Analysis of Tax Liability and Credit Utilization in GST Regime Introduction CA SOHRABH JINDAL The GST Constitutional amendment Bill has been passed by Rajya Sabha on 3 rd August-2016 and by passage of this bill from Rajya Sabha, it is clear that Indirect Tax Structure in India is going to be replaced by GST very soon. The Most common question in the mind of every person, whether Professional or Businessmen, is that how the Tax liability will be calculated after implementation of GST. Our Team has tried to prepare some real life example to understand the calculation of Tax Liability under GST regime. Rules for Calculation Tax Liability and Tax Credit 1- In case of Intra state Sale, CGST and SGST will be charged and no IGST will be charged. 2- In case of Inter State sales, only IGST will be charged and CGST / SGST will not be charged. 3- Output CGST will be adjusted only with Input CGST. 4- Output SGST will be adjusted only with Input SGST. 5- Cross adjustment of CGST with SGST and SGST with CGST is not allowed. 6- Output IGST will be adjusted with Input IGST after that with CGST and after that with SGST in this sequence only.
7- Input IGST will be adjusted with Output IGST after that with Output CGST and after that with Output SGST in this sequence only. Case: 1 Purchase in One State and Sale in same state Mr. Rajesh purchased goods from Delhi for Rs 1,00,000 on which CGST @9% is Rs 9,000 and SGST @ 9% Is Rs 9000. Mr. Rajesh sold goods to Mr. Shyam Delhi for Rs 1, 25,000 on which CGST @9% is Rs 11,250 and SGST @9% is Rs 11,250. Purchase Value 1,00,000 Sale Value 1,25,000 CGST 11,250 SGST 11,250 Nature of Tax Output Input Net Tax Payable / Credit IGST NIL NIL NIL CGST 11,250 9,000 2,250 SGST 11,250 9,000 2,250 Case: 2 Purchase in One State and sale in other state. Mr. Rajesh purchased goods from Delhi for Rs 1,00,000 on which CGST @9% is Rs 9,000 and SGST @ 9% Is Rs 9000. Mr. Rajesh sold goods to Mr. Shyam of Punjab for Rs 1,25,000 on which IGST @18% is Rs 22,500. Purchase Value 1,00,000 IGST Sale Value 1,25,000 IGST 22,500
Particulars Output Input Net Tax / Credit IGST 22,500 NIL When No IGST available as Input, Hence CGST to the extent of Rs.9000/- and then SGST to the extent of Rs.9000/- And after that Balance IGST will be deposited Rs.4500/- CGST - 9,000 NIL SGST - 9,000 NIL Case: 3 Purchase from other state and sale to other state. Mr. Rajesh a dealer in Delhi, purchased goods from Punjab of goods for Rs 1,00,000 on which IGST @18% is Rs 18,000. Mr. Rajesh sold goods to Mr. Shyam of Haryana for Rs 1,25,000 on which IGST @18% is Rs 22,500. IGST 18,000 Sale Bill 1,25,000 IGST 22,500 Particulars Output Input Net Tax Payable / Credit IGST 22,500 18000 4500 0 0 0 0 Case: 4 Purchase in one state as well as from other state and Sale in Same state as well as other state.
Mr. Rajesh a dealer in Delhi purchased goods from Punjab for Rs 1,00,000 on which IGST @18% is Rs 18,000 and purchased goods from Delhi of Rs 1,00,000 on which CGST @9% is Rs 9,000 and SGST @ 9% Is Rs 9000. Mr. Rajesh sold goods to Mr. Shyam of Haryana for Rs 1,50,000 on which IGST @18% is Rs 27,000 and sold goods in Delhi for Rs.30000/- on which CGST @9% is Rs 2700 and SGST @ 9% Is Rs 2700 of Delhi Sale Bill for 30,000 Delhi CGST 2,700 SGST 2,700 TOTAL 35,400 of Punjab IGST 18,000 Sale Bill for 1,50,000 Haryana IGST 27,000 TOTAL 1,27,000 Solution: Particulars Output Input Net Tax IGST 27,000 18,000 1-First, The IGST will be adjusted with Input IGST of Rs.18000/- and Balance IGST of Rs.9000/- will be paid through 2- Input CGST to the extent of Rs.6300/- and Balance IGST of Rs.2700/- will be paid through 3- Input SGST to the extent of Rs.2700/- 4- The Total IGST liability is NIL
CGST 2,700 9,000 NIL (No Credit no payable) SGST 2,700 9,000 Rs.3600/- Credit to be transferred to next month. Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us. Thanks and Best Regards CA SOHRABH JINDAL FCA, DISA(ICAI),CCA F-14B, Ground Flr, Street No-29, Madhu Vihar, Patparganj, Delhi-110092. Desktel: +91-11-47603624 Mobile: +91 9810216640 Email: sohrabh2006@gmail.com Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon. Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.