GST refers to the goods & services tax. It is called the largest indirect tax reform of the country. This law has replaced many indirect taxes that previously existed in India. The History of GST goes back years ago in 2006 when the then finance minister of our country proposed the idea of introducing it. GST was implemented on 1st July 2017. It is more transparent and self-policing tax regime that also helps to boost the economic growth of a country.
GST is basically an indirect text to be imposed on sale, manufacture, consumption of goods and services. It is a single text that is to be imposed on the supply of goods and services that is supplied from suppliers to the consumers. With the establishment of this new Jurisdiction, India has become a unified market with one indirect tax only.
GST has become a good advantage for consumption as it lessens the effect of the older tax regime. It also reduces the overall tax burden and also transparent to the consumer. Goods & services tax in India is a comprehensive, Multistage, destination-based tax that is imposed on every value addition.
Since GST is a tax based on a destination like an end-user consuming a tax are liable to pay the goods and services tax. The Tax will be paid by the state who will receive the goods and services. The state that manufactures the goods & services will not have to pay the Tax. In the case of Exports, the seller of the goods and services is free from paying the tax. GST removes the bads effect of tax i.e. tax on tax and that's exactly where the idea of CGST, IGST, and SGST came into the picture.
Under GST, CGST is a Tax imposed by Central Government on Goods & Services within a common state also known as intra-state supplies. It is governed by the CGST Act. On the other hand, SGST will also be imposed on the same intranet supplies but it will be governed by the State Government.
This means that both the central and state government is ready to impose their acts with a suitable proportion for revenue sharing between them. However, Taxes imposed on all intra-state supply will not be exceeding 14% each that is mentioned in Section 8 of the GST Act.
SGST is a Tax imposed on Intra-state supplies of both Goods & Services by State Government in the same way CGST is a Tax imposed on Goods & services supplied in the same state but will be governed by the Central government.
Under GST, IGST is a tax imposed on Goods & Services that are supplied at the inter-state level and will be governed by the IGST Act. IGST will be applicable in both cases whether the importing of Goods & services in India and exporting of Goods & Services out of India.
As GST is a consumption-based tax. The end consumer will pay GST. But for businesses have been made compulsory to collect GST from consumer and pay to the Government. Consequently, businessmen will impose GST tax on the consumer in addition to the cost of products. As soon as the GST is collected the businesses are required to submit the GST returns each month and suspend the GST tax collected before the 20 th of Next Month.
1. Wider the tax base, lower the tax rates: The number of taxes and duties are imposed on the item when it is production state to when it is consumed. These are imposed in the form of VAT, excise duty, service tax, etc. The total of these taxes is around 35 to 40% while the rate of GST does not exceed 16 to 18%. This is one of the important aspects of introducing GST.
2. Resolution of classification related disputes: One major thing to do is the classification of goods & services whether the particular item/activity is goods for which excise tax is imposed or services for which service tax is imposed. All these problems came to an end after the implementation of GST.
3. Removing cascading effects: GST plays an important role in removing the cascading effect of tax that was imposed earlier.
Let us consider this with the help of an example
Suppose a consultant if offering his services for Rs. 50,000 and charged a service tax of 15% i.e. Rs. 7500. After that, he will be going to buy office supplies for Rs 20000 and has to Pay 5% Tax as VAT i.e. Rs. 1000
In total, he has to pay Rs 8500 without getting any deduction of Rs. 1000 as VAT.
This was before GST was imposed
Now, Let's see what amount does the consultant has to pay under the GST regime.
GST imposed on services of Rs. 50,000 will be not more than 18%. Therefore, let's say GST of 18% will be charged i.e Rs. 9000. 5% GST imposed on office supplies will be deducted. Thus, the consultant only has to pay an amount of Rs. 8000
4. Reduction in duplicity of information: In the VAT structure, the same information is stored in various places for the same goods & services. As result duplicity of information increases because the information is stored in various places. This ultimately results in info inefficient utilization of the nation's resources. On the contrary, in GST structure it is vice versa.
5. Unorganized sector regulations under GST
Regulations with continuous accountability of unregulated and unorganized sectors like textile and construction industries are created.
6. Ease of doing business
With the help of GST difficulties in doing business is reduced. Earlier companies faced problems concerning VAT registration, Dealing with tax authorities, etc. The benefits of GST has companies to carry out business with ease.
6. Common National Market
GST helps in creating a common national market and facilitates in eliminating economic distortion. It led to a uniform tax law among different sectors in indirect taxes.
7. Tackling corruption: The taxpayers can directly make payments without interacting with tax authorities. A mechanism has been developed to match the invoices of the supplier and buyer. This will bring more business in the economy and also keeps a check on tax frauds and evasion.
1. Online taxation system: Unlike other taxes that were imposed most invoicing was done using pen and paper. It might be difficult for smaller businesses to adopt this technological change. It might be needed for the businesses to upload their return forms and invoices.
2. Short term business challenges: Adaptation of GST can interrupt the working capital of a business in the starting phase due to input credit lock-up.
3. Complexities for the businessman: GST has bound the businessman with laws by giving the control of businesses to the central and state government. This created complexity for many businesses across the nation.
4. Indigenous Manufacturing: On the contrary to make in India concept. It will hit the manufacturing sector as the exemption of tax was reduced from 1.5 crores to 20 lakhs rupees of turnover for excise duty.
Businesses whose turnover exceeds Rs. 40 lakhs is required to consider as a normal taxable person. For opening a certain business registration of GST is mandatory. If the business is carried out without registering under GST, it will lead to penalties and will be an offense under GST. GST registration takes usually 2-6 days working for the process of registration.
GST registration will be done online through a portal maintained by the central government of India. The government also provides experts for businesses to help in GST registration.
1. The applicant will need to submit his mobile number email address PAN in part A of GST REG-01 through the facilitation center on the GSTN portal.
2. A PAN is verified on the GST portal also the email and mobile number are verified by OTP (one-time-password). Once the verification is complete applicant will receive an application number on the mobile number that is registered
3. After that Applicant needs to fill part - B of form and specify the application reference number then afterward form can be submitted after attaching required documents.
4. if in case any additional information is required, Form GST REG-03 will be issued
5. The applicant needs to respond form GST REG -04 Within 7 days for required information from the date of receipt of Form GST REG-03.
6. If you have provided all information via Form GST REG-01 or form GST REG -04. The registration certificate in Form GST REG-06 for the principal place of business or for every additional place of business will be issued to the applicant. In case an applicant has many businesses within a state he can also file a separate registration in form GST REG -01. If the details provided are not mandatory application would be rejected using Forn GST REG-05.
Pan card of the applicant
Address proof of Directors along with the photograph
Proof of business registration.
Letter of Authorization.
Bank account statement or a canceled check.
GST ( Goods & Services Tax) was implemented to remove various indirect taxes in India. Online GST registration was passed on 29th March 2017 in the parliament but it became effective on 1st July 2017 in India. The threshold limit of GST registration is 40 lakhs for the supplier of goods and 20 lakhs for the supplier of services as per the changes in 32nd council meeting also with that the North-Eastern states have an option to choose between 20 lakhs to 40 lakhs.
GST registration can be done online by visiting the Online GST portal. Though it is easy to fill the form on GST online portal yourself but on the other hand, you require the experts to fill the information accurately and submit the documents accordingly. All the initial state GST registration is done with the help of experts because few terms cannot be understood by taxpayers.
It expands your business through various channels like Import-Export
You can apply easily for various and central government tenders is you have GST registration.
Business becomes 100% tax adapted.
You can collect taxes from customers legally and pass on the tax benefits to suppliers.
GST number is used for using mobile payment methods
GST certificate can also be used while opening a business account or current account.
1. What is GST (Goods & Service Tax)?
GST (Goods & Services Tax) is an indirect tax imposed on Goods & services as the name signifies. The Tax will be levied on all stages from the production of products to the final consumption stage.
2. What are the types of GST?
GST (Goods & Services Tax) is categorized in three different taxes i.e. CGST (Central Goods & Services tax), SGST (State Goods & Services Tax ) and IGST ( Integrated Goods & Services tax).
3. What is IGST?
Under GST, IGST ( Integrated Goods & Services Tax ) is a tax imposed on Goods & Services that are supplied at the inter-state level and will be governed by the IGST Act. IGST will be applicable in both cases whether the importing of Goods & services in India and exporting of Goods & Services out of India.
4. When did GST come into effect?
GST came into effect on 1st April 2017.
5. What is Input Tax Credit?
The Tax paid on Input Goods & Services can be used as an Input Tax Credit ( ITC ) against all Output Tax liabilities.
6 How does GST apply to business?
GST will apply to those businesses whose turnover exceeds 20 lakhs but in the case of North-Eastern states Nagaland, Manipur, Assam, Arunachal Pradesh, Tripura like Uttrakhand, Himachal Pradesh, Sikkim the limit is 10 Lakhs.
7. Is the Address proof required for GST registration?
Yes, Address proof is required for GST registration.
8. Is GST registration mandatory for small retailers to buy from wholesalers/Dealers?
No, for small retailers there are no such requirements.
9. Who is a Casual Taxable Person?
A person is a Normal taxable person who supplies taxable goods and services occasionally like an event management company that has events in various states that need to register as a casual taxable person for that particular state before supplying any goods & services.
10. When can be GST registration canceled?
It can be canceled in a few cases such as when the business constitution is updated and changed and secondly when the business is terminated.
11. Is it Necessary to take GST registration in the Multiple States?
If you have introduced your business in different states then you need to take GST registration in Different states.
12. Can I sell without having GST registration?
If a person's turnover is less than 20 Lakhs then you can sell the products without GST registration but if in case your turn exceeds the limit of 20 lakhs then you have to take GST registration.