Goods and Service Tax (GST)
Goods and Service Tax (GST) is levied on the supply of goods by way manufacturing or trading and rendering of any services in India. The introduction of GST is a very significant step in the field of Indirect Tax reforms in India to replace all the existing National and State Tax systems like VAT, CST, Service Tax, Excise Duty etc into a Single Tax. GST is a destination based tax on consumption of goods and/or services and it will remove the cascading effects of double taxation in a major way and pave the way for a common national market.
Useful Resources for Goods and Service Tax (GST)
Benefits of GST
- Application of GST eliminates the double tax charging concept from the system. It will lead to reducing the price of goods and services, and it helps to save more money from a common person.
- GST comes with the concept of “One Country One Tax”. It helps to prevent some of the barriers among states. It will lead to benefits to businessmen and make business easier.
- GST leads to reduce the cost of production. Now the goods and services are cheaper and as per the law of demand, demand will increase and it will address to increase in supply. Increase in demand and supply invite more employment in the country.
- Transparency is a key feature and benefit of GST. In GST, one can clearly cross verify whether GST has been pass on to them from the supplier or not and so that errors of Input Tax Credit will not arise.
- In the GST threshold limit for registration and Composition Scheme has been increased for the smaller business. Compliances under GST are also consolidated and easier compare to previous tax forms.
What are the components of GST?
Central Goods & Services Tax (CGST)
CGST is collected and levied by the Central Government on an intra-state sale (E.g.: transaction happening within Gujarat)
State Goods & Service Tax (SGST)
SGST is collected and levied by the respective State Government on an intra-state sale (E.g.: transaction happening within Gujarat)
Union Territory Goods & Service Tax (UTGST)
UTGST is levied by the respective Union Territory on the transactions happening in any Union Territory of India. UTGST is identical to SGST in apportionment and payment rules. UTGST applies to only those territories where we do not have a separate legislature and they are Chandigarh, Lakshadweep, Daman and Diu, Dadra and Nagar Haveli, Andaman and Nicobar Islands.
Integrated Goods & Service Tax (IGST)
IGST is collected by the Central Government but levied by the both Central and State Government for inter-state sale (E.g.: Gujarat to Maharashtra). IGST rate will be equal to the sum of CGST and SGST rate.
In most cases, the tax structure under the new regime will be as follows
|Transaction||New Regime||Old Regime||Revenue Sharing|
|Sale within the Same State||CGST + SGST||VAT + Central Excise/Service tax||Revenue will be shared equally between the Centre and the respective State|
|Sale to another State||IGST||Central Sales Tax + Excise/Service Tax||There will only be one type of tax (central) in case of inter-state sales. The Centre will then share the IGST revenue based on the destination of goods.|
The registration process for GST in India
GST registration process is online through a portal maintained by the Central Government of India. Govt. will also appoint GST Suvidha Providers (GSP) to help businesses with the registration process.
Based on the information provided by GSTN, registration process looks like this:
- The applicant will need to submit his PAN, mobile number and email address in Part A of Form GST REG–01 on the GSTN portal or through Facilitation center (notified by the board or commissioner).
- The PAN must verify on the GST Portal. Mobile number and E-mail address are verified with a one-time password (OTP). Once the verification is complete, the applicant will receive an application reference number on the registered mobile number as well as via E-mail. An acknowledgment should be issued to the applicant in the FORM GST REG-02 electronically.
- The applicant needs to fill Part- B of Form GST REG-01 and specify the application reference number, then the form can be submitted after attaching required documents.
- If additional information is required, Form GST REG-03 will be issued. The applicant needs to respond in Form GST REG-04 with the required information within 7 working days from the date of receipt of Form GST REG-03.
- If you have provided all required 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 as well as for every additional place of business will be issued to the applicant. If the person has multiple business verticals within a state he can file a separate application for the registration in Form GST REG-01 for each business verticals. If the details submitted are not satisfactory, the registration application is rejected using Form GST REG-05. The applicant who is required to deduct TDS or collect TCS shall submit an application in Form GST REG – 07 for registration. If he is no longer liable to deduct or collect tax at source then the officer may cancel and communicate the cancel of registration.
Documents required for GST registration
- Copy of PAN card of an applicant or the Company
- Proof of Constitution like Certificate of Incorporation, partnership deed, Memorandum of Association (MOA)/Articles of Association (AOA).
- Details and proof of place of business like rent agreement and latest electricity bill
- A cancelled cheque of your bank account showing the name of account holder, MICR code, IFSC code and bank branch details
- Authorized signatory like List of partners with their identity and address proof in case of partnership firm or List of directors with their identity and address proof in case of the company.
All registered businesses have to file monthly, quarterly or annual GST Returns based on the type of business.
What is GST Return?
A return is a document that contain the details of income which a taxpayer is required to file with the tax administrative authorities. It is used by tax authorities to calculate tax liability.
- Output GST (On sales)
- Input tax credit (GST paid on purchases)
Types of GST Returns
As per the CGST Act subject to changes by CBIC Notifications, here is a list of all the returns to be filed as prescribed under the GST Law along with the due dates.
|Return Form||Particulars||Frequency||Due Date|
|GSTR-1||Details of outward supplies of taxable goods and/or services affected||Monthly||11th* of the next month with effect from October 2018 *Previously, the due date was 10th|
|GSTR-2 Suspended||Details of inward supplies of taxable goods and/or services affected claiming the input tax credit.||Monthly||15th of the next month|
|GSTR-3 Suspended||Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of tax.||Monthly||20th of the next month|
|GSTR-3B||Simple Return in which summary of outward supplies along with Input Tax Credit is declared and payment of tax is affected by taxpayer||Monthly||20th of the next month|
|GSTR-4||Return for a taxpayer registered under the composition levy||Quarterly||18th of the month succeeding quarter|
|GSTR-5||Return for a Non-Resident foreign taxable person||Monthly||20th of the next month|
|GSTR-6||Return for an Input Service Distributor||Monthly||13th of the next month|
|GSTR-7||Return for authorities deducting tax at source.||Monthly||10th of the next month|
|GSTR-8||Details of supplies effected through e-commerce operator and the amount of tax collected||Monthly||10th of the next month|
|GSTR-9||Annual Return for a Normal Taxpayer||Annually||31st December of next financial year*|
|GSTR-9A||Annual Return a taxpayer registered under the composition levy anytime during the year||Annually||31st December of next financial year*|
|GSTR-10||Final Return||Once, when GST Registration is cancelled or surrendered||Within three months of the date of cancellation or date of cancellation order, whichever is later|
|GSTR-11||Details of inward supplies to be furnished by a person having UIN and claiming a refund||Monthly||28th of the month following the month for which statement is filed|
Late fees for non-filing of GST Return on the due date
- If GST Returns are not filed within the time frame, you will be liable to pay interest and a late fee.
- Interest is 18% per annum. It must be calculated by the taxpayer on the amount of outstanding tax to be paid. The time frame will be from the next day of filing to the date of payment.
- Late fee is Rs.25/- per day per Act. So it is Rs.25/- under CGST & Rs.25/- under SGST. Total will be Rs.50/-day. In case of NIL GST return Late fees is Rs.10/- per day per Act. So it is Rs.10/- under CGST & Rs.10/- under SGST. Total will be Rs.20/-day. Maximum late fees are Rs.10,000/-
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