Goods and Services Tax – General FAQ on GST – Frequently Asked Questions – 170731-05 – Question 1 : Whether formulations cleared have to be assessed to GST under transfer price mechanism or on the basis of MRP printed on them? Answer : The assessment of drugs and formulations under GST would be on the basis of transaction value at each level of supply with end to end ITC chain for neutralizing the GST paid at the procurement level. Question 2 : What are the requirements for clearance of physician samples distributed free of cost? Answer : In case of clearance of physician samples distributed free of cost, the ITC availed on the said samples has to be reversed in view of the provisions under Section 17(5)(h) of the CGST Act, 2017. No tax is payable on clearance of physician samples distributed free of cost as the value of supply is zero and no credit has been availed. Question 3 : What is the procedure for movement of time expired medicines from the retail outl
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incipal can send any inputs etc. to such units without payment of tax and the principal can clear the goods from the premises of such units if the principal declares these units as his additional place of business or where such units are themselves registered under section 25 of CGST Act, 2017. Question 5 : What is the treatment of clearances effected to Special Economic Zones? Answer : The clearances effected to the SEZ are zero rated supplies in terms of Section 16 of the IGST Act, 2017. Accordingly, the supplier can claim refund of IGST paid on such supplies or clear the same under bond/letter of undertaking and claim refund of the unutilised ITC. Question 6 : Whether SEZ unit located in a State requires a separate registration under GST? Answer : The SEZ unit located in a State is treated as a business vertical distinct from other units located in the State outside the SEZ [first proviso to Rule 8 of the CGST Rules, 2017 read with Section 25 of the CGST Act, 201
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l tax at the rate of nine per cent or more and forty per cent for the other goods of the central tax applicable on supply of such goods after 1st July, 2017 and the said amount shall be credited in the electronic credit ledger after the central tax payable on such supply has been paid. In case where integrated tax is paid, the amount of ITC would be at the rate of thirty per cent and twenty per cent respectively of integrated tax. This facility is available for a maximum period of 6 months from the appointed day (i.e. upto 31st December, 2017) or till the goods are sold out, whichever is earlier. Question 9 : Whether a manufacturer can avail deemed credit in respect of transitional stocks on the appointed day in respect of the stocks for which duty paying document is not available? Answer : In terms of the proviso to Section 140(3) of the CGST Act, 2017, the manufacturer is not eligible to avail deemed credit in respect of transitional stocks, for which duty paying document i
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rson in case of purchases from Unregistered Person? Answer : In terms of Section 9(4) of the CGST Act, 2017 read with Section 31(3) ibid, the Registered Person procuring the taxable supplies from an Unregistered Supplier has to raise invoice and pay GST on reverse charge basis in respect of such supplies. Question 12 : What is the treatment of supplies made from erstwhile tax free zones? Answer : Since GST is a destination-based consumption tax with seamless transfer of ITC credit, no exemptions are accorded to supplies made by erstwhile tax free zones. Accordingly, the goods cleared from erstwhile tax free zones would be subjected to GST from the appointed day (1st July, 2017). Question 13 : What is the effect of non-payment of consideration in respect of taxable supplies received by the recipient? Answer : If the recipient fails to pay to the supplier the amount towards the value of supply along with tax payable thereon within a period of one hundred and eigh
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mises to another premises under the same registration number? Answer : In terms of Rule 55(1)(c) of the CGST Rules, 2017 such movements have to be effected under the cover of a delivery challan along with any other document that may be prescribed in lieu of the e-way bill. Question 16 : Whether discounts can be claimed as an abatement from the price for assessing GST? Answer : In terms of Section 15(3) of the CGST Act, 2017, the value of supply for charging GST shall not include any discount which is given before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply. The value of supply shall also not include any discount which is given after the supply has been effected, if such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices and ITC attributable to such discount has been reversed by the recipient of the supply. Q
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