About GST

GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.

GST stands for Goods and Services Tax. It is an Indirect tax which introduced to replacing a host of other Indirect taxes such as value added tax, service tax, purchase tax, excise duty, and so on. GST levied on the supply of certain goods and services in India. It is one tax that is applicable all over India.

GST is a consumption based tax levied on sale, manufacture and consumption on goods & services at a national level. This tax will be substitute for all indirect tax levied by state and central government. Exports and direct tax like income tax, corporate tax and capital gain tax will not be affected by GST.

Historical Background of GST

The idea of moving towards GST was first mooted by the then Union Finance Minister in his Budget speech for 2006-07. Initially, it was proposed that GST would be introduced from 1st April 2010.The Empowered Committee of State Finance Ministers (EC) which had formulated the design of State VAT was requested to come up with a roadmap and structure for GST.

Joint Working Groups of officials having representatives of the States as well as the Centre were set up to examine various aspects of GST and draw up reports specifically on exemptions and thresholds, taxation of services and taxation of inter-State supplies. Based on discussions within and between it and the Central Government, the EC released its First Discussion Paper (FDP) on the GST in November, 2009. This spelt out features of the proposed GST and has formed the basis for discussion between the Centre and the States so far.

The introduction of the Goods and Services Tax (GST) is a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, GST will mitigate ill effects of cascading or double taxation in a major way and pave the way for a common national market.

From the consumers point of view, the biggest advantage would be in terms of reduction in the overall tax burden on goods, which is currently estimated to be around 25%-30%. It would also imply that the actual burden of indirect taxes on goods and services would be much more transparent to the consumer. Introduction of GST would also make Indian products competitive in the domestic and international markets owing to the full neutralization of input taxes across the value chain of production and distribution.

Studies show that this would have a boosting impact on economic growth. Last but not the least, this tax, because of its transparent and self-policing character, would be easier to administer. It would also encourage a shift from the informal to formal economy. The government proposes to introduce GST with effect from 1st July 2017.

Kinds Of GST

• The Central Goods and Services Tax (CGST)
• The State Goods and Services Tax (SGST)
• The Union Territory Goods and Services Tax (UTGST)
• The Integrated Goods and Services Tax (IGST)

1. The State Goods and Services Tax (SGST)

SGST is defined as one of the two taxes imposed on transactions of goods and services of every state. Levied by State Government of every state, SGST replaces every kind of existing state tax that include Sales Tax, Entertainment Tax, VAT, Entry Tax, etc. Under SGST, the State Government can claim the earned revenue.

2. The Central Goods and Services Tax (CGST)

CGST is referred as the Central Tax levied on transactions of goods and services which take place within a state. Imposed by the Central Government, CGST ensures to replace all other Central taxes inclusive of State Tax, CST, SAD, etc. Prices of goods and services under CGST are charged in accordance with the basic market price.

3. The Integrated Goods and Services Tax (IGST)

IGST is applied on the interstate transactions of goods and services. IGST is also applicable on the goods being that are imported to distribute among the respective states. The IGST is levied when the movement of products and services occur from one state to another.

4. The Union Territory Goods and Services Tax (UTGST)

Applicable on the Intra UT supply of goods and services, the aim to impose UTGST is to apply a collection of tax to provide benefits as same as SGST. The UTGST is applicable to five Union Territories namely Lakshadweep, Damn and Diu, Dadra and Nagar Haveli, Andaman and Nicobar Islands, and Chandigarh.

Benefits of GST

1. Removal of Cascading Effect- GST implementation will ensure that cascading effect of taxation is removed. Input tax credit can be availed smoothly under this GST regime.

2. Regulation of unorganized sector- There are certain industries in India which are still unorganized. The GST provisions will help to streamline the process of online compliances and payments and thereby help in regulation of unorganized sector.

3. Uniform tax structure – It harmonizes the laws, procedures and tax rates across the country resulting in a simplified tax structure.

4. Online Procedure under GST – The entire process under GST regime starting from registration to return filling is online. This would be quite advantageous for startup companies who do not have to opt for registration under various indirect tax regimes.

5. Increase in Revenue – Since GST is replacing 17 indirect taxes with single tax , it will lead to increase in product demand which will simultaneously lead to increase in revenue for the Central and the State Government.

The Main Features of GST

The main features of the GST are :

• GST has led to the subsuming of 17 different indirect taxes at the Central and State level.
• GST is a consumption-based tax.
• GST led to ‘one country one tax-rate’ system implemented across the country.
• Taxes imposed on – ‘supply of goods or services’
• No differentiation between goods or services
• It is a comprehensive tax levied on all goods and services.
• Most importantly, it stopped the earlier tax on the tax structure.
• GST led to the free-flow of credit.
• GST is collected on value addition at every step of the supply chain. GST is multistage; however, input tax credit mitigates the imposition of extra taxes.
• GST is dependent on goods consumption destination. For example – Suppose some particular goods are manufactured in State A while consumed in State B, under such circumstances. In that case, the collected GST is accredited to State B(consumption state) and not to State A(manufacturing state). This, however, may lead to loss of revenue to the manufacturing states, which is compensated by levying GST Compensation Cess.

GST Rates in India

There are four slabs categorized based on goods and services, as proposed by the Government:

5%: Under this slab, household items are included like sweets, sugar, spices, tea, coffee, coal, edible oil, etc.

12%: Under this slab, computers and processed foods are included like cheese, ghee, ayurvedic medicines, cell phones, and fertilizers, etc. Services like work contracts, business-class air tickets, and non-ac hotels are also included.

18%: This slab qualifies for toothpaste, soaps, hair oil, etc. as well as capital goods and industrial intermediaries.

28%: This slab involves luxurious items such as premium cars, consumer durables – AC, Refrigerators, etc.

How to Register For GST

                                                                    Register Here

Every supplier of goods or services is required to obtain registration in the State and Union Territory from where he makes a taxable supply if his aggregate turnover exceeds ₹ 40 Lakh for goods in a Financial Year. In the case of services, the threshold limit is ₹ 20 Lakh. However, compulsory registration under GST has required if the person makes inter-state supplies i.e., the threshold limit of ₹ 40 Lakh and ₹ 20 Lakh shall not apply for registration in this case.

The step by step procedure for registration under GST are as follows:

• Visit the GST portal, and click on the ‘Register Now’ option under the option ‘Taxpayers (Normal/TDS/TCS).’
• After clicking, a form will open in your window. You are now required to fill the following details:
  • Select the ‘New registration’ at the top; it needs to have a green color highlighted on the circle.
  • In the next drop-down menu select, I am a – Taxpayer.
  • Now select the state and district from the next drop-down menu.
  • The next step is to mention the registered ‘Name of the Business’ and the ‘PAN of Business.’
  • Now mention your email address and mobile number.
  • Follow it up by clicking on ‘Proceed.’ An OTP will be sent on both your email and mobile number.
• Now you need to enter the OTP received on your email and mobile number separately. In case you did not receive the OTP, then click on Resend OTP.
• The next window will show that you have received a Temporary Reference Number (TRN), which is sent to your email and mobile number as well.
• Now you need to revisit the GST portal and choose ‘Register Now.’
• This time select the Temporary Reference Number (TRN). Then enter the TRN along with captcha and follow it up by clicking on ‘Proceed’.
• Now enter the OTP you received on your email and mobile number.
• After the above steps, the next window will display your status of the application as a draft. Click on the ‘Edit’ icon.
• Now, you will see another form that has 10 sections. Fill the required details and attach the following documents:
  • Photo of Taxpayer/Promoters
  • Constitution of Taxpayer
  • Details of Bank account
  • Authorization form
  • Proof for the place of business
• After filling all the details and attaching the necessary documents, tick the deceleration, and submit the application in any of the following ways:
  • For companies, the application must be submitted using DSC.
  • If you opt for E-sign, OTP will be sent to your number that is registered with Aadhaar.
  • If you opt for EVC, OTP will be sent to your registered mobile number.
• After completing the above steps, the next window will display the success message along with the Application Reference Number (ARN), which is also sent to your registered email and mobile number.