Chapter – 1
Levy and collection of Tax (Section 5)
Q 1. What type of tax is levied on inter-State supply?
Ans. In terms of Section 5 of the IGST Act, 2017, inter State supplies are liable to IGST. The nature of supply (inter-State or intra-State) shall be ascertained based on the provisions prescribed under Section 7 and Section 8 respectively of the IGST Act, 2017. Further, the IGST on the import of goods shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975 on the value determined under the said Act at the point when duties of customs are levied on the said goods under Section 12 of the Customs Act, 1962.
Q 2. How to ascertain the taxable value for levy of IGST?
Ans. In terms of Section 5(1) the IGST shall be levied on the value of goods ascertained in terms of Section 15 of the CGST Act, 2017. It is specified that 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 case where the supplier and recipient are related persons, the draft valuation rules published contains the provisions and method for ascertaining the value of supplies.
Q 3. What is the rate of tax that is applicable on inter-State supplies?
Ans. The applicable rate of tax is yet to be notified. However, the provisions specifies that the Government may specify rate of tax which shall not exceed 20%.
Q 4. Who is responsible to pay taxes?
Ans. Generally, the person effecting taxable supplies is liable to pay taxes. However, following are certain exceptions:
(a) Reverse charge: In terms of Section 5(3) of the IGST Act, 2017, supply of goods or services or both, 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 supplies as may be notified by the Government on the recommendation of Council where supply is effected through e-commerce operator in terms of Section 5(5) of the IGST Act, 2017. In the event the ecommerce operator do not have physical presence in the taxable territory, following persons will be liable to pay tax:
(i) a person who is representing the e-commerce operator in the taxable territory;
(ii) in the absence of such representative, e-commerce operator should appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
Q 5. What does the payment of tax under reverse charge mean?
Ans. In terms of Section 2(98), the terms reverse charges defined to mean 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.
Q 6. What are the categories of supplies which are liable to tax under reverse charge mechanism?
Ans. The categories of supplies which are liable to tax under reverse charge mechanism are yet to be notified. Such categories of supplies may involve supply of goods or services or both as may be notified by the Government as per the recommendations of the
council. However, in terms of Section 5(4), it is specified that the registered recipient of goods or services or both is liable to pay tax under reverse charge in the event supplier of goods is not registered.
Q 7. Whether the tax on inter-State supplies is applicable to every supplies?
Ans. No. Section 5(1) which is the charging provision for levy and collection of tax on intraState supplies excludes supply of supply of alcoholic liquor for human consumption. Further, in terms of Section 5(2), tax on supply of petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.
Power to grant exemption (Section 6)
Q 8. Whether Council has powers to grant exemption on payment of taxes?
Ans. No. The power to grant exemption is vested with the Government. In other words, the Government by way of issuance of notification on the recommendations of the council may either grant the exemption absolutely or subject certain conditions.
Levy and collection (Section 5 to 6)
Q 1. ____________ supply shall attract IGST?
Ans. (b) Interstate
Q 2. Is there any ceiling limit prescribed on the rate under IGST?
Ans. (b) 40%
Q 3. What if an e-commerce operator having no physical presence in the taxable territory, does not have a representative in the taxable territory?
(a) His will have to discharge his tax liability in foreign currency
(b) He will not be liable to tax
(c) He has to appoint a person in the taxable territory for the purpose of paying tax on his behalf
(d) None of the above
Ans. (c) He has to appoint a person in the taxable territory for the purpose of paying tax on his behalf
Q 4. Unless and until notified, IGST shall not be levied on the inter-State supply of which of the following:
(a) Industrial alcohol
(b) Works contract
(d) None of the above
Ans. (c) Petroleum
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