The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. GST is an indirect federal sales tax that is applied to the cost of certain goods and services. The business adds the GST to the price of the product and a customer who buys the product pays the sales price plus GST. The GST portion is collected by the business or seller and forwarded to the government. In effect, GST provides revenue for the government.
GST is India’s first major sweeping tax reform in decades. This regime has rationalised tax collection and simplified compliance procedures to a great extent. Businesses that once had to register for a wide range of taxes, i.e., VAT, Excise Duty, Service Tax, CST, Octroi, Luxury Tax and Entertainment Tax, -- now only require a GST registration. GST is strictly an Indirect tax applied to the cost of certain goods and services while Income tax comes under Direct tax. This valueadded tax is levied on all goods and service providers in the domestic market. However, not all businesses require a registration.
Businesses that supply goods or services over a value of Rs. 20 lakh (Rs. 10 lakh in North Eastern states) are eligible for GST registration. Remember that the GST is levied on supply, not sales. Therefore, stock-taking, discounts and freebies also come under the GST net. Businesses selling to other states must register for GST, regardless of turnover.
Why GST? Benefits
Some of the benefits of GST are:
Decreased compliance burden
Removal of cascading effect on taxes
Increase in demand for goods, thereby leading to increase supply of goods
Simplification of taxes
Decrease in cost incurred for manufacturing
Increase of government revenues
Features of GST
GST is a comprehensive, value added indirect tax on goods and services, which has made India a unified market.
Some of the key features of GST are:
Some of the key features of GST are:
1.Dual tax structure: There is a centre and state tax levied for every supply of goods and services and these are termed Centre GST (CGST) and State GST (SGST), respectively
2. IGST on inter-state supplies: Integrated GST (IGST) on inter-state supplies where the revenue is shared by both the Centre and the Consumption state.
3. Supply between two establishments of same legal entity taxable:
The supply of goods between the agent and the principal are taxable. The “gifts” given by employers to employees exceedding INR 50,000 are taxable.
4. Imports and exports: All imports are treated as inter-state supplies and do attract IGST. all exports are zero rated.
5. Tax administration: An online system for tax, however, there are GST Facilitation centres, GSPs, ASPs that assist taxpayers in filing the returns, registrations, etc.
The GST regime offers reduced tax liabilities to businesses under the composition scheme. These businesses must have a supply turnover of under Rs. 50 lakh, and will also not be able to avail of input-credit. This scheme will not, however, apply to the service industry or to businesses making inter-state sales.
What is GST in India ?
In March 29, 2017 the Indian government declared the Goods and Service Tax to unify the state economies and enhance the overall economic growth of the country.
Act according to which the GST is an indirect tax that subsumes all other taxes.
This Act became effective on July 1 2017 and since then GST has replaced all the
taxes that were existed previously. GST is a comprehensive tax that is imposed at
every stage of sale.
How the GST system works in India
GST is a comprehensive, value-added tax imposed on manufacture, sale and
consumption of goods and services. GST is a single unified system that is applied
across the country.
How GST Will Transform India
As GST removes the cascading effect of taxes and the economic barriers between
the states, it will be beneficial for businesses and consumers. For instance, if a
product has a tax rate of 20%, this is inclusive of central and state government’s
taxes. The seller can manufacture in one state and supply to other states with no
taxes. Also, the consumers would be subject to only this indirect tax and no other
taxes. GST helps government in creating a common market with common
procedures, thereby reducing the corruption.
Goods and Services tax council
Why Do We Need A GST Council?
The GST Council in India is a governing body that regulates the GST act and all
its further amendments. The Council takes the key decisions related to GST, which
includes changes in tax rates, tax laws, tax deadlines, etc. The GST Council regularly
notifies the finance ministry of all the improvisations. One of the primary responsibilities
is to ensure that there is one uniform tax across India.
How Is The GST Council Structured?
Every business that has an annual turnover of more than Rs 20 lakh has to mandatorily
register for GST. Other businesses which fall under “special” category are also required
to register for GST. Once registered, the GST taxpayer will get a GST registration certificate
in Form GST REG-06, which can be downloaded from the GST portal. It has to be noted
that the government does not issue physical certificate.
GST notification & circulars
Regular notifications and circulars on GST orders are provided to people. Orders, that are
related to compliance, which need immediate attention are issued. The orders and circulars
of 2018 are:
Integrated tax circulars
Central tax orders
Integrated tax circulars
Which countries collect GST?
The Goods and Services tax was first introduced in France in the year 1954. Other countries
that followed suite are Singapore, UK, New Zealand, Malaysia, Canada, etc. Also, many
countries had protests and compliance burdens for short terms. The GST concept is the same
all around the world and only the rate differs. In the case of Canada, it is a dual GST similar to
India and the standard rate ranges from 13-15%.
India's adoption of GST
India decided to join the other leading countries which have successfully implemented GST.
Hence, one of the significant Indian tax reforms, GST is regarded as a “one tax, one nation”
that subsumes all indirect taxes. GST facilitates global competitiveness among businesses,
simplifies tax collection process, reduces corruption across the nation and make interstate
selling of goods easy. The dual GST set up came into force on July 2017, abolishing the
complex tax structures that were existing for decades. The main idea of GST was to eliminate
the cascading effect of taxes, i.e., tax on tax or double taxes right from manufacturing phase
till it reaches the consumer.
How to register on www.gst.gov.in?
This must be done on GST portal gst.gov.in. It is a simple 11-step process
What Is GST Registration?
GST refers to Goods and Services Tax which subsumes all taxes such as Sales tax,
Service tax, Excise duty etc. into GST.
GST registration is required primarily if your annual sales are more than Rs. 20 Lakh.
Even if your sales are less than Rs. 20 Lakh, we suggest that you voluntarily opt for
GST registration because:
- You will not get any tax refunds on purchases (e.g. if you buy goods worth
Rs 1 lakh in a year, and tax rate is 28% – you will lose tax refund of Rs. 28,000).
- GST registration typically takes between 2-6 working days. You need to file your
application with the department and sign it with your digital signature.
How can we help? Why Tally Champion?
We help you get a secure GST Identification Number.
We make it easy for you to get your GST from the comfort of your own home.
We do the entire process online.
We will file your returns and complete all other compliances as and when required.
Why Tally Champion
1 Business Day
Tally Champion can connect you with a GST expert in just one working day.And if you're not totally satisfied, we'll take another day to find a replacement.All at the lowest price, both online and offline.
9.1 Customer Score
We make your interaction with government as smooth as is possible by doing all the paperwork for you. We will also give you absolute clarity on the process to set realistic expectations.
78 Strong Team
Our team of experienced business advisors are a phone call away, should you have any queries about the process. But we'll try to ensure that your doubts are cleared before they even arise.