Goods and Service Tax (GST)

Home  »  Goods and Service Tax (GST)
slider_img1

What is GST ? Who Collects it ? Who manages (administers GST) in India ?

GST stands for Goods and Service Tax. From 1st July, 2017 onwards, GST is the prevalent (applicable) Indirect Tax for all types of Goods (Products) and Services in India. GST is a unified, nationally applicable, single destination, multi-stage consumption based tax which is applicable on manufacture (i.e. production, assembly) and consumption of Goods and Services at national scale in India. GST is applicable in cases of any economic activity in manufacturing, trading, e-commerce and all kinds of services. GST has replaced all kinds of previously prevalent indirect taxes in India like VAT, Excise Duty, Custom Duty, Service Tax, Octroi etc. GST is not applicable on exempted supplies and some exempted imports (e.g. Alcohol for Human Consumption, Crude Oil, Petrol, Diesel, Aviation Fuel, Natural Gas etc).

It is believed that a uniform tax rate on all goods and services in India (across all States and Union Territories) shall reduce the tax burden, tax compliance burden, increase tax base and in the long term bring prices of products and services down, thereby making Indian products and services more affordable and competitive for domestic market consumption as well as for export. GST will also help to stop double taxation issues which were prevalent in the Pre-GST tax regime. Another highlight of GST Tax system is that GST is a consumption based Tax i.e. now, not only the states where products and services are produced shall receive tax revenues, but states where the products and services are consumed shall also receive revenue via GST.

GST is a dual characteristic indirect tax. GST shall be levied by Centre and States simultaneously, on a common tax base :

  • GST shall be levied by Centre on Intra-State Supply of Goods and Services. It will be called Central GST (CGST).
  • GST which shall be levied by the States / Union Territories would be called State GST (SGST) / Union Territory GST (UTGST).
  • Integrated GST (IGST) will be levied and administered by Centre on every Inter-State supply of Gods and Services.

GST would be levied by Centre and States/Union Territories simultaneously on a common Tax Base (economic activity). Law applicable for GST regulation and compliance is same (uniform) across all States and Union Territories of India.

  • Central Government shall levy and administer : Central GST (CGST) & Integrated GST (IGST).
  • State Governments / Union Territories shall levy and administer : State GST (SGST) & Union Territory GST (UTGST).

GST -Klariti

When is GST applicable under the GST Act ?

GST is applicable on all economic activity wherein there is value addition in product or service production and delivery. Any business transaction e.g. sale of goods and services, transfer, barter, exchange, license, rental, lease or disposal of taxable products and services is considered as a taxable event under the GST act across India. GST is applicable from 1st July, 2017 across India.

What are the benefits of Goods & Services (GST) Tax ?

for Economy

  • Enhanced Foreign Direct Investment in India.
  • Economy shall move from Informal Sector to Formal Sector.
  • One Nation One Market. Enhances Cooperative Federalism.
  • Free flow of Goods and Services across India with Increased logistics efficiency.

for Governments

  • Control on Tax Leakage : GST will result in plugging the gaps in tax payment due to its robust IT Infrastructure. As a result of seamless transfer of Input Tax Credit (ITC) from stage to stage, this will ensure Tax Compliance by Traders and other business entities.
  • Higher Indirect Tax Revenue : GSTN is an IT enabled Tax system, which is simple and more easy to understand and operate. GST System also eliminates scope for informal economy to thrive. This will lead to higher indirect tax revenue for the central and state governments. With more and more business entities joining GST, it is expected that the cost of tax collection shall also drastically go down in the near future.
  • Tax Base : Increased Tax Base (Indirect Tax).
  • Simplified Process : Online simpler Tax Return Filing procedure shall increase Tax Compliance. GST is simpler and easier to administer than previously administered plethora of indirect taxes, levied by state and central governments.

for Business

  • No Double Taxation (Tax on Tax) in GST.
  • Taxation clarity for Indian and Foreign Businesses (GST subsumes variety of Indirect Taxes like ST, VAT, Excise etc)
  • Easy Compliance: Taxation compliance under GST is much easier and organised that it will help businesses to spend less resources on tax compliance. All taxpayer services like Registrations, Returns, Payments, etc. are available online in a transparent manner.
  • Ease of Doing Business : National uniformity and neutralisation of taxation structure (Tax Rates, Rules and Regulations etc) will lead to more clarity in business operations and therefore improve the ease of doing business.
  • Enhanced Competitiveness: Clarity in taxation, reduction in transaction cost, India becoming level playing field for all businesses; will further lead to transition of market structure towards higher levels of competitiveness and transparency.
  • Economic Benefit for Manufacturers and Exporters : GST Tax Regime shall bring down compliance cost. Further, the cost of locally manufactured products and services shall also go down. This will lead to increase in the competitiveness of Indian goods and services (by improving the Bottom Line of Indian Business Entities), destined for the international market and thereby boosting exports and international market share.
  • Input Tax Credit (ITC) : Input Tax Credit shall be easier to avail.

for Consumers (of goods and services)

  • Transparency for Consumers : Under GST Tax Regime, there will be total clarity about taxes on a specific product, since there shall be no hidden taxes. This will bring transparency for the consumer to make n informed decision before purchase a good (products) or service.
  • Lowering of Prices : After GST implementation, India has become one unified and equal playing field for all businesses offering their products and service. Thereby the prices of goods and services shall come down, as well as taxation burden on consumers will reduce, thereby benefitting the customers.

Which taxes have been replaced by GST (Goods and Service Tax) ?

GST is the new All in One Indirect Tax applicable in India. From 1st July, 2017 onwards, GST replaces the following indirect taxes :

Central Indirect Taxes

  • Service Tax.
  • Central Excise Duty.
  • Additional Excise Duty.
  • Special Additional Duty of Customs.
  • Additional Customs Duty (Countervailing Duty).

State Indirect Taxes

  • Sales Tax
  • Luxury Tax
  • Purchase Tax
  • Value Added Tax
  • Octroi and Entry Tax
  • Taxes on Lottery, Betting and Gambling.
  • Central Sales Tax (levied by Centre. Collected by States)
  • Entertainment Tax (excluding tax levied by Local Bodies)

How can I Enroll for GST ?

Enrolment for GST can be done via GSTN Portal. Expert Team at Klariti TaxCorp can help you to complete GST Enrolment in a fast and economical manner. contact us

Can I obtain multiple GST Registrations ?

Yes. If an individual has more than one (multiple) business interests in a state, he/she can obtain separate GST registration for each business, in each state (i.e. state wise registration for each business vertical is permitted).

Can an individual apply for one time Central GST Registration for all the businesses ?

No. A person cannot apply for Central GST Registration, which may be applicable for pan India basis. There is no such provision in GST. Every person must apply for separate GST in every state, wherein the person has business operations.

How is GST applicable on Export of Goods and Services ?

Since, GST is a consumption based tax. In case of export of Goods and Services, the consumption shall be outside India, therefore no GST is applicable on exported Goods and Services. Under the new GST Tax regime in India, exports are “zero rated supplies” i.e. there is no GST tax applicable on export of goods and services from India to other countries. Under zero rated supply, Integrated GST (IGST) paid on export goods/services or input tax credit shall be refunded. Refunds on export of goods and services can be obtain under the following conditions :

  • Export under Bond or Letter of Undertaking (LoU) without payment of Integrated Tax and Claim Refund of Unutilized Input Tax Credit (ITC).
  • Export on payment of Integrated Tax and claim refund of the Tax so paid on goods and services exported.

Note : Under GST Tax Regime, Zero Rated Supplies means Export of Goods and Services or Supply of Goods and Services to SEZ Developer or SEZ Unit. For further information, contact us

Who are exempted from “GST Registration” ?

Following are the exclusions from the GST Registration:

  • Services : Services of any Court or Tribunal established under law in India.
  • Services : Funeral, Burial, Crematorium, Mortuary and Transportation of Deceased.
  • Services : Government Transactions : Issuance of Passport, Visa, Driving License, Death and Birth Certificates.
  • Individual : An Agriculturist : For Agricultural work.
  • Individual : Individuals making Non-Taxable/ Non-GST supplies of Goods and Services.
  • Organisation : UN Agency notified under United Nations Act, 1947.
  • Organisation : Foreign Embassies/Consulates/Diplomatic Missions in India.
  • Organisation : Small Business : Turnover less than INR 20 Lakhs. (North East and Hill States : Exemption Limit will be INR 10 Lakhs)

What are the Taxable Event in GST Regime ?

Taxable Event(s) under the old taxation system (i.e. Pre GST) such as Manufacture, Sale or Provision of Services have be subsumed in GST Regime as Taxable Event – also known as “supply” :

  • Taxable Event = Supply of Goods or Services or both.
  • CGST and SGST/ UTGST = Intra-State Supplies.
  • IGST = Inter-State Supplies.

What is the mode of payment of GST ?

Payment of GST (Tax, Penalty, Fees etc) can be done via :

  • NEFT or RTGS
  • Credit Card / Debit Card
  • Internet Banking (e- Banking)
  • Tax Consultants can make payments on behalf of their clients.

Where should I register my business for GST ?

You must obtain GST Registration in the state (one or many), wherein your business have operations. If you have your business in one state, then you must obtain GST registration from that state. If your business operation is spread across multiple states, then you should obtain GST Registration in all the respective states.

What is the turnover limit for exemption from GST Registration in India ?

Any business enterprise in India, which has an aggregate turnover not exceeding Rs. 20 Lakh in a Financial Year does not require to register for GST Registration. However, for enterprises in North East, an aggregate turnover upto Rs. 10 Lakh is exempted from GST Registration.

How can existing businesses (i.e. existing Taxpayers) migrate from existing taxation system to GST ?

Every taxpayer which is already registered under the existing indirect tax law in India, shall be issued a “Provisional Registration Certificate” with a six months validity. Thereafter, the taxpayer must furnish the requisite information within 6 months and thereby shall be granted Final Registration Certificate by the certificate issuing authority.

What are final GST Tax Rate Slabs ?

Under the Goods and Services Tax (GST), following Tax Rate Slabs will be levied :

0%

  • Export Goods and Services
  • Essential Farm Products : Milk, Cereals, Fruits, Vegetables, Jaggery (Gur), Food Grains, Wheat.
  • Mass Consumption Food Items : Spices, Tea, Coffee, Sugar, Vegetable Oil, Mustard Oil, Newsprint, Coal, Indian Sweets.
  • Kajal, Education Services, Health Services, Unbranded Atta, Unbranded Maida, Fresh Vegetables, Salt, Unbranded Natural Honey, Unpacked Paneer, Children’s Drawing and Color Books.

5%

  • Sugar, Packed Paneer, Tea, Coal, Edible Oil, Raisin, Domestic LPG, Roasted Coffee Beans, PDS Kerosene, Skimmed Milk Powder, Cashew Nuts, Footwear (

12%

  • Butter, Ghee, Almonds, Fruit Juice, Packed Coconut Water, Computers, Processed Food, Mobiles, Umbrella, Preparation of Vegetables, Fruits, Pickle, Chutney, Murabba, Jelly.

18%

  • Hair Oil, Capital Goods, Toothpaste, Industrial intermediaries, Soap, Ice Cream, Pasta, Toiletries, Corn Flakes, Computers, Soups, Printers, Restaurants (serving alcohol).

28%

  • Small Cars (cess), High End Motorcycles (+15% cess), Consumer Durables (AC, Fridge etc).

At what instance is GST required to be paid ?

GST is payable at the earliest of the following :

  • In case of moveable goods :
    • Date on which the taxable goods are “Removed for Supply to the Recipient”.
    • Date on which the taxable goods are “Made Available to the Recipient”.
  • Date of “Issue of Invoice by Supplier”.
  • Date of “Receipt of Payment by the Recipient” of the taxable goods or services.
  • Date on which the recipient of the taxable goods or services “Shows the Receipt of the goods in his Account Books”.

How and When is GST to be collected from e-commerce companies ?

GST has to be collected at Source. Every e-commerce company shall collect the tax at (whichever is earlier) :

  • Time of Credit or
  • Time of payment, whichever is earlier.

GST is “Destination based Tax on Consumption”. What does this mean ?

GST is applicable at point of consumption. Tax would accrue to the “Taxing Authority” which has jurisdiction over the geographic place of product or service consumption. This is also known as “place of supply”.

What are the major features of proposed payment procedures under GST ?

They are as follows :

National Commonality :

  • Common Accounting Codes across India.
  • Common set of Authorized Banks across India.

Challan :

  • Use of Single Challan and Single Payment Instrument. (Challan forms with Auto-Population Features)
  • Electronic payment process- no generation of paper at any stage
  • GSTN – Single Point (Single Widow) User Interface for Challan Generation – GSTN

Ease of Payment : Due Payment can be easily and quickly made via :

  • NEFT and RTGS.
  • Online Banking.
  • Debit and Credit Cards.
  • Via Cheque payment at Banks.

Registration

  • New Businesses : Single Application to be filed online for registration under GST.
  • Each Business Entity shall be given unique ID GSTIN.
  • Registration Number will be PAN based and shall serve the purpose for Centre and State.

How will Imports be taxed under GST ?

Under GST Regime, the Import of Goods and Services into India shall be treated as Inter-State supplies and therefore, IGST (Integrated GST) shall be applicable/levied. SGST will accrue to the State where the imported Goods and/or Services are being consumed. The Additional Duty of Excise, Countervailing Duty (CVD) and Special Additional Duty (SAD) have been subsumed under GST. The states where imported goods are consumed will obtain their share from IGST on the said imported goods.

What is “Reverse Charge” ?

Under the Reverse Charge mechanism, the liability to pay tax is on the recipient of supply of goods and services instead of the supplier of the said goods or services. Reverse Charge applies to supplies of both goods and services.

What will happen in case of receipt of supply of Goods and Services from unregistered persons ?

In case of receipt of supply of goods and services from an unregistered person/business entity then, the registered person/business entity who is receiving goods or services shall be liable to pay total GST Tax under “reverse charge mechanism”.

What are the average GST rates across the world ?

  • Japan : 5%
  • New Zealand : 15%
  • Austria : 20%
  • Australia : 10%
  • Malaysia : 6%
  • Canada : 5%
  • Singapore : 7%

What are the different types of supplies under the GST Law ?

The different types of supplies under GST Law are as follows :

  • Zero Rated Supplies.
  • Taxable and Exempt Supplies.
  • Composite and Mixed Supplies.
  • Inter-State and Intra-State Supplies.

How and when should the returns be filed for GST compliance ?

  • Common e-return for CGST, SGST and IGST.
  • Returns allow Auto-Population of Data from Vendors and Automated Matching of Invoices

Various due dates for filing of e-returns are as follows :

S. No. Return/Ledger Description of Applicable Form Due Date
1 GSTR1 Outward Supplies made by Taxpayer (other than compounding taxpayer and ISD) 10 of the next month
2 GSTR2 Inward Supplies received by Taxpayer (other than a compounding taxpayer and ISD) 15 of the next month
3 GSTR3 Monthly Return (other than compounding taxpayer and ISD) 20 of the next month
4 GSTR4 Quarterly Return for compounding Taxpayer 18 of the month next to quarter
5 GSTR5 Periodic Return by Non-Resident Foreign Taxpayer Last day of registration
6 GSTR6 Return for Input Service Distributor (ISD) 13 of the next month
7 GSTR7 Return for Tax Deducted at Source 10 of the next month
8 GSTR8 Annual Return 31 December of next financial year

What is Empowered Committee ?

Empowered Committee is a committee of the Finance Ministers of all the states of India. The Empowered Committee has played a crucial role in shaping and structuring of the GST Taxation system.

Is there a provision for a person to get himself voluntarily registered though he may not be liable to pay GST ?

Yes. A person, who is not liable for GST taxation can voluntarily get registered with GST.

I do not have a PAN Card. Can I get registered with GST ?

In order to get GST registration, it is mandatory to have a Permanent Account Number (PAN) issued by the Income Tax Department, before GST registration can commence. PAN is not mandatory for a non-resident taxable individuals in order to get GST registration.

Is GST Registration valid for lifelong or whether it has to be renewed periodically ?

GST Registration is permanent and need not be renewed (once certificate is granted), unless it is voluntarily surrendered or cancelled/suspended/revoked by Government.

What is meant by “Casual Taxable Person” ?

Casual Taxable Person is defined as an individual who conducts business/economic transactions involving supply of goods or services for the purpose of Business Development, in any part of India. Casual Taxable Person has a fixed place of business or residence in India.

What is meant by “Non-Resident Taxable Person” ?

Non-Resident Taxable Person is defined as an individual who conducts business/economic activities involving supply of goods or services whether as principal or agent or in any other capacity. The defining differentiation is that the Non-Resident Taxable Person does not have a fixed place of business or residence in India.

Can a person without GST Registration claim ITC and Collect Tax ?

A person without GST Registration can neither collect GST, nor claim Input Tax Credit (ITC).

Which commodities have been keep outside the purview of GST ?

  • Alcoholic Liquor for Human Consumption.
  • Petroleum Products : Petroleum Crude, Motor Spirit (Petrol), High Speed Diesel, Natural Gas and Aviation Turbine Fuel

What is GSTN ?

GSTN stands for Goods and Service Tax Network (GSTN). GSTN will provide IT Infrastructure and Digital Services Governments (Central Government and State Government), Tax Payers and other stakeholders in GST. In simple words, GSTN is the Single Window Web Portal (Front End) for Governments and Tax Payers to operate and interact w.r.t. Indirect Taxation in India, post 1st July, 2017 (i.e. GST Tax Regime). GSTN Portal can also be termed as the Technology Backbone of Indirect Taxation of India under GST Tax Regime. Goods and Services Tax Network (GSTN) is a Section 8 Private Limited Company which was incorporated on 28th March, 2013. GSTN shall have the following functions :

Registration

  • Online GST Registration.

Data & Reporting

  • Access to Data.
  • Analysis of Taxpayer’s Profile.
  • Data Analytics & Business Intelligence.
  • Generation and sharing of Management Information System (MIS) Reports for State and Central Governments.
  • GST Tax Returns

    • Filing Online Returns.
    • Payment of GST by Taxpayers
    • Refunds, Reversal, Appeal, Audit etc.
    • Computation and Settlement of IGST.
    • Matching Tax payment with Banking Network.
    • Forwarding GST Returns to Central and State Governments.

    What is HSN Code ?

    HSN stands for “Harmonized System of Nomenclature”. HSN is an international approved and used system of product nomenclature and has been developed by World Customs Organization. In the absence of HSN coding system, it will not be possible to standardise tax collection for goods, worldwide.

    How will the goods and services be classified under GST ?

    In order to bring commonality, uniformity and standardisation in the classification of Goods and Services, the Harmonised System of Nomenclature(HSN) code shall be used. Services will be classified using Services Accounting Code (SAC).

    • If Turnover less than INR 1.5 Crores : No need to mention HSN Code in invoice.
    • If Turnover is between INR 1.5 Crores and INR 5 Crores : 2 Digit HSN Code.
    • If Turnover is above INR 5 Crores : 4 Digit HSN Code.
    • n the case of Imports/Exports, 8 Digit HSN Codes is mandatory.

    Will donation of essential commodities by a charitable institution be taxable under GST ?

    Since, donations of essential commodities by a charitable institution does not fall in the objective of furtherance of business (business development), thus such activity shall not be considered a supply under GST. Thus, GST is not applicable in this regard.

    How would GST be administered in India ?

    After the implementation of GST from 1st July, 2017 onwards, there are two major components of GST in India, namely :

    • Central GST (CGST)
    • State GST (SGST)

    What is GST “Compliance Rating” ?

    GST Compliance Rating is a performance based rating which is provided at the GSTN Portal. The GST Compliance Rating depends upon the level of compliance (how promptly Taxpayers upload Invoices, Pay Taxes and File Returns etc) of Taxpayer with GST Act. As per model GST Law, refund claims shall be processed on merit basis. Now, here is where GST Compliance Rating comes into effect. The better the compliance ratings of a tax payer, the higher the merit standings. Under the GST Compliance ratings, all taxpayers shall be classified into pre-defined merit slabs and refunds shall be made accordingly. GST Compliance Ratings shall be updated at periodic time levels and made public on the GSTN Portal, as Tax Authorities believe that peer pressure will lead to proactive communication and higher compliance on behalf of the Taxpayers. Further, if buyers would want to claim Input Tax Credit for goods or services which they have purchased, they (buyers) shall have to mention/declare all the purchase transactions wherein they paid GST.

    Parameters on which GST Compliance Rating shall be based are as follows :

    • No Evasion of Taxes.
    • Timely Filing of Tax Returns.
    • Timely Payment of all Taxes.
    • Declaring Correct (Real Value of) Sales.
    • Declaring Correct GSTIN Details of Outward Supplies.

    Who will decide Tax Rates for levy of GST ?

    Central GST (CGST) and State GST (SGST) shall be levied jointly by the Central Government and State Governments. The Tax Rates shall be notified on the recommendations of GST Council.