आयकर व वस्तू व सेवा कर Income Tax and GST

थोडक्यात सारांश

Income tax in India is levied under the Income-tax Act, 1961, on the total income of a "person" for a year. This topic explains the basic words used in every tax problem (assessee, previous year, assessment year, person, gross total income) and how to decide the residential status of an individual. Residential status decides which incomes are taxable in India.

महत्त्वाचे मुद्दे

• Income tax is a direct tax: the person who earns pays it. It is charged under Section 4.
• Previous year (PY) is the financial year (1 April to 31 March) in which income is earned. Assessment year (AY) is the next year, in which it is assessed. Income of PY 2025-26 is assessed in AY 2026-27.
• Person (Sec 2(31)) has 7 types: individual, HUF, company, firm, AOP/BOI, local authority, artificial juridical person.
• Assessee (Sec 2(7)) is a person by whom tax is payable.
• Income is computed under five heads: Salaries, House Property, Profits and Gains of Business or Profession, Capital Gains, Other Sources.
• Residential status (निवासी दर्जा) of an individual (Sec 6) is: Resident and Ordinarily Resident (ROR), Resident but Not Ordinarily Resident (RNOR), or Non-Resident (NR).
• Status is decided separately for every previous year.
• An ROR is taxed on world income; an NR is taxed only on income received, accrued or deemed to accrue in India.
• Agricultural income in India is exempt (Sec 10(1)).

महत्त्वाच्या संज्ञा

• Gross Total Income (GTI) – total of income under all five heads after clubbing and set-off.
• Total Income – GTI minus deductions under Chapter VI-A (80C to 80U).
• Exempt income – income not included in total income, e.g. agricultural income.
• Casual income – lottery, crossword, game-show winnings; taxed at a flat rate.

नमुने व सूत्रे

Basic conditions for an individual to be resident (any one is enough):

• For an Indian citizen leaving India for employment, or a crew member of an Indian ship, condition (b) does not apply (only 182 days counts).
• For an Indian citizen or PIO visiting India, 60 days becomes 182 days; but if Indian income exceeds ₹15 lakh, it becomes 120 days (with 365 days in 4 years).
• A resident becomes ROR if he was resident in at least 2 of the 10 preceding years AND stayed 730 days or more in the 7 preceding years. Otherwise he is RNOR.

५ महत्त्वाचे प्रश्न

Q1. Distinguish between previous year and assessment year.

Previous year is the financial year in which income is earned; assessment year is the year following it, in which that income is assessed and taxed. Example: income of 2025-26 is assessed in AY 2026-27.

Q2. Define "person" under the Income-tax Act.

Under Sec 2(31) a person includes an individual, HUF, company, firm, AOP or BOI, local authority, and every artificial juridical person not covered above.

Q3. Mr. John, a foreign national, came to India for the first time on 1 October 2024 and stayed till 31 March 2025. Find his residential status for PY 2024-25.

Days in India: October 31 + November 30 + December 31 + January 31 + February 28 + March 31 = 182 days. He satisfies condition (a), so he is resident. He was not resident in 2 of the 10 preceding years (he never came before), so he is Resident but Not Ordinarily Resident (RNOR).

Q4. Explain the provisions for determining the residential status of an individual.

Outline: basic conditions (182 days; 60 + 365 days), exceptions for citizens leaving for employment and visiting citizens/PIO (182 / 120 days), deemed resident (Indian citizen with income above ₹15 lakh not liable to tax in any other country), additional conditions for ROR (2 of 10 years and 730 days in 7 years), and how status changes scope of income.

Q5. Explain the scope of total income according to residential status.

Outline: Sec 5; draw the table above; give one example of each income (salary earned in India, profit from foreign business controlled from India, foreign rent); conclude that ROR pays on world income and NR only on Indian income.

परीक्षेसाठी टीप

In residential status problems, always count days month by month in a table and write the conclusion in one line: "Hence, he is RNOR for PY ____."

थोडक्यात सारांश

Salary (वेतन) is taxable only when there is an employer–employee relationship. Sections 15 to 17 cover what is included in salary: basic pay, allowances, perquisites and profits in lieu of salary. This topic shows how to compute taxable salary, including HRA exemption, standard deduction and professional tax.

महत्त्वाचे मुद्दे

• Salary is taxed on a due or receipt basis, whichever is earlier (Sec 15).
• Salary includes wages, pension, annuity, gratuity, fees, commission, perquisites, leave encashment and advance salary (Sec 17(1)).
• Allowances are fixed money given for expenses: fully taxable (dearness allowance, city compensatory), partly exempt (HRA, children education), or fully exempt (allowance to UN employees).
• Perquisites (परिलब्धी) are benefits in kind, e.g. rent-free house, car, free education (Sec 17(2)).
• Profits in lieu of salary include compensation on termination (Sec 17(3)).
• Standard deduction (Sec 16(ia)): ₹50,000 in the old regime and ₹75,000 in the new regime.
• Professional tax (Sec 16(iii)) is deductible in the old regime only. In Maharashtra it is ₹2,500 a year.
• Entertainment allowance deduction (Sec 16(ii)) is only for government employees.
• In the new regime (Sec 115BAC), HRA exemption and professional tax deduction are not allowed.

महत्त्वाच्या संज्ञा

• Basic salary – fixed pay as per the terms of employment.
• Dearness Allowance (DA) – paid to offset inflation; "DA forming part" counts for retirement benefits.
• House Rent Allowance (HRA) – allowance for rent; exemption under Sec 10(13A).
• Gratuity – lump sum paid on retirement for long service.
• Leave encashment – payment for unused earned leave.

नमुने व सूत्रे

HRA exempt = least of:

1. Actual HRA received
2. Rent paid − 10% of salary
3. 50% of salary (Mumbai, Delhi, Kolkata, Chennai) or 40% of salary (other cities)

Here, salary = basic + DA (if forming part) + commission at a fixed % of turnover, for the period of stay.

Format of taxable salary:

५ महत्त्वाचे प्रश्न

Q1. What is a perquisite? Give two examples.

A perquisite is a benefit in kind given by the employer in addition to cash salary, such as a rent-free house or free use of a car for personal purposes.

Q2. What is the standard deduction from salary?

It is a flat deduction from gross salary under Sec 16(ia), without proof of expense: ₹50,000 (old regime) or ₹75,000 (new regime). Check the current year's figures.

Q3. Mr. Patil works in Nagpur. Basic ₹40,000 p.m., DA 10% of basic (forming part), HRA ₹10,000 p.m., rent paid ₹12,000 p.m., professional tax ₹2,500. Compute income from salary under the old regime.

Salary for HRA = 4,80,000 + 48,000 = ₹5,28,000.

Under the new regime, the whole HRA (₹1,20,000) is taxable and only ₹75,000 standard deduction is allowed.

Q4. Explain the different types of allowances with their tax treatment.

Outline: meaning of allowance; fully taxable (DA, overtime, city compensatory, tiffin); partly exempt (HRA, children education ₹100 p.m. per child for two children, hostel ₹300 p.m. per child, transport for disabled); fully exempt (to UN staff, government employees abroad); note which are lost in the new regime.

Q5. Explain the tax treatment of gratuity.

Outline: government employees – fully exempt; employees covered by the Payment of Gratuity Act – least of actual, 15/26 × last salary × years of service, ₹20 lakh; others – least of actual, ½ month's average salary × completed years, ₹20 lakh. Check the current limit.

परीक्षेसाठी टीप

Always show the HRA working separately as "least of three" before the main computation. Write the city type (metro or non-metro) clearly.

थोडक्यात सारांश

Income from house property (घरमालमत्तेपासून उत्पन्न) is taxed under Sections 22 to 27. The tax is on the annual value of a building and the land attached to it, owned by the assessee and not used for his own business. This topic explains how to find Gross Annual Value, Net Annual Value and the deductions allowed.

महत्त्वाचे मुद्दे

• Three conditions (Sec 22): there must be a building or land attached, the assessee must be the owner, and it must not be used for own business or profession.
• Rent from vacant land is not taxed here; it is "income from other sources".
• Gross Annual Value (GAV) is found from Municipal Value, Fair Rent, Standard Rent and Actual Rent.
• Municipal taxes are deducted only if paid by the owner during the year.
• Two deductions are allowed (Sec 24): standard deduction of 30% of NAV and interest on borrowed capital.
• For a self-occupied property the annual value is nil. Up to two houses can be treated as self-occupied.
• Interest on a loan for a self-occupied house is deductible up to ₹2,00,000 (construction/purchase, old regime); in the new regime no interest deduction is allowed for a self-occupied house.
• Pre-construction interest is allowed in 5 equal instalments starting from the year of completion.
• Loss under this head can be set off against other heads only up to ₹2,00,000 a year; the rest is carried forward for 8 years.

महत्त्वाच्या संज्ञा

• Municipal Value (MV) – value fixed by the local body for property tax.
• Fair Rent (FR) – rent a similar property in the same area would fetch.
• Standard Rent (SR) – maximum rent allowed under the Rent Control Act.
• Expected Rent (ER) – higher of MV and FR, but not more than SR.
• Net Annual Value (NAV) – GAV minus municipal taxes paid by the owner.

नमुने व सूत्रे

• Expected Rent = higher of (MV, FR), limited to SR
• GAV = higher of (ER, Actual rent received/receivable) — when there is no vacancy

५ महत्त्वाचे प्रश्न

Q1. What is Gross Annual Value?

GAV is the starting figure of house-property income. It is the higher of Expected Rent and the actual rent received or receivable for a let-out property.

Q2. What deductions are allowed under Section 24?

(a) Standard deduction of 30% of NAV, for repairs and collection, whatever the actual spending; (b) interest on capital borrowed to buy, build, repair or reconstruct the property.

Q3. Compute income from house property: MV ₹1,20,000; FR ₹1,50,000; SR ₹1,40,000; actual rent ₹1,60,000; municipal tax paid by owner ₹10,000; interest on housing loan ₹60,000.

Expected Rent = higher of MV and FR = ₹1,50,000, but limited to SR = ₹1,40,000. GAV = higher of ER (1,40,000) and actual rent (1,60,000) = ₹1,60,000.

Q4. Explain the tax treatment of a self-occupied house property.

Outline: annual value nil (Sec 23(2)); two houses allowed; no deduction for municipal tax or standard deduction; interest limit ₹2,00,000 for loans taken after 1-4-1999 for purchase/construction completed within 5 years, otherwise ₹30,000; new-regime position; resulting loss and its set-off.

Q5. Explain the conditions for taxing income under the head "House Property" and the cases where rent is not taxed under this head.

Outline: three conditions; exceptions – property used for own business, rent of vacant land, composite letting of building with machinery (business or other sources), farm house, property held as stock-in-trade (notional rent after 2 years).

परीक्षेसाठी टीप

Write the Expected Rent working first in one line. Remember: municipal tax is deducted only when the owner pays it, not when it is merely due.

थोडक्यात सारांश

Income from business or profession (व्यवसाय व पेशा यापासून नफा) is taxed under Sections 28 to 44. The starting point is the net profit shown by the Profit and Loss Account. This profit is then adjusted: expenses the Act does not allow are added back, and incomes taxed under other heads are deducted. Small businesses can also use presumptive taxation.

महत्त्वाचे मुद्दे

• Business (Sec 2(13)) includes trade, commerce, manufacture or any adventure in the nature of trade. Profession needs special skill and learning, e.g. doctor, lawyer, CA.
• Expenses allowed: rent, repairs and insurance of premises (Sec 30); of machinery (Sec 31); depreciation as per block of assets (Sec 32); and any expense wholly and exclusively for business (Sec 37(1)).
• Not allowed: personal and capital expenses, income tax, penalties for breaking law, donations (allowed only under Sec 80G), drawings.
• Sec 40A(3): a cash payment of more than ₹10,000 to one person in a day is disallowed (₹35,000 for transporters).
• Sec 43B: certain expenses (taxes, employer's PF, bonus, bank interest, payments to micro and small enterprises) are allowed only when actually paid.
• Sec 40(a): expenses on which TDS was not deducted can be partly or fully disallowed.
• Incomes credited in P&L but taxable under other heads (rent, dividend, interest on securities, capital gain) are deducted.
• Presumptive taxation: Sec 44AD (business) – 8% of turnover, or 6% of turnover received digitally; Sec 44ADA (profession) – 50% of gross receipts.
• Book depreciation is replaced by depreciation under the Income-tax Act.

महत्त्वाच्या संज्ञा

• Block of assets – group of assets of the same class with the same rate of depreciation.
• Written Down Value (WDV) – cost less depreciation allowed in earlier years.
• Capital expenditure – spending that gives a lasting benefit, e.g. buying machinery.
• Revenue expenditure – day-to-day running expense, e.g. wages, rent.

नमुने व सूत्रे

Presumptive limits (check the current year's figures): Sec 44AD up to ₹2 crore turnover (₹3 crore if cash receipts are not more than 5%); Sec 44ADA up to ₹50 lakh (₹75 lakh on the same condition).

५ महत्त्वाचे प्रश्न

Q1. What is Section 40A(3)?

If a payment for an expense exceeding ₹10,000 is made to one person in one day otherwise than by account payee cheque, draft or electronic mode, the whole payment is disallowed.

Q2. What is presumptive taxation under Section 44AD?

An eligible small business (individual, HUF or firm other than LLP) may declare profit at 8% of turnover (6% for digital receipts) without keeping detailed books.

Q3. Mr. Shinde's P&L shows net profit ₹3,00,000. Debited: income tax ₹20,000, personal expenses ₹15,000, book depreciation ₹40,000, donation to a charitable trust ₹10,000. Credited: dividend ₹8,000. Depreciation allowable under the Act is ₹35,000. Compute business income.

Q4. Explain the expenses expressly allowed and disallowed under the head "Profits and gains of business or profession".

Outline: Sections 30–37 (rent, repairs, insurance, depreciation, scientific research, bad debts u/s 36(1)(vii), employer's PF contribution, interest on business loans); general deduction u/s 37(1); disallowances under Sec 40, 40A(2) (excess payment to relatives), 40A(3), 43B; give an example of each.

Q5. Explain depreciation under the Income-tax Act.

Outline: Sec 32; conditions (owned, used for business); block of assets and WDV method; half rate if the asset is used for less than 180 days in the year of purchase; additional depreciation for new plant in manufacturing; common rates (building 10%, furniture 10%, plant 15%, computers 40%); no depreciation on land and goodwill.

परीक्षेसाठी टीप

Write every adjustment with a short reason in the table ("Add: income tax – not a business expense"). Examiners give marks for the reasons, not just the final figure.

थोडक्यात सारांश

Capital gains (भांडवली नफा) is profit on the transfer of a capital asset such as land, building, shares or gold (Sections 45 to 55). The gain is short-term or long-term depending on how long the asset was held. Income from other sources (Sec 56 to 59) is the residual head for income not covered by the other four heads, such as interest, dividends, lottery winnings and certain gifts.

महत्त्वाचे मुद्दे

• A capital asset is any property held by the assessee, except stock-in-trade, personal movable assets (clothes, furniture, car), and rural agricultural land.
• Holding periods (transfers on or after 23 July 2024): listed securities and units of equity funds – more than 12 months is long-term; all other assets – more than 24 months is long-term.
• Short-term capital gain (STCG) = sale price − expenses on transfer − cost of acquisition − cost of improvement.
• Long-term capital gain (LTCG): since 23 July 2024 generally taxed at 12.5% without indexation. For land or building bought before that date, an individual or HUF may choose 20% with indexation, whichever tax is lower.
• Listed equity shares and equity funds (STT paid): STCG 20% (Sec 111A); LTCG 12.5% on gain above ₹1.25 lakh (Sec 112A).
• Exemptions: Sec 54 (house sold, new house bought), Sec 54F (any long-term asset sold, house bought), Sec 54EC (gain invested in specified bonds within 6 months, up to ₹50 lakh), Sec 54B (agricultural land).
• Other sources include dividends, interest on bank deposits and securities, rent of vacant land or machinery, family pension, and casual income.
• Casual income (lottery, crossword, game shows, online games) is taxed at a flat 30% with no deductions or basic exemption.
• Gifts (Sec 56(2)(x)): money or property above ₹50,000 in a year from non-relatives is taxable; gifts from relatives, on marriage, or by will are exempt.
• Family pension: deduction of one-third or ₹15,000 (₹25,000 in the new regime), whichever is less.

महत्त्वाच्या संज्ञा

• Transfer – sale, exchange, giving up rights, or compulsory acquisition of an asset.
• Cost of improvement – capital expense on additions or alterations to the asset.
• Indexation – raising the cost by the Cost Inflation Index to remove the effect of inflation.
• Securities Transaction Tax (STT) – tax paid on buying and selling shares on a stock exchange.

नमुने व सूत्रे

५ महत्त्वाचे प्रश्न

Q1. What is a capital asset?

Property of any kind held by the assessee, whether or not connected with business, except stock-in-trade, personal effects and rural agricultural land in India.

Q2. How is casual income taxed?

Winnings from lotteries, crosswords, races and game shows are taxed at a flat 30% (plus cess) under Sec 115BB; no expense or deduction is allowed against them.

Q3. Mrs. Kulkarni bought land in 2016 for ₹20,00,000 and sold it in December 2025 for ₹50,00,000, paying brokerage of ₹50,000. Compute the capital gain and tax at 12.5% (without indexation).

Held for more than 24 months, so it is long-term.

Cess at 4% is added on the total tax. (She may also compare with 20% after indexation, since the land was bought before 23 July 2024.)

Q4. Explain the exemptions from capital gains under Sections 54, 54EC and 54F.

Outline: who can claim, which asset is sold, in what the gain must be invested, time limits (purchase 1 year before or 2 years after, construction within 3 years; bonds within 6 months), amount exempt, lock-in and withdrawal of exemption on transfer of the new asset.

Q5. What incomes are taxable under "Income from Other Sources"? Explain the deductions allowed.

Outline: Sec 56 list (dividends, interest, casual income, gifts, family pension, rent of machinery, interest on enhanced compensation); deductions under Sec 57 (collection charges, depreciation on let machinery, family pension deduction); Sec 58 disallowances.

परीक्षेसाठी टीप

Always state first whether the gain is short-term or long-term with the holding period. Most marks are lost by applying the wrong tax rate.

थोडक्यात सारांश

After adding incomes under all five heads we get Gross Total Income (GTI). Deductions under Chapter VI-A (Sec 80C to 80U) are subtracted to get Total Income. Tax is then calculated on total income under the old regime or the new regime (Sec 115BAC, the default), rebate under Sec 87A is given, and 4% health and education cess is added.

महत्त्वाचे मुद्दे

• Sec 80C: up to ₹1,50,000 for LIC premium, PPF, EPF, ELSS, tuition fees of 2 children, home-loan principal, 5-year bank FD, NSC, Sukanya Samriddhi.
• Sec 80CCD(1B): extra ₹50,000 for NPS contribution.
• Sec 80D: health insurance – ₹25,000 for self and family (₹50,000 if senior citizen), and the same again for parents.
• Sec 80E: interest on education loan, no upper limit, for 8 years.
• Sec 80G: donations to approved funds and charities – 100% or 50%, with or without a limit.
• Sec 80TTA: savings bank interest up to ₹10,000; 80TTB: deposit interest up to ₹50,000 for senior citizens.
• New regime: lower slab rates but most deductions are not allowed. Allowed: standard deduction ₹75,000 and employer's NPS contribution (80CCD(2)).
• Rebate u/s 87A: new regime – tax rebate up to ₹60,000 when total income does not exceed ₹12,00,000; old regime – up to ₹12,500 when total income does not exceed ₹5,00,000.
• Marginal relief in the new regime: if income is slightly above ₹12 lakh, tax cannot exceed the income above ₹12 lakh.

महत्त्वाच्या संज्ञा

• Gross Total Income – total of the five heads after set-off of losses.
• Total Income – GTI minus Chapter VI-A deductions.
• Rebate – reduction in the tax itself (not in income).
• Cess – extra 4% health and education cess on income tax.

नमुने व सूत्रे

Slab rates for individuals, FY 2025-26 (check the current year's figures):

Format: GTI → less Chapter VI-A deductions → Total income (rounded to nearest ₹10) → tax on slabs → less rebate u/s 87A → add 4% cess → tax payable.

५ महत्त्वाचे प्रश्न

Q1. What is Gross Total Income?

The total of income under the five heads – salary, house property, business or profession, capital gains and other sources – after clubbing and set-off of losses, before Chapter VI-A deductions.

Q2. State any four investments eligible for deduction under Section 80C.

Life insurance premium, Public Provident Fund, Employees' Provident Fund contribution, and tuition fees for up to two children (also ELSS, NSC, home-loan principal).

Q3. Mr. Deshmukh (age 40) has GTI of ₹8,00,000. Under the old regime he invests ₹1,50,000 in PPF and pays health insurance premium ₹25,000. Compute his tax.

No rebate, since total income is above ₹5,00,000.

Q4. A salaried person has gross salary ₹13,00,000 and no other income. Compute tax under the new regime for FY 2025-26.

Taxable salary = 13,00,000 − 75,000 = ₹12,25,000.
Tax on slabs: 4–8 lakh @ 5% = 20,000; 8–12 lakh @ 10% = 40,000; 12–12.25 lakh @ 15% = 3,750; total ₹63,750.
Income exceeds ₹12 lakh by ₹25,000, so marginal relief limits tax to ₹25,000.
Add cess 4% = ₹1,000. Tax payable = ₹26,000.
(If gross salary were ₹9,00,000: taxable ₹8,25,000, tax ₹22,500, fully cancelled by the 87A rebate, so tax = nil.)

Q5. Compare the old and new tax regimes for individuals.

Outline: slab rates; deductions allowed and not allowed; standard deduction; rebate limits; who gains from each (people with large 80C/HRA/home-loan claims may prefer the old regime); the new regime is the default and a salaried person can choose each year.

परीक्षेसाठी टीप

Show slab-wise working line by line. Round total income to the nearest ₹10 before applying rates, and always add cess at the end.

थोडक्यात सारांश

Goods and Services Tax (GST) (वस्तू व सेवा कर) is a single, destination-based indirect tax on the supply of goods and services. It replaced many older taxes such as excise duty, service tax, VAT and entry tax from 1 July 2017. This topic covers the structure of GST, the GST Council, the concept of supply, and registration.

महत्त्वाचे मुद्दे

• GST was introduced by the 101st Constitutional Amendment Act, 2016. Laws: CGST Act, SGST Acts, IGST Act and UTGST Act, 2017.
• Dual GST: on an intra-state supply, the Centre levies CGST and the State levies SGST (or UTGST); on an inter-state supply and on imports, the Centre levies IGST.
• GST Council (Article 279A): chaired by the Union Finance Minister, with State Finance Ministers as members; it recommends rates, exemptions and rules.
• Taxable event is supply (Sec 7 of the CGST Act): sale, transfer, barter, exchange, licence, rental, lease made for consideration in the course of business.
• Composite supply is taxed at the rate of its principal supply; mixed supply at the highest rate among its items.
• Outside GST: alcohol for human consumption; petroleum crude, diesel, petrol, natural gas and aviation turbine fuel (GST not yet levied).
• Rates: from 22 September 2025 the main slabs are 5% and 18%, with 40% on a few luxury and sin goods, besides nil-rated items and special low rates (e.g. 3% on gold).
• Registration is compulsory when aggregate turnover exceeds ₹40 lakh (supply of goods) or ₹20 lakh (services) in a normal state like Maharashtra; lower limits (₹20 lakh / ₹10 lakh) apply in some special-category states.
• Compulsory registration regardless of turnover: inter-state suppliers of goods, e-commerce operators and sellers through them (with some exceptions), casual taxable persons, persons under reverse charge, non-resident taxable persons.
• Composition scheme: for small taxpayers with turnover up to ₹1.5 crore (₹75 lakh in special states); tax at 1% for manufacturers and traders, 5% for restaurants; no input tax credit and no tax collection from customers.
• GSTIN is a 15-character number: 2-digit state code (Maharashtra = 27) + 10-character PAN + entity number + "Z" + check digit.

महत्त्वाच्या संज्ञा

• Aggregate turnover – total value of taxable, exempt, export and inter-state supplies under the same PAN, excluding taxes.
• Reverse charge – the receiver, not the supplier, pays GST on certain supplies.
• Place of supply – decides whether a supply is intra-state or inter-state.
• HSN / SAC – codes used to classify goods / services.

नमुने व सूत्रे

Example: goods worth ₹1,00,000 at 18% GST.

५ महत्त्वाचे प्रश्न

Q1. What is GST?

GST is a comprehensive, multi-stage, destination-based indirect tax levied on every value addition in the supply of goods and services, with credit for tax paid on inputs.

Q2. What is the composition scheme?

An optional simple scheme for small taxpayers (turnover up to ₹1.5 crore) who pay tax at a low fixed rate on turnover, file fewer returns, cannot charge GST on invoices and cannot claim input tax credit.

Q3. Explain the dual structure of GST with examples.

Outline: CGST, SGST/UTGST, IGST; who levies and collects each; intra-state vs inter-state; use the ₹1,00,000 example; settlement of IGST between Centre and States.

Q4. Explain the provisions for registration under GST.

Outline: threshold limits; compulsory registration cases; voluntary registration; procedure on the GST portal (Form REG-01, PAN, mobile and email verification, Aadhaar authentication, ARN, certificate in REG-06); structure of GSTIN; cancellation.

Q5. Explain the features and advantages of GST.

Outline: one nation one tax, removal of cascading effect (tax on tax), seamless input tax credit, destination-based, online compliance, GST Council; advantages to business, consumers and government; criticisms (compliance load, petroleum outside GST).

परीक्षेसाठी टीप

Remember the date 1 July 2017 and the 101st Amendment. In any numerical, write the state names to show clearly why you chose CGST + SGST or IGST.

थोडक्यात सारांश

Input Tax Credit (ITC) (इनपुट कर जमा) means a registered person can reduce the GST he pays on sales by the GST he has already paid on purchases used in business. This removes "tax on tax". This topic covers the conditions for ITC, blocked credits, the order of using credits, and the main GST returns.

महत्त्वाचे मुद्दे

• ITC is available on inputs, capital goods and input services used in the course of business (Sec 16 of the CGST Act).
• Conditions for ITC: (1) a valid tax invoice or debit note; (2) goods or services actually received; (3) the supplier has paid the tax to the government; (4) the recipient has filed his return; (5) the invoice appears in the recipient's GSTR-2B.
• If the supplier is not paid within 180 days from the invoice date, the ITC must be reversed (it can be re-claimed on payment).
• Blocked credits (Sec 17(5)): motor vehicles for personal travel (with exceptions), food and beverages, beauty treatment, health services, club membership, works contract for immovable property, goods lost, stolen or given as free samples, and goods or services for personal use.
• Order of using ITC: IGST credit is used first for IGST, then for CGST and SGST (in any order or proportion). CGST credit → CGST, then IGST. SGST credit → SGST, then IGST. CGST credit can never be used for SGST, or SGST credit for CGST.
• Tax not covered by credit is paid in cash through the electronic cash ledger.
• Composition taxpayers cannot take ITC.

महत्त्वाच्या संज्ञा

• Electronic credit ledger – shows the ITC available to a taxpayer.
• Electronic cash ledger – shows cash deposited for paying GST.
• GSTR-2B – auto-drafted monthly statement of ITC available, from suppliers' filings.
• QRMP scheme – Quarterly Return, Monthly Payment, for taxpayers with turnover up to ₹5 crore.

नमुने व सूत्रे

ITC rule: Net GST payable in cash = Output tax − Eligible ITC (used in the legal order).

५ महत्त्वाचे प्रश्न

Q1. What is input tax credit?

The credit of GST paid on purchases of goods and services used in business, which can be set off against the GST payable on outward supplies.

Q2. What is GSTR-3B?

A monthly (or quarterly) self-declared summary return showing outward supplies, ITC claimed and tax paid; tax is paid along with it.

Q3. A dealer's output tax: IGST ₹20,000, CGST ₹30,000, SGST ₹30,000. ITC available: IGST ₹35,000, CGST ₹10,000, SGST ₹12,000. Compute the tax payable in cash.

Total cash payable = ₹23,000. Check: total output ₹80,000 − total ITC ₹57,000 = ₹23,000. (The remaining IGST credit of ₹15,000 could also be split between CGST and SGST; the cash total stays the same here.)

Q4. Explain the conditions for claiming ITC and the blocked credits.

Outline: five conditions of Sec 16(2); 180-day payment rule; time limit (30 November after the year or the annual return date, whichever is earlier); blocked credits list from Sec 17(5) with examples.

Q5. Explain the different returns under GST.

Outline: GSTR-1, GSTR-3B, GSTR-2B, CMP-08, GSTR-4, GSTR-9, GSTR-9C; who files, contents and due dates; late fee and interest; benefits of the QRMP scheme.

परीक्षेसाठी टीप

In ITC numericals, always use IGST credit first. Write the rule "CGST and SGST cannot be cross-utilised" under your table.