Sec 2(82) – Output tax

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Sec 2(82) – Output tax 2017-04-22T18:19:42+00:00
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    “output tax” in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis;

    Priya MadrechaPriya Madrecha
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    The output tax chargeable on intra-State taxable supply of goods or services can be summarised as under:
    Type of Supply Output tax Reference
    Supplies within a State (or UT with Legislature) CGST + Specific
    (intra-State supply) SGST Section 8(1) and 8(2) of the IGST Act
    Supplies within a UT without Legislature CGST + UTGST
    (intra-State supply) Section 8(1) and 8(2) of the IGST Act
    The following aspects need to be noted:
    • While input tax is in relation to a registered person, output tax is in relation to a taxable person. Evidently, the law excludes persons who are not registered under the law from being associated with any input tax. However, where there is a liability due to the Government, the law paves the way to cover those persons who are liable to tax, but who have failed to obtain registration.
    • The amount covered under this term is the amount of tax that is ‘chargeable’, and not the amount that is ‘charged’. Therefore, in case a person wrongly charges tax, or charges an excess rate of tax, as compared to the applicable tax rate, such excess would not qualify as output tax.
    • Some experts are of the view that taxes payable by recipient of supply, on account of making inward supplies of such categories of supply as are notified for the purpose of reverse chargeability of tax, or making inward supplies from unregistered persons, would also be out of the scope of ‘output tax’.
    • The implication of the exclusions mentioned above is that the input tax credit cannot be utilised for making payment of any amount that does not qualify as output tax. Discharge of liability in such cases has to be by way of cash payments (i.e., through the electronic cash ledger, on depositing money by means of cash, cheque, etc.).
    • The law makes a specific inclusion in respect of supplies made by an agent on behalf of the supplier, to treat the tax paid on such supplies as output tax in the hands of the supplier.

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