Goods & Service Tax

What is 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.

 

Benefits of GST

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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?

CGST is collected and levied by the Central Government on an intra-state sale (E.g.: transaction happening within Gujarat)

SGST is collected and levied by the respective State Government on an intra-state sale (E.g.: transaction happening within Gujarat)

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.

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

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:
  1. 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).

  2. 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.

  3. 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.

  4. 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.

  5. 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

  1. Copy of PAN card of an applicant or the Company.

  2. Proof of Constitution like Certificate of Incorporation, partnership deed, Memorandum of Association (MOA)/Articles of Association (AOA).

  3. Details and proof of place of business like rent agreement and latest electricity bill.

  4. A cancelled cheque of your bank account showing the name of account holder, MICR code, IFSC code and bank branch details.

  5. 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.

GST Returns

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. Under GST, a registered dealer has to file GST returns that includes:
  1. Purchases
  2. Sales
  3. Output GST (On sales)
  4. 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.

Types of GST Returns

  1. If GST Returns are not filed within the time frame, you will be liable to pay interest and a late fee.

  2. 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.

  3. 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/-