Goods and Services Tax (GST) is an indirect tax or simply we can say that it is a consumption-based tax which is levied on the basis of “Destination principle.” It is also known as “One Nation One Tax”. It is a new form tax regime, which came into effect from 1st July 2017. With the introduction of the GST, various disadvantages which has to be faced in the earlier tax regime has been removed, for example the cascading effects which has been faced by the taxpayers earlier, has been removed now, as only value addition will be taxed and burden of tax is to be borne by the final consumer. It is levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as set of.
It has subsumed all the indirect taxes which are levied earlier such as service tax, entry tax, sales tax, excise duty, and customs duty. However, Basic Customs Duty continues to be levied on imports. This reform changed the way business activities were conducted in India. This initiative was taken to improve the ease of doing business in India. This move not only benefitted the unorganized sectors of India but also improved the flow of foreign investment in India.
GST is levied on supply of goods, or services or both, except on the supply of the alcoholic liquor for human consumption. The utmost benefit of GST is that one can take the credits of the taxes i.e. Input Tax Credits paid by them on supply of goods and services.
There are basically three taxes that are levied under this system: CGST, SGST & IGST. CGST is the tax collected by the Central Government on an intra-state sale. SGST is the tax collected by the state government on an intra-state sale and IGST is a tax collected by the Central Government for an inter-state sale/Import.
The CGST and SGST are levied at rates to be jointly decided by the Centre and States. The rates would be notified of the recommendations of the GST Council.
Goods & Service tax is applicable on the Suppliers based on their aggregate turnover. The term “Aggregate turnover” shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals. Every supplier whose aggregate turnover exceeds Rupees 40 Lakh (in case of exclusive supply of goods) (Rupees 20 lakh if business is in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand) and Rupees 20 lakhs (in case of supply of services or in case of mixed supplies) (Rupees 10 lakh if business is in States of Manipur, Mizoram, Nagaland and Tripura) required to get mandatorily registered under GST. The small businesses, having turnover below the threshold limit can, however, voluntarily opt to register.
Under GST, there is another option which is available for the taxpayers that is Composition Scheme. A taxpayer whose turnover is upto Rs. 1.5 crore in the preceding financial year can opt for Composition Scheme. For the states namely (i) Arunachal Pradesh, (ii) Manipur, (iii) Meghalaya, (iv) Mizoram, (v) Nagaland, (vi) Sikkim, (vii) Tripura, (viii) Uttarakhand aggregate turnover limit shall be Rs. 75 lakh.
This scheme has been further expanded for those suppliers who are either providing independent services or a combination of both goods and services, and have a turnover of up to Rs 50 lakhs in the preceding financial year.
The Composition scheme is beneficial for the small taxpayers as the rate of tax is very low and the compliances under this scheme are comparatively less and hassle free as compared to other. However, upon opting for this scheme, he cannot issue taxable invoice under GST law and can neither collect GST from his customers nor can claim Input Tax credit on his purchases.
However, one can take the advantage of the GST only if it is registered under this. Once a business is successfully registered, a unique registration number is assigned to them known as the Goods and Services Tax Identification Number (GSTIN) called and a certificate of registration incorporating there in this GSTIN is made available to the applicant on the GST common portal. The first 2 digits of the GSTIN is the State code, next 10 digits are the PAN of the legal entity, the next two digits are for entity code, and the last digit is check sum number. Registration under GST is not tax specific which means that there is a single registration for all the taxes i.e., CGST, SGST/UTGST, IGST and cesses.
A given PAN based legal entity would have one GSTIN per State, that means a business entity having its branches in multiple States will have to take separate State-wise registration for the branches in different States. But a person having multiple places of business in a State or Union territory may be granted a separate registration for each such place of business. Without GST registration, a person can neither collect tax from his customers nor claim any input tax credit of tax paid by him.
We, JKG Corporate Consultants provide the following services to our client in relation to GST:
- Filing of Application/Amendment/Cancellation/Revocation of GST Registration
- Computation of tax payments and filing of various returns
- GST Audit
- Advising on various GST related queries
- Processing, planning, and coordinating with department related to GST Refunds and demands.
- Other GST Compliances
Disclaimer: [This article has been prepared on the basis of information available till date. But professionals are advised to study the laws and compliance thoroughly].
