GOODS AND SERVICE TAX

Goods and Services Tax (GST) is a comprehensive tax on supply of goods or services or both. It eliminates the cascading effect of taxes, as GST is imposed at every stage of supply chain and the input credit is available in across the supply chain. The uninterrupted credit in the supply chain ensures that the end consumer purchases goods and services at a lower price and to ensure this the government has introduced the Anti-profiteering clause based on the experience in Malaysia where GST was implemented from 1st April 2015.
   Under GST, taxes are paid at all stages in the supply chain i.e. from manufacturing to the end sale to the consumer. Taxes are levied at all the stages and input tax credit is available to the extent of the tax paid during the purchase. The end consumer will not pay taxes directly to GST authorities; the retailer pays the taxes on behalf of the end consumer. The overall idea of having GST in India is to increase the tax base over a period, and this will result in lower tax rates over a period. Various scholars estimate that the GDP is expected to go any number between 0.5% to 2%. And it is also anticipated that it will promote the ease of doing business in India.
Another significant shift in the taxes under GST is the introduction of destination-based consumption taxation in place of origin-based taxation. That means GST will be the tax revenue for the state where ultimately the goods or services are consumed. GST moves with the movement of goods and services and there is seamless movement of input tax credit also along with goods and services in the entire value chain, except the cases where the credit chain breaks.
Certain key terms are as under: 

1. Supply: Tax incidence in case of GST is ‘supply’. Supply includes all forms of supply of goods or services or both such as sale, exchange, transfer, license, barter, rental, lease or disposal made or agreed to be made for consideration by a person in the course or furtherance of business. The above definition is an inclusive definition means that any other form or transaction can also be built in the definition of supply. 
2. Time of Supply: time of supply refers to the tax point at which the tax liability has to be accounted, and tax invoice has to be issued. Under GST there are two tax points one for the supply of goods and another for the supply of services. The significant change as per time of supply is that taxes have to be levied even on receipt of advance from customers for the supply of goods or service or both, unlike the earlier taxation system where it was applicable only for services. 
3. Consideration: in relation to the supply of goods or services or both includes––                       (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b)the monetary value of any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:                                       Provided that a deposit, whether refundable or not, given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; From the above definition, it is evident that even if the consideration for the supply of goods or services or both is not received in cash, still it has to be treated as consideration for the supply. 
4. Furtherance of Business: 
5. furtherance of business refers to the inward supply of goods or services being used for carrying out the business or for business purpose. If any of the inward supplies are used for nonbusiness purpose or for employee related activities or for personal consumption, then input tax credit is not eligible under GST. 
6. Goods: unlike in Central Excise, there is no concept of manufacture or input. Under GST, anything has to be classified as goods or services. Goods according to GST means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; Any physical item which has an Harmonised System of Nomenclature (HSN) code is deemed to be goods under GST. Service: This means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged 
7. Capital Goods: This means goods, the value of which is capitalized in the books of accounts of the person claiming the credit and which are used or intended to be used in the course or furtherance of business. Composite 
8. Supply: This means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; 
9. Illustration.— Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; 
10. Mixed Supply: This means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. 
11. Illustration.— A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately;
12.  Input Tax Credit: In GST input tax credit can be availed on inward supply of goods or service or both if the same are used for furtherance of business. Since GST is charged on both goods and services, input credit can be availed on both goods and services (except those which are on the exempted.