GST India introduces FAQ series wherein 10 questions a day covering all aspects (from levy to assessments) of GST will be covered.
In first part of this series, we re-produce 10 questions pertaining to Levy and Exemption under GST:
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 GST?
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 verticals?
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 supplies.
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.
In next Part of this series, we will bring another set of questions from levy and exemption under GST.