All about GST – Everything you need to know about Goods & Service Tax. GST is a game changer for the Indian economy as it facilitates creation of a common market with minimum exemptions and maximum compliances. GST has provided uniformity of tax structure and rates across the country and has also helped in avoiding cascading of taxes and reduction in cost of compliance. Widening tax base as a result of GST implementation would help in preventing revenue leakages and will achieve the objective of rationalisation of tax structure.
All about GST – Everything you need to about Goods & Service Tax
BEFORE INTRODUCTION OF GST, BASICS UNDER CURRENT TAXATION SYSTEM IS DEFINED
MEANING OF TAX
It is a contribution or an enforced contribution which is imposed by Government in the name of
- Toll,
- Tribute,
- Import Duty,
- Custom,
- Excise,
- Subsidy
- Aid etc.
A GLIMPSE TO SHOW CURRENT TAXATION SYSTEM
| CENTRAL TAXES | STATE TAXES |
| Central Excise Duty | Central Sales Tax |
| Additional Duty Paid On Goods Having Special Importance
Excise Duty On Medicinal And Toiletries. |
State VAT |
| Excise Duty On Textiles And Its Products. | Entertainment Tax |
| Service Tax | Entry Tax |
| Additional Duty Of Custom | Luxury Tax |
| Central Level Surcharge And Cesses. | Tax on Lotteries |
| Special Additional Duty on Tax | Purchase Tax |
| —————- | State Surcharges and Cesses related to supply of goods and services. |
SO, LET US JOIN HANDS TO REPLACE ALL THESE ABOVE MENTIONED TAXES WITH ONE SINGLE TAX NAMELY GST i.e. GOODS AND SERVICE TAX.
DISADVANTAGES OF INDIRECT TAX BEFORE INTRODUCTION OF GOODS AND SERVICE TAX (GST)
- These taxes are not equitable
- Indirect taxes is always concealed in the price of a product or services as a person doesn’t know that he is paying tax which is already included in tax.
- These taxes cause the price of an article to raise more.
- They cause huge cascading effect as tax on tax at each and every stage.
- Due to all these indirect taxes levied and charged, there is lack of transparency in the current tax system.
REASONS FOR THE INTRODUCTION OF GST
Following are the reasons that Why GST (GOODS AND SERVICE TAX) is introduced:
- To help the customer by levying only one tax from manufacturer to the customer as there is total transparency of the taxes paid by the costumer.
- It will become easier to run or administer the newly introduced tax i.e. GST than other indirect taxes.
- Helps to reduce cascading effect at each stage.
- It will help to generate more revenue and which will leads to high revenue.
- The overall burden borne by the consumer will be decreased as the rates of various commodities will be decreased.
- It will help customers as their investments will increase due to increase in savings.
- It will help to increase employment level.
- The major reason for introduction of GST is to get away the difference created between goods and services.
WHAT IS GST??
It is an integrated Tax which is levied on Supply of Goods or Services rather than manufacturing / Production of goods or Provision of Services.
It has a system of Input Tax Credit which will allow sellers to claim the tax already paid, so that the final liability on the end consumer is decreased.
Input Tax Credit is the backbone of GST and a matter of concern for the registered persons.
Input tax Credit is available against the tax paid on goods or the services used or further to be used for business purpose and following are the conditions to be fulfilled for allowing the input tax credit:
- Possessing the invoice
- Receipt of Goods and services
- Tax actually paid by the supplier to government
- Furnishing the GST Return on timely basis.
TYPES OF GST
- Central Goods and Service Tax – Tax on Intra State Supply of Goods and Services by Centre
- State Goods and Service Tax – Tax on Intra State Supply of Goods and Services by State
- Integrated Goods and Service Tax – Tax on Inter State Supply of Goods and Services by Centre.
LEVY AND COLLECTION OF TAX
- Centre Would Levy And Collect Only Tax Related To Central Goods And Services.
- State Related To State Goods And Service Tax
- Centre Would Collect and Administer Integrated Goods and Service Tax.
Applicability of GST
GST is applicable on all persons which includes:
- Individuals
- HUF
- Company
- Firm
- LLP
- AOP
- Co-operative society
- Society
But does not apply to Agriculturists.
FEATURES ON GST TO GET AN OVERVIEW OF THE SAME
- GST is applicable on Supply of Goods but not on manufacture or sale of goods.
- It is a concept of DUAL GST which means:
- On Intra State Supply Of Goods/ Services – To Be Levied By Centre And States Both
- If There Is Intra State Supply Of Goods And Services Then Integrated GST Will Be Levied by Centre.
- GST will be based on the concept of destination based consumption tax rather than origin based
- All The Rates Of SGST/ CGST Will Be Decided By Both Centre/ States Only On The Recommendations Of GST Council.
Following Are The Central And State Taxes That Would Be Replaced By GST:
AT CENTRAL LEVEL
- Central Excise Duty
- Excise Duty On Toiletries And Medicinal Preparations
- Additional Duty Of Excise On Textile Products
- Additional Duty Of Excise On Goods Of Special Importance
- Service Tax
- Cess And Sur Charge Related To Supply Of Goods And Services
- Custom Duty
AT STATE LEVEL
- Vat
- Luxury Tax
- Entry Tax
- Entertainment Tax
- Central Sales Tax
- Tax On Lotteries
- Purchase Tax
- Cess And Sur Charge Related To Supply Of Goods And Services
Defined and Proper Coding Will Be Done for Classification of the Goods and Services
| TURNOVER | CODE DIGIT |
| Above 1.5 Crores But Below 5 Crores | 2 Digit Code |
| Above 5 Crores | 4 Digit Code |
| Less Than 1.5 Crores | No Code |
Important Points:
- The Above Mentioned Coding System Is Known As Harmonized System of Nomenclature Code (HSN Code)
- For Services Accounting Code (SAC Code) Will Be Used.
Registration under GST
Before Studying Registration, Hereunder are the definitions discussed to get an overview
Normal Taxable Person:
Any person who is engaged in the business of Supply of Goods or Services and is registered under GST Act.
Non-taxable Person
A person outside India occasionally supplying goods/services in India and he does not have a fixed place of business in India.
Input Service Distributor
Means an office meant for receiving tax invoices issued towards receipt of input services and to distribute the Credit to supplier on proportionate basis.
Aggregate Turnover
It means the total value of:
- All taxable and Non-taxable Supplies
- Exempt Supplies
- Export of goods or services of a person having Same Pan
Points to be considered while Registration under GST
- Registration Under GST is important as one can collect GST from its customers and claim Input tax credit of the tax under GST initially paid by him.
- Every person shall have PAN in order to get himself registered under GST.
- Every Person who is liable to get himself registered under GST have to get himself registered State wise, in accordance with the operations of business carried on.
- If a Person is having different business verticals in a state, then separate registration to be taken for each business verticals.
- When A Suppliers Aggregate Turnover Exceeds 20 Lakhs In A year Is Liable To Get Himself Registered But Certain Categories As Decided By Council Are There That Irrespective of The Limit Defined Are Liable To Get Registered.
Following Are The Cases To Get Registration Under GST:
- In Case Of Inter State Supply
- Non Resident Taxable Persons
- A Person Who Supply Goods On Others Behalf
- Input Service Distributor
A Person Supplying Goods through E- Commerce Route
- Every Electronic Commerce Operator
- Any Other Person As Per Recommendations of the Council
- Pan Is Mandatory For All The Person Getting Registered But Not For Non- Resident Taxable Person.
- It Is Possible That The Officer Can Reject Application For Registration By:
- Giving Notice And
- Opportunity Of Being Heard
On following grounds:
- By Not filing Return Continuously
- By not commencing Any Business
THRESHHOLD LIMIT TO PAY TAX – BY NORMAL TAXPAYER AND SMALL TAX PAYER
Following are the definitions along with the threshold limit to pay tax
Composition Scheme
Only taxable persons whose ‘aggregate turnover’ does not exceed Rs.75 lakhs in a financial year will be eligible to opt for payment of tax under the composition scheme.
Threshold Limit to Pay Tax:
- A Tax Payer Having An Annual Turnover of More Than 20 Lakhs Is Liable To Pay Tax And 5 Lakhs In Case Of North Eastern States.
- An Option Related to Pay A Tax At A Fix Rate Without Availing Credits Will Be Available To Only Small Tax Payers Having An Annual Turnover Of Rs. 50 Lakhs And This Scheme Is Called As Composition Scheme Which Both Optional Or Mandatory Depends On The Person.
- A Composition Scheme Supplier Cannot Issue A Tax Invoice.
NOTE: Minimum Rate for Tax Payers Opting Composition Scheme is 1%
CASES FOR CREDIT AVAILABILITY
- Credit Of CGST cannot be used For payment Of SGST Nor SGST can be used for payment of CGST
- But IGST Credit can be used for the payment of IGST, CGST and SGST
- Credit of CGST can be used for Payment of CGST and IGST both
- Credit of SGST can be used for the payment of SGST and IGST.
LET US TAKE AN EXAMPLE
Current Tax System
If A Product Is Sold From Mumbai To Nagpur At A Price Of 1000 Rs, Then Vat Will Be Charged @ 10% I.E Rs. 100 And Then From Nagpur Product Is Sold To Chennai, Then Cost Will Be Rs. 1100 And Profit Of Rs. 1000 Will Be Added To Rs. 1100 And Then Selling Price Will Be Equal To 2100, Further Cost Will Be Charged @10% Which Will Be 210 Rs.
Now Total Cost of the Product Will Be 2310
GST System
If A Product Is Sold From Mumbai To Nagpur At A Price Of 1000 Rs , Then GST Will Be Charged @10% I.E Rs. 100 (Includes Both CGST @50% And SGST @50% And Then From Nagpur Product Is Sold To Chennai , Then Cost Will Be Rs. 1100 And Profit Of Rs. 1000 Will Be Added To Rs. 1100 And Then Selling Price Will Be Equal to 2100, Further IGST Will Be Charged @10% Which Will Be 210 Rs
Now The Credit Of SGST And CGST Will Be Taken From CGST And SGST Paid. So, IGST Will Amount To Rs. 110
Now total cost of the product will be 2210
GST Audit
Points to Be Remembered While Audit Of GST
- Any Officer of CGST And SGST Authorized By The Commissioner By The Order Either Given In General Or Specific Sense May Conduct Audit Of The Tax Payer.
- A Special Audit Is Conducted When The Situation Is:
- Complex,
- Critical And
- The Revenue Percentage is Very High.
- Before Conducting Audit A Prior Notice Of 15 Days Is To Be Given To The Tax Payer.
- Audit Is To Be Completed Within A Period Of 3 Months From The Date Of Commencement Of Audit.
- Special Audit May Be Conducted By:
- Chartered Accountant
OR
- Cost Accountant
As The Commissioner Deems Fit.
RETURNS UNDER GST
A Return is a document that a tax payer is bound to file with tax administrative authorities. So, Same as Separate returns are required to be filed by different categories of Tax Payers.
Points to have a look over and to be kept in mind while filing returns under GST
- Normal Tax payers, Tax payers opting Composition Scheme, Input Service Distributors have to file separate electronic returns on different dates as defined.
- Annual Return is to be filed by 31st December of the following financial year.
- Returns which are shortly filed are treated as invalid
Following are the Returns to be filed under GST
| WHAT TO BE FILED | BY WHOM TO BE FILED | Due Date | FORM |
| Details of Outward Supplies of taxable goods or services | Registered Taxable Supplier | 10th of Next Month | GSTR-1 |
| Details of Inward supplies of taxable goods or services | Registered Taxable Recipient | 15th of Next Month | GSTR-2 |
| Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax. | Registered Taxable Person | 20th of Next Month | GSTR-3 |
| Quarterly return for compounding taxable person | Composition Supplier | 18th of Next Month | GSTR-4 |
| Return for Non Resident foreign taxable person | Non Resident taxable person | 20th of Next Month | GSTR-5 |
| Return for Input Service Distributor | Input Service Distributor | 13th of Next Month | GSTR-6 |
| Return for the authorities deducting TCS | Tax Deductor | 10th of Next Month | GSTR-7 |
| Details of Supplies through E-Commerce operator | E-Commerce Operator | 10th of Next Month | GSTR-8 |
| Annual Return | Registered Taxable person | 31st Dec of following Financial year | GSTR-9 |
| Final Return | Taxable person whose registration has been cancelled or surrendered | Within 3 months of the cancellation or date of Cancellation order whichever is later | GSTR-10 |
| Details of Inward Supplies if a person is having UIN | Person who have UN | 28th of the month following the month for the statement is filed | GSTR-11 |
PROVISIONS UNDER REFUND
REFUND
It is very crucial to make the process related to Refund much easier under GST. A delay in refund will trouble both exporters/ manufacturers in maintaining the working capital and cash flow.
So, Strict and proper provisions and regulations is required to be made for refund under GST.
Following are the cases in which Refund is granted under GST:
- At the time of Excess payment of Tax
- Finalisation of Provisional assessment
- Refund of the amount deposited at the time of filing of an appeal
- Refund at the time when tax is paid on purchases made by Embassies or UN bodies.
- Refund of tax for International Tourists.
GSTN PORTAL
Goods and Services Tax Network (GSTN) is a non-profit non-government company, which will provide shared IT infrastructure and services to both central and state governments including tax payers and other stakeholders.
It acts like Front office which provides services like:
- Registration,
- Returns and
- Payments
To all taxpayers will be provided by GSTN. It will be the interface between the government and the taxpayers.
OPPORTUNITIES FOR CS IN AREAS OF GST
- Help in Tax Planning Under GST
- As The CS Is Already Known as Compliance Officer, If He Enters in GST, Then he may check all the Compliances are done or not.
- Helps to Maintain Proper Records
- Helps to Give Good Presentation on GST with Full Confidence
- Helps to Interpret Laws and Advise On The Critical Matters
CONCLUSION
The existing tax system of India consists of direct taxes (the income tax), and indirect taxes which compromises numerous state and central levies such as VAT, Excise, sales tax, Service Tax, octroi and luxury tax.
With the implementation of the Goods and Services Tax Law, all these indirect taxes will be covered under a single approach of taxation system. The core idea behind implementing a single tax is that it will help the country’s to earn gains for the end consumer who will be rid of multiple cascading taxes, and will have to now pay a single tax on goods and services.
As mentioned above, GST will subsume all indirect taxes levied on goods and service, including State and Central level taxes. The GST mechanism is an advancement on the VAT system, the idea being that a unified GST Law will create a seamless nationwide market.
It is also expected that Goods and Services Tax will improve the collection of taxes as well as boost the development of Indian economy by removing the indirect tax barriers between states and integrating the country through a uniform tax rate.
Further, Let us Support the approach and initiative of SINGLE TAXATION for the sake of our Country.
Author – ACS Kanika Kumar
