Real Estate

GST on Real Estate Industry

Emerging as a preeminent global sector in the contemporary landscape, real estate is divided into four distinct sub-sectors: housing, retail, commercial, and hospitality. The dynamic surge in corporate environments, the embrace of co-working culture, and the escalating influx of multinational corporations (MNCs) into India have precipitated a notable boom within this sector. This growth is unmistakably evident in burgeoning demands for commercial edifices and residential communities, which have intensified even amidst the backdrop of the COVID-19 pandemic. This trend is exemplified by the remarkable expansion witnessed in Gurgaon.

  • Notably, within India, the real estate domain stands as the second most significant generator of employment, trailing only behind the agricultural sector.
  • A projection by Savills India suggests a 15-18 million sq. ft. augmentation in the demand for data center facilities by 2025.
  • The escalation in urbanization and a concurrent uptick in household incomes have kindled a heightened demand for residential properties.
  • India’s position in the upper echelons of the list of top 10 globally appreciating housing markets attests to this fervent growth.
  • Impressively, the period from April 2000 to September 2022 has witnessed Foreign Direct Investment (FDI) inflows totaling USD 55.18 billion in this sector, encompassing both construction development and related activities.
  • The focal point of this discourse pertains to the implications of the Goods and Services Tax (GST) on the real estate sector, with specific attention paid to the various activities encompassed within this domain. These activities encompass:
  1. Sale/purchase of immovable properties, including commercial spaces and residential flats.
  2. Renting of immovable properties.
  3. Operating a paying guest (PG) business.

The GST implications on these activities are elaborated upon in two parts:

Part A: GST on Sale/Purchase of Immovable Properties

In accordance with Para 5 of Schedule III of the CGST Act, 2017, the sale of land and buildings (where the entire consideration has been received post-issuance of completion certificate or after the initial occupation, whichever comes first) does not qualify as supply of goods or services and therefore does not attract GST. However, when it comes to the sale of under-construction properties for which an occupancy certificate is yet to be issued, GST does apply. This signifies that properties sold after completion are exempt from GST, while properties sold during the construction phase are subject to it. The GST rates are as follows:

  1. Residential Property (under the affordable housing scheme): 1% without Input Tax Credit (ITC) on total consideration.
  2. Residential Property (not under the affordable housing scheme): 5% without ITC on total consideration.
  3. Commercial Properties (offices, shops, godowns, etc.): 12% with ITC on total consideration.

Further, as per GST law, the activity of constructing complexes, buildings, civil structures, or their components is classified under works contract services, encompassing the supply of services. Conversely, the sale of land does not attract GST, a stance reiterated by the CBIC circular dated August 3, 2022. Developed land is also classified as land under Schedule III of the CGST Act, 2017, affirming that it remains exempt from GST.

GST on Renting of Immovable Properties

Under GST law, renting of immovable properties is treated as a supply of service. Individuals earning rental income exceeding INR 20,00,000 annually are mandated to register under GST and are liable to pay GST at a rate of 18%. This division encompasses renting both commercial and residential properties. For commercial property rentals, GST is levied under the forward charge mechanism, irrespective of whether the recipient of the service is registered. The input tax credit is accessible for both commercial and residential property rentals, provided they are utilized for the registered person’s business activities.

Part B: In-Depth Explorations

  1. Affordable Housing Under GST: In the realm of GST, the government defines affordable housing as residential units valued up to INR 45 lakh, with stipulated size criteria for metropolitan and non-metropolitan areas.
  2. GST on Maintenance Charges for Housing Societies: Maintenance charges exceeding INR 7,500 per month incur an 18% GST, applicable to flat owners and housing societies. However, RWAs with turnovers below INR 20 lakhs are exempt. If both criteria are fulfilled, the entire maintenance charge exceeding INR 7,500 per month per member is subject to GST.
  3. GST on One-Time Maintenance Deposit by Builders: A recent ruling establishes that GST applies to non-refundable one-time maintenance deposits collected by builders from home buyers. However, GST is deducted when these funds are eventually utilized for maintenance.
  4. GST on Developable Land: GST does not apply to investments in developable plots, even with basic infrastructure. This exemption is reinforced by a circular issued by the CBIC.
  5. GST on Home Loans: Home loans involve certain services subject to GST, including processing fees, technical valuation fees, and legal fees.

In conclusion, the multifaceted realm of real estate intertwines with the complexities of GST, shaping the landscape for both developers and consumers. The provisions and implications of GST underscore the need for a comprehensive understanding of the regulatory framework within which this pivotal sector operates.

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Discrepancies Among GSTR 2A, GSTR 2B, GSTR 8A

Exploring the ins and outs of GSTR-2A, GSTR-2B, and GSTR-8A, and shedding light on the possible problems these forms can create for people who pay taxes.

  1. GSTR-2A: GSTR-2A is like a list automatically put together for what someone buys. It’s made up of details about the things someone bought during a specific time for taxes. This info comes from the people who sold those things, and they report it in their own tax forms called GSTR-1. So, GSTR-2A helps you check if what you bought matches what the sellers said they sold you in a month. It’s like a first look to see if everything is okay with your buying records.
  2. GSTR-2B: GSTR-2B is quite similar to GSTR-2A. But it’s a bit different because it doesn’t use the most up-to-date seller information. Instead, it’s made once a month and shows all the tax credits you can use. It’s like a big summary of how much tax credit you can take from your purchases. Even though it comes from GSTR-1, it’s mainly for helping you understand things, not for immediate use in taxes.
  3. GSTR-8A: GSTR-8A is a report that deals with taxes collected when you buy things online. It’s for those online shops that gather tax money for the government. This form lists how much tax those online shops collected during a certain time.

Problems and Mismatched Stuff: If you see that things from GSTR-2A don’t appear in GSTR-8A, there could be some reasons:

  1. Seller Slip-Ups: Sometimes, the people who sold you things might forget to say what they sold in their tax forms. This can cause things to go missing from your GSTR-2A.
  2. Time Mix-Ups: If the time when sellers report in their GSTR-1 is different from when you tell about your buys in GSTR-2A, there might be confusion, especially toward the end of tax reporting time.
  3. Computer Issues: Technical problems or delays with the tax system’s computer network could also make the forms not match up.
  4. Saying It Wrong: Either the sellers or you might tell the tax system about things in the wrong way, causing things to not match up.
  5. How It Affects You: When GSTR-2A and GSTR-8A don’t match, along with other forms, it can lead to some not-so-good things:
  1. Tax Credit Confusion: Differences between GSTR-2A and GSTR-8A can mess up your tax credit claims. This means you might not get all the credit you’re supposed to.
  1. Sorting Out Problems: You’ll have to spend extra time fixing these differences, which can take a lot of time and effort.
  1. Extra Charges: If there’s a mix-up and you say you have more tax credit than you really do, you might need to pay extra for that.
  1. Following the Rules: When things don’t match up, it could mean you’re not following the tax rules right. This might lead to fines or other legal issues.
  1. Money Squeeze: If there are delays or mix-ups in getting your tax credit, it could mess up how much money you have available to use.

To solve these issues, it’s really important for you to check what you bought against what’s in GSTR-2A, GSTR-2B, and other forms. You should also talk to the people who sold you things to make sure everything is correct. This helps to avoid troubles and keeps your money situation steady.

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Outcomes of late GSTR-1 filing

In the intricate landscape of Goods and Services Tax (GST), the precision and timeliness with which taxpayers file their returns stand as pillars of paramount significance. Within the realm of GST compliance, the punctual submission of GST Returns bears equal weight, as the repercussions for failing to adhere to deadlines extend not only to the registered taxpayer but also cast a shadow on the recipients of supplied goods and services. Among the pivotal instruments within the framework of GST compliance, two forms, namely GSTR-1 and GSTR-3B, play a pivotal role in encapsulating the complex tax ecosystem.

  • Form GSTR-1 assumes the role of a meticulous repository, capturing an exhaustive array of details pertaining to outward supplies of goods and services.
  • Its counterpart, Form GSTR-3B, serves as a comprehensive summary return that serves as a nexus for crucial information encompassing tax liability, input tax credit, and the quantum of payable tax.
  • Filling out Form GSTR-1 is like a regular task that happens every month or quarter for GST requirements. Sometimes, you can also choose to submit invoices monthly using Invoice Furnishing Facility (IFF), but that’s optional. This return is like a pathway for a registered entity to wrap up a complete summary of the different supplies they provided.

    Embedded within Form GSTR-1 is a multitude of intricate facets, ranging from taxable outward supplies tailored for registered entities to the inter-state taxable outward supplies tailored for unregistered entities, zero-rated supplies that transcend international boundaries, and the realm of deemed exports, just to scratch the surface. But not submitting GSTR-1 on time leads to serious consequences, each with its own effects.

    Ineligibility to claim Input Tax Credit (ITC)

Foremost among these is the pronounced ineligibility to assert Input Tax Credit (ITC). Should a supplier inadvertently falter in filing GSTR-1 within the stipulated timeframe, a cascade of repercussions unfolds, impacting the recipient of the goods or services who is then stripped of the privilege to claim ITC during the corresponding window in their GSTR-3B return.

  • In simpler terms, this means that the person receiving something will have a hard time using the taxes they paid while buying it to reduce the taxes they owe later. This leads to having to pay more taxes overall.
  • Consequently, the failure to file GSTR-1 punctually severely restricts the recipient’s capacity to assert ITC hinged upon the invoices issued by the supplier.
  • This, in turn, casts a profound ripple effect on their cash flow dynamics, necessitating the full settlement of taxes pertaining to the acquired goods or services.

Differences between GSTR-2A and GSTR-2B

When you forget to submit GSTR-1, it creates problems in other forms like GSTR-2A and GSTR-2B. These forms show transactions between you and your suppliers. If you don’t submit GSTR-1, these transactions won’t show up in those forms. This causes difficulties in matching your records with the supplier’s records. This can lead to big problems in fixing these differences, which could turn into disputes if not solved.

Failure to adhere to GST regulations

Simplifying the situation further, failing to adhere to the deadline for submitting your GSTR-1 under the GST regulations can result in various negative consequences. This non-compliance can trigger penalties and legal entanglements. Additionally, there’s a significant risk that your GST registration could be revoked, effectively prohibiting you from engaging in any transactions or operations that involve GST within the Indian context.

In essence, missing the GSTR-1 filing deadline not only invites financial repercussions and legal issues, but it also threatens the very existence of your business within the framework of the GST system. The potential cancellation of your GST registration looms as a daunting possibility, which, if realized, would strip your business of its ability to participate in activities that are governed by GST regulations in India. This underscores the critical importance of timely and accurate submission of GST-related documentation to avoid such dire ramifications.

Late Fees

The late submission of returns within the GST ambit incurs not just the wrath of penalties but also accumulates late fees. Each passing day beyond the due date bears a cost, with the current late fee pegged at Rs. 50 per day per Act, eventually capping at Rs. 5,000 per Act. Notably, the late fees for GSTR-1 adhere to a cumulative trajectory, thereby magnifying the financial ramifications in direct proportion to the duration of delay in return submission.


Penalties are like reminders of what happens if you don’t submit GSTR-1. They show how important it is to follow the rules. The more you don’t follow, the bigger the penalties get.

In simple terms, submitting GSTR-1 and GSTR-3B forms on time is really important for following the GST rules. If you don’t submit them correctly or on time, there can be big problems. These problems include losing out on tax credits, getting stuck in confusing paperwork, facing fines, having trouble making e-way bills, and even losing your right to do business under GST. These forms aren’t just paperwork – they’re like protectors for your business. They keep your business running smoothly by keeping you out of legal and money problems. Following GST rules is not just about money, it’s also about being honest and responsible in how you run your business.

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GST for E-Commerce Business

In India, electronic commerce enterprises are categorized as either “aggregators” or “marketplaces.” These platforms serve as intermediaries that facilitate transactions between sellers and buyers, giving rise to their liability under the Goods and Services Tax (GST) framework. Consequently, these digital marketplaces bear the responsibility of collecting and remitting GST on behalf of the vendors they host. The applicable GST rate hinges on the nature of the goods or services being transacted.

The process of registering for GST as an e-commerce business is as follows:

  • E-commerce entities that fall within the ambit of GST are obligated to secure GST registration.
  • This registration procedure is conducted exclusively through online channels, with businesses being able to initiate their application via the GST portal.
  • Essential documents, such as the Permanent Account Number (PAN) card, Aadhaar card, proof of address, and banking details, need to be submitted during the registration process.

How to register for GST as an E-Commerce Business?

  • GST operates on a principle of taxation based on the destination of goods and services, signifying that they should be taxed at the point of utilization or consumption, rather than their origination point.
  • The determination of the “location of supply” governs the appropriate form of GST to be levied on the goods or services for the purpose of GST collection, encompassing Central GST (CGST), State GST (SGST), or Integrated GST (IGST).
  • Erroneous assignment of the location of supply can culminate in the incorrect collection of taxes by an unintended state.

Here are several instances that illustrate the kind of Goods and Services Tax (GST) applied according to different locations of provision-

Illustration 1: Intra-regional Transaction

  • Amit, a resident of Shimla, Himachal Pradesh, engages in a purchase of a smartwatch from TechGems, a seller operating from Chandigarh and listing on the e-commerce platform “Ezonics.”
  • Given that both Amit, the purchaser, and TechGems, the vendor, are located within the boundaries of the same state, the transaction incurs the levies of Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) exclusively.

Illustration 2: Inter-regional Transaction

  • Amit, residing in Shimla, Himachal Pradesh, initiates the acquisition of a smartwatch from GadgetHub, a seller headquartered in Pune, Maharashtra, featured on the online platform “GizmoWorld.”
  • Considering that the geographical location of the supplier differs from that of the purchaser, the transaction triggers the application of Integrated Goods and Services Tax (IGST).

Illustration 3: Delivery to a Third Party

  • Amit, a resident of Shimla, Himachal Pradesh, places an order for a smartwatch through “Ezonics,” intended as a gift for his friend Ravi, residing in Jaipur, Rajasthan.
  • Facilitating the delivery is ExpressTech, an entity based in Delhi, National Capital Territory of Delhi. Despite the delivery being directed towards Ravi, the invoice for the purchase is addressed to Amit.
  • Within the framework of the Goods and Services Tax regulations, it is deemed that the consignment of the smartwatch is effectively received by the primary buyer, Amit, even though the ultimate recipient is his friend.
  • Since this particular scenario aligns with intra-state supply criteria, the transaction attracts the imposition of Integrated Goods and Services Tax (IGST).

Key Considerations for E-Commerce Enterprises Regarding Goods and Services Tax (GST)

In the realm of e-commerce, meticulous attention to GST-related aspects is imperative for seamless operations. E-commerce operators should be cognizant of the following essential points to ensure compliance with GST regulations:

  1. Tax Officer Interaction: In instances where tax authorities necessitate information pertaining to supplies or inventory from e-commerce operators, an official notice will be dispatched to the operator. It becomes the responsibility of the e-commerce entity to furnish the requested particulars within a 15-day window subsequent to the notice issuance. Notably, this notice is dispatched by an officer holding a position not lower than that of a Deputy Commissioner.
  2. Additional Place of Business: For suppliers who choose to warehouse their products within the facilities managed by e-commerce operators, it is mandatory for the said warehouse to be formally registered as an auxiliary place of business. Adhering to this requirement ensures that the entire supply chain remains in compliance with GST mandates.
  3. Tax Collection at Source (TCS) for Tax-Exempt Goods: E-commerce operators are not mandated to levy TCS on transactions involving tax-exempted goods through their portals. This exemption is grounded in the fact that the net taxable value of these products amounts to nil, consequently negating the need for TCS imposition.
  4. TCS Exemption for Supplier-Owned E-Commerce Platforms: In cases where a supplier directly sells goods via their proprietary e-commerce platform, the imposition of TCS is not applicable. This underscores the distinction between transactions facilitated by the operator and those conducted on an individual supplier’s digital platform.

In conclusion, comprehending the intricacies of GST within the Indian e-commerce landscape holds paramount importance. Adhering to the stipulated laws and regulations is pivotal to evading legal complications. Maintaining an informed stance, coupled with meticulous record-keeping, empowers businesses to accurately administer GST rates, ensure timely GST Return Filing, and fulfill tax obligations. This diligence not only safeguards against penalties but also actively contributes to the nation’s economic advancement, fostering transparency and accountability within the tax framework.

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E-way bill

E-Way Bill provisions

The e-way bill is an electronically generated document used in India for tracking the movement of goods from one place to another. It is a crucial mechanism to ensure seamless transportation and prevent tax evasion. Here’s an in-depth look at the e-way bill system:

Purpose and Benefits of E-Way Bill

  • Efficient Tracking: The e-way bill system enables efficient tracking of goods during transit, ensuring their timely and secure delivery.
  • Tax Evasion Prevention: By monitoring goods movement, the e-way bill system helps prevent tax evasion and enhances tax compliance.
  • State Boundary Check-post Elimination: The digital interface eliminates the need for state boundary check-posts, reducing delays and ensuring smooth inter-state transportation.

E-Way Bill Generation Process under Rule 138

  1. Two Parts of E-Way Bill: The e-way bill consists of two parts – Part A with invoice and goods details, and Part B with transporter information.
  2. Primary Responsibility: The registered person (supplier or recipient) is primarily responsible for generating the e-way bill. If they don’t, the transporter can generate it.
  3. Voluntary Generation: E-way bills can also be generated voluntarily, even if the value of goods is below Rs. 50,000.
  4. Part-B Not Mandatory for Short Distances: Part-B is not mandatory for goods transported up to 50 km within a state between the consignor and transporter or from transporter to consignee. However, it should be updated if goods are transferred between vehicles.
  5. Multi-Vehicle Option: When goods are transported in multiple vehicles on a single invoice, the transporter can update Part B using the multi-vehicle option.
  6. Assignment of E-Way Bill: The consignor, recipient, or transporter can assign the e-way bill number to another person to update Part B.
  7. Consolidated E-Way Bill: Transporters can indicate serial numbers for each e-way bill generated for multiple consignments in one conveyance, creating a consolidated e-way bill (EBW-02).
  8. E-Way Bill for Different Modes of Transport: E-way bills for railway, air, or vessel transport can be generated by the registered person (supplier or recipient) by furnishing Part B on the common portal.
  9. Cancellation Rules: E-way bills can be canceled within 24 hours of generation, except if already verified in transit.

Special Scenarios and E-Way Bill

  1. Bill-To-Ship-To Model: In the “Bill-to-Ship-to” model, only one e-way bill is required by either “A” or “B” when “A” orders “B” to deliver goods directly to “C” on their behalf.
  2. Linking with GSTR-1: E-Way Bill and GSTR-1 are linked through information provided in Part A of FORM GST EWB-01 on the common portal.
  3. Validity Across States: E-Way Bill generated under 138 GST rules holds validity across all states and union territories, ensuring the seamless movement of goods throughout the country.

Documents Required During Goods Transportation

The person in charge of the conveyance must carry the following documents:

1. Tax Invoice, Bill of Supply, or Delivery Challan as required

2.  Copy of the E-Way Bill or E-Way Bill number or an E-Way Bill mapped to an RFID device

3.  In the case of e-invoice, the IRN (Invoice Reference Number) may also be provided to the proper officer.

Goods Exempt from E-Way Bill Requirement

The e-way bill is not mandatory for the transportation of certain goods, including:

  1. Alcoholic liquor
  2. Petroleum products (crude, diesel, petrol, natural gas, and aviation fuel)
  3. Goods under Schedule III of CGST Act
  4. Transit cargo to Nepal/Bhutan
  5. Goods moved by the Ministry of Defence
  6. Supply of heavy water to NPCIL
  7. Government transportation by rail
  8. Movement of empty cargo containers
  9. Goods transported up to 20 km for weighbridge purposes
  10. Empty LPG cylinders used for packing (not for supply)
  11. Goods specified in the Annexure to the rules.

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GSTR-1 & GSTR-3B Filing Mistakes to Avoid

The Goods and Services Tax (GST) regime in India mandates businesses to comply with tax regulations by filing two types of GST returns: GSTR-1 and GSTR-3B. These returns play a vital role in providing detailed information about a registered taxpayer’s outward supplies and ensuring proper tax reporting. Let’s delve into the specifics of each return:


GSTR-1 is a critical component of the GST return filing system in India. It serves as a comprehensive and detailed account of the outward supplies made by a registered taxpayer during a specific tax period. The purpose of GSTR-1 is to provide the tax authorities with a transparent view of all the supplies made by the taxpayer, be it to other businesses (B2B) or consumers (B2C). The return encompasses a wide range of information, including invoice-wise and rate-wise data on supplies, taxable value, and the amount of GST collected on these supplies.

  • For businesses with a substantial turnover, GSTR-1 needs to be filed on a monthly basis.
  • Conversely, for businesses with a turnover below the threshold limit, GSTR-1 can be filed on a quarterly basis.
  • The threshold limit is subject to change and is determined by the tax authorities based on revenue considerations.
  • Timely and accurate filing of GSTR-1 is of utmost importance as it helps in claiming input tax credit (ITC), which is crucial for businesses to offset their tax liabilities against the GST they have paid on their purchases.
  • Filing GSTR-1 involves meticulous preparation and verification of data.
  • Businesses must ensure that all the transactions are accurately reported under the appropriate sections of the return.
  • Correct classification of supplies is vital to avoid any discrepancies, as incorrect reporting can lead to tax audits, penalties, and potential loss of credibility with the tax authorities.
  • To facilitate compliance, businesses are required to maintain a detailed record of all invoices issued during the tax period.
  • This includes not only business-to-business transactions but also business-to-consumer transactions, making GSTR-1 a comprehensive record of the taxpayer’s overall sales and supplies.
  • Additionally, the return must capture invoices issued for both goods and services, and the invoice-level data must be matched with the accounting system to ensure accuracy.


GSTR-3B is another essential return under the GST system, introduced to ease the compliance burden on businesses during the initial implementation phase of GST. Unlike GSTR-1, GSTR-3B is a summarized self-declaration that provides a consolidated view of a registered taxpayer’s outward and inward supplies for a particular month.

  • This return aims to capture the total sales, purchases, and the amount of tax payable, tax paid, and eligible input tax credit for the said month.
  • While GSTR-1 provides invoice-level details, GSTR-3B takes a more aggregated approach to reporting, which simplifies the filing process for businesses.
  • However, it is essential to note that the summarized nature of GSTR-3B does not negate the importance of accurate reporting and compliance.
  • GSTR-3B filing is mandatory for all registered taxpayers, and the due date for filing the return is typically the 20th of the following month.
  • For example, the GSTR-3B return for the month of July is due on or before the 20th of August.
  • Failure to file GSTR-3B within the prescribed timeline can result in the imposition of late fees and interest charges, impacting a business’s financial standing and compliance record.
  • As GSTR-3B does not require invoice-level data, it can be considered more straightforward to file compared to GSTR-1.
  • However, businesses must not overlook the importance of accurately reporting the total sales, purchases, and tax liabilities. Failure to do so may lead to penalties and non-compliance issues.

Both GSTR-1 and GSTR-3B are crucial components for complying with the GST regulations in India. To ensure smooth and error-free filings, businesses need to be aware of common mistakes to avoid while filing GST returns:

  1. Incorrect Reporting of Supplies: Accurate reporting of all supplies, whether taxable or exempt, is imperative. It is essential to allocate transactions correctly, such as correctly documenting sales from a manufacturer to a distributor.
  2. Mismatch of Invoice Details: Ensuring that the invoice details in GSTR-1 match those in the accounting system is crucial to prevent potential tax audits or penalties.
  3. Late Filing: Timely filing of returns is essential to avoid late fees, interest charges, and compliance issues, along with the risk of losing input tax credit (ITC).
  4. Ignoring Amendments: If there are any changes to invoices or supply details after filing GSTR-1, it is crucial to update the returns accordingly.
  5. Incorrect ITC Claims: Double-checking the input tax credit (ITC) claimed in GSTR-3B against eligible invoices and expenses helps avoid penalties for incorrect claims.
  6. Non-Reconciliation of Data: Regularly reconciling the data between GSTR-1 and GSTR-3B ensures consistency and accuracy in tax reporting.
  7. Failure to Report HSN/SAC Codes: Accurate provision of Harmonized System of Nomenclature (HSN) or Services Accounting Code (SAC) for goods and services is essential to avoid classification errors.
  8. Omission of Nil Returns: Even during periods with no sales or purchases, filing nil returns is necessary to maintain compliance with GST regulations.
  9. Non-compliance with E-way Bill: Proper generation and linkage of e-way bills for goods movement, as required under GST, is essential to avoid non-compliance issues.
  10. Non-filing of Annual Return: Filing the annual return (GSTR-9) within the due date is crucial as it provides a consolidated summary of all transactions throughout the financial year.

By adhering to these guidelines and ensuring accurate and timely filings of GSTR-1 and GSTR-3B, businesses can maintain compliance with GST regulations and contribute to the smooth functioning of the tax system in India.

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Insurance Policy

GST on life insurance policy

Prior to the introduction of the Goods and Services Tax (GST) on life insurance policies, premiums for such policies were subject to various service taxes, which included the Basic Service Tax, Swachh Bharat Cess, and Krishi Kalyan Cess, collectively amounting to a 15% tax rate.

With the implementation of GST, the taxation landscape for life insurance policies underwent a change, as policyholders were now required to pay GST according to the terms of their respective policies.

This article aims to delve into the comprehensive impact of GST on Life Insurance Policies in India.

  • One of the notable effects of GST on life insurance plans was the increase in the tax rate from 15% to a standardized 18%, consequently leading to higher premium costs for policyholders.
  • While this initial change may have posed a financial challenge for consumers, it was not without its benefits for the overall life insurance sector in India.
  • The introduction of GST provided insurers with an incentive to reevaluate and streamline their policy-related expenses.
  • As a result, there was an observable surge in competition among insurers, prompting them to offer more competitive and affordable insurance products.

Moreover, with the service tax component of insurance prices now standardized under GST, consumers found themselves empowered to focus on other crucial factors while making informed decisions regarding their life insurance plans.

Comprehending the Impact of GST on Various Life Insurance Products in India

When delving into the realm of life insurance procurement in India, it becomes imperative to grasp the implications of Goods and Services Tax (GST) on different insurance products.

Insurance seekers must be aware of the following key points:

  1. Term Insurance Plans: These plans, renowned for their affordability, are subject to a standard GST rate of 18% on premium payments. This means that when policyholders pay their premiums, 18% of the amount will be collected as GST by the government.
  1. Unit-Linked Insurance Plans (ULIPs): ULIPs, which combine insurance with investment opportunities, are also subject to an 18% GST charge. The GST not only applies to the premium payments but also encompasses the charges for fund management associated with the investment component of the policy.
  1. Traditional Life Insurance Policies (Endowment Plans): These policies, commonly known as endowment plans, are subject to a different GST rate structure. In the first year of the policy, a GST rate of 4.5% is applied to the premium amount. For subsequent years, the GST rate reduces to 2.25%.
  1. Single-Premium Annuity Policies: For policies offering a single-premium annuity, entitling the policyholder to a fixed income stream for life, the applicable GST rate is notably lower at 1.8%.

Given the varying GST rates for different life insurance products, it becomes pivotal for consumers to gain a thorough understanding of the tax implications before making their insurance choices. By being well-informed about the GST rates on premiums, policyholders can make more informed decisions and effectively plan their finances. This knowledge empowers individuals to select insurance products that align with their financial goals, making the most of the benefits offered by each policy while minimizing the impact of GST.

How to Optimize Income Tax Savings on Life Insurance Premiums with GST in India?

The introduction of Goods and Services Tax (GST) on life insurance plans in India has resulted in some policyholders facing higher premium amounts. However, there are beneficial avenues to explore that can help individuals save on income tax while availing life insurance coverage.

  • The Income Tax Act of 1961 offers two significant deductions – Section 80C and Section 80D – that can assist policyholders in reducing their income tax liability effectively.
  • These deductions not only apply to the actual premium amounts paid but also encompass the GST component of those premiums.
  • Under Section 80C, taxpayers can claim deductions of up to Rs. 1.5 lakhs on their life insurance premiums, including the GST portion.
  • This provision allows policyholders to make substantial savings while securing their future through life insurance.
  • Furthermore, if a medical rider is included along with the life insurance policy, individuals can avail of additional deductions on premiums under Section 80D. This further enhances the overall tax-saving benefits.

By making the most of these deductions during Income Tax Return (ITR) filing, policyholders can effectively lower their tax burden while ensuring financial protection for their loved ones with a comprehensive life insurance policy.


Despite the implementation of GST on life insurance plans leading to higher premium costs initially, it has brought several positive changes to the insurance sector in India. One such advantage is the fostering of healthy competition among insurers, leading to more competitive prices and standardization of service tax aspects concerning insurance premiums.

It is important to note that all businesses operating in India with an annual turnover exceeding Rs. 40 lakhs (Rs. 20 lakhs in special category states) are required to have GST registration, including insurance companies and policyholders with life insurance plans.

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GSTN Verified E-Invoice App with QR Code

In its commitment to streamlining and ensuring precise e-invoice verification, the Goods and Services Tax Network (GSTN) has developed a highly efficient application called the GST E-Invoice QR Code Verifier. This app addresses the importance of seamless e-invoice authentication, aiming to simplify the process and enhance user convenience when verifying electronic invoices.

Understanding the Role of QR Code in E-Invoicing

In the e-invoice ecosystem, the QR code plays a pivotal role as it is specifically designed to be read and interpreted by machines. All e-invoices are now required to feature a digitally signed QR code. This inclusion of the QR code in e-invoices enables easy and convenient access to valid GST invoices.

The Significance of Including QR Codes in E-Invoices

The incorporation of QR codes is crucial in the e-invoicing system to ensure the integrity and validity of e-invoices. When taxpayers upload tax invoices to the e-invoice portal or Integrated Reporting and Payment System (IRP) for verification and authentication, the IRP conducts various checks on the invoice details. After a successful verification process, the IRP digitally signs the invoice, assigns it an Invoice Reference Number (IRN), and generates a signed QR code.

Ensuring Compliance and Avoiding Penalties

Compliance with the requirement of including the QR code on the final e-invoice is of utmost importance. Failure to do so can result in both the e-invoice and the subsequent e-way bill being rendered invalid and unusable. Non-compliance with this regulation may also attract severe penalties from tax authorities. Moreover, buyers may lose the ability to claim their entitled input tax credit if the QR code is missing or incorrect.

Introducing the E-Invoice Verifier App and Its Features

The E-Invoice Verifier App is a user-friendly application designed to facilitate e-invoice verification. With its simple interface, users can effortlessly scan the QR code of an e-invoice to authenticate its validity. The app does not require users to create an account or share any personal information, ensuring a privacy-friendly approach.

Key Features of the App:

  1. User-friendly Interface: The app boasts a simple and intuitive interface, allowing users to navigate through its various features and functionalities with ease.
  1. QR Code Verification: The primary function of the app is to verify the authenticity of e-invoices by scanning their QR codes.
  1. Non-Login-Based Approach: Users can utilize the app without the need for account creation or sharing personal information, enhancing privacy protection.

Steps to Install and Use the QR Code Verifying App

  1. Visit the official website for the QR Code Verifying App and enter your mobile number.
  2. Receive a One-Time Password (OTP) and enter it to verify your mobile number.
  3. Download the APK file to your device.
  4. Install the APK file and open the app.
  5. To scan a QR code, click the “Verify QR Code” option and scan the QR code on the invoice.
  6. To upload a JSON file, click the “Verify signed e-invoice” option and upload the JSON file.


The GSTN E-Invoice Verifier App is a reliable, efficient, and user-friendly solution for authenticating e-invoices. Utilizing QR code authentication and offering an intuitive interface, the app covers all six IRPs without requiring users to create an account. With its commitment to accuracy and convenience, the app provides a seamless e-invoice verification experience for all users.

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GST Rates on Wall Paints

Before the implementation of the Goods and Services Tax (GST) regime, India had a complex taxation system with numerous taxes like excise duty, services tax, customs duty, surcharges, and State-level Value Added Tax (VAT) levied on the provision of goods and services. However, the current indirect taxation system in the country is based on GST. In this article, we will delve into the subject of GST Rates as they apply to Interior and Exterior Wall Paints.

  • GST Rate, in essence, refers to the percentage of Goods and Services Tax (GST) that is applicable to a specific category of goods or services.
  • GST itself is a value-added tax imposed on the supply of goods and services across India.
  • The rates of GST vary depending on the nature and classification of goods or services, resulting in different rates being assigned to different items.
  • The application of GST rate is expressed as a percentage and is calculated based on the value of the goods or services being supplied.
  • These rates are organized into distinct slabs, namely 0%, 5%, 12%, 18%, and 28%. Each slab corresponds to various goods and services based on their characteristics and essentiality.
  • The responsibility of determining these GST rates lies with the Goods and Services Tax Council, which comprises representatives from both the central and state governments.
  • As the economic conditions, policies, or other factors may change over time, it is crucial to bear in mind that GST rates can be subject to revisions by the government to accommodate these developments.

Understanding GST Rates on Wall Paints: A Comprehensive Guide

When it comes to selecting interior and exterior wall paints for your living spaces, one crucial aspect that requires careful consideration is the Goods and Services Tax (GST) rates applicable to these products. The GST rates play a significant role in determining the overall cost of the paints and understanding these rates can be beneficial for consumers and businesses alike.

  • Both interior and exterior wall paints fall under the category of goods subject to a 28% GST rate.
  • This means that 28% of the total value of these paints is collected as tax by the government.
  • It is essential to be aware of this rate while budgeting for your paint-related expenses.
  • Interior wall paints are specially formulated to enhance the aesthetic appeal of indoor spaces while providing protection to the walls.
  • With a diverse range of colors and finishes available in the market, consumers have the luxury to choose from various options that cater to their unique preferences and requirements.
  • The 28% GST rate on interior wall paints affects the final price consumers pay for these products.
  • As a result, it becomes imperative for individuals, interior designers, and businesses involved in the construction or renovation industry to factor in this rate while planning their projects.
  • On the other hand, exterior wall paints are designed to endure harsh outdoor conditions, offering protection against weathering, moisture, and other environmental factors.
  • Due to their ability to withstand the elements, these paints are highly durable and long-lasting.
  • Similar to interior wall paints, exterior wall paints are also subjected to a GST rate of 28%.
  • For consumers looking to beautify and safeguard the exterior of their homes or commercial buildings, understanding this tax rate is vital in making informed decisions and managing their budget effectively.

In conclusion, the GST rates on interior and exterior wall paints are set at 28%, making it crucial for consumers and businesses to be aware of this aspect while purchasing these products. Being informed about these rates will not only help in better financial planning but also assist in making the right choices in paint selection based on individual needs and preferences. Whether you are an individual homeowner or a business owner, keeping track of GST rates on wall paints can ultimately lead to more informed and financially prudent decisions for your projects.

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GST on Khadi Products

Khadi, an embodiment of self-sufficiency and a cherished aspect of India’s cultural heritage holds a special place in the hearts of Indians, renowned for their exquisite craftsmanship and positive impact on the environment and society. Nonetheless, the discussion surrounding Khadi products often brings up inquiries concerning the applicability of the Goods and Services Tax (GST).

This article delves into the nuanced status of GST exemption on Khadi, sheds light on the relevant GST HSN code, and addresses common questions related to GST on Khadi.

Contrary to common misconceptions, Khadi products do not enjoy full exemption from GST. However, they do receive certain favorable treatment within the GST framework, particularly for entities registered under the Khadi and Village Industries Commission (KVIC). Such registered entities benefit from a reduced GST rate of 5% specifically for Khadi products.

This implies that Khadi goods are subject to a more favorable GST rate compared to other items, which further contributes to the promotion and sustenance of this iconic symbol of Indian heritage and self-reliance.

GST HSN Code for Khadi Products

The GST HSN code for Khadi products is 50.08, which belongs to the category of yarn and fabrics made from natural fibers.

HSN codes are utilized for the classification of goods under GST.

Khadi Product HSN Code
Khadi fabric, without embroidery 5208
Khadi fabric, with embroidery 5810
Khadi yarn 5205
Khadi garments 6104
Khadi shawls, stoles, and scarves 6214
Khadi blankets and rugs 6301
Khadi sarees, dhotis, lungis, angavastrams 5208
Khadi towels, handkerchiefs 6302

GST Registration for Khadi Products in India 

  • In India, the process of GST registration for Khadi products holds specific provisions to accommodate the interests of Khadi producers and sellers operating exclusively through KVIC (Khadi and Village Industries Commission) outlets.
  • For such individuals or entities, there exists a notable exemption from the GST registration requirement.
  • This means that those Khadi producers and sellers, who solely distribute their products through KVIC outlets, are not obligated to undergo GST registration, nor do they need to file GST returns or remit GST on their sales.
  • This pivotal exemption has been implemented as a supportive measure, particularly benefiting small-scale Khadi producers who might encounter challenges in complying with the intricate GST regulations due to limited resources.
  • However, it is essential to note that this exemption is applicable only to those individuals or entities who exclusively operate via KVIC outlets.
  • If Khadi producers or sellers opt to diversify their distribution channels and venture into avenues such as retail stores or online marketplaces, GST registration becomes mandatory under certain circumstances.
  • Specifically, if their annual turnover surpasses the GST threshold limit of Rs. 20 lakhs, they must register for GST and fulfill the associated tax obligations.

By establishing a tailored approach to GST registration, India aims to foster the growth and sustainability of the Khadi industry, while simultaneously ensuring compliance with tax regulations in line with the turnover and distribution dynamics of Khadi producers and sellers.

Input Tax Credit Exemption and Khadi Product Distribution

  • Khadi products, when retailed through KVIC (Khadi and Village Industries Commission) outlets, are granted a unique privilege as they remain exempt from the imposition of Goods and Services Tax (GST).
  • Consequently, businesses involved in the direct sale of Khadi items through these official channels are not eligible to claim an input tax credit (ITC) due to the absence of GST levied on the products.
  • Conversely, should Khadi merchandise find its way to consumers via alternative distribution channels, sellers engaging in such transactions have the opportunity to avail themselves of input tax credit benefits.
  • In such instances, these sellers can rightfully reclaim the GST amount paid during the procurement process of the Khadi products, thereby reducing their overall tax liability.
  • This differential treatment encourages the promotion of Khadi products through the KVIC network, where consumers can obtain them at a cost sans the GST component.
  • On the other hand, enabling ITC for Khadi items distributed through other channels incentivizes businesses to participate in the wider dispersal of these traditional, hand-spun products, consequently supporting the growth of Khadi enterprises while fostering economic development.
  • It is important to note that this distinction in tax treatment seeks to strike a balance between stimulating the domestic Khadi industry and fostering a competitive marketplace for these indigenous products.

In conclusion, the GST exemption for Khadi products retailed via KVIC outlets ensures affordability and accessibility for consumers, while the provision of input tax credit for those distributed through other avenues serves as a catalyst for market expansion and progress within the realm of Khadi enterprises. 

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