

→ Place of supply = Mumbai → Inter-State (IGST)

Example 2:

Restaurant services rendered in Bengaluru to customer from Hyderabad.

→ Place of supply = Bengaluru (actual location) → Intra-State (Karnataka CGST + SGST)

📘 Chapter 5: Exemptions from GST

1. What is an Exemption?
An exemption under GST means:

A supply of goods or services on which no GST is chargeable.

It may be a full exemption (0% tax) or a conditional exemption.

GST exemptions are given:

Through notification by the Government, on recommendation of the GST Council.

Under Section 11 of the CGST Act, and Section 6 of the IGST Act.

2. Types of Exemptions

Type Meaning

Absolute Exemption Applies automatically, whether the recipient is registered or not

Conditional Exemption Applies only if conditions are met (e.g., turnover threshold, type of
recipient)
Partial Exemption Applies up to a certain limit or subject to value conditions
 3. Statutory Power to Grant Exemption

Section 11 (CGST Act):

Govt. Can issue notifications to:

Exempt specific goods/services

Grant special exemptions under exceptional circumstances (through special order)

Similar power exists under Section 6 of IGST Act for inter-State supplies.

4. Examples of GST-Exempt Supplies

🏥 Healthcare:

Services by a clinical establishment, doctor, or paramedics

Services by way of health check-up or treatment

🎓 Education:
Pre-school to higher secondary education by an educational institution

Transportation, catering, and exam services to such institutions

🌾 Agriculture:

Agricultural produce handling: cultivation, harvesting, loading, warehousing

Renting of agricultural machinery for cultivation

⚖️Government Services:

Services by government (except in competition with private sector)

Licensing services (like driving license, passport) are exempt

🚌 Transport:

Transportation of passengers by:

Metro, tramway, inland waterways, public buses

Transport of goods by road (excluding GTA and courier agency)

💼 Charitable Trusts:

Services by charitable/religious trust registered under Section 12AA of Income Tax Act:

Health care

Education to the poor

Public religious events

Advancement of religion

💌 Miscellaneous:

Services by way of renting of religious place (if charges < ₹1,000/day)

Services provided by Resident Welfare Associations (if member contribution ≤ ₹7,500/month)

5. Zero-Rated vs Exempted vs Nil-Rated vs Non-Taxable

Term Meaning

Exempt Supply GST not charged due to government exemption

Zero-Rated Supply Export/supply to SEZ → GST rate = 0% but ITC is allowed
Nil-Rated Tax rate = 0% → Listed in rate schedule
Non-Taxable Not included in GST law (e.g., alcohol for human consumption)

6. Effect of Exemption

If a supply is exempt:

Supplier cannot collect GST on it

Supplier cannot claim ITC (Input Tax Credit) on inputs used for that supply

Exempt supply is included in aggregate turnover for registration purposes

7. Revocation of Exemption

Government can withdraw exemptions anytime through notification.

Example: GST exemption on certain food items withdrawn → now taxable

8. Practical Illustration

Example 1:
An NGO runs a free school for poor children and also charges ₹100 for yoga sessions.
→ Educational services = exempt
→ Yoga = taxable unless under exempted charitable activity

Example 2:
ABC Ltd. Provides transportation of rice by road (not by GTA).
→ Exempt, since food grains fall under agricultural produce transport exemption.

✅ End of Chapter 5: Exemptions from GST

Fully covered with:

Legal basis (Sec. 11)

Absolute vs conditional exemption

Sector-wise examples

Practical implications

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📘 Chapter 6: Time of Supply

(Determines when GST becomes payable – i.e., the “taxable event”)

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1. Why is Time of Supply Important?

GST is payable at the time of supply.

It determines:

When liability to pay tax arises

Which rate, exemptions, and notifications apply (based on that date)

It is different for goods, services, and under reverse charge.

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2. Time of Supply of Goods [Section 12 of CGST Act]

🧾 General Rule (Forward Charge):

Earliest of the following:

1. Date of issue of invoice, or

2. Last date by which invoice should have been issued, or

3. Date of receipt of payment, whichever is earlier

> 📌 Invoice must be issued within:

Before or at the time of removal (if goods move)

Delivery to recipient (if no movement)

🧠 Example:

Invoice date: 5th May

Payment received: 3rd May

→ Time of supply = 3rd May

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3. Time of Supply of Services [Section 13 of CGST Act]

🧾 General Rule (Forward Charge):

Earliest of:

1. Date of issue of invoice (within prescribed time), or

2. Date of payment, whichever is earlier

If invoice not issued within prescribed time → then date of provision of

service or payment, whichever is earlier

> 📌 Invoice must be issued within 30 days of service (or 45 days for banks)
🧠 Example:

Service rendered: 1st June

Invoice issued: 30th June

Payment received: 25th June

→ Time of supply = 25th June

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4. Time of Supply Under Reverse Charge [Section 12(3) & 13(3)]

Applies when recipient is liable to pay tax (e.g., for legal or GTA services).

(a) For Goods:

Earliest of:

1. Date of receipt of goods

2. Date of payment, or

3. 30 days from invoice date

If not determinable → date of entry in books of recipient

(b) For Services:

Earliest of:

1. Date of payment, or

2. 60 days from invoice date

If not determinable → date of entry in books of account

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5. Time of Supply for Vouchers [Section 12(4) & 13(4)]

Type of Voucher Time of Supply

Voucher for identifiable goods/services Date of issue of voucher

Voucher for non-identifiable use Date of redemption

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6. Change in Rate of Tax [Section 14]

If there’s a change in GST rate, time of supply is determined using special

rules. Three events are considered:

1. Supply of goods/services

2. Issue of invoice

3. Payment received

🧠 Depending on whether the supply happened before or after the rate

change, different rules apply to decide which rate is valid.

📌 Example:

Rate changes from 12% to 18% on 1st April

Supply made on 31st March, but invoice issued on 2nd April

→ Old rate (12%) may apply if payment was also before 1st April
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7. Special Cases

Continuous supply of goods/services: Time of supply determined by due

dates in the contract or payment schedule

Additions in value by interest, penalty, late fee: Time of supply = date on

which supplier receives such amount

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8. Summary Table – Time of Supply

Situation Time of Supply

Normal supply of goods Earlier of invoice or payment

Normal supply of services Earlier of invoice (if within time) or payment

Reverse charge – goodsEarliest of receipt, payment, or 30 days from invoice

Reverse charge – services Earliest of payment or 60 days from invoice

Voucher with known use Date of issue of voucher

Voucher with unknown use Date of redemption

Additional interest/penalty Date of actual receipt

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✅ End of Chapter 6: Time of Supply

Every provision explained clearly with:

Forward & reverse charge rules

Realistic examples

Invoice timing

Rate change impact

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📘 Chapter 7: Value of Supply

(Determines the value on which GST is charged)

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1. Why Is Value of Supply Important?

GST is charged as a percentage of the value of goods/services.

So, to determine tax liability, the correct value must be computed.

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2. Statutory Provision: Section 15 of CGST Act

> "Value of supply = transaction value, i.e., price actually paid or payable
when:

Supplier and recipient are not related

Price is the sole consideration"

✅ If these conditions are met → use invoice value

❌ If related party or non-monetary consideration → special valuation rules

apply
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3. Inclusions in Value [Sec. 15(2)]

The following must be added to the invoice price:

1. Taxes, duties, cesses, fees (except GST itself)

2. Amount liable to be paid by recipient but incurred by supplier

3. Incidental expenses (e.g., packing, commission, design fee)

4. Interest, late fee, penalty for delayed payment

5. Subsidies linked directly to the price (except Government subsidies)

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4. Exclusions (Not Part of Value)

GST itself (CGST/SGST/IGST/UTGST)

Discounts:

Pre-supply discounts shown on invoice are allowed

Post-supply discounts are allowed if:

Agreement existed before supply

Linked to specific invoices

ITC reversed by recipient

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5. Valuation in Foreign Currency

Converted to INR as per Customs rules (CBIC notified exchange rates)

This applies mainly to imported/exported services

---

6. Special Valuation Cases (Rules 27–35 of CGST Rules)

A. Valuation when consideration is not wholly in money [Rule 27]

🧠 Example: Supply of goods + part payment in kind

Value = Open market value or sum total of consideration + money value of

non-monetary consideration

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B. Supply between Related Persons / Distinct Persons [Rule 28]

If parties are related (e.g., branches with same PAN in different states):

Use open market value, or

Value of similar goods, or

Cost + 10% markup, or

Declared invoice value (if ITC is fully available)

---

C. Pure Agent Concept [Rule 33]

If a supplier incurs expenses on behalf of the recipient as a pure agent:

Such expenses are not added to the value, if:

Supplier acts as an agent

Expenses are separately indicated in invoice

Recipient is the actual beneficiary

🧠 Example: Legal firm pays govt. registration fees for client — not part of
value

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D. Valuation in case of Lottery / Betting / Gambling [Rule 31A]

Lottery: Value = 100 ÷ 128 × face value of ticket

Gambling: Value = Full bet amount

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E. Value of Tokens, Vouchers, Coupons [Rule 32(6)]

Value = Money value of goods/services redeemable against them

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F. Valuation for Money Changing & Forex Services

Service Type Value of Supply

Currency conversion Difference between buying/selling rate and RBI rate,

or use fixed % slabs

Inter-bank services 1% of gross amount exchanged, subject to ₹250 min

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7. Illustrations

Example 1:

Price = ₹1,00,000

Packing charges = ₹1,000

Freight = ₹2,000

Discount on invoice = ₹5,000

→ Value = ₹1,00,000 + ₹1,000 + ₹2,000 – ₹5,000 = ₹98,000

Example 2:

Supplier gives post-sale discount not mentioned in invoice

→ Not allowed as deduction from value

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8. Summary – What to Include in Value

✅ Include:

Extra costs, charges, taxes

Packing, freight, commission

Subsidies (non-govt.)
Late fees, penalties

❌ Exclude:

GST

Allowed discounts

Govt. subsidies

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✅ End of Chapter 7: Value of Supply

Complete with:

Section 15 explained

All inclusions & exclusions

Special cases under valuation rules

Examples and treatment

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📘 Chapter 8: Input Tax Credit (ITC)

(The heart of GST: Avoids cascading, gives credit for taxes paid on inputs)

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1. What is ITC?

Input Tax Credit (ITC) means:

You can claim credit of GST paid on purchases (inputs) used for making
taxable outward supplies.

> In short: Tax paid on inputs can be deducted from tax payable on output.

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2. Legal Definition [Sec. 2(63) & Sec. 16]

“Input tax” = CGST, SGST, IGST, or UTGST paid on:

Inward supply of goods or services

Import of goods/services

Reverse charge payments

ITC is governed by Section 16 to Section 21 of the CGST Act + related rules.

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3. Eligibility to Claim ITC [Section 16]

✅ Conditions to claim ITC:

1. Must be a registered person

2. Must have tax invoice or similar document

3. Goods/services must be received

4. Tax must be paid to government by supplier

5. ITC must be reflected in GSTR-2B

6. Return (GSTR-3B) must be filed

> 🧠 If invoice is not in GSTR-2B → No ITC allowed, even if you paid tax

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4. Time Limit to Claim ITC

ITC must be claimed by:

30th November of the following financial year, or

Date of filing annual return

🕒 Whichever is earlier
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5. Blocked ITC – Section 17(5)

You cannot claim ITC on:

Item Condition

Motor vehicles (<13 seats) Unless used for transport, training, or

commerce

Food, beverages, outdoor catering Unless for business obligation under law
(e.g., factory canteen)

Membership of clubs, health, life insurance Not allowed unless legally

required

Travel benefits to employees Not allowed

Works contract servicesUnless for further supply of such contracts

Construction of immovable property ITC blocked (except for plant &

machinery)

Goods lost, stolen, or destroyed ITC not allowed

Personal use ITC not allowed

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6. Reversal of ITC [Rule 42 & 43]

(a) If inputs are used for both taxable and exempt supplies:

Common ITC must be apportioned

ITC on exempt part must be reversed monthly

(b) Personal vs business use:

Proportionate reversal needed

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7. Matching Concept (GSTR-2B vs GSTR-3B)

ITC can be claimed only if invoice appears in GSTR-2B of the recipient

Claimed through GSTR-3B return

If supplier does not upload invoice → No ITC

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8. Utilization of ITC [Sec. 49A, 49B]

Credit Type First Used For Then For

IGST IGST → CGST → SGST

CGST CGST → IGST ❌ Not for SGST

SGST/UTGST SGST/UTGST → IGST ❌ Not for CGST

> ✅ Cross-utilization between CGST and SGST is not allowed

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9. Input Service Distributor (ISD)

ISD = Office that distributes ITC on common services (e.g., HR, admin)

Distributes ITC via ISD invoice

Useful for companies with multiple branches

---

10. ITC on Capital Goods

Allowed if capital goods used for business purposes

Proportionate reversal if used for exempt supply or personal use

---

11. ITC on Job Work

Principal can take ITC on goods sent to job worker

No reversal required if goods returned within:

1 year for inputs

3 years for capital goods

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12. ITC on Reverse Charge Supplies

Allowed to recipient (after paying tax)

Even if invoice doesn’t appear in GSTR-2B, ITC allowed if payment made

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13. ITC Restrictions – Rule 86B

Large taxpayers (monthly turnover > ₹50 lakh) can use only 99% ITC

At least 1% of tax must be paid in cash (to prevent fake ITC)

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14. Practical Example

ABC Ltd. purchases goods worth ₹1,00,000 + 18% GST

→ ITC = ₹18,000

Sells goods for ₹1,50,000 + 18% GST = ₹27,000 output tax

→ Net payable = ₹27,000 – ₹18,000 = ₹9,000

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✅ End of Chapter 8: Input Tax Credit (ITC)

Covered in full:

Eligibility & conditions

Blocked credits

Reversal & utilization

Rules, examples, and real GST form logic

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📘 Chapter 9: Registration under GST

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1. Why Is Registration Important?

GST registration gives a legal identity as a supplier.

Allows you to:

Collect GST

Claim Input Tax Credit (ITC)

File returns

It’s mandatory in many cases, and voluntary in others.

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2. Legal Basis

Section 22 to 30 of CGST Act

Registration rules in Chapter VI of CGST Rules

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3. Who Is Liable to Register? [Sec. 22]

A person must register if:

Aggregate turnover exceeds ₹20 lakh (normal states)

Or ₹10 lakh (for special category states)

🧾 Threshold for supply of only goods = ₹40 lakh (normal states), ₹20 lakh
(special states), unless:

Inter-State supply

E-commerce operator

Ice cream, tobacco, pan masala dealers

📌 Aggregate turnover includes:

Taxable + exempt + exports + inter-state supplies across India (under same

PAN)

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4. Who Must Register Compulsorily? [Sec. 24]

Regardless of turnover:

Person TypeRegistration Required

Inter-State supplier ✅ Yes

Casual taxable person ✅ Yes

Reverse charge liable recipient ✅ Yes

E-commerce operator or aggregator ✅ Yes

Supplier via e-commerce platform ✅ Yes

Non-resident taxable person ✅ Yes

ISD (Input Service Distributor) ✅ Yes

TDS/TCS deductors ✅ Yes

Agent of a supplier ✅ Yes

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5. Voluntary Registration [Sec. 25(3)]

Anyone can register voluntarily, even if not required — to:

Claim ITC

Do B2B supplies
Expand business credibility

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6. Procedure for Registration

📄 Application via GST Portal: www.gst.gov.in

Fill Form GST REG-01

Submit PAN, email, phone, documents

Verification → issue of GSTIN

Final certificate issued in Form GST REG-06

> 📌 Registration is State-wise, i.e., different registration for different States

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7. GSTIN Structure

15-digit alphanumeric code

Format: 11ABCDE1234F1Z5

First 2 digits = State code

Next 10 = PAN

13th digit = Entity number in state

14th = Blank (Z by default)

15th = Check digit

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8. Separate / Multiple Registrations [Rule 11]

One PAN → multiple registrations within the same State allowed if:

Business verticals are separate

Accounts and tax compliance are independent

Separate registration for different States is mandatory

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9. Casual Taxable Person

Occasionally supplies in a State with no fixed place

Must apply at least 5 days before business starts

Valid for 90 days (extendable once)

🧾 Must deposit estimated tax liability in advance

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10. Non-Resident Taxable Person

No fixed place in India

Must register before starting business

Validity: 90 days (extendable)

Must pay estimated tax in advance

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11. Amendment of Registration [Rule 19]

If any details change → apply in Form GST REG-14

Changes include:

Business name

Address

Partner/director

Email, phone
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12. Cancellation of Registration [Sec. 29]

Occurs when:

Business discontinued

No longer liable to register

Contravention of GST rules

🧾 Apply via Form GST REG-16

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13. Suspension of Registration

Pending cancellation, registration can be suspended

No need to file returns during suspension

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14. Revocation of Cancellation

If registration was cancelled by officer, taxpayer may apply for revocation

within:

30 days of cancellation order (can be extended)

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15. Penalties for Non-Registration

Supply without registration = ₹10,000 or tax amount (whichever is higher)

Late registration also attracts interest & late fees

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16. Example Scenarios

🧠 Example 1:

Turnover = ₹45 lakh in Maharashtra, supplying only goods

→ Registration mandatory (exceeds ₹40 lakh limit)

🧠 Example 2:

Providing legal services across India from Delhi

→ Inter-State supply → Must register, even if turnover is low

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✅ End of Chapter 9: Registration under GST

Fully covered:

Thresholds

Compulsory and voluntary registration

GSTIN structure

Casual and non-resident provisions

Cancellation/amendment/penalties

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📘 Chapter 10: Tax Invoice, Credit & Debit Notes, and E-Way Bill
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1. Why This Chapter Is Important

Tax invoice = foundation for GST compliance

Correct invoicing = essential for:

Collecting tax

Claiming ITC

Filing returns

Credit/debit notes correct earlier invoices

E-Way Bill ensures movement of goods is tracked & legal

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2. Tax Invoice [Section 31 of CGST Act]

🧾 A tax invoice is issued by a registered person when supplying taxable
goods or services.

(a) For Goods:

Must issue before or at the time of removal (if moved) or delivery (if not
moved)

(b) For Services:

Must issue within 30 days of supply (or 45 days for banks/insurance)

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3. Contents of Tax Invoice [Rule 46]

Mandatory Details Include:

Supplier name, address, and GSTIN

Unique invoice number (consecutive)

Date of issue

Recipient name, address, GSTIN (if any)

Description of goods/services

HSN/SAC code
Quantity and unit

Total value

Taxable value (after discount)

CGST, SGST, IGST, UTGST, Cess amounts

Place of supply (for inter-State)

Signature/digital signature

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4. Revised Invoices

If registered within 30 days of liability:

Can issue revised invoices for supplies from effective date of registration

Must issue within 1 month of registration certificate

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5. Bill of Supply

Used instead of tax invoice when:

Supplying exempted goods/services, or

Supplier is under composition scheme

📌 No tax is charged or shown in a bill of supply

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6. Credit Note [Section 34(1)]

Issued when:

Taxable value or tax charged in original invoice is more than actual

Goods returned

Services not fully performed

➡️GST liability can be adjusted downward

🕒 Must be declared by 30th November of next FY or before annual return,

whichever is earlier
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7. Debit Note [Section 34(3)]

Issued when:

Taxable value or tax charged in original invoice is less than actual

➡️GST liability increases

No time limit to issue debit note, but must be reported in return

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8. Receipt Voucher, Payment Voucher

Used when:

Advance is received → Receipt Voucher

Payment made under reverse charge → Payment Voucher

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9. Delivery Challan [Rule 55]

Used when:

Goods sent on approval or for job work

Non-taxable supply

Quantity unknown at time of dispatch

📄 Must include:

Serial number, date, name/address of consigner & consignee

Description & quantity

Signature

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10. E-Way Bill System [Rule 138]

E-Way Bill is required for movement of goods worth > ₹50,000:

Interstate or intrastate

For supply or other reasons (like returns, job work)

Key Aspects:

Generated at www.ewaybillgst.gov.in

Form GST EWB-01: Part A (details of goods), Part B (transporter)

🕒 Validity depends on distance:

Distance Validity

Up to 100 km 1 day

Every additional 100 km +1 day

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11. Who Generates the E-Way Bill?

Movement Type Responsibility

By supplier Supplier generates it

By recipientRecipient generates it

By transporter If neither does it

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12. Exceptions to E-Way Bill

No E-Way Bill required for:

Goods transported by non-motorised conveyance

Exempted goods

Transit through another state without delivery

Goods value ≤ ₹50,000 (unless mandatory under certain rules)

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13. Consequences of Non-Compliance

Detention/seizure of goods

Penalty = ₹10,000 or tax evaded (whichever is higher)

ITC claim issues if invoice is incorrect or absent

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14. Example – Credit Note

ABC Ltd. raised invoice for ₹1,00,000 + 18% GST = ₹1,18,000

Later, discount of ₹10,000 given → Credit note issued for ₹10,000 + ₹1,800

→ Output tax reduced by ₹1,800 in return

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✅ End of Chapter 10: Tax Invoice, Credit & Debit Notes, and E-Way Bill

Complete with:

Invoicing rules
E-way bill mechanism

Credit/debit note treatment

Penalties, time limits, examples

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📘 Chapter 11: Accounts and Records under GST

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1. Why This Chapter Matters

Proper record-keeping under GST is mandatory for:

Audit and inspection

Filing returns

Availing Input Tax Credit (ITC)

Failure to maintain records leads to penalties and estimated tax liability

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2. Legal Provisions

Section 35 of the CGST Act → Maintenance of accounts and records

Section 36 → Period of retention

Rules 56 to 58 of CGST Rules, 2017

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3. Who Must Maintain Records?

Every registered person under GST (except composition taxpayers in some

cases) must keep records of:

Inward & outward supplies

Stock

Input tax credit

Output tax payable and paid

Other prescribed particulars

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4. Where to Maintain Records?

📍 At the principal place of business, as declared in GST registration.

> If multiple places of business are declared → records must be maintained

at each location for transactions related to that location.

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5. Electronic Recordkeeping Allowed

Books and documents may be maintained electronically

Must be accessible and usable for future reference

Backup should be retained

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6. List of Mandatory Records to Be Maintained [Rule 56]

Record Type Details Required

Purchase RegisterAll inward supplies (taxable and exempt)

Sales Register Outward taxable supplies

Stock Register Opening, receipts, supply, losses, closing stock

ITC RegisterInput tax credit availed, reversed, utilized

Output Tax Register GST liability on supplies made

Payment Register Details of GST paid (cash or credit)

Advance Received Register Amount of advance and invoice against which

adjusted

Credit/Debit Note Register Serial-wise record of all such documents

E-Way Bill Register (If applicable) movement of goods

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7. Additional Requirements for Manufacturers [Rule 56(12)]

Monthly production records showing:

Raw materials used

Finished goods produced

Waste and by-products

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8. Requirements for Service Providers

Must maintain:

Name and address of recipient

Description of services

Value and tax collected

Payments received in advance

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9. Requirements for Works Contractors

Records of:

Contracts executed

Name & address of persons receiving service

Goods/services used for the works contract

Payments received and tax paid

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10. Retention Period for Records [Sec. 36]

Records must be retained for 6 years from the due date of annual return for
that year.

> 📌 If under audit/investigation, retain till 1 year after final order, even if it
exceeds 6 years.
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11. Consequences of Not Maintaining Records

If proper records are not maintained:

Officer may estimate tax liability

Penalty of ₹10,000 (or more if serious)

May trigger audit or inspection

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12. Example Scenario

ABC Ltd. fails to maintain separate records for taxable and exempt goods

→ Officer estimates tax liability and disallows ITC claimed on exempt goods

→ Penalty imposed + tax payable as per best judgment

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13. Best Practices

✅ Keep:

Physical or digital invoices, vouchers, and returns

Daily backups of electronic records

Separate files for each GSTIN, branch, or business unit

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✅ End of Chapter 11: Accounts and Records

Complete with:

Legal rules

Specific registers

Who maintains what

Penalties and retention rules

📘 Chapter 12: Returns under GST

1. What is a GST Return?

A GST return is a document filed by registered taxpayers containing:

Details of sales (outward supply)

Purchases (inward supply)

Tax collected and paid

Input Tax Credit (ITC) claimed

 📌 Filing returns ensures tax is paid, matched, and compliance is monitored.

 2. Types of GST Returns

Form Filed By Purpose Frequency

GSTR-1 Regular Registered Persons Details of outward supplies Monthly/Quarterly

GSTR-3B Regular Registered Persons Summary return + tax payment Monthly
GSTR-4 Composition Taxpayers Consolidated return Annually
GSTR-5 Non-Resident Taxable Person Inward/outward supplies, tax paid Monthly
GSTR-5A OIDAR Service Providers Details of supplies and tax paid Monthly
GSTR-6 Input Service Distributors ITC received and distributed Monthly
GSTR-7 TDS Deductors Tax deducted and deposited Monthly
GSTR-8 E-Commerce Operators Tax collected at source (TCS)Monthly
GSTR-9 Regular Taxpayers Annual return Annually
GSTR-9C Taxpayers > ₹5 crore turnover Reconciliation + Auditor Certification
Annually
GSTR-10 Cancelled GST Registration Final return One-time
GSTR-11 UIN Holders (Embassies, etc.) Inward supply and tax refund claim
Monthly

3. Return Filing Process – Overview

Step 1: Supplier uploads sales → GSTR-1

Step 2: Buyer sees invoices in GSTR-2B (auto-generated)
Step 3: Buyer claims ITC in GSTR-3B
  🔁 This ensures matching of invoices and prevention of fake ITC

4. Due Dates (As per latest standard timeline)

Form Due Date

GSTR-1 11th of next month (Monthly) or 13th (Quarterly under QRMP)

GSTR-3B 20th/22nd/24th of next month (based on state/turnover)
GSTR-4 30th April of next FY
GSTR-9 31st December of next FY
GSTR-9C 31st December of next FY
GSTR-7/8 10th of next month
GSTR-6 13th of next month
GSTR-5/5A 20th of next month

5. Composition Scheme Return – GSTR-4

Filed annually by 30th April

But tax liability is declared quarterly through CMP-08

6. Quarterly Return Monthly Payment (QRMP) Scheme

Available for taxpayers with turnover ≤ ₹5 crore:

Quarterly GSTR-1 & GSTR-3B

Monthly payment of tax via PMT-06

Invoices visible to recipients through Invoice Furnishing Facility (IFF)

7. Late Fees & Penalties

Return Type Late Fee

GSTR-1/3B ₹50 per day (₹25 CGST + ₹25 SGST)

Nil Return ₹20 per day (₹10 + ₹10)
Max Cap ₹5,000
  🔁 Interest @18% p.a. also applicable on late payment of tax

8. Non-Filing Consequences

Cannot file next period’s return until current return is filed

May lead to:

Penalty

Suspension of GSTIN

Blocking of e-way bill generation

Restriction on ITC to recipients

9. Annual Return – GSTR-9 / GSTR-9C

GSTR-9: Filed by all regular taxpayers (except composition)

GSTR-9C: Reconciliation + certification by CA/CMA if turnover > ₹5 crore

Must be filed by 31st December of the following FY

10. Final Return – GSTR-10

Filed within 3 months of GST registration cancellation

Captures:

Closing stock

Liability

Final settlement

11. Amendments & Revisions

Returns cannot be revised once filed

Corrections allowed only in subsequent returns

E.g., mistake in GSTR-1 of April → rectify in GSTR-1 of May

12. Best Practices

✅ File on time
✅ Reconcile GSTR-2B before claiming ITC
✅ Avoid mismatches between books vs returns
✅ Cross-check credit notes, advances, and debit notes

✅ End of Chapter 12: Returns under GST

Complete coverage of:

Types of returns

Due dates

Penalties
Annual/final return

Real-time matching flow

📘 Chapter 13: Payment of Tax under GST

1. Overview

Every registered person under GST is required to:

Determine tax liability

Pay the tax within the due date (via GSTR-3B or CMP-08 etc.)

Discharge tax using cash and/or ITC balances

2. Statutory Provisions
Governed by Section 49 to 53 of the CGST Act

Supported by Rule 85 to 88C of CGST Rules

3. Electronic Ledgers (Section 49)

💻 The GST system maintains 3 electronic ledgers:

Ledger Name Purpose

Electronic Liability Ledger Shows total tax liability (auto-updated)

Electronic Credit Ledger ITC balance available (CGST, SGST, IGST)

Electronic Cash Ledger Cash deposits made by taxpayer

4. Modes of Payment

Online via GST portal using:

Net banking / UPI / NEFT / RTGS

Credit/debit card
Challan (Form GST PMT-06) to be generated

Validity of challan = 15 days

5. Discharge of Liability Order [Section 49(8)]

Liability must be discharged in the following order:

1. Self-assessed tax & other dues for previous tax periods

2. Self-assessed tax & other dues for current tax period

3. Any other amounts payable (interest, penalty, late fees)

6. Utilization of ITC – Rule 88A

💡 Order of utilization of Input Tax Credit (ITC):

Credit Type First Use For Then For

IGST IGST → CGST → SGST

CGST CGST → IGST

SGST/UTGST SGST/UTGST → IGST

 ❌ CGST cannot be used to pay SGST

❌ SGST cannot be used to pay CGST

6. Interest and Late Fees

Situation Consequence

Delay in payment of tax 18% interest (Sec. 50)

Wrongful ITC claim/utilization 24% interest

Late return filing Late fee of ₹50/day (₹25+₹25)

Late filing of NIL return ₹20/day (₹10+₹10)

Late fee cap ₹5,000 per return (GSTR-3B)

 7. Cash Ledger: Refunds & Re-credit

Excess balance in cash ledger can be claimed as refund

Refund application filed in Form RFD-01

Refund processed within 60 days, else interest payable by Govt.

8. TDS & TCS under GST

(a) TDS [Section 51]

Government departments / PSUs must deduct TDS @ 2% on payments to

suppliers if contract > ₹2.5 lakh

File GSTR-7

Credit appears in recipient’s cash ledger

(b)TCS [Section 52]

E-Commerce operators must collect TCS @ 1%

File GSTR-8

Credited to supplier’s cash ledger

9. Challan Generation and Payment Process

📝 Steps to pay GST:

1. Log in to www.gst.gov.in

2. Navigate to Payments > Create Challan

3. Choose heads (CGST, SGST, IGST)

4. Make payment (Net banking, NEFT, RTGS, OTC)

5. Amount credited to cash ledger

 10. Restrictions on ITC Utilization [Rule 86B]

If monthly taxable supply > ₹50 lakh:

→ At least 1% tax must be paid in cash, even if ITC is available

 Exceptions: Govt entities, exporters, etc.

11. Illustration – Tax Payment

ABC Ltd. Has:

IGST liability: ₹10,000

CGST liability: ₹4,000

SGST liability: ₹4,000

ITC available:

IGST = ₹6,000
CGST = ₹2,000

SGST = ₹2,000

✅ Apply in order:

IGST → ₹6,000 from IGST ITC → ₹4,000 cash

CGST → ₹2,000 from CGST ITC + ₹2,000 cash

SGST → ₹2,000 from SGST ITC + ₹2,000 cash

✅ End of Chapter 13: Payment of Tax

Full coverage of:

Ledgers and payment flow

ITC utilization

TDS/TCS
Challans and interest

Reverse charge payments

📘 Chapter 14: Job Work under GST

1. What Is Job Work? [Sec. 2(68)]

Job Work = Processing or working on goods supplied by another person

(called Principal) to carry out manufacturing or finishing, without transferring
ownership.

 📌 Job worker only processes, does not own the goods.

2. Who Is a Principal and Who Is a Job Worker?

Principal: Supplies inputs or capital goods to job worker

Job Worker: Performs processing or treatment and returns goods

3. Legal Provisions

Section 143 of CGST Act

Rule 45 of CGST Rules

Input Tax Credit allowed to Principal

4. Scope of Job Work

✔️Can involve:

Manufacturing

Processing

Packing, testing, labeling

Reworking or repairing

🚫 Cannot involve:

Sale or transfer of title to goods

5. Key Conditions for Sending Goods for Job Work

Goods Type Time Limit to Bring Back from Job Work

Inputs Within 1 year from dispatch

Capital goods Within 3 years from dispatch

 🧠 If not brought back in time → treated as supply on the date

originally sent → tax + interest due

6. How to Send Goods to Job Worker

📋 Must send goods with Delivery Challan (DC), not tax invoice

Generate DC as per Rule 55

Mention “Sent for job work”

Can be sent:

Directly from supplier to job worker

From principal’s premises to job worker

7. Input Tax Credit (ITC) on Goods Sent for Job Work

✅ Principal can claim ITC on:

Inputs/capital goods sent to job worker

Even if goods are sent directly to job worker without coming to principal first
 8. Return of Goods from Job Worker

Goods can be returned in same or processed form

No GST is charged when goods are returned within time limit

📦 Job worker sends goods back with Delivery Challan + E-Way Bill

9. Supply from Job Worker’s Premises

If the Principal wants to supply goods directly from job worker’s premises,
then:

Declare job worker’s place as additional place of business in registration, or

Job worker must be registered under GST

✅ GST to be charged on actual supply invoice by Principal

10. Waste & Scrap

Waste/scrap generated during job work can be:

Returned to Principal, or

Sold directly by job worker (if registered), with GST

11. Form GST ITC-04

📄 A statement of goods sent/received from job worker

When to file Who files Form

Quarterly/half-yearly (as notified) Principal Form ITC-04

Details to include:

Goods sent

Goods returned

Balance with job worker

 12. E-Way Bill Rules for Job Work

If goods sent for job work > ₹50,000, e-way bill is mandatory

Even if within same state

13. Example – Job Work Compliance

ABC Ltd. (Principal) sends ₹10 lakh worth raw materials to XYZ Ltd. (Job
Worker).

XYZ processes and returns goods after 8 months.

✅ Within 1 year → No GST, just delivery challans

❌ If returned after 1 year → considered as supply on original dispatch date →

GST due + interest

✅ End of Chapter 14: Job Work

Fully covered with:

Legal structure

Dispatch/return rules

ITC eligibility

Direct supply & waste handling

ITC-04 and practical examples

📘 Chapter 15: Assessment and Audit under GST

1. Overview

Assessment = Determining tax liability of a registered person

Audit = Examination of records to verify correctness of declared tax, ITC, and

compliance

Both are key for:

Ensuring transparency
Detecting tax evasion

Enforcing accountability

2. Types of Assessment [Sec. 59–64 of CGST Act]

Type of Assessment Description

1. Self-Assessment Taxpayer assesses own liability → files returns (GSTR-

3B, GSTR-1 etc.)

2. Provisional Assessment Taxpayer requests officer to assess

provisionally if unsure of value/rate

3. Scrutiny Assessment Officer scrutinizes return → asks for explanations if

inconsistencies found

4. Best Judgment AssessmentOfficer assesses on his own if return is not filed

or incomplete

5. Summary Assessment Urgent assessment by officer to protect

revenue (with approval)

3. Self-Assessment [Sec. 59]

Default method under GST

Taxpayer:

Files returns

Calculates tax

Pays using ITC/cash

 📌 If ITC claimed wrongly → interest + penalty apply

4. Provisional Assessment [Sec. 60]

Allowed if:

Taxpayer is unable to determine value or rate

May request officer in writing with reasons

📄 Officer issues provisional order within 90 days

✅ Taxpayer must execute bond + security

 Final assessment done within 6 months (extendable to 4 years)

5. Scrutiny of Returns [Sec. 61]

Officer can scrutinize filed returns

If discrepancy found:

Notice issued

Taxpayer must respond in writing

If response is unsatisfactory → further action (audit, inspection, etc.)

6. Best Judgment Assessment [Sec. 62 & 63]

Type When Applicable

u/s 62 Registered person fails to file return

u/s 63 Unregistered person liable to pay tax

📌 Officer uses available data (e.g. GSTR-1, e-way bills) to determine liability

🕒 Taxpayer can file return within 30 days → assessment order gets withdrawn

7. Summary Assessment [Sec. 64]

Passed when evidence of tax liability is urgent and delay may harm revenue

Must be authorized by Additional/Joint Commissioner

No hearing opportunity necessary

🕒 Can be withdrawn within 30 days if found unjustified

8. Audit under GST [Sec. 65–66]

A. Departmental Audit [Sec. 65]

Commissioner (or authorized officer) can audit any taxpayer

Notice given 15 days in advance

Audit to be completed within 3 months (extendable to 6 months)

✅ Audit report shared with taxpayer

B. Special Audit [Sec. 66]

Ordered by officer during scrutiny/investigation

Conducted by Chartered Accountant or Cost Accountant nominated by

Commissioner

📌 Conditions:

Complexity in valuation or ITC claim

Expenses paid by Government

Audit must be completed within 90 days (extendable to 180)

 9. Power of Officers During Audit

Officers can:

Examine books of account

Ask for documents and records

Verify physical stock

Cross-check with third parties (e.g. suppliers, customers)

10. Consequences of Audit Findings

If discrepancies are found:

Taxpayer is given opportunity to explain

May result in:

Tax demand

Interest

Penalty

Prosecution (in serious cases)

11. Records Required During Audit

✅ Must present:

Purchase & sales register

Stock register

ITC ledger

Invoices, challans

Bank statements

Annual return (GSTR-9)

 12. Best Practices for Audit Preparedness

✔️Regular reconciliation

✔️Maintain all GST returns

✔️Cross-check GSTR-3B vs GSTR-2B

✔️Update vendor compliances

✔️Keep documentary proof for ITC and exemptions

✅ End of Chapter 15: Assessment and Audit under GST

Covered completely with:

Self vs Departmental assessments

Scrutiny, best judgment, and summary powers

Audit procedures, timelines, and consequences

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