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CMA Intermediate · Direct and Indirect Taxation

Levy and Collection of CGST and IGST for CMA Intermediate

Levy and collection of CGST and IGST covers when GST is charged, on what, at what rate, and who pays it. You solve questions by first testing whether there is a supply, then fixing the taxable person, the place of supply, the rate, and whether forward charge, reverse charge, an e-commerce operator or composition applies.

What this chapter covers

This chapter is the base of the indirect tax half of Paper 7. It explains the charging section of the CGST Act and the IGST Act. The key ideas are the taxable event (supply), the taxable person, the rate of tax, and who is liable to pay: the supplier, the recipient under reverse charge, or an e-commerce operator.

The chapter also covers special routes. Reverse charge shifts liability to the recipient. Electronic commerce operators have collection and payment duties in specified cases. The composition levy lets small taxpayers pay tax at a flat percentage of turnover, with restrictions. The IGST part applies the same logic to inter-State supplies, imports and exports.

Everything later depends on this chapter. Time and value of supply, input tax credit, registration, returns and payment all assume you can first decide whether tax is leviable, who pays it and under which Act. Weak command here leads to mistakes in the numerical questions of later chapters.

Questions on supply, reverse charge, composition and IGST appear in both the 30-mark MCQ section and the 14-mark written questions, and they link easily to value of supply and input tax credit. The rules are conditions-based, so you can score reliably if you learn the conditions exactly. Students who treat this chapter as the foundation also find the later GST chapters much easier.

Levy and Collection of CGST and IGST: topics in the order to study them

  1. 1Levy and Collection of CGST and IGSTStart with the charging provisions so you see the overall structure of levy, collection and who is liable before the details.
  2. 2Taxable Event, Supply and Taxable PersonSupply is the trigger for every other rule, and you cannot decide liability without knowing who the taxable person is.
  3. 3Rates of Tax and Tax on Alcohol and PetroleumOnce you know what is taxable, learn how the rate is applied and which goods sit outside the normal GST levy or are treated specially.
  4. 4Reverse Charge MechanismIt changes who pays, so study it after the normal forward-charge position is clear.
  5. 5Tax on Electronic Commerce OperatorsThis is another case where liability or collection sits with someone other than the supplier, and it builds on your reverse charge understanding.
  6. 6Composition Levy and Related ProvisionsIt is an alternative scheme with conditions and limits, best learned after the regular levy is firm in your mind.
  7. 7Integrated Tax Levy and Collection under IGST ActFinish with IGST, which applies the same levy ideas to inter-State supplies, imports and exports, and ties the chapter together.

How to prepare Levy and Collection of CGST and IGST

Treat this chapter as a decision flow plus a set of exact conditions. Read the current text of the Acts and ICMAI material, and practise applying the flow to short facts.

  1. Write a one-page flow: Is there a supply? Is it taxable? Who is the taxable person? Intra-State or inter-State? What rate? Who pays: supplier, recipient, or e-commerce operator?
  2. Learn the definition of supply and its parts in plain words, then test yourself on examples that are and are not supply.
  3. Make a short list of each special route (reverse charge, e-commerce operator, composition) with its conditions, limits and restrictions. Keep the list in your own words.
  4. Practise small numerical questions: compute tax payable under forward charge, reverse charge and composition, and show the intra-State and inter-State split as CGST plus SGST or IGST.
  5. Solve MCQs in sets of 15 within 25 to 30 minutes to build speed. Review every wrong answer and note the condition you missed.
  6. Write two or three full 14-mark answers with a clear layout: state the provision, apply it to the facts, show working, then conclude. Check the current legal position before the exam.

Common mistakes in Levy and Collection of CGST and IGST

  • Charging tax before checking whether there is a supply.

    Fix: Begin every answer by stating whether the facts amount to a supply and why.

  • Mixing up who pays tax under reverse charge.

    Fix: Mark the recipient as the payer in your working and show the tax in the recipient's liability only.

  • Applying CGST and SGST to an inter-State supply, or IGST to an intra-State one.

    Fix: Decide intra-State or inter-State before computing tax, and write the heads of tax accordingly.

  • Treating composition as available to everyone, or letting a composition taxpayer charge tax.

    Fix: List the eligibility limit, the barred categories and the no-tax-collection rule, and test each fact against them.

  • Writing a conclusion with no legal basis.

    Fix: Name the provision in words, apply it to the facts, then conclude. This earns step marks even if the final figure is off.

  • Using outdated rates or conditions.

    Fix: Refresh rates, limits and notifications from current official sources shortly before the exam.

Last-day revision: Levy and Collection of CGST and IGST

  • 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.

Levy and Collection of CGST and IGST practice questions

Levy and Collection of CGST and IGST in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Levy and Collection of CGST and IGST: frequently asked questions

What is the first step in any CGST and IGST levy question?

Check whether the facts amount to a supply. Then identify the supplier, recipient and place of supply. Only after this should you decide the type of tax and the rate.

How is reverse charge different from normal charge?

Under normal charge the supplier collects and pays tax. Under reverse charge the recipient is liable to pay tax on specified supplies. Show this clearly in the working so the examiner sees who bears the liability.

Can a composition taxpayer collect GST from customers?

No. A composition taxpayer pays tax at a flat rate on turnover and does not collect tax from customers. Eligibility depends on a turnover limit and several conditions, so check each one in a question.

How should I prepare this chapter for the MCQ section?

Learn the conditions of each special route and practise short fact-based questions. Most wrong answers come from missing one condition, so keep a log of such slips and revise it before the exam.