Tax in India

As per Section 9 of the CGST Act, 2017 there are two types of supplies which are liable to tax under reverse charge mechanism: –
1. As per sub-section 3 specified categories of supply of goods or services or both as notified by Government on recommendations of the Council.
2. As per sub-section 4 Supply of taxable goods or services or both by an unregistered supplier to a registered person.                                                                          However, the supplies made by unregistered suppliers to a registered person are exempted, if the aggregate value of such supplies does not exceed 5,000/- in a day.

(ICAI FAQ PUBLICATION 06-09-2017 LEVY AND COLLECTION:  FAQ NO. 18)

In terms of Section 2(98), the term reverse charge means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under section 9(3) or (4) of the CGST Act, 2017 or under section 5 (3) or (4) of the IGST Act, 2017.

(ICAI FAQ Publication 6-9-17   LEVY AND COLLECTION: FAQ NO. 17:)

Generally, the person effecting taxable supplies is liable to pay taxes. However, following are certain exceptions:
(a) Reverse charge: On supply of goods as specified under Notification 04/2017- Central Tax (Rate), dated 28.06.2017 and on supply of services as specified under Notification 13/2017- Central Tax (Rate), dated 28.06.2017 or such other goods or services, as may be notified by the Government on the
recommendations of the Council, the tax shall be paid by the recipient under reverse charge; and
(b) E-Commerce: Categories of services as specified under Notification 17/2017- Central Tax (Rate), dated 28.06.2017 or such other services as may be notified by the Government on the recommendations of the Council the tax shall be paid by the electronic commerce operator if such services are supplied through it.

(ICAI FAQ PUBLICATION 06-09-2017 LEVY AND COLLECTION:  FAQ NO. 16)

Government has notified different rates of taxes for different category of goods and services. For instance, Notification 01/2017- Central Tax (Rate), dated 28.06.2017 prescribes the rate of central tax for supply of goods and Notification 11/2017- Central Tax (Rate), dated 28.06.2017 prescribes the rate of central tax for supply of services. Further, the provision specifies that the Central/State Government may specify rate of tax not exceeding 20%.

(ICAI FAQ PUBLICATION 06-09-2017 LEVY AND COLLECTION:  FAQ NO. 15)

Section 15 of the CGST Act, 2017 specifies that the value of supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. Further, Section 15 provides for certain inclusions which will form part of the value viz., incidental expenses, commission, interest, penalty etc. In cases where the supplier and recipient are related persons or where the price is not the sole consideration, the provisions and method for ascertaining the value of taxable supply as prescribed in the Central Goods and Services Tax Rules (“the CGST Rules” or “the CGST Rules, 2017”) (Rules 27 – 35) shall apply.

(ICAI FAQ PUBLICATION 06-09-2017 LEVY AND COLLECTION:  FAQ NO. 14)

In terms of Section 9 of the CGST Act, 2017, intra-State supplies are liable to CGST. In terms of Section 7 of UTGST Act, 2017, intra-State supplies effected by a taxable person located in Union Territory (within the Union Territory) will be liable to UTGST. Therefore, in case of intra-State supplies in case of State or Union Territory, CGST and SGST or CGST and UTGST will be applicable respectively.

(ICAI FAQ PUBLICATION 06-09-2017 LEVY AND COLLECTION:  FAQ NO. 13)