Levy and Collection of CGST and IGST: formula sheet

Key formulas

CGST charging rule (section 9(1))

CGST = notified rate (not above 20%) × value under section 15, on intra-State supplies

Levied on supply of goods or services or both. Liquor for human consumption is excluded.

IGST charging rule (section 5(1) IGST Act)

IGST = notified rate (not above 40%) × value under section 15 of the CGST Act, on inter-State supplies

The value rule is borrowed from the CGST Act. Imports of goods follow the proviso.

Who pays

Taxable person (supplier) by default; recipient under section 9(3) or 9(4); e-commerce operator under section 9(5)

Reverse charge and operator liability apply only to categories notified by the Government.

Petroleum products

Tax applies from a date to be notified (section 9(2); section 5(2) IGST Act)

Covers petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel.

Imported goods

IGST on imports of goods = levied under section 3 of the Customs Tariff Act, 1975, on value under that Act

Collected when customs duty is levied under section 12 of the Customs Act, 1962. Notified goods are excluded.

Basic test of supply (section 7(1)(a))

Supply under clause (a) = supply of goods or services or both (in forms such as sale, transfer, barter, exchange, licence, rental, lease, disposal) + made or agreed to be made for a consideration + by a person in the course or furtherance of business

Three elements are essential: a supply of goods or services or both, consideration, and the course or furtherance of business. The listed forms are examples ('such as'), not a closed list or a separate condition. Missing any essential element means it is not a supply under clause (a), unless clause (aa), (b) or (c) applies.

Other inclusions in supply

Section 7(1)(aa): supplies between a non-individual person and its members for consideration | Section 7(1)(b): import of services for consideration, business or not | Section 7(1)(c): Schedule I activities without consideration

Clause (b) does not need the business condition. Clause (c) does not need consideration.

Classification of a supply

Section 7(1A): activities treated as supply of goods or services as per Schedule II

This decides whether the supply is goods or services. It does not decide whether there is a supply.

Not a supply

Section 7(2): Schedule III activities, and notified public-authority activities = neither goods nor services

This overrides section 7(1). Check it before concluding a transaction is taxable.

Taxable person vs registered person

Taxable person = registered OR liable to be registered | Registered person = actually holds registration

Registered person is a subset of taxable person. This status is separate from the test of supply: it tells you who the person is, not whether a supply exists.

CGST rate ceiling

CGST rate ≤ 20% (Section 9(1), CGST Act)

Applies to intra-State supplies. The actual rate is notified by the Government on the Council's recommendation.

IGST rate ceiling

IGST rate ≤ 40% (Section 5(1), IGST Act)

Applies to inter-State supplies. Notified in the same manner.

Alcoholic liquor exclusion

No CGST or IGST on alcoholic liquor for human consumption, and on un-denatured extra neutral alcohol or rectified spirit used to make it

The extra neutral alcohol and rectified spirit words were inserted w.e.f. 1-11-2024.

Petroleum products

CGST: Section 9(2). IGST: Section 5(2). Levy from a date notified on the Council's recommendation

Covers petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel.

Value on which tax is charged

Value determined under Section 15 of the CGST Act

Both CGST and IGST use this value.

IGST on imports

Levied under Section 3 of the Customs Tariff Act, 1975, on value as per that Act, when customs duty is levied

Proviso to Section 5(1) of the IGST Act. Notified goods are excluded from the proviso.

Section 9(3) rule

Notified goods or services → tax payable by the recipient

Applies whether the supplier is registered or not, as the notification specifies. The recipient is treated as the person liable to pay tax.

Section 9(4) rule

Notified class of registered recipient + specified goods or services + unregistered supplier → recipient pays tax

All three conditions must hold. Supply from a registered supplier does not fall under this sub-section.

RCM tax computation

Tax = Value of supply (section 15) × notified rate

Intra-State: CGST + SGST/UTGST. Inter-State: IGST. No tax is charged by the supplier on the invoice.

Input tax credit on RCM

ITC = tax paid under RCM, if section 16 conditions are met

Tax must actually be paid first, in cash. Credit can be taken only after payment, and only if the supply is for business.

Section 9(5) rule

Notified services supplied through an e-commerce operator → operator pays tax

Separate from RCM under 9(3) and 9(4). The operator is treated as the supplier.

Section 9(5) liability rule

Notified service + supplied through operator + intra-State supply ⇒ operator pays CGST (as if operator is the supplier)

Applies only to categories of services notified by the Government on the Council's recommendation. Not all services on a platform.

Operator without physical presence

Representative in taxable territory pays; if none, operator must appoint a person who pays

Given in the two provisos to section 9(5).

TCS under section 52(1)

Amount collected = notified rate (not exceeding 1%) × net value of taxable supplies

Applies where the operator collects the consideration. Rate is as notified.

Net value of taxable supplies (section 52)

Net value = taxable supplies by all registered persons through operator in the month (other than 9(5) services) − taxable supplies returned in the month

Services notified under section 9(5) are excluded.

TCS payment and statement dates

Pay TCS and file monthly statement within 10 days after end of the month

Annual statement is due before 31 December following the end of the financial year.

Registration

Persons liable under section 9(5) and every operator required to collect tax under section 52 must register

Section 24(iv) and 24(x). Section 24(ix) covers suppliers supplying other than 9(5) services through an operator liable to collect TCS.

Turnover limit (section 10(1) and 10(2A))

Aggregate turnover in preceding financial year ≤ ₹50 lakh

The Government may notify a higher limit under section 10(1), but not above ₹1.5 crore.

Maximum rate under section 10(1)

Manufacturer: up to 1%; supplies under para 6(b) of Schedule II: up to 2.5%; other suppliers: up to 0.5% of turnover in State or Union territory

These are caps in the Act. The actual rate is prescribed in the rules. Para 6(b) of Schedule II covers supply of food or drink as part of a service.

Maximum rate under section 10(2A)

Up to 3% of turnover in State or Union territory

For a person not eligible under section 10(1) and (2), subject to its own conditions.

Services allowance (second proviso to section 10(1))

Services value ≤ higher of (10% of preceding-year turnover in the State or UT) or ₹5,00,000

Covers services other than para 6(b) of Schedule II. Interest or discount on deposits, loans or advances is ignored in this test.

Key bars under section 10(2)

No services (save as allowed); no non-taxable supplies; no inter-State outward supplies; no supply through e-commerce operator liable for TCS under section 52; not a notified manufacturer; not a casual or non-resident taxable person

Same PAN rule: all registered persons with the same PAN must opt together.

Effect of composition (section 10(4))

No tax collected from recipient; no input tax credit

Option lapses from the day aggregate turnover exceeds the limit (section 10(3)).

Charging rule for IGST

IGST = Value of supply (Section 15 CGST Act) × IGST rate

Applies to inter-State supplies. The IGST rate equals the CGST rate plus the SGST rate for the same item.

Rate structure

IGST rate = CGST rate + SGST rate (for example, 18% = 9% + 9%)

Notified rate ceiling for IGST is 40%.

IGST on imported goods

Assessable value + basic customs duty (and other duties forming part of value) = Value for IGST; IGST = this value × IGST rate

Levied as additional duty of customs on the goods. Take the exact build-up given in the question.

Inter-State supply (goods or services)

Location of supplier and place of supply are in different States or Union territories

Imports and supplies to or from a SEZ developer or unit are also inter-State supplies.

Exclusion and deferred levy

Alcoholic liquor for human consumption is outside IGST (Section 5(1))

Under Section 5(2), IGST on petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel applies only from the date notified on the Council's recommendation.

Quick revision

• Supply is the taxable event; the first step is always to test whether a supply exists.
• Decide the supplier, recipient and place of supply before deciding the type of tax.
• Intra-State supply attracts CGST plus SGST or UTGST; inter-State supply attracts IGST.
• Under reverse charge the recipient pays tax, and the supplier does not charge it on that supply.
• Reverse charge applies only to notified goods, services or suppliers, or to specified cases in the Act.
• Electronic commerce operators have collection or payment duties only in the cases the law specifies.
• Composition is optional, subject to a turnover limit and conditions; a composition taxpayer cannot collect tax from customers.
• Check the exclusions and special treatment of alcohol for human consumption and petroleum products.
• Read the rate and conditions from the current notification or text, and do not rely on memory.
• In numericals, show the working: value, rate, CGST, SGST or IGST, and total tax.
• Always state the provision and then apply it to the facts in written answers.

Common mistakes

• Stating that the Act fixes GST rates at 5%, 12%, 18% and 28%. Fix: The Act sets only ceilings: 20% for CGST and 40% for IGST. Actual rates are notified by the Government on the Council's recommendations.
• Saying liquor for human consumption is taxed under GST. Fix: Section 9(1) and section 5(1) exclude alcoholic liquor for human consumption, and un-denatured extra neutral alcohol or rectified spirit used to make it.
• Saying every transaction without consideration is not a supply. Fix: Always check Schedule I. Section 7(1)(c) makes those activities supplies even without consideration.
• Applying the business condition to import of services. Fix: Remember that section 7(1)(b) covers import of services for consideration whether or not in the course or furtherance of business.
• Writing that the ceiling is 20% for both CGST and IGST. Fix: Remember 20% for CGST (Section 9) and 40% for IGST (Section 5).
• Saying alcohol is exempt from GST in every form. Fix: Say 'alcoholic liquor for human consumption'. Industrial alcohol is not covered by this exclusion, except the extra neutral alcohol or rectified spirit used for making liquor for human consumption.
• Assuming every purchase from an unregistered person attracts RCM. Fix: Section 9(4) works only for a notified class of registered persons and specified goods or services. Check all conditions.
• Charging GST on the supplier's invoice and also paying RCM. Fix: Under RCM the supplier does not charge tax. Only the recipient pays.
• Saying the operator pays tax on every supply made through it. Fix: Liability under 9(5) arises only for categories of services notified by the Government. Other supplies are taxed in the hands of the supplier.
• Confusing section 9(5) with reverse charge under section 9(3) or 9(4). Fix: Under reverse charge the recipient pays. Under 9(5) the operator pays. Check who is named in the section.

Exam tips

• Memorise both ceilings: 20% for CGST and 40% for IGST. MCQs often test them with distractors like 28% or 18%.
• Quote the section number with the rule. Writing 'section 9(1) CGST' or 'section 5(1) IGST' earns step marks.
• For theory, list the four elements: supply, value under section 15, notified rate, and person liable.
• Remember the exclusions: liquor for human consumption, and petroleum products until notified.
• In numerical questions, state first whether the supply is intra-State or inter-State, then compute.
• In MCQs, watch words like 'only', 'every' and 'all'. Section 7 has exceptions both ways, so such options are often wrong.
• In written answers, name the element of section 7(1) you are testing, then apply the facts. Step marks come from this structure.
• Always state the conclusion on Schedule III and Schedule I explicitly, even if the facts do not trigger them.