India: GST: Back On Track For July 2017 Rollout?


Cast your mind back to November last year: following the implementation of the Government's demonitisation drive, the realisation of the new goods and services tax ("GST") regime was looking unlikely. Many predicted that the momentum achieved in passing the 101st Amendment to the Constitution of India (the "Amendment") back in the summer of 2016, paving the way for the GST regime, would be lost.

Against all the odds, several months later, Parliament passed cornerstone legislation at the beginning of April (the "Acts"), keeping the implementation of the new GST regime on track. The Acts essentially implement the intention of the Amendment, clearing the way for new fiscal powers at the Center and the State level, permitting the collection and sharing of the GST.


In order to implement the Amendment, Parliament passed the following 4 (four) Acts to put into effect the new regime for the taxation of goods and services.

  • The Central Goods and Services Tax Act, 2017 (the "CGST");
  • The Integrated Goods and Services Tax Act, 2017 (the "IGST");
  • The Goods and Services Tax (Compensation to States) Act, 2017 (the "GSTCS"); and
  • The Union Territory Goods and Services Tax Act, 2017 (the "UTGST").

The bills were introduced in the Lok Sabha on March 27, 2017 and were passed on March 29, 2017. They were subsequently introduced in the Rajya Sabha on April 6, 2017 and were passed on the same day. The bills then received presidential assent on April 6, 2017.

Pursuant to and upon the implementation of the above Acts, States are now required to implement their respective State Goods and Services Tax Acts ("SGSTs") to complement the CGST and IGST, effectively completing the statutory framework to implement the new regime.

GST essentially abolishes and replaces a number of indirect taxes, including: the State Value Added Tax; Entry Tax and other local body taxes; Luxury Tax; and Taxes on advertisements.

The CGST and SGST will stipulate (in their respective schedules) those goods and services which will be taxed where there is no inter-State movement. The IGST will be applicable to all goods and services if such a supply of goods and services crosses State borders.


3.1 Scope and Applicability of the Acts

  1. CGST and SGST

    The CGST and SGST will levy tax on all intra-State supply of goods and services (except tax on alcohol for human consumption). The rate of tax will be determined by each respective State based on the recommendations of the Goods and Services Tax Council (the "Council"). The rate of tax that can be imposed under the CGST is capped at twenty (20) percent of the value of the goods and services.1
  2. IGST

    The IGST will levy tax on all inter-State supply of goods and services. The rate of tax will be determined by the Central Government based on the recommendations of the Council. The rate of tax under the IGST is capped at forty (40) percent of the value of the goods and services.2
  3. GSTCS

    The GSTCS is intended to compensate the States for losses they may suffer as a result of the change in the taxation regime that the CGST, SGST and IGST introduces. The GSTCS is time-bound and will be in force only for a period of 5 years or the period recommended by the Council.3
  4. UTGST

    The UTGST is the union territory equivalent of the SGST for union territories that do not have their own legislatures. The UTGST will implement the taxation scheme in the same manner as the SGSTs implement it in the States.

3.2 Place of Supply

Considering the distinction drawn between inter-State and intra-State supply of goods and services, the IGST specifies the manner of determination of the place of supply of goods and services (and applicable under the CGST as well). The determination of the place of supply plays a key role in concluding the place and instance of taxation under the CGST, IGST and SGST.

  1. Goods

    Under the IGST, the place of taxation of goods is determined as follows:4

    • Transactions in relation to the installation or assembling of goods will be taxable at the place of such installation or supply;
    • Transactions requiring the physical transfer of goods will be taxable at the final destination of the goods;
    • Transactions requiring the physical transfer of goods under the direction of a third party that is neither the supplier or recipient, will be taxable at the place of business of such third party;
    • Transactions that do not involve movement of goods are taxable where the goods are situated at the time of delivery to the recipient;
    • Transactions involving the movement of goods on board a conveyance are taxable at the location where the goods are taken on board; and
    • Transactions involving the import of goods are taxable at the location of the importer.5
  2. Services

    The place of supply of services under the IGST is determined as follows:

    • Services by a person registered under the IGST and CGST will be taxable at the place where such person is located;6
    • Services by an unregistered person will be at the location of the recipient, if such recipient's address is available, failing which, it will be taxable at the location of the supplier of the services;7
    • Services in relation to immovable property will be taxable at the place where the immovable property is situated;8 and
    • Services that are to be actually performed at a particular place (such as catering, grooming and fitness services) will be taxable at the place where the services are actually performed.9
    Similar provisions have been promulgated to specify the place of supply of services of events, functions, exhibitions, conferences, telecommunication, banking and advertisement services. Services for which, either the supplier or recipient is situated outside of India, are taxable at the place where the recipient is situated, unless such location is unavailable, in which event, the place of taxation will be the location of the supplier.

3.3 Computation of Tax

The value of the goods or services for the purpose of taxation under the acts, will be computed considering the following, as may be applicable:10

  • Price actually paid or payable for the goods and services;
  • Any amount incurred by the recipient in relation to the supply of goods or services that the supplier will be liable to pay, if such amount was not included in the price of the goods and services;
  • Incidental expenses to the supply of goods and services, either before or at the time of such supply, including, but not limited to, commission and packing;
  • Interest, penalty or late fee charged for any delayed payment of consideration;
  • Subsidies, other than State and Central Government subsidies, that have a direct correlation to the price of the goods and services.

3.4 Composition Levy

As an alternative to the taxation of each instance of supply under the CGST and SGST, any registered person under the Acts whose turnover does not exceed INR 50,00,000 (Indian Rupees fifty lakhs) (approximately USD 75,000) in the previous financial year can opt to pay a composition levy.11 The CGST stipulates the upper limit of the composition levy that may be prescribed for different categories of supply and the conditions that the dealers must fulfil to be eligible to opt for a composition levy.

3.5 Investigative and Recovery Powers

It should be noted that the CGST grants wide powers of search and seizure. Any officer of the rank of Joint Commissioner or higher may authorize any officer of central tax to conduct and inspect or search a place and seize documents or goods if he reasonably suspects that an transgression of the Acts had occurred, and that such inspection, search or seizure is necessary to investigate such transgression.12 The officers so authorized by an officer of the rank of the Joint Commissioner or above, will also have access to the place of business of a registered person and the right to inspect any record, document, account or computer device.

The CGST also provides powers to officers to assess any person's returns and determine if either tax was unpaid, or short paid, or input tax credit was wrongly availed. In such instances, the officer must issue a notice to the assessee and provide the assessee with an opportunity to make a representation. If the officers passes an order adverse to the assessee, the assessee has a period of 3 (three) months from the order to pay the demand amount, failing which, the officer can institute recovery proceedings.13

The modes of recovery include:14

  • any officer who holds any monies of the assessee to deduct the due amount from the same;
  • any officer who holds any goods of the assessee to sell the same and recover the due amount;
  • any person who holds monies for the assessee (or may hold monies for the assessee at some time in the future, including banks and insurers) to deduct the due amount from such monies and pay the Department;
  • the attachment and sale of any movables or immovable of the assesse;
  • the dues recovered as arrears in land revenue.

3.6 Miscellaneous Provisions

The Acts retain the input tax credit scheme and provide for the utilization of input tax credit provided under one Act to be utilized towards dues under another Act (or Acts). The Acts provide for a specific manner in which input tax credit can be availed interchangeably. However, it should be underlined that tax credits gained under the IGST and CGST cannot be utilized for payment of dues under the SGST and vice versa. As under the previous tax regime, input tax credit can only be availed by persons who have registered themselves under the Acts.

The Acts also retain the taxation on a reverse charge basis, under which, the recipient of the goods or services is required to pay the tax under the Acts instead of the supplier. The respective Governments are to determine the specific goods and services, for which, tax will be imposed on a reverse charge basis.

The Acts also provide for the determination of the time at which the tax liability arises, establishment of anti-profiteering measures and establishment of a "compliance rating" for each person that falls under the purview of the Acts, which shall be made available in the public domain.

Further, the Acts also make the partners of a partnership firm liable15 and the directors of a company[16] personally liable, jointly or severally, to pay any tax that has been determined to be due but unpaid. Similarly, for transactions between an agent and principal, both may be held liable for any tax that has been determined to be due for the said transaction but remains unpaid.[17]


The Central Government has fixed July 1, 2017 as the date of the implementation of the GST and has already undertaken numerous measures to transition to the new regime. The Central Government, through its central tax departments and instrumentalities, has implemented various awareness and outreach campaigns to inform the public of the transition to the new regime, the change that it would introduce to daily life and the steps to be taken by the public to register and comply with the GST laws.

The Finance Ministry has set up a 'GST Working Group' to examine sector specific issues and peculiar difficulties that certain sectors might face in the transition and how best to alleviate such issues and difficulties.18

The Central Board of Excise and Customs has, as of this date, released two sets of non-binding FAQs that provide detailed information on the purpose, applicability and scope of the Acts and the proposed implementation of the various provisions thereunder.

The various draft GST rules have been formulated and released for public perusal and comment and the draft rules are currently available for perusal on the website of the Central Board of Excise and Customs.

The next step in the transition is for the various State Governments to introduce their respective SGST Acts and for the Central and State Governments to ensure that the various dealers under the old taxation regime all register under the GST Acts and for the Governments to announce the rates applicable for the goods and services effective July 1, 2017


The Acts, implementing the intention of the Amendent, pave the way for the roll out of the GST later this year. How quickly each State Government implements the SGST remains to be seen and will determine whether the target date of 1 July 2017 will be met.

Concerns persist in the manner of implementation of the Acts, and to what extent the SGST is implemented in its model form across the country. Correlating the Acts is absolutely critical in bringing about uniform implementation. It also remains to be seen to what extent different State Governments will deviate from the recommendations of the Council in setting applicable rates.

Moreover, doubts continue to remain as to whether the Acts, in their current form, will be effective in reducing the regulatory and administrative hurdles and paperwork currently faced by those to whom the Acts apply. That said, the Acts, though less than perfect, are steps in the right direction of creating a unified indirect taxation market.


1. Section 9(1) of the CGST

2. Section 5 of the IGST

3. Section 8(1) of the GSTCS

4. Section 10(1) of the IGST

5. Section 11 of the IGST

6. Section 12(2)(a) of the IGST

7. Section 12(2)(b) of the IGST

8. Section 12(3) of the IGST

9. Section 12(2)(4) of the IGST

10. Section 15 of the CGST

11. Section 10 of the CGST

12. Section 67 of the CGST

13. Section 78 of the CGST

14. Section 79(1) of the CGST

15. Section 90 of the CGST

16. Section 89 of the CGST

17. Section 86 of the CGST

18. By way of the Central Board of Excise and Customs order dated March 24, 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Link Legal India Law Services
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Link Legal India Law Services
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions