FAQ's and Guide on GST Basics

GST Basics Explained

Basic GST FAQs

1What is GSTIN?

GSTIN means GST identification number assigned to every person registered under GST.

2What is the structure of GSTIN?

GSTIN is a 15-digit number assigned to every taxpayer registered under GST.

  1. First 2 digits- state code.
  2. Next 10 digits-PAN number of the taxpayer.
  3. The 13th digit will be assigned based on the number of registrations of taxpayer in the state.
  4. The 14th digit will be Z by default.
  5. The last digit is for check code.
3What are the types of GST?

  • CGST: Central goods & Service Tax which is collected by the centre.
  • SGST: State Goods & Service tax which is collected by the state.
  • IGST: Integrated goods & service tax which is collected by the centre.

4What is Intra State supply of goods or services?

Where the location of the supplier and place of supply of goods or services are in the same state/union territory, it is treated as intra state supply of goods or services.

5What is Inter-state supply of goods or services?

Where the location of the supplier and place of supply of goods or services are in two different states or two different union territories or a state and union territory, it is treated as inter-state supply of goods or services.

6What is exempt supply?

Exempt supply means supply of any goods or services or both which attracts nil rate of tax or which may be exempt from tax and includes non-taxable supply.

7What is zero rated supply?

Zero rated supply means any of the following supplies of goods or services or both:

  • Export of goods or services or both.
  • Supply of goods or services or both to a SEZ developer or SEZ unit.
8What is taxable event under GST?

Taxable event under GST is supply of goods or services or both. CGST and SGST/UTGST will be levied on intra state supplies. IGST will be levied on inter- state supplies.

9What is meant by reverse charge?

Reverse charge means liability to pay taxes is on the recipient of goods or services instead of supplier of goods or services in notified transactions.

10Who will pay the tax liability if the receipt of supply is from unregistered persons?

If the receipt of supply is from an unregistered person, then the registered person who is receiving goods or services is liable to pay tax under reverse charge.

11Can a person without GST registration claim ITC and collect tax?

No, a person without GST registration can neither claim ITC nor collect GST from his customers.

12What is the penalty for not filing GST returns within due date?

Any registered person who fails to furnish the returns within the due dates shall be liable to pay a penalty of Rs 100 per day subject to a maximum of Rs 5000.

13What is Annual return and the due date of filing Annual return?

All taxpayers filing return in GSTR 1 to GSTR 3 are required to file an annual return. However, the following persons are not required to file annual return

  1. Casual taxable persons.
  2. Non-resident Taxable persons.
  3. ISD.
  4. Persons authorized to deduct or collect tax at source.
Annual return needs to be filed by the 31st December of next financial year.

14What is the due date of payment of GST?

Payment should be made on or before 20th of every month.

15What is electronic cash ledger?

Electronic cash ledger means a summary of all the deposits or payments made by a taxpayer. It is maintained on GST portal.

16Are physical challans allowed under GST regime?

Manual or physical challans are not allowed under GST regime. It is mandatory to pay the challan online.

17How many challans are prescribed for various tax payments under GST?

There is a single challan prescribed for CGST, SGST, IGST, interest, penalty etc under GST regime.

18Can the taxpayer utilize the amount available in one major head against other major head or minor head liability?

No, the taxpayer cannot utilize the amount available in one major head for discharging the liability of other major head or minor head. For example, amount available in CGST cannot be utilized for paying the liability under SGST or IGST or interest.

19What is Electronic credit ledger?

Electronic credit leger means summary of the input credit available to registered taxable person. It is maintained on GST portal.

20What is electronic liability register?

Electronic liability register means details of total tax liability of a taxpayer for the month. It is maintained on GTS portal.

21What is input Tax?

Input Tax means CGST, SGST, IGST or UTGST paid on inward supplies of goods or services of a registered person. It also includes tax paid on reverse charge basis and import of goods or services.

22Can the taxpayer registered under GST claim the credit of input tax paid on the goods or services?

A registered person can take the credit of all input tax paid by him on the goods or services which are used or intended to be used in the course of business subject to conditions.

23Does Input tax includes tax paid on input goods, input services and capital goods?

Yes, it includes taxes paid on input goods, input services and capital goods.

24Where the goods against an invoice are received in lots or instalments, how will a registered person entitled to ITC?

The registered person shall be entitled to the credit only upon receipt of last instalment.

25What is the manner of utilization of ITC?

ITC of IGST can be used to pay the liability of

  • IGST
  • CGST
  • SGST

ITC of CGST can be used to pay the liability of

  • CGST
  • IGST

ITC of SGST can be used to pay the liability of

  • SGST
  • IGST

26What is an invoice?

An invoice is a commercial instrument issued by a supplier of goods/services to recipient. It consists of supplier and buyer details, description and quantity of items sold, date of shipment, prices, discounts, delivery and payment terms.

27Can the unregistered person issue tax invoice?

No, the unregistered person cannot issue tax invoice.

28What is bill of supply?

Bill of supply should be issued instead of tax invoice in case of the following supplies:

  • Supply of exempted goods/services.
  • Supplies made by composition supplier.

29What are the circumstances in which a credit note can be issued?

For issuing a credit note, an invoice should have been issued earlier. A credit note may be issued in the following cases:

  • Taxable invoice in invoice > Taxable value in respect of such supply.
  • Tax charged in invoice > Tax payable in respect of such supply.
  • When the goods supplied by the supplier are returned by the recipient.
  • Where the goods or services or both found to be deficient.

30What are the circumstances in which a debit can be issued?

For issuing a debit note, an invoice should have been issued earlier. A debit note may be issued in the following circumstances:

  • Taxable invoice in invoice < Taxable value in respect of such supply.
  • Tax charged in invoice < Tax payable in respect of such supply.

31What are the contents of Tax invoice?

The tax invoice should contain the following details:

  • Name, address, GSTIN of the supplier.
  • Consecutive Serial Number unique for a financial year.
  • Date of Issue.
  • Name and address of the recipient.
  • GSTIN / UID of the recipient, if registered.
  • HSN code of Goods or Accounting Code of Services.
  • Description of Goods / Services.
  • Quantity and Unit (or Unique Quantity Code) in case of Goods.
  • Total Value of Goods and Services.
  • Post discount/abatement taxable value of Goods and Services.
  • Rate of Tax and Amount of Tax Charged.
  • Place of Supply along with the name of the State if the supply is an inter-State supply.
  • Place of delivery if different from place of supply.
  • Whether tax is payable on reverse charge.
  • Signature/Digital Signature of the Supplier or his authorised representative.

32What is the time limit for availing Input Tax credit?

The time limit for availing ITC is due date of filing of return for the month of September of succeeding financial year or date of filing of the relevant annual return whichever is earlier.

33What is the general time limit for raising invoices?

Supply of goods:

  1. When the supply of goods involves movement of goods, invoice should be issued before or at the time or removal of goods.
  2. When the supply of goods involves delivery or making available, then invoice should be issued before or at the time of delivery.

Supply of services:

Invoice should be issued within 30 days of supply of service.

34What is composite supply?

It means supply which consists of two or more supplies in conjunction with each other. One of the supply is principal supply and tax liability shall be at the rate of principal supply. For example, charges supplied along with mobile phones.

35What is mixed supply?

It consists of two or more supply which can be supplied independently still supplied together. Tax liability is applicable to the supply that attracts highest rate of tax. For example, gift consisting of sweets and chocolates.

36What are HSN / SAC codes?

HSN means harmonized System nomenclature for goods. SAC means Service Accounting codes for services.

37Is it compulsory to mention HSN/ SAC codes?

The board or commissioner by notification may specify the number of digits of HSN /SAC code that a taxpayer is required to mention.

  • Dealers with annual turnover up to Rs 1.5 crore – not required to mention HSN code.
  • Dealers with annual turnover between 1.5 crore to 5 crores- mention first two digits of HSN code.
  • Dealers with annual turnover more than 5 crores – mention four digits of HSN code.

38What is the threshold limit for opting composition scheme?

Small taxpayers whose aggregate turnover in the preceding financial year does not cross 75 lakhs can register under Composition scheme.

39When will the person registered under composition scheme have to pay tax?

The person registered under composition scheme has to pay the tax on quarterly basis on or before 18th of the succeeding quarter.

40Can the registered person under composition scheme claim input tax credit?

No, the registered person under composition scheme is not eligible to claim input tax credit.

41Can the composition tax be collected from customers?

No, the registered person under composition scheme is not permitted to collect tax. It means they cannot issue tax invoices.