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levy and collectionIn This article we do critical analysis of the concept of  levy and collection of GST.

General Principles

Section 9 is the charging section in respect of supply of goods and service under GST. As per section 9(1) there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. Which means if we combine the total of state and central GST the maximum tax rate would be 40 per cent before cess on demerit items. The government has through various communications indicated that the tax rates would be in 4 slabs of 5%, 12%, 18% and 28% apart from the nil rate.

From the aforesaid discussion it can be inferred that for levy and collection of CGST following conditions must be satisfied:-

  1. There must be an intrastate supply of goods or services or both within the meaning of the Act.
  2. The supply must be capable of being valued as per the provisions of the act and the will be levied on the basis of the value so determined.
  3. The tax will be collected at the prescribed rates not exceeding twenty per cent. If the supply is not capable of being categorised under any of the prescribed rates category than tax cannot be levied on the same.
  4. Tax can be collected in the prescribed manner and that too from the taxable person. If any person does not fall within the ambit of the definition of taxable person than tax cannot be collected from him. Taxable person means a person who is registered or liable to be registered under section 22 or section 24 of the Act.

Tax on reverse charge basis

Normally supplier of goods or services or both is liable to pay tax under GST. However there are certain circumstances under which the onus to pay tax lies with the recipient of taxable supply.

According to section 9(3) of the CGST Act, the Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Supply by unregistered suppliers

As per section 9(4) of the CGST Act, the central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

From the aforesaid discussion it is clear that if the supplier is an unregistered person making supply of taxable goods or services or both to a registered person than in that the recipient person is liable to pay tax on reverse charge basis as if he is the person making taxable supply and these provisions are applicable in respect of all goods and supplies rather than the notified goods.

ca rishabhkumarThe author is a fellow member of the Institute of Chartered Accountants of India and also a qualified Company Secretary. The author has also done DISA(ICAI), certificate on IFRS (ICAI), Certificate on Forex and Treasury Management (ICAI), Certificate on Forensic Accounting and Fraud Prevention (ICAI). The author practices as a Chartered Accountant under the name and style of Rishabh Kumar Barmecha and Associates and is an expert in auditing, financial investigation, direct and indirect taxation. The author can be reached at rishabhkumarbarmecha@gmail.com or 91 9007909221 or Twitter @CARKBarmecha.

CA Rishabh Kumar Barmecha

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3 thoughts on “Concept of levy and collection under GST

  1. Pankaj Rathod says:

    I am a trader of toys. My annual turnover is about Rs. 18 lacs in 16-17.
    I am vat registered in Gujarat. till date i didn’t’ migrated in GST as my turnover is below 20 lac. In GST regime, i may be unregistered dealer, in that case can i sale goods without bill or have to issue supply bill.

    1. admin says:

      You can sale you goods by issue Supply Bill, you can’t collect tax from your customers

  2. Mohanasundaram A says:

    GST @5% for research purpose only the requirement of GAMMA Remote Sensing Software

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