consumption

[Arun Aggarwal]

Sir,

I want to understand the difference between the local consumption and local sales under the GST regime if any .

Any commodity sold locally in the same state after charging SGST and CGST not necessarily will be consumed in the same state and can be sold further to any other state after charging IGST.

The problem may arise where the sales/clearances made by the units availing the area based exemptions and after getting some benefits in the SGST and CGST from the state govt on the local consumption and which in return can be further sold to some other state after charging IGST and were never actually consumed in the same state but were only sold.

Pls help me to understand this

Thanks

Arun

[ANITA BHADRA]

The term sales has been replaced with SUPPLY in GST regime

Your point can be explained with the help of following example :-

Suppose Mr X ( in Karnataka )sold an item to Mr. Y in same state( Karnataka ) . He will charge SGST & CGST . If the same good will be sold by Mr. Y to other state ( say Maharashtra ) , Mr. Y will be charging IGST

Mr. Y will avail ITC for CGST & SGST paid to X and the Maharashtra will be the consumption point

Regarding Area Based Exemption :- Due to introduction of GST all the manufacturing units are mandatorily required to clear the manufactured goods including traded goods on payment of GST

Area based exemption unit will be eligible for budgetary support .

The application for imbursement of budgetary support shall be made by the eligible unit after the payment of CGST/IGST has been made, for the quarter to which the claim relates, in cash, in respect of specified goods after utilization of Input Tax credit, if any.

Thus even for area based exemptions , GST has to be paid and then budgetory support will be provided .

Regards

[Arun Aggarwal]

Madam .

Does that means local consumption and local sales have the same meaning under GST?

[ANITA BHADRA]

Sales and consumption are two different terms . The term sales has been replaced with Supply but consumption has its own meaning .

GST is destination (consumption) based tax means where the goods and services supply will flow (consumed) whole tax revenue will go to that state.

[Arun Aggarwal]

thanx

[KASTURI SETHI]

I support the views of the expert. Reply comprehensive and crystal clear.

AI Summary

Destination-based taxation ensures tax revenue follows consumption; intra-state supplies attract SGST and CGST, inter-state IGST. Supply replaces sales under GST while consumption remains distinct: GST is destination based so revenue goes to the consuming state. Intra state supplies attract SGST and CGST; subsequent inter state sale attracts IGST and allows the buyer to utilise input tax credit for taxes paid on the inward supply. Area based exemption units must clear goods on payment of GST and may claim budgetary support thereafter, with reimbursement applications made after payment of CGST/IGST and utilisation of any ITC for the relevant quarter.