SIP on Goods and Service Tax

`
AMITY COLLEGE OF COMMERCE & FINANCE,
AMITY UNIVERSITY, KOLKATA, WEST BENGAL
PROJECT REPORT
On
GOODS AND SERVICE TAX
A Report Submitted in Partial Fulfillment of the Requirements for the
degree of Masters of Commerce (2018-20)
Faculty Guide Submitted By,
Dr. Keya Das Ghosh Lucky Upadhyay
Assistant Director M.COM
Enrollment No. A90957618010
Industry Guide
Mr. Ashwani Jhunjhunwala
Managing Director

DECLARATION
I the undersigned hereby declare that the report presented titled Goods and service Tax is
uniquely prepared by me under the supervision of my Faculty Guide Dr. Keya Das Ghosh.
I further certify that:
❖ The work contained the report is solely done by me under the guidance of my faculty guide
and is original.
❖ The work has not been submitted for any other degree/certificate in this university or any
other university India or Abroad.
❖ All guidelines provide by the university has been followed while preparing the report.
❖ Wherever any material has been used from any other sources, due credit had been given to
them in the text report and in the references.
LUCKY UPADHYAY
M.com (2018-20)
A909057618010

CERTIFICATE
This is to certify that the project report entitled, “Goods and Service Tax (GST)” submitted by
Ms. Lucky Upadhyay, Enrollment No. A90957618010, in partial fulfillment of requirements
for the award of the degree of MASTER OF COMMERCE at Amity University is an authentic
work carried out by her under my supervision and guidance.
The data reported in it is original to the best of my knowledge and belief. Any assistance and
help received during this project has been duly acknowledged.
Date:………………….. Signature
Place:…………………. Dr. Keya Das Ghosh
(Faculty Guide)

ACKNOWLEDGEMENT
I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and organizations. I would like to extend my sincere thanks
to all of them.
I am highly indebted to my Industry Guide Mr. Ashwani Jhunjhunwala, Managing Director of
Jhunjhunwala Jewellery Private Ltd. for their guidance and constant supervision as well as for
providing necessary information regarding the project & also for his support in completing the
project.
I would also like to express my gratitude towards my parents & friends for their kind co-
operation and encouragement which help me in completion of this project.
I would like to express my special gratitude and thanks to my Faculty Guide and Mentor
Dr.Keya Das Ghosh for her constant encouragement and supervision.
My thanks and appreciations also go to my university in developing people who have willingly
helped me out with their abilities.

EXECUTIVE SUMMARY
Through this study, the importance of timely recording of data entries and proper maintenance of
records were established.
The main reason of this study was to acquire knowledge about:
➢ Maintenance of accounting data
➢ Maintenance of various records – Customers’ records, Vendors’ records, Purchases’
records, Sales’ records, Stock records, Cash Ledger, Credit Ledger, Capital goods’
records, Invoices etc
➢ Raising sales invoices / Debit Notes / Credit Notes etc
➢ Claiming of ITC on purchase invoices
➢ Accounting of invoices on which ITC is not allowable that is Block Credit
➢ Reconciling Input Tax Credit on Input goods / Input Services / Capital Goods
➢ Preparation of MIS for ease filing of returns
➢ Making liability payment of GST
➢ Filing various GST Returns – GSTR 3B / GSTR 1 / GSTR 9
➢ Reconciling Annual data as per GST Returns with that of Books
➢ Treating excess / shortage amount popup after reconciliation
The study is structured in chapters, namely General Introduction, Framework of Study, Nature
& Methodology of the Study and last Conclusion.

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ELEMENTS OF REPORT
Sr
No
Chapt
ers Contents
Page
Nos
1 Preliminary Pages
Declaration / Undertaking
Certificate for Guidance
Acknowledgements
Executive Summary
2 Table of Contents 1-2
1 General Introduction 3-7
1.1 Brief Profile of Company 4
1.2 Brief Profile of the Management 5
1.3 Background of the Study 6
1.4 Objective of the Study 7
2 Theoretical Framework of Study 8
2.1
Meaning of Goods & Service Tax [GST], its Features and
Deficiencies in Current VAT System 9-10
2.2 History of GST 11
2.3 Genesis/ Evolution of GST in India 12-14
2.4 Framework of GST in India 15-16
2.5 Taxes Subsumed Under GST 17
2.6 Goods not within the purview of GST 18
2.7 Advantages & Disadvantages of the GST 18-21
2.8 Model/ components of GST 22
2.9 Rates of Tax in GST 23-24
2.10 GST Council 25
2.11 GSTN and GSTIN 26
2.12 GST Registration 26-30
2.13 Invoicing Under GST 31-32

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2.14 ITC Utilization Rules 33-35
2.15 GST Forms, Returns & Audit 35-41
3 Nature, Methodology & Conceptual Framework of the Study 43-54
3.1 Old Tax Structure vs New Tax Structure 43-44
3. 2 Study of Purchase / Sales Invoices 45
3.3 Arrangements of Purchase Invoices 46
3.4 Reconciliation of GSTR 2A with Books 47-49
3.5 Raising of Self Invoices under RCM 50
3.6 Verification of records under GST 51
3.7 Study of MIS for ease filing of Returns 52-53
3.8 Preparation of GST Reconciliation Statement 53-54
4 Conclusion 55-56
5 References 57-58

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CHAPTER 1
GENERAL INTRODUCTION

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1.1 BRIEF PROFILE OF THE COMPANY
NAME OF THE COMPANY JHUNJHUNWALA JEWELLERY PRIVATE
LIMITED
TYPE OF COMPANY PRIVATE LIMITED BY SHARES
CIN OF COMPANY U51909WB2014PTC203230
REGISTERED ADDRESS OF
THE COMPANY
3 MITRA LANE
NEAR MAHAJATI SADAN
KOLKATA 700007
YEAR OF ESTABLISHMENT 2014
AUTHORIZED CAPITAL OF
THE COMPANY
150,000 EQUITY SHARES OF ` 10 EACH
PAID UP CAPITAL OF THE
COMPANY
130,000 EQUITY SHARES OF ` 10 EACH
Nos. OF DIRECTORS 3 [THREE]
NAME OF DIRECTORS 1. Mr ASHWANI JHUNJHUNWALA
2. Mr. NIKUNJ JHUNJHUNWALA
3. Mrs MANJU JHUNJHUNWALA
NAME OF SHAREHOLDERS
WITH SHAREHOLDING
PATTERN
1. Mr ASHWANI JHUNJHUNWALA _42.31%
2. Mr. NIKUNJ JHUNJHUNWALA_42.31%
3. Mrs MANJU JHUNJHUNWALA_15.38%
GSTIN OF THE COMPANY 19AADCJ3720G1ZQ
BRIEF OBJECT OF THE
COMPANY
MANUFACTURING STUDDED DIAMOND
JEWELLERY AND PROVIDING JOB WORK
AREA OF OPERATION IN AND OUTSIDE INDIA

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1.2 BRIEF PROFILE OF THE MANAGEMENT
Jhunjhunwala Jewellery Private Limited was established in year 2014 with object of
manufacturing Studded diamond Jewellery and providing Job work to Jewellery houses
in and outside India. The company is managed and operated by Mr. Ashwani
Jhunjhunwala, Mr. Nikunj Jhunjhunwala and Mrs. Manju Jhunjhunwala.
Mr. Ashwani Jhunjhunwala, who has sound knowledge of educational background is
looking after the Finance department of the company. After completing B. Com [H] from
St Xavier’s College, he achieved MBA – Finance degree from IBS, Ahmedabad in year
2010. Before stepping stone as entrepreneur, he has worked in Meghalaya Cement Ltd as
General Manager.
Mrs Manju Jhunjhunwala who has strong creative thinking and vision is looking after the
Designing department of the company. Because of her father’s business, she always had
strong perception towards Jewellery & Ornaments. She supports her team by providing
new designing ideas to attract the Customers’ Market and their need. Being social lady,
she always tries to satisfy the customer with product quality, price and service.
Mr. Nikunj Jhunjhunwala is looking after the Manufacturing & Job work department of
the company. Being inspired and encouraged by her mother Mrs. Manju Jhunjhunwala,
he served under a renowned jewellery businessman during his college days’ to gain
experience about the Manufacturing of Jewellery. After having B. Com [H] degree from
St Xavier’s college in hand, he started exploring the Opportunities available in
Jewellery’s Market and soon started his business. After span of three – four years, the
their business started to flourish. He then along with his brother Mr. Ashwani
Jhunjhunwala and mother Mrs. Manju Jhunjhunwala started this company named
Jhunjhunwala Jewellery Private Limited

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1.3 BACKGROUND OF THE STUDY
The primary focus of Internship was given on study of impact of Goods and Service Tax
on Jewellery Business and how practical approach is followed in day to day business
transactions for compliance of Goods and Service Tax Act & Rules.
Hence, to achieve the aforesaid focus / goal, I thought to get internship at the business
house where I will able to get the desired result though volume of transactions may be
less. After searching through friends, I get in touch with Mr Ashwani Jhujhunwala,
Finance head and director of Jhunjhunwala Jewellery Private Limited who agreed to give
8 weeks internship. On first day of Internship, he elaborated the applicability of GST on
Jewellery Business and advised to understand following areas during internship.
➢ Accounting Entries for booking of Sales Invoices and Purchase Invoices
➢ Preparation of MIS for analysis of Amount due from Customer / Amount due to
Vendors / Stock Reconciliation / identification of Banking transactions
➢ Maintenance of records under Goods & Service Tax Act
➢ Maintenance of records of Vendor / Customer
➢ Applicability of various returns under GST
➢ Preparation of Monthly statement for ease filing of GST returns
➢ Nature of transaction on which RCM [Reverse Charge Mechanism] is applicable
➢ Filing of GST Returns
➢ Reconciliation of Input Tax Credit taken in books vs Return filed by Vendors
➢ Preparation of GST Reconciliation Statement
Apart from above, he also advised to understand following aspects for better practical
training of academic knowledge.
➢ Preparation of financial statements
➢ Dealing with Statutory Auditor
➢ Filing of Income Tax return

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1.4 OBJECTIVE OF THE STUDY
As aware, the trainee should be able to develop industry specific skills and knowledge
and to capture work experiences through Internship Program. Hence, my objectives of the
Summer Internship Program are -
• To understand practical aspects of Goods & Service Tax
• To get experience of maintenance of records and filing of Returns under GST
• To have knowledge how to reconciliation Input Tax Credit uploaded by Vendor
and claimed by Organization
• To reconcile GST figures disclosed in books Vs disclosed in returns
• To develop soft skills and networking
• To find out additional work opportunities

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CHAPTER 2
FRAMEWORK OF STUDY

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2.1.1 MEANING OF GST AND ITS FEATURES
The goods and services tax (GST) is a value-added tax levied on most goods and
services sold for domestic consumption. The GST is paid by consumers, but it is
remitted to the government by the businesses selling the goods and services. In
effect, GST provides revenue for the government.
The goods and services tax (GST) is an indirect federal sales tax that is applied to
the cost of certain goods and services. The business adds the GST to the price of
the product, and a customer who buys the product pays the sales price plus GST.
The GST portion is collected by the business or seller and forwarded to the
government. It is also referred to as Value-Added Tax (VAT) in some countries.
2.1.2 FEATURES OF GST
o GST is a value added tax levied on manufacture, sale and consumption of
goods and services.
o GST offers comprehensive and continuous chain of tax credits from the
producer's point/service provider's point upto the retailer's level/consumer’s
level thereby taxing only the value added at each stage of supply chain.
o The supplier at each stage is permitted to avail credit of GST paid on
the purchase of goods and/or services and can set off this credit against the
GST payable on the supply of goods and services to be made by him. Thus,
only the final consumer bears the GST charged by the last supplier in the
supply chain, with set-off benefits at all the previous stages.
o Since, only the value added at each stage is taxed under GST, there is
no tax on tax or cascading of taxes under GST system. GST does not

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differentiate between goods and services and thus, the two are taxed at a
single rate.
2.1.3 DEFICIENCIES IN CURRENT VAT SYSTEM
• Double taxation of a transaction as both goods and services as the distinction
between goods and services was often blurred, e.g. software was liable to
both VAT and service tax.
• CENVAT did not include chain of value addition in the distributive trade
below the stage of production. Similarly, in the State-level VAT, CENVAT
load on the goods was not removed leading to the cascading of taxes. To
illustrate, when the goods were manufactured and sold, both central excise
duty (CENVAT) and State-Level VAT were levied.
• Though CENVAT and State-Level VAT were essentially value added taxes,
set off of one against the credit of another was not possible as CENVAT was
a central levy and State-Level VAT was a State levy.
• There were several taxes in the States, such as, Luxury Tax, Entertainment
Tax, etc. which were not subsumed in the VAT.
• VAT on goods was not integrated with tax on services, at the State level, to
remove the cascading effect of service tax. With service sector being the
fastest growing sector in the economy, the exclusion of services from the tax
base of the States potentially eroded their tax- buoyancy.
• CST was another source of distortion in terms of its cascading nature since it
was non-VATABLE. Being an origin based tax, CST was also against one of
the basic principles of consumption taxes that tax should accrue to the
jurisdiction where consumption takes place.

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2.2 HISTORY OF GST
France was the first country to implement the GST in 1954, and since then an
estimated 165 countries have adopted this tax system in some form or another.
Some of the countries with a GST include Canada, Vietnam, Australia, Singapore,
United Kingdom, Monaco, Spain, Italy, Nigeria, Brazil, South Korea, and India.
India became 166th country to adopt GST.
Most countries with a GST have a single unified GST system, which means that a
single tax rate is applied throughout the country. A country with a unified GST
platform merges central taxes (e.g. sales tax, excise duty tax, and service tax) with
state-level taxes (e.g. entertainment tax, entry tax, transfer tax, sin tax, and luxury
tax) and collects them as one single tax. These countries tax virtually everything
at a single rate.
Only a handful of countries, such as Canada and Brazil, have a dual GST
structure. Compared to a unified GST economy where tax is collected by the
federal government and then distributed to the states, in a dual system, the federal
GST is applied in addition to the state sales tax. In Canada, for example, the
federal government levies a 5% tax and some provinces/states alsoa provincial
state tax (PST), which varies from 7% to 10%. In this case, a consumer’s receipt
will clearly have the GST and PST rate that was applied to his or purchase value.
More recently, the GST and PST have been combined in some provinces into a
single tax known as the Harmonized Sales Tax (HST). Prince Edward Island was the
first to adopt the HST in 2013, combining its federal and provincial sales taxes to
a single tax at 14%, which was raised to 15% in 2016. Since then, several other
provinces have followed suit, including New Brunswick, Newfoundland and
Labrador, Nova Scotia and Ontario.

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2.3 GENESIS/ EVOLUTION OF GST IN INDIA
The history of the Goods and Services Tax (GST) in India dates back to the year
2000 and culminates in 2017 with four bills relating to it becoming an Act. The
GST Act aims to streamline taxes for goods and services across India.
The implementation of the Goods and Services Tax (GST) in India was a
historical move, as it marked a significant indirect tax reform in the country. The
amalgamation of a large number of taxes (levied at a central and state level) into a
single tax is expected to have big advantages. One of the most important benefit
of the move is the mitigation of double taxation or the elimination of the
cascading effect of taxation. The initiative is now paving the way for a common
national market. Indian goods are also expected to be more competitive in
international and domestic markets post GST implementation. The GST, due to its
self-policing and transparent nature, is also easier to administer on an overall
scale
➢ In the year 2000, the then Prime Minister mooted the concept of GST and set up a
committee to design a Goods and Services Tax (GST) model for the country. In
2003, the Central Government formed a task force under Vijay Kelkar, which in
2004 strongly recommended fully integrated ‘GST’ on national basis.
➢ Subsequently, the then Union Finance Minister, Shri P. Chidambaram, while
presenting the Union Budget (2006-2007), announced that GST would be
introduced from April 1, 2010. Since then, GST missed several deadlines and
continued to be shrouded by the clouds of uncertainty.
➢ The talks of ushering in GST, however, gained momentum in the year 2014 when
the NDA Government tabled the Constitution (122nd Amendment) Bill, 2014 on
GST in the Parliament on 19th December, 2014. The Lok Sabha passed the Bill
on 6th May, 2015 and Rajya Sabha on 3rd August, 2016. Subsequent to

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ratification of the Bill by more than 50% of the States, Constitution (122nd
Amendment) Bill, 2014 received the assent of the President on 8th September,
2016 and became Constitution (101st Amendment) Act, 2016, which paved the
way for introduction of GST in India.
➢ In the following year, on 27th March, 2017, the Central GST legislations - Central
Goods and Services Tax Bill, 2017, Integrated Goods and Services Tax Bill,
2017, Union Territory Goods and Services Tax Bill, 2017 and Goods and Services
Tax (Compensation to States) Bill, 2017 were introduced in Lok Sabha. Lok
Sabha passed these bills on 29th March, 2017 and with the receipt of the
President’s assent on 12th April, 2017, the Bills were enacted. The enactment of
the Central Acts was followed by the enactment of the State GST laws by various
State Legislatures. Telangana, Rajasthan, Chhattisgarh, Punjab, Goa and Bihar
were among the first ones to pass their respective State GST laws. By 30th June,
2017, all States and Union Territories had passed their respective SGST and
UTGST Acts except Jammu and Kashmir. With effect from 1st July, 2017, the
historic indirect tax reform – GST was introduced. GST law was enacted to
Jammu and Kashmir on 8th
July, 2017.
➢ GST is a path breaking indirect tax reform which attempts to create a common
national market. GST has subsumed multiple indirect taxes.

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2000
• The idea of adopting GST was firstt suggested by the Atal Bihari
Vajpayee Government in 2000. An Empowered Committee (EC).
2006
• February- The finance minister set 1 April 2010 as the GST introduction date.
2009
• Pranab Mukherjee, the new finance minister of India, announced the basic
skeleton of the GST system. The 1 April 2010 deadline was being followed then as
well.
2014
• The (122nd Constitution Amendment)Bill was introduced in the Lok Sabha.
2016
• In September 2016 The Honourable President of India gives his consent for the
Constitution Amendment Bill to become an Act.
• 1st GST Council meeting was held.
April
2017
• CGST, IGST, UTGST and GST (Compensation to States) Act passed.
May
2017
• GST council recommends all the rules and regulations.
30.06
2017
• All States except Jammu and Kashmir pass their SGST Act
01.07
.2017
• GST was introduced.
08.07
.2017
• GST extended to the states of Jammu & Kashmir.

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2.4 FRAMEWORK OF GST IN INDIA
1. Dual GST: India has adopted a Dual GST model in view of the federal
structure of the country. Consequently, Centre and States simultaneously levy
GST on taxable supply of goods or services or both, which takes place within
a State or Union Territory. Thus, tax is imposed concurrently by the Centre
and States, i.e. Centre and States simultaneously tax goods and services. Now,
the Centre also has the power to tax intra-State sales & States are also
empowered to tax services. GST extends to whole of India including the State
of Jammu and Kashmir.
2. CGST/SGST/ICGST/UTGST
GST is a destination based tax applicable on all transactions involving supply
of goods and services for a consideration subject to exceptions thereof. GST
in India comprises of Central Goods and Services Tax (CGST) - levied and
collected by Central Government, State Goods and Services Tax (SGST) -
levied and collected by State Governments/Union Territories with
Legislatures and UnionTerritory Goods and Services Tax (UTGST) - levied
and collected by Union Territories without Legislatures, on intra-State
supplies of taxable goods and/or services.
Inter-State supplies of taxable goods and/or services are subject to Integrated
Goods and Services Tax (IGST). IGST is the sum total of CGST and
SGST/UTGST and is levied by Centre on all inter-State supplies.
3. Legislative Framework- There is single legislation – CGST Act, 2017 - for
levying CGST. Similarly, Union Territories without Legislatures [Andaman
and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu
and Chandigarh are governed by UTGST Act, 2017 for levying UTGST.
States and Union territories with their own legislatures [Delhi and
Puducherry] have their own GST legislation for levying SGST.

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Though there are multiple SGST legislations, the basic features of law, such
as chargeability, definition of taxable person, classification and valuation of
goods and services, taxable event, procedure for collection and levy of tax and
the like are uniform in all the SGST legislations, as far as feasible. necessary
to preserve the essence of dual GST.
4. Classification of Goods and Services
HSN (Harmonised System of Nomenclature) is used for classifying the goods
under the GST. Chapters referred in the Rate Schedules for goods are the
Chapters of the First Schedule to the Customs Tariff Act, 1975.
A new Scheme of Classification of Services has been devised wherein the
services of various descriptions have been classified under various sections,
headings and groups. Each group consists of various Service Codes (Tariff).

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2.5 TAXES SUBSUMED UNDER GST
CENTRAL TAXES
SUBSUMED
STATE TAXES
SUBSUMED
TAXES NOT
SUBSUMED
Central Excise Duty State Value Added Tax
(VAT)/ Sales tax
Property Tax & Stamp duty
Additional Excise Duty Central Sales Tax (CST) Electricity duty
Excise Duty under
Medicinal and Toilet
Preparation Act.
Purchase Tax Professional tax
Service Tax Entertainment Tax levied by
the states
Basic Custom Duty on
import of goods to India
Central Sales Tax Luxury Tax Excise Duty on Alcoholic
Liquor for Human
Consumption
Additional Custom Duty
commonly known as
Countervailing Duty
(CVD), Special
Additional Duty (SAD)
Tax on Lottery, Betting and
Gambling
Excise Duty on Petrol and
Diesel.
Surcharge & Cess Entry Tax other than local
bodiesCENVAT

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2.6 GOODS NOT WITHIN THE PURVIEW OF GST
o Alcohol for Human Consumption- Power to tax remains with the State
o Five petroleum products
✓ Petroleum Crude Oil
✓ High Speed Diesel,
✓ Motor Spirit (petrol)
✓ Natural Gas
✓ Aviation Turbine Fuel
GST Council to decide the date from which GST will be applicable
o Entertainment tax- Power to tax remains with the local bodies
o Tobacco- Within the purview of GST. Power to levy excise duties, also retained.
2.7.1 ADVANTAGES OF GST
GST benefits in India will assist the Government as well as the consumers in the
long run in creating a win-win situation for both. Some of the advantages of GST
in India are enlisted as follows:
➢ Mitigation of Cascading effect : Under the GST administration, the final tax
would be paid by the consumer for the goods and services purchased.
However, there would be an input tax credit structure in place to ensure that
there is no slumping of taxes. GST is levied only on the value of the good or
service.
➢ Abolition of Multiple Layers of Taxation :One of the advantages of GST is
that it integrated different tax lines such as Central Excise, Service Tax, Sales
Tax, Luxury Tax, Special Additional Duty of Customs, etc. into one
consolidated tax. It prevents multiple tax layers imposed on goods and
services.

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➢ Resourceful Administration by Government : Previously, the management
of indirect taxes was a complicated task for the Government. However, under
the GST establishment, the integrated tax rate, simple input of tax credit
mechanism and a merged GST Network, where information is available, and
administration of resources are well-organised and straightforward for the
Government.
➢ Enhanced Productivity of Logistics: The restriction on inter statement
movement of goods has reduced. Earlier logistic companies had to maintain
multiple warehouses across the country to avoid state entry taxed on interstate
movements.
➢ Creation of a Common National Market: GST gave a boost to India’s tax to
Gross Domestic Product ratio that aids in promoting economic efficiency and
sustainable long – term growth. It led to a uniform tax law among different
sectors concerning indirect taxes. It facilitates in eliminating economic
distortion and forms a common national market.
➢ Ease of Doing Business: With the implementation of GST, the difficulties in
indirect tax compliance have been reduced. Earlier companies faced
significant problems concerning registration of VAT, excise customs, dealing
with tax authorities, etc. The benefits of GST has aided companies to carry out
their business with ease.
➢ Regulation of the Unorganized Sector under GST: It has created provisions
to bring unregulated and unorganised sectors such as the textile and
construction industries to name a few under regulation with continuous
accountability.

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➢ Reduction of Litigation: GST aids in reducing litigation as it establishes
clarity towards the jurisdiction of taxation between the Central and State
Governments. GST provides a smooth assessment of tax.
➢ Tackling Corruption and Tax Leakages: With the GST online network
portal, the taxpayer can directly register, file returns and make payments of the
taxes without having to interact with tax authorities. A mechanism has been
devised to match the invoices of the supplier and buyer. This will not only
keep a check on tax frauds and evasion but also bring in more businesses into
the formal economy.
2.7.2 DISADVANTAGES OF GST
There are various benefits of GST in India as listed above. However, a tax reform
of such magnitude comes with its teething problems.
➢ IT Infrastructure: Since GST is an IT-driven law, it cannot be sure whether
all the states in India are currently equipped with infrastructure and workforce
availability to embrace this law. Only a few states have implemented this E-
Governance model. Even today some states use the manual VAT returns
system.
➢ Higher Tax Burden of SME’s: Earlier the small and medium enterprises had
to pay excise duty only on a turnover that exceeded Rs. 1.5 crore every
financial year. However, under the GST administration, businesses whose
turnover exceeds Rs 40 lacs are liable to pay GST.

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➢ Increase Burden of Compliance: The GST administration states that
companies are required to register in all the states they operate in. This
increases the burden on the business for excessive paperwork and compliance.
➢ Petroleum Products don’t fall under the GST Slab: petrol and petroleum
products have not been included in the scope of GST until now. States levy
their taxes on this sector. Tax credit for inputs will not be available to these
industries or those related industries.
➢ Coaching of Tax Officers: there is inadequate training that is provided to the
Government officers for practical usage and implementation of such systems
since the GST administration heavily banks on information technology.

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2.8 MODEL/ COMPONENTS OF GST
CGST Act (Central GST) SGST Act (State GST) IGST Act (Inter-State
GST)
▪ Replace central
Excise Duty &
service Tax.
▪ Cover Sale
transaction
▪ Administered by CG
▪ It is expected that
the duty and tax paid
on closing stock
would be available
as credit.
▪ Levied on all
intrastate
sale/supplies of
goods or services.
▪ Replace State Vat,
Entry Tax,
Entertainment Tax,
& Luxury Tax.
▪ Cover taxing of
Services.
▪ Administered by SG
▪ Rate can be a bit
higher than CGST
rate.
the duty and tax paid
on closing stock
would be available
as credit.
▪ Levied on all
intrastate
sale/supplies of
goods or services.
▪ Levied on all inter –
state supplies of
goods or services
which are sold or
transferred.
▪ Applicable to
imports of goods or
services.
▪ Expected to be
equal to CGST as
well as SGST.
the duty and tax
paid on closing
stock would be
available as credit.

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2.9 RATES OF TAX IN GST
➢ Maximum Rate: Maximum rate of tax can be 28%.
➢ GST Tax Rates on some common Goods and Services
Tax Rates
GOODS
Nil Tax Rate
Regular consumption include fresh fruits and vegetables, milk, butter
milk, curd, natural honey, flour, besan, bread; Hulled cereal grains
like barley, wheat, oat, rye, etc. Sindoor, bangles and Kajal [other
than kajal pencil sticks]; fresh meat, fish, chicken, eggs; Vegetables
preserved using various techniques including brine and other
preservatives that are unsuitable for immediate human consumption;
Picture books, colouring books or drawing books for children; Music
Books/manuscripts; All types of salt; Sanitary Napkins; Unit
container-packed frozen branded vegetables (uncooked/steamed)
0.25% Cut and semi-polished stones are included under this tax slab.
5% Household necessities such as edible oil, sugar, spices, tea, and coffee
(except instant) are included. Coal, Mishti/Mithai (Indian Sweets)
and Life-saving drugs are also covered under this GST slab
12% This includes computers and processed food
18% Hair oil, toothpaste and soaps, capital goods and industrial
intermediaries are covered in this slab.
28% Luxury items such as small cars, consumer durables like AC and
Refrigerators, premium cars, cigarettes and aerated drinks, High-end
motorcycles are included here

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Tax
Rates SERVICES
Nil Tax
Rate
Chargeable services offered on Basic Savings Bank Deposit (BSBD)
account opened under the PMJDY (Pradhan Mantri Jan Dhan Yojana)
Hotel accommodation for transaction value per unit per day being Rs. 1000
or less
5% Working for printing of newspapers; Tour operator services; Goods
transported in a vessel from outside India; Leasing of aircrafts; Renting a
motor cab without fuel cost; Print media ad space; Transport services in AC
contract/stage or radio taxi; Transport by air (scheduled)/air travel for
purpose of pilgrimage via chartered/non-scheduled flights
12% Rail transportation of goods in containers from a third party other than
Indian Railways; Construction of building for the purpose of sale; Air
travel excluding economy; IP rights on a temporary basis; Food /drinks at
restaurants without AC/heating or liquor license; Movie Tickets less than or
equal to Rs. 100; Renting of accommodation for more than Rs.1000 and
less than Rs.2500 per day; Chit fund services by foremen; Railway wagons,
coaches, rolling stock (without refund of accumulated Input Tax
Credit/ITC); Hotel accommodation for transaction value per unit per day
ranging between Rs. 1001 to 7500
18% Food/drinks at restaurants with liquor license; Food /drinks at restaurants
with AC/heating; Outdoor catering; Renting for accommodation for more
than Rs.2500 but less than Rs.5000 per day; Hotel accommodation for
transaction value per unit per day being Rs. 7501 or more; Circus, Indian
classical, folk, theatre, drama; Supply of works contract; Movie Tickets
over Rs. 100; Supply of food, shamiyana, and party arrangement
28% Entertainment events-amusement facility, water parks, theme parks, joy
rides, merry-go-round, race course, go-carting, casinos, ballet, sporting
events like IPL; Race club services; Gambling; Food/drinks at AC 5-star
hotels

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2.10 GST COUNCIL
➢ It is set up by president under article 279-A. It is chaired by union finance
minister.
➢ It will constitute of the following members:
(a) The Union Minister….Chairperson
(b) Union Minister of state in charge of revenue
(c) Minister in charge of finance or taxation or of any other field
nominated by state governments.
➢ The 2/3rd representatives in council are from states and 1/3rd from union.
➢ It will make recommendations on :
a. Taxes, surcharge, cess of central and states which will be integrated
in GST. b. Goods and services which may be exempted from GST.
c. Interstate commerce – IGST- proportion of distribution between
state and center.
d. Registration threshold limit for GST.
e. GST floor rates.
f. Special rates during calamities.
g. Provision with respect to special category states specially north east
states.
➢ It may also work as Dispute Settlement Authority for GST. The Council
would consist of 2/3rd
representation of states and 1/3rd representation of the
Centre.
➢ The GST Council will take all decisions regarding tax rates, dispute
resolution, exemptions and so on. Recommendations of the GST Council
(75% votes) will be binding on the Centre and the States.

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2.11.1 GSTN
Goods and Services Tax Network has been set up by the Government as a private
company under erstwhile Section 25 of the Companies Act, 1956. GSTN would
provide three front end services, namely Registration, Payment and Return to
taxpayers. It will also assist some State with the development of back end
modules.
2.11.2 GSTIN
Goods and Services Identification Number is a 15 digit alphanumeric number.
First two digit shows the State code
Another ten digit shows the Permanent Account Number (PAN)
Next number shows the entity number of the same PAN holder in a state
Next is alphabet Z by default
Next is the check sum digit.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
State
Code
PAN
Entry Code/ Check
Digit
2.12.1 GST REGISTRATION
2.12.1 Types of GST Registration
Under the GST Act, GST Registration can be of various types. It is vital that the
taxpayer is aware of the different types of GST Registration and selects the
appropriate one.
The different types of GST Registration are mentioned below:
➢ Normal Taxpayer: Most of the businesses in India fall under this
category. The applicant need not provide any deposit in order to become a

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normal taxpayer. There is also no expiry date for taxpayers who fall under
this category.
➢ Casual Taxable Person: Individuals who wish to set up a seasonal shop
or stall can opt for this category. An advance amount that is equal to the
expected GST liability during the time the stall or seasonal shop is present
must be deposited by the taxpayer. The duration of the GST Registration
under this category is 3 months and it can be extended or renewed.
➢ Composition Taxpayer: Taxpayers who wish to obtain
the GST Composition Scheme can opt for this type of GST Registration.
A flat GST rates must be deposited by taxpayers who opt for GST
Registration under this category. Input tax credit cannot be obtained by
taxpayers who come under this category.
➢ Non-Resident Taxable Person: In case individuals live outside India, but
supply goods to individuals who stay in India, must opt for this type of
GST Registration. Similar to the Casual Taxable Person type of GST
Registration, taxpayers must pay a deposit that is equal to the expected
GST liability during the time the GST registration is active. The duration
for this type of GST registration is usually 3 months, but it can be
extended or renewed at the type of expiry.
➢ Non-Resident Online Service Provider
➢ Special Economic Zone Developer
➢ GST TDS Deductor – Government Entities
➢ UN Embassy/ Body/ other notified individuals
➢ Special Economic Zone Unit
➢ GST TDS Collector – E-commerce Companies

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2.12.2 Persons Liable for Registration under GST Act
GST Registration must be completed by the below-mentioned individuals and
businesses:
o Individuals who have registered under the tax services before the GST law came
into effect.
o Non-Resident Taxable Person and Casual Taxable Person
o Individuals who pay tax under the reverse charge mechanism
o All e-commerce aggregators are required to register for GST
o Input service distributors and agents of a supplier
o Individuals who supply goods through an e-commerce aggregator.
o Individuals who are providing database access and online information from outside
India to people who live in India other than those who are registered taxable persons
must complete GST Registration.
o The increased threshold limit for GST registration. These limits are applicable from
1st April, 2019.
Category of States For Sale of Goods For Providing services
Normal Category States Annual Turnover of Rs. 40
lakh or more
Annual Turnover of Rs. 20
lakh or more
Special category States Annual Turnover of Rs. 20
lakh or more
Annual Turnover of Rs. 10
lakh or more
Note: The special category states under GST include Arunachal Pradesh, Assam,
Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh,
Uttarakhand, Jammu & Kashmir.

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2.12.3 Documents Required for Registration
The below-mentioned documents are required to complete the GST Registration:
o Permanent Account Number (PAN) of the applicant
o Aadhaar card of the applicant
o The bank account statement of the applicant, as well as a cancelled cheque, must be
submitted
o The address proof where the business is located must be given
o The Incorporation Certificate or the business registration proof must be submitted
o The Digital Signature must be given
o The Director’s or Promoter’s address proof and identity proof must be submitted
along with their photographs.
o The Authorised Signatory must receive the Letter of Authorisation or Board
Resolution.
Amendment in Registration
• Every registered taxable person shall inform the proper officer of any
changes in the information furnished at the time of registration, or that
furnished subsequently, in the manner and within such period as may be
prescribed.
• The proper officer may, on the basis of information furnished under sub-
section (1) or as ascertained by him, approve or reject amendments in the
registration particulars in the manner and within such period as may be
prescribed, provided that approval of the proper officer shall not be
required in respect of amendment of such particulars as may be prescribed.
• The proper officer shall not reject the request for amendment in the
registration particulars without giving a notice to show cause and without
giving the person a reasonable opportunity of being heard.

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• Any rejection or approval of the amendments under the CGST/SGST Act
shall be deemed to be rejection or approval of amendments under the
CGST/SGST Act.
2.12.4 Penalty for Non- Registration under the Act
In case the offender does not pay tax or makes a payment that is lesser than the
amount that must be paid (due to genuine errors), the penalty that is levied is 10% of
the tax amount that is due.
However, the minimum penalty that must be paid is Rs.10,000.
In case the offender does not complete the GST Registration on purpose and tries to
evade tax, the penalty that is levied is 100% of the tax amount that is due.
2.12.5 Figure depicted a GST Registration Page

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2.13 INVOICING UNDER GST
2.13.1 Invoice: An invoice or a bill is a list of goods sent or services provided,
along with the amount due for payment.
2.13.2 Persons Liable to Issue GST Invoice:
A GST registered business, needs to provide GST-complaint invoices to clients
for sale of good and/or services.
Also, A GST registered vendors will provide GST-compliant purchase invoices.
2.13.3 Mandatory Fields in GST Invoice
A tax invoice is generally issued to charge the tax and pass on the input tax credit.
A GST Invoice must have the following mandatory fields-
1. Invoice number and date
2. Customer name
3. Shipping and billing address
4. Customer and taxpayer’s GSTIN (if registered)**
5. Place of supply
6. HSN code/ SAC code
7. Item details i.e. description, quantity (number), unit (meter, kg etc.), total value
8. Taxable value and discounts
9. Rate and amount of taxes i.e. CGST/ SGST/ IGST
10. Whether GST is payable on reverse charge basis
11. Signature of the supplier
**If the recipient is not registered AND the value is more than Rs. 50,000 then the
invoice should carry:
i. name and address of the recipient,
ii. address of delivery,
iii. state name and state code

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2.13.4 Figure Depicting Sample GST Invoice

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2.14 ITC UTILIZATION RULES
2.14.1 Set-off Rules under the Act
Old set off rules for ITC under GST were as follows: –
Payment For First Utilize Secondly Utilize
SGST TAX SGST CREDIT IGST CREDIT
CGST TAX CGST CREDIT IGST CREDIT
IGST TAX IGST CREDIT CGST CREDIT & SGST
CREDIT
New set off rules for ITC under GST are as follows: –
As per new Rules, flexibility of using IGST credit is restricted and for a given
Return period, such credit has to be exhausted fully for payment of all
components of output GST liabilities before using any amount from CGST and
SGST credits, so that later credits can be used only if IGST credit is insufficient to
absorb all output GST liability for a given Return Period.
Accordingly Utilization of ITC under Revised set off rules has to be made according
to following steps:-
Step Particulars
1. First utilize IGST credit for payment of output IGST liability
2. If output IGST liability is not fully paid under Step 1, then follow Step 5 and
6 below
3. If output IGST liability is fully paid under Step 1, and balance IGST credit is still
left then follow Step 4 below

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4. At the option of the taxpayer
First pay CGST liability out of such balance of IGST Credit and if balance IGST
credit still remains pay SGST liability out of such remaining balance
Or
First pay SGST liability out of such balance of IGST Credit and if balance IGST
credit still remains pay CGST liability out of such remaining balance.
In either case, tax payer should ensure that all available balance in IGST Credit
remaining after Step 1, must be utilized to the extent of output Tax liabilities under
CGST and SGST, so that after Step 4 , balance can remain in IGST credit, only if
all CGST and SGST liabilities are paid off through IGST credit. In other words
after Step 4, tax payer cannot simultaneously keep balance in IGST credit and
unpaid liability under CGST or SGST.
If any balance IGST Credit remains even after full payment of CGST and SGST
liabilities as per Step 4, then, balance of IGST credit still left shall be automatically
carried forward in the Electronic ledger to the next period as opening balance of
IGST credit.
5. If CGST liability is not fully paid out of IGST credit after Step 4, then utilize CGST
credit for payment of CGST liability, to the extent of CGST credit balance and pay
unpaid CGST Liability, if any, in cash
If any balance CGST Credit remains after full payment of CGST liability, utilize
such balance for payment of balance IGST liability remaining after Step 1. If IGST
liability is fully paid and Balance CGST credit remains thereafter, same shall be
carried forward in the Electronic ledger to the next period as opening balance of
CGST credit.
If Balance IGST Liability is still not fully paid under Step 5, follow Steps 6 and 7.
6. If SGST liability is not fully paid out of IGST credit after Step 4, then utilize SGST
credit for payment of SGST liability, to the extent of SGST credit balance and pay
unpaid SGST Liability, if any , in cash.

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If any balance SGST Credit remains after full payment of SGST liability, utilize
such balance for payment of balance IGST liability remaining after Step 1and 5. If
IGST liability is fully paid and Balance SGST credit remains thereafter the same
shall be carried forward in the Electronic ledger to the next period as opening
balance of SGST credit.
If Balance IGST Liability is still not fully paid under Step 6, follow Step 7
7. Pay unpaid IGST liability remaining after Step 5 and/or 6 in cash
2.14 GST FORMS, RETURNS AND RETURN
2.14.1 Types of GST Returns
1. GSTR-1
GSTR-1 is the return to be furnished for reporting details of all outward supplies of goods
and services made, or in other words, sales transactions made during a tax period, and
also for reporting debit and credit notes issued. Any amendments to sales invoices made,
even pertaining to previous tax periods, should be reported in the GSTR-1 return.
GSTR-1 is to be filed by all normal taxpayers who are registered under GST. It is to be
filed monthly, except in the case of small taxpayers with turnover up to Rs.1.5 crore in
the previous financial year, who can file the same on a quarterly basis.
2. GSTR-2A
GSTR-2A is the return containing details of all inward supplies of goods and services i.e.
purchases made from registered suppliers during a tax period. The data is auto-populated
based on data filed by the suppliers in their GSTR-1 return. GSTR-2A is a read-only
return and no action can be taken.

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3. GSTR-2
GSTR-2 is the return for reporting the inward supplies of goods and services i.e. the
purchases made during a tax period. The details in the GSTR-2 return are auto-populated
from the GSTR-2A. Unlike GSTR-2A, the GSTR-2 return can be edited.
GSTR-2 is to be filed by all normal taxpayers registered under GST, however, the filing
of the same has been suspended ever since the inception of GST.
4. GSTR-3
GSTR-3 is a monthly summary return for furnishing summarized details of all outward
supplies made, inward supplies received and input tax credit claimed, along with details
of the tax liability and taxes paid. This return is auto-generated on the basis of the GSTR-
1 and GSTR-2 returns filed.
GSTR-3 is to be filed by all normal taxpayers registered under GST, however, the filing
of the same has been suspended ever since the inception of GST.
5. GSTR-3B
GSTR-3B is a monthly self-declaration to be filed, for furnishing summarized details of
all outward supplies made, input tax credit claimed, tax liability ascertained and taxes
paid.
GSTR-3B is to be filed by all normal taxpayers registered under GST.
6. GSTR-4 / CMP-08
GSTR-4 is the return that was to be filed by taxpayers who have opted for the
Composition Scheme under GST. CMP-08 is the return which has replaced the now
erstwhile GSTR-4. The Composition Scheme is a scheme in which taxpayers with
turnover up to Rs.1.5 crores can opt into and pay taxes at a fixed rate on the turnover
declared.
The CMP-08 return is to be filed on a quarterly basis.

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7. GSTR-5
GSTR-5 is the return to be filed by non-resident foreign taxpayers, who are registered
under GST and carry out business transactions in India. The return contains details of all
outward supplies made, inward supplies received, credit/debit notes, tax liability and
taxes paid.
The GSTR-5 return is to be filed monthly for each month that the taxpayer is registered
under GST in India.
8. GSTR-6
GSTR-6 is a monthly return to be filed by an Input Service Distributor (ISD). It will
contain details of input tax credit received and distributed by the ISD. It will further
contain details of all documents issued for the distribution of input credit and the manner
of distribution.
9. GSTR-7
GSTR-7 is a monthly return to be filed by persons required to deduct TDS (Tax deducted
at source) under GST. GSTR 7 will contain details of TDS deducted, the TDS liability
payable and paid and TDS refund claimed, if any.
10. GSTR-8
GSTR-8 is a monthly return to be filed by e-commerce operators registered under the
GST who are required to collect tax at source (TCS). GSTR-8 will contain details of all
supplies made through the E-commerce platform, and the TCS collected on the same.
The GSTR-8 return is to be filed on a monthly basis.
11. GSTR-9
GSTR-9 is the annual return to be filed by taxpayers registered under GST. It will contain
details of all outward supplies made, inward supplies received during the relevant
previous year under different tax heads i.e. CGST, SGST & IGST and HSN codes, along

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with details of taxes payable and paid. It is a consolidation of all the monthly or quarterly
returns (GSTR-1, GSTR-2A, GSTR-3B) filed during that year.
GSTR-9 is required to be filed by all taxpayers registered under GST*, except taxpayers
who have opted for the Composition Scheme, Casual Taxable Persons, Input Service
Distributors, Non-resident Taxable Persons and persons paying TDS under section 51 of
CGST Act.
*The 37th GST Council meeting took the decision to make GSTR-9 filing optional for
businesses with turnover up to Rs.2 crore in FY 17-18 and FY 18-19.
12. GSTR-9A
GSTR-9A is the annual return to be filed by taxpayers who have registered under the
Composition Scheme in a financial year*. It is a consolidation of all the quarterly returns
filed during that financial year.
*GSTR-9A filing for Composition taxpayers has been waived off for FY 2017-18 and FY
2018-19 as per the decision taken in the 27th GST Council meeting
13. GSTR-9C
GSTR-9C is the reconciliation statement to be filed by all taxpayers registered under
GST whose turnover exceeds Rs.2 crore in a financial year. The registered person has to
get their books of accounts audited by a Chartered/Cost Accountant. The statement of
reconciliation is between these audited financial statements of the taxpayer and the
annual return GSTR-9 that has been filed.
GSTR-9C is to be filed for every GSTIN, hence, one PAN can have multiple GSTR-9C
forms being filed.

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14. GSTR-10
GSTR-10 is to be filed by a taxable person whose registered has been cancelled or
surrendered. This return is also called a final return and has to be filed within 3 months
from the date of cancellation or cancellation order, whichever is earlier.
15. GSTR-11
GSTR-11 is the return to be filed by persons who have been issued a Unique Identity
Number(UIN) in order to get a refund under GST for the goods and services purchased
by them in India. UIN is a classification made for foreign diplomatic missions and
embassies not liable to tax in India, for the purpose of getting a refund of taxes. GSTR-11
will contain details of inward supplies received and refund claimed.
2.14.2 Due Dates of filing GST returns
(as per CGST Act)
Return
Form
Particulars Frequency Due Date
GSTR-1 Details of outward supplies
of taxable goods and/or
services affected
Monthly 11th* of the next
month with effect from
October 2018
*Previously, the due date
was 10th
GSTR-2
Suspended
Details of inward supplies
of taxable goods and/or
services affected claiming
Monthly 15th of the next month

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the input tax credit.
GSTR-3
Suspended
Monthly return on the basis
of finalization of details of
outward supplies and
inward supplies along with
the payment of tax.
GSTR-3B Simple Return in which
summary of outward
supplies along with Input
Tax Credit is declared and
payment of tax is
affected by taxpayer
CMP-08** Return for a taxpayer
registered under the
composition levy
Quarterly 18th of the month
succeeding quarter
GSTR-5 Return for a Non-Resident
foreign taxable person
GSTR-6 Return for an Input Service
Distributor
GSTR-7 Return for authorities
deducting tax at source.

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GSTR-8 Details of supplies effected
through e-commerce
operator and the amount of
tax collected
GSTR-9 Annual Return for a Normal
Taxpayer
Annually 31st December of next
financial year*
GSTR-9A Annual Return a taxpayer
registered under the
composition levy anytime
during the year
Annually 31st December of next
financial year*
GSTR-10 Final Return Once, when
GST
Registration is
cancelled or
surrendered
Within three months of the
date of cancellation or date
of cancellation order,
whichever is later.
GSTR-11 Details of inward supplies
to be furnished by a person
having UIN and claiming a
refund
Monthly 28th of the month following
the month for which
statement is filed

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CHAPTER 3
NATURE, METHODOLOGY &
CONCEPTUAL FRAMEWORK OF
THE STUDY

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3.1 METHODOLOGY ADOPTED
3.1. OLD TAX STRUCTURE V/S NEW TAX STRUCTURE
To gain insight and knowledge of changes in tax structure due to the implementation of
GST, industrial guide Mr. Ashwani Jhunjhunwala had dicussed the old Tax system and
current Tax system. The same is tabulated as under: -
Sl.
No
Particulars Old Tax System Current Tax System
1 Tax Applicable Value Added Tax &
Central State Tax
Goods & Service Tax
2 Registration Nos VAT 19293114052
CST 19293114052
GSTIN 19AADCJ3720G1ZQ
3 Tax rate applicable
on main product
1% on basic value 3% on basic value
4 ITC [Input Tax
Credit]
Available on VAT
purchase only
Available on all purchase /
service invoices except for u/s
17(5) of CGST Act
5 ITC [Input Tax
Credit] on capital
goods
Not available Available except for u/s 17(5) of
CGST Act
6 Type of Tax One Three
a) IGST
b) CGST
c) SGST
7 Accounting Entries
for purchase
Purchase
……………..Dr
VAT ………………Dr
To Supplier / Bank
IGST invoice
Purchase ……….Dr
IGST……………Dr
To Supplier / Bank
CGST/SGST invoice

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Purchase ……….Dr
CGST/SGST…………Dr
To Supplier / Bank
8 Accounting Entries
for Sale
Party / Bank A/c……Dr
To Sales
To VAT / CST
IGST invoice
Party / Bank A/c……..Dr
To Sales
To IGST
CGST/SGST invoice
Party / Bank A/c……..Dr
To Sales
To CGST / SGST
9 Is ITC reconciliation
compulsory
No, to be done at the
time of Assessment
Yes, timely reconciliation is
necessary
10 Source of
Reconciliation
No source GSTR 2A which can be
downloaded from GST Portal in
Excel form
11 HSN / SAC details Not required Required to be mentioned in
Invoice
12 Return Quarterly - Monthly – GSTR 3B [Payment]
and GSTR 1 [Outward supply]
13 Payment Monthly payment is
sufficient
Payment will be completed after
offsetting liabilities i.e filing
form GSTR 3B
14 Is Revised Return
possible
Yes, No, however error can be
rectified in subsequent return
15 Annual Return Form 88A [Audit Report] Form 9
16 Mode of submitting
Annual Return
Physical Hard Copy in
jurisdiction
Soft Copy through GST portal

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3.2 STUDY OF PURCHASE AND SALE INVOICES
After analysing above summary, Purchase / Sales invoices were gone through along
with accounting entries of both tax systems. Following points were populated in mind
during verification of invoices.
➢ Format of Invoice: In GST regime, standard format is to be used
➢ Maintenance of data base of Customer / Parties for smooth billing / ease filing of
returns / quick correspondence
➢ No Input tax credit is available for CST paid on purchases and for Service Tax paid
on services taken. However, in GST the ITC is available on each Invoices and hence,
uninterrupted and seamless chain of ITC is one of the key features of GST
➢ Integrated GST [IGST] would be levied and collected on Interstate supply of goods
/services and it is required to be separately shown in Invoice.
➢ Central GST [CGST] & State GST [SGST] would be levied and collected on
Intrastate supply of goods /services and it is required to be separately shown in
invoice.
➢ HSN [Harmonized System Nomenclature] is required to shown separately based on
GST rate wise
➢ Separate accounting head is required to be kept for IGST / CGST / SGST
➢ 100% Input of Capital goods would be available in year of purchase and will be
accounted under same head of IGST / CGST / SGST as the case may be.
➢ Once invoice is raised, it cannot be revised. Any revision in Invoice should be
through Debit Note / Credit Note

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3.3 ARRANGEMENT OF PUCHASE INVOICES
Looking into necessity of maintaining Invoices separately and ease of filing annual
return [GSTR 9], direction was given by the Industry Guide to arrange the invoices in
chronological order from July 17 onwards and to keep duplicate copy in separate file.
It was also necessary to verify whether:
➢ invoices were raised as per prescribed format under GST Act
➢ ITC [Input Tax Credit] has been claimed properly
➢ GSTIN of applicable parties [Vendor / Customer / Our organization] is mentioned
properly
➢ accounting heads have been properly selected during entries i.e. CGST / SGST /
IGST was accounted for in proper accounting head.
To follow up with the directions , the following summarised activities were performed:
➢ Making of a Purchase File
➢ Printing of purchase register from accounting package, TALLY
➢ Verifying purchase invoices and accounting entries
➢ Separating the copy of Invoices with GST & Invoices without GST
➢ Rectifying minor errors on spot and reporting major mistakes like GSTIN not
mentioned in Invoice
➢ Communicating with the vendor for issuing duplicate invoice for missing invoices
➢ Updating Vendor database [GSTIN / PAN / Contact details] in accounting package
➢ Photocopy of each invoice on which GST was charged was done
➢ Arranging all the duplicate copy of invoices in chronological order
➢ Arranging the main Purchase file

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3.4 RECONCILIATION OF GSTR2A WITH BOOKS
After successfully completed the task, directions were given to reconcile Input claimed
in books with those appearing in GSTR 2A downloaded from GST portal. Under
supervision of Industry Guide, the following tasks was performed.
➢ Downloaded Monthly GSTR 2A from GST portal. A Snap shot of GSTR 2A has been
provided below

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➢ GSTR 2A could not be downloaded in yearly format. Hence, entire monthly format
was combined in one Master Sheet for having details in one place and named as
“GSTR 2A” in workbook of Excel Sheet.
➢ Purchase Register was extracted in Excel format from accounting Package TALLY,
containing details of Vendor, Vendor GSTIN, Bill date, Bill Nos, Bill Amount,
Taxable Amount, Tax Amount, Tax Type etc. This spreadsheet was kept beside of
above work book “GSTR 2A” and named as “Purchase Register”.
➢ Reconciliation statement was prepared based on GSTIN as base. Excel formulae such
as – Duplicate removal, SumIf, V-Lookup etc were used for the purpose of preparing
the Reconciliation Statement to control the error / mistake.

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➢ An analysis of the above mentioned reconciliation statement was done and discussed.
However, it was understood that this statement cannot depict the errors like incorrect
bill date /bill number unless each invoices is verified minutely.
➢ Sample Reconciliation Statement is tabulated below: -
➢ Written communication was sent to parties who have failed to file their return or have
filed their return with inaccurate information / data.

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3.5 RAISING OF SELF INVOICES UNDER RCM
During reconciliation, it was noticed that the organization has paid GST under Reverse
Charge Mechanism (RCM) as per Sec 9(3) and Sec 9(4) of CGST Act 2017. However, as
required u/s 9(4), no self-invoice was made. After discussion, directions were given to
prepare Self – Invoice as prescribed under GST.
Following activities were performed during preparation of Self – Invoices:-
➢ Identification of expenses on which Sec 9(4) is applicable
➢ Collate the desired information – vendor details etc
➢ Prepare the monthly Self – Invoice
➢ Reconciled GST paid on RCM and subsequent its claimed as ITC
The study of the nature of transaction were done on which RCM is applicable u/s 9(3) of
CGST Act 2017. It was noted that company is liable for payment of tax under RCM only
on Transport Service and Legal Service.

51 | P a g e
3.5 VERIFICATION OF RECORDS UNDER GST
Maintenance of various records under GST is necessary as required by the Act and
hence steps were taken to verify whether these records are in order to ease completion
of assessment. The enlisted records were which have been gone through for the said
purpose: -
The enlisted records were which have been gone through for the said purpose: -
➢ Display of GSTIN in name board / Invoices / challans etc
➢ Purchase invoices with Purchase Register
➢ Sales invoices with Sales Register
➢ Debit Note & Credit Note
➢ Stock Register containing details of movement of goods – inward / outward and daily
stock balance
➢ Electronic Cash Ledger / Electronic Credit Ledger
➢ GST Ledgers – Receivable & Payables
➢ Challan Copy
➢ GST Returned copy
➢ Cash book / Bank Book

52 | P a g e
3.7 STUDY OF MIS FOR EASE OF FILING RETURNS
After completion of two weeks training, suggestions were made by the Industrial Guide
to involve me in day to day business transactions. And for the aforesaid purpose, various
MIS reports were studied by my end. During the study of the reports, it was noticed that
these reports are necessary for ease of filing of returns and compliance under GST.
The following enlisted reports and its purpose were studied.
Sl. No Reports Purpose
1 Amount due from Customer Follow up for payment / raising of Credit Note
2 Amount due to Vendors Payment should be made within 180 days
3 Stock Reconciliation All outward quantity is properly billed &
accounted for
4 Sales Report For ease filing of Return in form GSTR 1
5 ITC Report For ease filing of Return in form GSTR 3B
6 Identification of Banking
Transactions
To know direct credit by Customer / payment if
not accounted for
Understand the practical aspects of Returns [GSTR 1. GSTR 3B and GSTR 9] were
necessary. Based on aforesaid reports, GSTR 1 and GSTR 3B were prepared and after its
review by the head accountant, the same were filed.
A Snap shot of copy of filed GSTR 3B as is given in the next page:

53 | P a g e
3.8 PREPARATION OF GST RECONCILIATION STATEMENT
GST Reconciliation Statement was prepared for the accounting year 2017-18 containing
following details: -
➢ Total Turnover of the year 2017-18
➢ Turnover for 1st
Quarter – April 2017 to Jun 2017, broadly called turnover under
VAT / CST
➢ Balance Turnover i.e. for 2nd
Quarter to 4th
Quarter – July 2017 to Mar 2018, broadly
called turnover under GST
➢ Rate wise & Category wise details of Turnover
➢ Similar details captured for Purchase / Service’ Invoice
➢ GST payment details
➢ Net GST liabilities
➢ Final Actual payment by the Organization
➢ Difference excess / shortage

54 | P a g e
After discussing the matter with the head Accountant, the following activities were
performed:
➢ Preparation of Sales Invoice and passing the accounting entries in TALLY
➢ Understanding the system of Purchase ordering and Goods Receipt Note
➢ Accounting the Purchase Invoice
➢ Updating the Stock Register
➢ Preparation of Bank Reconciliation Statement
➢ Preparation of MIS Reports

55 | P a g e
CHAPTER 4
CONCLUSION

56 | P a g e
4. CONCLUSION
Overall, during the internship, Industrial Guide has given me an opportunity to
understand the flow of financial transactions, its recording, compliance and finalization.
I am thankful to him for providing his guidance and support and proving me with an
opportunity to work under him.
This study highlights the overview of practical approach to be followed during
transaction entries, preparation of MIS, maintenance of records, reconciliation and filing
of returns and other day to day activities.

57 | P a g e
CHAPTER 5
REFERENCES/ BIBLIOGRAPHY

58 | P a g e
5. REFERENCES/ BIBLIOGRAPHY
▪ https://www.investopedia.com/terms/g/gst.asp
▪ https://www.treasury.gov.my/pdf/gst/list_of_countries.pdf
▪ http://www.gstinindia.in/Core-of-GST.aspx
▪ http://ijissh.org/wp-content/uploads/2017/01/IJISSET-010204.pdf
▪ A STUDY ON IMPACT OF GST AFTER ITS IMPLEMENTATION by
Milandeep Kour, Kajal Chaudhary, Surjan Singh, Baljinder Kaur
▪ https://www.gstindia.com/history-of-gst/
▪ https://www.bankbazaar.com/tax/history-of-gst.html
▪ https://www.business-standard.com/article/economy-policy/more-foreign-
company-agents-move-court-against-18-igst-imposed-on-them-
118091801499_1.html
▪ https://www.karvy.com/growth-hub/tax/advantages-disadvantages-of-gst-in-india/
▪ https://www.slideshare.net/AmanSingh888/gst-79014526?from_action=save
▪ https://www.paisabazaar.com/tax/gst-rates/
▪ https://www.slideshare.net/sheetalgwagh/an-overview-of-gst-
126738961?from_action=save
▪ https://cleartax.in/s/how-to-register-for-gst

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