CS Executive · Tax Laws and Practice

Levy and Collection of GST: formula sheet

Full chapter guide

Key formulas

Charge of CGST: CGST = Rate × Value under section 15, on intra-State supplies; Section 9(1). Levied on supply of goods or services or both, paid by the taxable person.
Rate ceiling: CGST rate ≤ 20%; The Government notifies the rate on the Council's recommendations. Twenty per cent is the upper limit for CGST.
Excluded supplies: Alcoholic liquor for human consumption, and un-denatured ENA or rectified spirit used to make it, are outside the levy; Section 9(1). These are outside GST.
Petroleum products: Levy on crude, HSD, petrol, natural gas, ATF applies from a notified date; Section 9(2). Until notified, GST is not levied on them.
Reverse charge, notified categories: Recipient pays tax on notified categories of supply; Section 9(3). The recipient is treated as the person liable to pay.
Reverse charge, unregistered supplier: Notified class of registered persons pays tax on specified supplies from unregistered suppliers; Section 9(4).
E-commerce operator: ECO pays tax on notified services supplied through it; Section 9(5). If the ECO has no physical presence in the taxable territory, its representative pays; if there is none, it must appoint a person to pay.
CGST rate ceiling: CGST rate ≤ 20% (section 9(1) CGST Act); Rate is notified by the Government on the Council's recommendation, within this ceiling.
IGST rate ceiling: IGST rate ≤ 40% (section 5(1) IGST Act); Applies to inter-State supplies. Do not confuse it with the CGST ceiling.
Excluded supply: Alcoholic liquor for human consumption (and un-denatured extra neutral alcohol or rectified spirit used to make it) is outside CGST and IGST levy; Section 9(1) CGST Act and section 5(1) IGST Act. The extra spirit wording was inserted w.e.f. 1-11-2024.
Deferred levy: Petroleum crude, high speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel: tax levied from a notified date; Section 9(2) CGST Act and section 5(2) IGST Act. Date is notified on the Council's recommendation.
Charge base: Tax = notified rate × value determined under section 15; Value comes from section 15 of the CGST Act.
Section 9(3) rule: Notified category of goods or services → recipient pays tax on reverse charge; All provisions of the Act apply to the recipient as if he is the person liable to pay tax. Applies whether the supplier is registered or not, as the notification provides.
Section 9(4) rule: Notified class of registered recipient + specified supply + unregistered supplier → recipient pays tax on reverse charge; All three conditions must be met. Supply by a registered supplier is not covered.
RCM tax computation: Tax payable by recipient = Value of supply (section 15) × notified rate; For an intra-State supply, split into CGST and SGST/UTGST at half the rate each. Rate cannot exceed 20% for CGST under section 9(1).
Forward vs reverse charge: Forward charge: supplier pays. Reverse charge: recipient pays; Under RCM the recipient has to pay tax in cash first; credit is claimed afterwards if the section 16 conditions are met.
Credit condition on payment of tax: ITC needs tax charged to be actually paid to the Government (section 16(2)(c)); So RCM tax must be paid before credit is taken.
Core rule of section 9(5): Notified service + supplied through e-commerce operator + intra-State supply → operator pays tax, as if he is the supplier; The Government notifies the categories of services on the Council's recommendations.
Operator with no physical presence in the taxable territory: Representative in taxable territory is liable; if none, operator must appoint a person to pay tax; These are the two provisos to section 9(5).
Compulsory registration: Section 24(iv): persons required to pay tax under section 9(5) must be registered; Applies whatever the turnover; it overrides the threshold in section 22(1).
Link with section 52 (TCS): Net value for TCS excludes services notified under section 9(5); TCS rate not exceeding 1%; Use this to show the two provisions are mutually exclusive for the same service.
Turnover limit for opting: Aggregate turnover in preceding financial year ≤ ₹50,00,000 (can be raised by notification up to ₹1,50,00,000); Section 10(1). The test is on the preceding financial year, not the current year.
Maximum rates under Section 10(1): Manufacturer: up to 1% | Supplies under Schedule II para 6(b): up to 2.5% | Other suppliers: up to 0.5%; Applied on turnover in State or turnover in Union territory. The actual rate is prescribed.
Maximum rate under Section 10(2A): Up to 3% of turnover in State or Union territory; For a person not eligible under sub-sections (1) and (2), with aggregate turnover up to ₹50 lakh in the preceding year.
Tax payable: Composition tax = Turnover in State or UT × Prescribed rate; Turnover excludes supplies made before liability for registration and exempt interest, discount on deposits, loans or advances (Explanation 2).
Services allowance: Services (other than Schedule II para 6(b)) ≤ higher of 10% of preceding-year State/UT turnover or ₹5,00,000; Second proviso to Section 10(1). Lets a composition dealer make some incidental services.
Lapse of option: Option lapses from the day aggregate turnover in a financial year exceeds the limit; Section 10(3).

Quick revision

Section 9(1) CGST taxes intra-State supplies of goods or services or both; Section 5(1) IGST taxes inter-State supplies.
CGST rate ceiling is twenty per cent; IGST rate ceiling is forty per cent. Rates are notified on the Council's recommendation.
Alcoholic liquor for human consumption is excluded from GST; so are un-denatured extra neutral alcohol or rectified spirit used to make it.
Petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel are taxed only from a date notified on the Council's recommendation.
Section 9(3): notified categories of supply are taxed on reverse charge, with the recipient liable to pay.
Section 9(4): notified classes of registered persons pay reverse charge on notified supplies received from unregistered suppliers.
Section 9(5): notified categories of services supplied through an e-commerce operator are taxed in the operator's hands. If the operator has no physical presence in the taxable territory, its representative there is liable. If it has no representative either, it must appoint a person in the taxable territory, who is liable to pay the tax.
Composition: aggregate turnover in the preceding financial year must not exceed fifty lakh rupees, unless the Government notifies a higher limit up to ₹1,50,00,000.
Composition ceilings, all on turnover in the State or Union territory: one per cent for manufacturers; two and a half per cent for persons making supplies under clause (b) of paragraph 6 of Schedule II (supply of food or drink as part of a service); half per cent for other suppliers; and up to three per cent under Section 10(2A) for registered persons not eligible under Section 10(1) and (2), such as service providers.
A composition person cannot make inter-State outward supplies. He also cannot supply services through an e-commerce operator who must collect tax at source under Section 52. Since 1 October 2023 the bar covers services only, so supplying goods through such an operator is no longer barred.
A composition person cannot collect tax from the recipient or claim input tax credit.
The option lapses from the day aggregate turnover in a year exceeds the limit.

Common mistakes

Saying Section 9 taxes sale or manufacture. Fix: State that the taxable event is supply of goods or services or both.
Stating that GST applies to alcohol for human consumption. Fix: Say that alcoholic liquor for human consumption is excluded, and also the specified un-denatured ENA or rectified spirit used to make it.
Saying alcohol is exempt from GST Fix: Alcoholic liquor for human consumption is excluded from the levy in section 9(1). Exemption is a separate power under section 11.
Saying petroleum products are permanently outside GST Fix: Section 9(2) defers the levy to a notified date. It does not exclude these products.
Applying section 9(4) to a supply from a registered supplier. Fix: Remember that 9(4) needs an unregistered supplier. 9(3) works on the notified category, regardless of supplier status as notified.
Assuming every purchase from an unregistered person attracts RCM. Fix: It applies only to a notified class of registered recipients for specified categories. Without notification, no RCM arises.
Saying the operator pays tax on every supply made through its platform. Fix: Section 9(5) applies only to categories of services notified by the Government. Other supplies are taxed in the supplier's hands.
Confusing section 9(5) with section 52 TCS. Fix: Under 9(5) the operator is the supplier and pays full tax. Under 52 it collects a small percentage (not exceeding 1%) from the supplier's payments. Notified 9(5) services are excluded from 52.
Testing eligibility on current-year turnover. Fix: Section 10(1) tests the preceding financial year. Current-year turnover matters only for lapse under Section 10(3).
Allowing a composition dealer to make inter-State outward supplies. Fix: Section 10(2)(c) bars inter-State outward supplies. Memorise this with the other bars before attempting any case.

Exam tips

Start every answer with the words of Section 9(1): intra-State, supply, section 15 value, notified rate, twenty per cent., taxable person.
Learn the sub-sections in order: (1) levy, (2) petroleum, (3) and (4) reverse charge, (5) ECO. Cite the exact one.
Do not mix up the exclusion for alcohol with the deferred levy on petroleum products. Examiners often test them together.
In case questions, decide intra-State or inter-State first, then who pays.
Close with a one-line conclusion. ICSI marking rewards a clear final answer.
Write both limbs of section 9: ceiling and exclusions, with sub-section numbers.
Contrast alcohol (excluded) and petroleum (deferred) in one line; examiners like this.
Always state 20% for CGST and 40% for IGST separately.