What is GST?

Goods & Service Tax or GST is a value added tax which will subsume and replace all the current indirect taxes levied in India. GST will be applicable to all businesses, (small & large). the entire nation will follow a unified tax structure. GST will be levied on goods and services both. There will be dual system of GST to be followed in India to keep the Centre and State fiscally independent of each other. The GST Council, consists of Union Finance Minister and various State Finance Ministers, A four-tiered tax structure with tax slabs of 5%, 12%, 18%, and 28% & Highest rate pegged at 40%.

Which taxes will be replaced by GST?

(i) Currently levied and collected by the Centre:

  1. Central Excise duty
  2. Additional Duties of Customs (CVD)
  3. Special Additional Duty of Customs (SAD)
  4. Service Tax

(ii) Currently levied and collected by the State:

  1. State VAT
  2. Central Sales Tax (CST) (for inter-state sale)
  3. Entertainment and Amusement Tax (except when levied by the local bodies)
  4. Taxes on lotteries, betting and gambling.

GST framework :-

  1. Dual form of GST (like Canada & Brazil)
  2. At  intra-state level (within the state)- CGST (Central Goods and Services Tax) & SGST (State Goods and Services Tax) will be levied
  3. At the inter-state level (between states)- IGST (Integrated Goods and Services Tax) shall be levied.
  4. For Imports (considered as inter-state supply)- IGST. {Basic customs duty will applyon imports}
  5. Exports shall be zero-rated.
  6. Supplies to SEZ will be zero-rated

Benefits of GST :-

  1. Removal of the cascading tax effect (Removal of tax on tax).
  2. Input tax credit can be availed smoothly across goods and services thus reducing the tax burden
  3. Unified number of returns and compliances (no separate return).

 

Taxable person :-

A person who carries on any business at any place in India and who is registered or liable to be registered under the GST Act. 

GST registration is mandatory for (amongst others)-

  1. Turnover exceeding Rs 20 lakhs in any financial year (Rs 10 lakhs for North Eastern and hill states)
  2. Inter-state sale/ purchase
  3. TDS
  4. Non- Resident Suppliers
  5. Casual Taxable person
  6. Input service distributor
  7. E-commerce operator or aggregator
  8. Person Registered under previous law (E.g- VAT, Service Tax, Excise, Etc)
  9. Person who supplies via e-commerce aggregator

GSTIN :-

It is a unique Goods and Services Tax Identification Number (GSTIN), allotted to each taxpayer & will be a state-wise PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN).

PAN has been mandatory for GST. A person have to obtain a PAN before registering under GST.

Reverse Charge :-

when the receiver of goods/services becomes liable to pay the tax, it is called reverse charge.

Concept of reverse charge mechanism is  present in service tax.  will be applicable for goods & services both under GST regime.

Mixed Supply & Composite Supply under GST :-

The concept of composite supply in GST regime is similar to the concept of bundled services under Service Tax Laws. However, the concept of mixed supply is entirely new.

Composite supply :-

Where a supply comprises two or more goods/services  naturally bundled and supplied with each other in ordinary course of business, The items cannot be supplied separately is said as Composite supply

Mixed supply :-

Two or more individual goods or services supplied together by a taxable person for a single price is said as Composite supply.

These items can be supplied separately & is not dependent on any other.

Continuous Supply :-

Periodical supply of goods/services and payments also, Daily/ monthly/ yearly. (For example:- supply of  newspaper, Telecom and internet services )

GST Compliance Rating :-

Ratings will be given by  the GST authority to the taxpayers on basis of their neat & clear payment of Taxes, Person dealing with any registered dealer would also check the rating for the particular registered dealer, the instant refunds will be made in terms of percentage basis on the individual rating of the taxpayer. (For example:- taxpayer rated 6/10 will get 60% instant refund)