In India, GST is a successor to VAT used in India on the supply of goods and services. GST is a digitalised form of VAT where you can also track the goods & services. Both VAT and GST have the same taxation slabs. It is a tax on goods and services sold domestically for consumption. The tax is included in the final price and paid by consumers at point of sale and passed to the government by the seller. The GST is usually taxed as a single rate across a nation
What is Goods & Service Tax (GST) ?
Goods and Services Tax (GST) is an indirect tax that was introduced in India w.e.f. 1st July 2017, which replaced all the existing indirect taxes like Central Sales Tax (CST) , Value Added Tax (VAT), Service Tax, Central Excise Duty, and others. GST is a comprehensive tax levied on the supply of goods and services across India. The introduction of GST has led to the simplification of the Indian tax system, seamless flow of Input Tax Credit (ITC) , reduction of tax evasion , and increased compliance.
In this blog, we will discuss the various aspects of Goods and Service Tax (GST) in India.
How many types of Goods and Service Tax (GST ) – Dual Tax Structure
In India, GST is divided into three categories: Central GST (CGST), State GST (SGST), and Integrated GST (IGST).
CGST is levied by the central government on the intra-state supply (supply within the state) of goods and services, similarly SGST is levied by the state government on the intra-state supplies ( i.e. supply within the state). IGST is levied by the central government on the inter-state supply (supply from one state to other state) of goods and services.
Who is required to register under GST & how can we take registration under GST ?
Any individual or entity engaged in the supply of services with a turnover of more than Rs. 20 lakhs (Rs. 10 lakhs for North-Eastern states) in a financial year ( i.e. if turnover from supply of services is more than Rs.20 lacs for the period 1st April,2022 to 31st March,2023) is required to register under GST.
Similarly any individual or entity engaged in the supply of goods with a turnover of more than Rs.40 lakhs (Rs. 20 lakhs for North-Eastern states) is required to register under GST.
The registration process is completely online, and a unique 15 digit Goods and Services Tax Identification Number (GSTIN) is assigned upon successful registration.
The GSTIN is PAN based wherein first two digits specify the State Code , the next 10 digits are the PAN of individual or the entity, 13th digit is the no. of registrations taken in the same state , 14th digit will be “Z”, the last 15th digit can be number or an alphabet.
What are the returns to be filed under GST & how to file them ?
Under GST, registered taxpayers are required to file periodic returns to the government, providing details of their sales , Input tax credit (ITC) on purchases & few other details. The frequency of filing returns varies depending on the type of taxpayer and turnover.
Although there are various returns to be filed by GST registered taxpayers however broadly , there are three types of GST returns: GSTR-1, GSTR-2A/GSTR-2B, and GSTR-3B which every registered taxpayer should know
GSTR-1 is a monthly or quarterly return filed by taxpayers to provide details of their outward supplies (sales).
GSTR-2A is a return that is automatically generated based on the purchases made by the taxpayer from registered suppliers.
GSTR-3B is a monthly return that summarises the details of both outward and inward supplies.
What is Input Tax Credit(ITC) and who can claim it?
Under GST, registered taxpayers can claim Input Tax Credit (ITC) for the tax paid on their purchases. ITC can be claimed only on purchases made from registered suppliers and used for business purposes. ITC cannot be claimed for personal or non-business expenses.
Who can file GST Annual Return ( GSTR-9/9C)?
Registered taxpayers with a turnover of more than Rs. 2 crores/Rs.5 crores are required to file their annual return in GSTR-9 before 31st December of following year (i.e. GSTR-9/9C for FY 2022-23 needs to be filed before 31st Dec,2023) declaring the summary of the Sales , Purchases & few other details. The reconciliation statement should be filed electronically in Form GSTR-9C.
Penalties for Non-Compliance with GST Provisions
Non-compliance with the GST provisions can attract heavy penalties. Penalties can range from Rs. 10,000 to 25,000, depending on the nature and severity of the default.
Conclusion
GST has brought about significant changes to the Indian tax system, simplifying it and increasing compliances and also it has changed the way a business used to operate in India. As an individual or any business entity who is doing business in India it is crucial to stay updated with the changes in the GST regime and ensure compliance.
Understanding the different aspects of GST, including registration, returns, ITC, audit, and penalties, is essential to ensure that there are no unnecessary huge fines & penalties on the individual or entity doing business in India.