Goods and Services Tax (GST) is a unified indirect tax regime, built on the motto of ‘ONE NATION, ONE TAX, ONE MARKET‘; levied on each transaction of supply of goods or provision of services.it is a unified, comprehensive, consumption cum destination based, multi level tax on every value-addition. It is seen as a reformation of indirect taxation for ease of doing business.
Date of Applicability
GST is levied in India for the first time from 1st July, 2017. This date is earmarked as one of the most important dates in the history of Indirect taxation governed by Central Board of Excise and Customs (CBEC).
CBEC is a part of The Central Board of Revenue or Department of Revenue, which is the apex body charged with the administration of taxes under the Ministry of Finance formed under the Central Board of Revenue Act, 1924 by Government of India.
GST is tax on supply of goods or provision of services by any person conducting business.
Person here includes Individuals, HUF, Partnership Firm, LLP, Company, AOP, Co-operative society, Society, Trust etc. However, GST does not apply to person having agricultural practice including growing crops, poultry breeding, dairy farming, horticulture, floriculture, etc.
Hence, it is not applicable to individuals working without business motive such as employees. Thus, persons salaried under any business organisation is not covered under GST net.
GST is applied to whole of India, into each and every State and Union territory; except Jammu & Kashmir. As of now, Jammu & Kashmir State Government has not affirmed to apply GST, however, efforts are made by Centre to bring this into GST region. Moreover, J&K State Finance minister Haseeb Drabu has hinted of GST likely to roll-out in the valley by 6th June, 2017.
- Supply of Goods or agreed to supply (within the state or inter-state)
- Servie provided or agreed to be provided
- Branch Transfer / Stock Transfer
- Profession, vocation or similar activity
Sale of Immovable Property is NOT Taxable under GST.
Businesses having annual turnover over Rs. 20 Lakhs shall mandatorily collect and pay GST (Rs. 10 Lakhs for North-Eastern States).
However, the GST registration is compulsory in the following cases irrespetive of the annual turnover:
- Inter-state supply of goods/services
- Casual taxable persons – Any person who supplies goods/services in a taxable territory and has no fixed place of business
- Non-resident taxable persons
- Person required to pay tax under reverse charge mechanism. Reverse charge mechanism means where the person receiving the goods/services has to pay tax instead of the supplier.
- Agents or any other person who makes supply on behalf of other registered taxable persons
- Input service distributors
- E-Commerce Operator; eg. Flipkart, Amazon, etc.
- Persons who supplies (except branded services) via an e-commerce operator
- Aggregator supplying services under his brand name
- Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person.
Goods- Almost all goods except few such as agricultural crops, cereals, milk, non-packed cottage cheese, meat, fish, seeds, handloom, newspaper, etc.
Services – Exempted earlier are also exempted in GST, rest are taxable now under GST
As of now, Alchoholic beverages for human consumption, Pertrol fuel and Sale of Immovable Property is NOT Taxable under GST.
Thus, if the flat is booked before Completion Certificate, it is TAXABLE under GST, whereas, if the flat is purchased after Completion Certificate (Ready-possession flat), it is NOT Taxable under GST since it is treated as sale of immovable property.
Types of GST
GST is broadly divided into 3 categories:
- Central Goods & Service Tax (CGST) – For supply of goods / services within the state
- State Goods & Service Tax (SGST) – For supply of goods / services within the state
- Integrated Goods & Service Tax (IGST) – For supply of goods / services from one state to other
Incidence of GST
GST is destination baased tax system. Hence, it is applied on supply of goods or provision of service, however, its levy depends on the place of supply and destination of goods or service delivered.
Eg. For a sale of goods from one state (Maharashtra) to other state (Haryana) attracts interstate tax known as IGST while such sale within one state (Maharashtra) itself attracts CGST and SGST.
The following taxes will be replaced by the GST:
- Central Excise Duty
- Commercial Tax
- Value Added Tax (VAT)
- Food Tax
- Central Sales Tax (CST)
- Entertainment Tax
- Entry Tax
- Purchase Tax
- Luxury Tax
- Advertisement tax
- Service Tax
- Additional Customs Duty / CVD
- However, Basic Customs duty and Profession tax will still persist its presence in indirect taxation.
Rates of Tax
GST till now is defined to be applied at different rates for different products such as 0%, 5%, 12%, 18% and 28%; other than for those opting for Composition scheme.
However , hints have already been given to gradually converge to one or two slab rates over the years by Finance Secretary Shri Hasmukh Adhia, backed by Finance Minister Shri Arun Jaitely.
Registration / Migration
As discussed earlier in applicability to business entities who are needed to register under GST, business organisations already conducting their business under various other laws like Central Excise, State VAT, Service Tax, etc. will also have to migrate into GST.
GST migration started after a couple of months of the Houses of parliament pass GST Law in September, 2016. However, new GST registrations have just started from 25th June, 2017.
Documents Required for Registration
The documents required for registration / migration are PAN, proof of constitution of business, place of conduct of business, details of authorised signatory and commercial bank details. This is to be self-verified by DSC, e-signature or EVC mode.
GST Identification number (GSTIN) is a 15 digit alpha-numeric PAN based unique identification code for the assessee.
Old VAT / Excise TIN or STC will be replaced by this number.
Structure of this number is as under:
Out of which first two digits are state code (in which Registration is taken) – eg. ’27’ is for Maharashtra
Next 10 digits (AAAAA0000A) denotes PAN number of the assessee
Followed by the number at which place the person is in PAN and last 2 digits are as check digits
Input Tax Credit (ITC) in simple words can be said as taking a set-off or tax credit for tax already paid while purchase, against payment of Output tax collected on sales. This helps to facilitate multi-level taxation system and avoiding cascading effect of taxation.
For Payment of ITC can be taken of
IGST IGST, CGST, SGST
CGST IGST, CGST
SGST IGST, SGST
Invoicing in any Indirect tax system earlier laid some required specification, however no formal format was mandated.
In GST, numerous suggestive invoicing templates have been provided, whose resemblences is needed while filing details in GST return.
Some of the types are:
- Sales Invoice
- Purchase Voucher
- Debit Note / Credit Note / Revised Invoice
- Export Invoice
- Delivery Challan
- Bill of Supply
- Receipt / Payment / Refund Voucher
- Composition Scheme
- .Option for all assessees having annual turnover upto Rs.75 lakhs during previous year (Rs. 50 Lakhs for North-Eastern States and Himachal Pradesh)
- .Rates – Manufacturers – 2% tax
– Traders – 1% tax
-Restaurants – 5% tax
3.No Input Tax Credit shall be available under this scheme.
4.Since this scheme is optional, assessee has to apply for this and then GST Official’s permission is required to opt for this, which can be opted online.
5.If this scheme is availed, GST cannot be charged in the Invoices raised by the Assessee, thereby dealer unablle to pass the GST credit.
- If this is availed in one year and for next year you intend to do away with this, you can apply to GST officials and take permission for the same i.e. either to Opt-in or Opt-out of the scheme.
- Only one GST return in 3 months, ie. Quarterly
RETURN Filing Due Dates
- 10th of Next Month – Output GST (including Advance from Suppliers) i.e. Sale Return (GSTR-1)
- 11th to 15th – system will be closed / blocked for any entry, but entries can be viewed during this period, including Entries of your suppliers. View Supplier’s sales entries, and ensure if they match with your purchase entries in your books.
- 17th of Next Month – Input GST i.e. Purchase Return (GSTR-2) These entries HAVE TO MATCH with the entries made by your suppliers in their Sales Return.
- 21st if Next Month – Monthly Return in GSTR-3, alongwith payment. Liability of Payment shall be calculated by the System itself, after filing of GSTR-1 & 2 as mentioned above.
- 31st December of Next Financial Year – Annual Return (GSTR-9), alongwith Audit Report. Audit is compulsory for Assessees having Turnover of Rs.1 Crore and more.
6.Thus during the year, total 37 Returns (12months X 3 each month = 36 plus 1 Annual) are to be filed by Assessee, for each of Place of Business. If the Assessee is caarying out business at more than one places, he has to obtain GST Registration at each of such place and has to file 37 Returns for each of such place of business.
Assessees cannot revise returns under GST once filed.