GOODS & SERVICE TAX (GST)

GOODS & SERVICE TAX (GST)

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Overview

GST is supposed to bring many benefits to the people and the overall Indian economy. The primary objective of GST is to reduce corruption and sale without a receipt. Apart from this, the following are certain other objectives:

Salient Features of GST:-

  1. Uniform tax rates and structures across all States and Union Territories reduce a multiplicity of taxes and compliance costs. There are 5 slabs under GST: Nil, 5%, 12%, 18% and 28%
  2. One Nation, One Tax: GST replaced multiple indirect taxes levied by the Central and State Governments, such as excise duty, service tax, value-added tax (VAT), and others. It brought uniformity in the tax structure across India, eliminating the cascading effect of taxes.
    Dual Structure: GST operates under a dual structure, comprising the Central GST (CGST) levied by the Central Government and the State GST (SGST) levied by the State Governments. In the case of Inter-state transactions, Integrated GST (IGST) is applicable, which is collected by the Central Government and apportioned to the respective State. Import of goods or services would be treated as inter-state supplies and would be subject to IGST in addition to the applicable customs duties.
  3. Dual Structure: GST operates under a dual structure, comprising the Central GST (CGST) levied by the Central Government and the State GST (SGST) levied by the State Governments. In the case of Inter-state transactions, Integrated GST (IGST) is applicable, which is collected by the Central Government and apportioned to the respective State. Import of goods or services would be treated as inter-state supplies and would be subject to IGST in addition to the applicable customs duties.
  4. Input Tax Credit (ITC): GST allows for the utilization of input tax credit, wherein businesses can claim credit for the tax paid on inputs used in the production or provision of goods and services. This helps avoid double taxation and reduces the overall tax liability.
  5. Composition Schemes:- (Cannot claim Input Tax Credit)
    The composition scheme is an alternative method for levy of GST. It is designed for small business whose turnover is up to prescribed limit. Initially the composition scheme was designed for supplier of goods and restaurant services. It has Lower Rates of Tax (1%, 2%, 5%, 6%)
  6. Regular Schemes:- (Can claim Input Tax Credit)
    Regular GST is a one type of registration under GST. Every supplier of goods or services or both is required to obtain registration in the state or union territory from where he makes the taxable supply if his aggregate turnover exceeds specified threshold limit in a financial year. The taxpayers registered under regular GST are required to pay taxes on monthly basis and file returns on quarterly basis up to turnover of Rs 5 crores and pay taxes and file returns on monthly basis for business with turnover above 5 crores. In a fiscal year, the threshold limit for GST registration is Rs 20 lakhs / 40 lakhs. However, in certain states, the registration fee is reduced to Rs 10 lakhs Refer GST Registration Thresholds & Registration process of GST.
    Rates of Taxes:- 0%, 5%, 12%, 18%, 28%

How to switch from a Regular GST to Composition GST ?

Due Date : The due date for conversion of regular GST to Composition GST is 31st March every year. The window for conversion will be opened in the month of Feb-March every year

Documents required to file GST registration:-

  • Aadhar
  • PAN( Individual/Enterprise PAN)
  • Photo
  • if Rent:- Rent / Lease Agreement & Land receipt of House/Land Owner
  • If Own:- Land Receipt (Current Date)
  • Electricity Bill/Municipal receipt
  • Mobile no.

Documents required to file GST Returns:-

  • Purchase & Sale Invoice