Goods and Services Tax: Registration, ITC and Compliance
Part II examines the CGST Act, 2017 read with IGST and compensation cess: levy and collection, supply, exemptions, registration, time and place of supply, input tax credit, invoicing, returns and payment. Questions typically combine classification, ITC eligibility and procedural dates.
Registration and composition
Threshold is ₹40 lakh aggregate turnover for goods (₹20 lakh in special category states) and ₹20 lakh for services (₹10 lakh). Application is due within 30 days of becoming liable; casual and non-resident taxable persons apply at least 5 days before commencement. Composition under section 10(1) covers goods up to ₹1.5 crore (₹75 lakh special category) at 1% for manufacturers and traders and 5% for restaurants; services up to ₹50 lakh are taxed at 6% under section 10(2A). A composition dealer cannot claim ITC or collect tax.
ITC and blocked credits
Section 16 requires possession of a tax invoice, receipt of goods or services, tax actually paid, filing of the return, and supplier compliance. Section 17(5) blocks motor vehicles with approved seating capacity up to 13 persons (unless used for further supply, passenger transport or driving training), food and beverages, club membership, and works contract services for constructing immovable property. Common credit is reversed under Rules 42 and 43. If the recipient fails to pay the supplier within 180 days, ITC is reversed with interest.
Worked example
Output tax is ₹2,50,000. Raw material purchases are ₹10,00,000 plus 18% GST = ₹1,80,000, eligible. Office construction is ₹5,00,000 plus ₹90,000, blocked under 17(5)(d). A car for the director is ₹8,00,000 plus ₹1,44,000, blocked under 17(5)(a). Eligible ITC is ₹1,80,000, so net cash payable is ₹2,50,000 − ₹1,80,000 = ₹70,000; the blocked credits are added to cost.
Traps
Place of supply for immovable property is the property location; restaurant services are supplied where performed. Under reverse charge, time of supply for goods is the earliest of receipt, payment, or 30 days after the invoice. E-invoicing applies at ₹5 crore turnover, and GSTR-9C at ₹5 crore. Interest is 18% on delayed tax and 24% on excess ITC utilised.