Basics: GST Laws and Rules Part -3 - Imprezz

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Basics GST Laws and Rules Part -3

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The Goods and Services Tax (GST) has brought
significant changes in the Indian economy. It has
been consistently reshaping the tax
calculation system. However, it has also confused
taxpayers and people in business concerning the
GST laws and rules. The new GST tax system has
eliminated the cascading taxes on the supply of
goods and services. It has successfully replaced
indirect taxes such as value-added tax, excise
tax, service tax, and other local taxes. In
theory, the implementation of GST and relaxations
notified recently might sound great, but how do
business owners get ahead with it? This article
is part of our basic GST guide Part-3 briefly
summarizes various GST rules and regulations.
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GST Rule-1 Title, Commencement
Application The above mentioned GST laws put
together can be termed as Goods and Services Tax
(GST) Valuation Rules, 2016. This rule helps
determine the value of the supply of goods and
services. The law applies to the supply of
services and goods under CGST, IGST, and
SGST. GST Rule-2 Definitions These rules
define specific terms as per the context. For
instance, the Act is defined either as the IGST
Act or CGST Act and, in some context, SGST Act.
The term goods of like kind and quality is used
to define physically similar, identical,
qualitative, and reputed goods. It describes the
value of goods that perform the same functions.
Wherein the term services of like kind and
quality defines the identical or similar
services supplied. Any word, expression, or
phrase that is not explicitly defined under this
rule shall have the same meaning as specified by
the law.
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GST Rule-3 Determination of Value The value of
any goods or services is considered as
transaction value, subject to rule 7 under the
GST law. In monetary terms, transaction value
is the specified value of the supplies. When a
transaction consists of both taxable and
non-taxable supply, it is identical to the
monetary consideration attributed to it. The
acceptance of the value remains unchanged even
when the supplier and recipient are related. The
value of supplies depends on where goods are
being transported from one business place to
another, principal to an agent or visa-versa, one
country to another, and the same location. Only
supply values specified under subsection (4) of
GST law, as per Article 17, are determined
according to Rules 4 to 6.
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GST Rule-4 Determination of Value of Supply
Through Comparison The value of supplies that
cannot be determined under Rule 3 is determined
under this rule. For instance, the value of goods
and services supplied is determined by the
transaction value based on the same quality and
kind under the sub-rule provisions (2). Wherein.
If the value is being determined under sub-rule
(1), various factors have to be considered the
difference in the date of supply and the
difference in the quantity and commercial levels.
The officer must also consider the difference in
composition, design, quality, freight, and
insurance charges of the goods and services
concerning the place of supply.
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GST Rule-5 Value Method When the value of
supply cannot be determined by the rules
mentioned above, it is determined under Rule 5
based on the computed value. The value methods
include production cost, manufacturing,
processing, cost of provision, brand or design
charges, profits, and general of the goods and
services of the same kind and quality as that of
other suppliers. GST Rule-6 Residual
Method The residual method helps determine the
value of goods and services that other rules fail
to determine. Rule 6 determines the value using
factors consistent with the general and principal
provisions of these rules.
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GST Rule-7 Rejection of Declared Value If the
concerned authority feels the need to cross-check
the values furnished details or accuracy, they
will ask the supplier to provide additional
information as evidence. After receiving further
proof, if the designated authorities feel the
need to examine the declared values accuracy,
the value of any such goods or services will be
considered deemed. The transaction value of any
such goods or services cannot be determined as
per the sub-rule (1) under Rule 3. The reasons
for doubt cannot be limited to the significantly
higher or lower value of goods or services than
the market value of similar products. Authorities
cannot reject the determined value based on the
description, quality, manufacturing or production
date, and quantity. Concerned officers must
notify the suppliers by writing the reasons for
doubting the accuracy of furnished details of
determining value. Further, suppliers will be
provided with an opportunity to clarify the
doubts before taking the final decision under the
rub-rule (1).
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GST Rule-8 Valuation in Certain Cases Pure
Agent  The value of goods and services that
remain undetermined under any of the rules
mentioned above will be contained under Rule 8.
The law excludes a service providers expenditure
as a pure agent from the value of taxable
service. Money Changer  The value of any
taxable service supplied, which includes the
purchase of foreign currency or currency
exchange, is determined by the service provider.
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Conclusion

• Staying GST compliant while running a business
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  business owners adhere to GST rules in 2020. The
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