GST or Goods Service Tax: 10 Basics Everyone Should Know
GST or the Goods and Services Tax was rolled out in the month of July 2017 and is considered by the experts as one of the best and the most prominent tax reform in the history of our country since its independence. Not only will it have a vast impact on the economic front of the country but is also an important step towards future economic growth. Even though GST is a simple phenomenon for a large number of people, it is still quite difficult to understand for a majority of the people who are affected by it. From the general public to the businessmen, everyone seems to be confused with the provisions of the GST law as well as how to proceed with it in a proper manner. A large number of people still face troubles with the basics of GST even today and the concept of GST is still not clear to them. So, in order to help the people understand the GST concept in a better way, here is a list of the top ten basics that have been complied that can help them understand it better.
Applicability of GST
- GST is applicable to businesses, freelancers, professionals and service providers with an annual turnover sales exceeding Rs.20 lakhs.
- It is applicable if you are selling goods from one place to a buyer in another state.
- It is applicable if you are an online seller.
- It is applicable to agents who sell goods on behalf of another person.
- It is applicable if you deal with goods/services where a buyer has to deposit tax in place of the seller.
Getting registered if GST is applicable to you.
- If you commence business throughout India, you will have to apply for registration in every state where you will be conducting your business within a period of 30 days.
- A separate registration for each state has to be obtained as registration is state wise.
- GST registration can also be done voluntarily even if your sales are less than Rs. 20 lakhs.
- The GSTIN i.e. the registration number in GST is PAN-based.
The different types of GST
- SGST and CGST are State and Central levies resulting from intra state sales.
- IGST, is a result of inter-state sales and is a sum total of SGST and CGST and is also applicable on imports.
Available Set-off in GST
- The payments of SGST can be set off against the inputs of IGST and SGST.
- The payments of CGST can be set off against the inputs of IGST and CGST.
- The payments of IGST can be set off against inputs of IGST, CGST and SGST.
- Variable rates of GST are imposed on variable items.
- The different slabs of GST slabs are at 0%, 5%, 12%, 18% & 28%.
- The GST council meetings keep on changing the items from time to time but most of the items fall in 18% slab.
- GST Invoice is the bill provided for the supply of the various Goods and Services and describes all the information that is relevant.
- The benefit of Input tax credit can only be claimed through a GST invoice.
- The government does not provide a proper format but has made it mandatory to fill up some of the information and the supplier can create the Invoice as per his convenience.
- Based on their business, every GST registered entity has to file a return containing details of income with the tax authorities every month, quarter or year.
- Separate returns such as GSTR1, GSTR3B or GSTR4 has to be filed for each category.
- A business venture needs to file three monthly returns and one annual return amounting to 36 returns annually.
- In case you don’t file returns then heavy fines and penalties will be imposed.
Input Tax Credit (ITC)
- ITC means that at the time of paying tax on your output, you can get the same reduced in case you have already paid tax on inputs and then you only need to pay the balance amount.
- ITC can only be claimed for business purposes.
- It can only be availed in a specified time frame and manner.
The concept of Reverse Charge Mechanism
- In this case the liability to pay tax is of the person who receives these goods and not the one who supplies them.
- It is applicable to both Goods and Services.
- A reverse charge applies to situations where an unregistered dealer sells goods to a registered dealer and where the services are provided through an e-commerce platform or operator.
What is a Casual Taxable Person?
- A casual taxable person is the one who supplies goods and services in an area where GST is applicable but does not have a fixed place of business in the said area.
- A temporary registration for a period of 90 days can be obtained by a casual taxable person. The said period can be extended for an additional period of 90 days.
The idea behind introduction of GST was to create a singular market across all the states in order to not only avoid bad effects of indirect tax system but also to improve the system and create a proper category for every business. It is a huge leap forward into the future and is simply amazing for the economy as well as the business ventures that would benefit from it in a great way. It is a technical system that if understood correctly, will benefit the business houses in a great way and will bring down their costs and make their profits rise high.
About the Author:
Kohal Dev, is a lawyer by profession and has a penchant for writing and his ability to juggle several tasks at a time, in the most effective and efficient manner is something that allows him to deliver content fresh out of the box. His extensive experience in the field of Law, Finance, Real Estate and Marketing allows him to write some of the most amazing blogs and articles in exactly the way they are required to be done. When not at work, he can be found reading and of course, writing.