You must have come across the term GST or Goods and Services Tax . Have you really caught what it’s all about? This line is going to help you understand the concept behind this line and help you understand what it is all about GST Registration.
What is GST?
GST is a form of indirect tax, very similar to how service tax or VAT are indirect taxes. It aims to unify the Indian market and act as a single line for the entire country. GST is applicable on supply of all goods and services from the manufacturer to the consumer. It will provide a system for tax crediting of all taxes paid at each stage and thus the taxation of value addition at each stage. At the last stage of acquiring any goods or services the consumer is obliged to pay the taxes collected by the dealer before him and can get set for all other taxes paid earlier.
GST is being implemented in India with an objective to standardize the tax structure, which is evident through the tagline “One tax for one country”.
A breakdown of GST is recommended
IGST – stands for Integrated GST. It will be imposed and administered by the Center on every inter-state goods and services.
CGST – stands for Central GST. It is levied by the Center on intra-State supply of goods and/or services.
SGST – stands for State GST and is levied by States on goods and services.
Benefits of GST to Indian Economy
The benefits of GST accrue to different customers in different ways. Let’s look at these benefits from a personal perspective.
Benefits for businesses
- Businesses and consumers, in general, will find it easier to comply with the requirements of the taxation system as it will be supported by a complete IT system. It will provide all services like registration, return filing and tax payment through online mode. In this way, one can implement the procedures of GST in an easy manner.
- Doing business across the country will become a neutral process. A common tax rate system allows people to start and run a business anywhere.
- This system of taxation eliminates the cascading effect of tax and thus, reduces the hidden costs of doing business.
- A reduction in tax rates and a uniformity across them will lead to increased competition across industries.
Benefits to governments
- Hitherto, the central and state governments administered several indirect taxes, all of which had a number of norms and rules that had to be complied with and verified. Now, with a uniform tax rate and system across the country, with the support of an efficient IT system, the task of managing the taxation system will be simplified.
- A comprehensive check on taxes and continuous monitoring with dedicated IT systems will ensure that tax non-compliance is easily caught.
- Due to the online taxation system, the cost of tax collection is also expected to come down significantly. As a result, there will be higher revenue collection from the government.
Benefits to the end consumer
- Today, there are many goods and services in the country that are fraught with the cost of hidden taxes. With a single taxation system and availability of input tax credit at every stage, there can be transparency in the prices of goods.
- The overall tax burden on most items will come down significantly.
Benefits for SME / MSME
- The total income of the taxpayer is Rs. 250 crore to pay a tax rate of 25%, and a turnover of Rs. 250 crore to pay a tax rate of 30%.
- All taxpayers eligible for entry exemption will have the option to pay tax with Input Tax Credit (ITC) concessions.
- SMEs in the service sector do not get any exemptions or concessions. Offers are limited to SME manufacturers. The total tax incidence on every product we manufacture in India is between 27 and 31%, which should come down to 20%.
- Rs. SMEs with a turnover of up to 1.5 crores are exempted from duty but are subject to VAT/CST/entry tax etc. under state law. 1.5 crores exempted from excise duty does not mean that small and medium enterprises are exempted from excise duty.
What are the current taxes included in GST?
(i) Central taxes treated as one under GST:
- Central Excise
- Excise Duties (Medical and Toilet Products)
- Additional Duties of Excise (Goods of Special Importance)
- Additional Duties of Excise (Textiles and Textile Products) 4 5
- Additional Duties of Customs (commonly known as CVT)
- Special Additional Duty (SAD) of Customs
- Service tax
- Central surcharges and cesses are so far as they relate to the supply of goods and services
(ii) Below State taxes subject to GST:
- State Vat
- Central Sales Tax
- Luxury tax
- Entry Tax (All Forms)
- Amusement and entertainment tax (except when levied by local bodies)
- Tax on advertisements
- Purchase tax
- Tax on lotteries, betting and gambling
- State Surcharge and Cess related to supply of goods and services
How does the government plan to manage GST?
Since India has a federal system, GST will be administered at two levels, the central and state levels. GST is levied on supply of all goods and services. Cross utilization of input tax credit is not allowed and input tax credit of respective phase is allowed to be set off from that phase itself. However, cross-application of Central GST will be allowed on goods and services, which will be allowed for State Administration GST.
Salient features of the proposed payment system under GST
The complete system of GST will be governed by the following aspects:
- Fully electronic system
- A single point of interface for generation of cells
- Online methods for taxes
- General Challan
- General set of approved banks
- Common accounting codes
Return filing under GST system
- Central and state taxes have a common income.
- In total, eight forms have been prepared for the purpose of filing taxes under the GST system. However, for the purpose of an average user, only four of them will need to be used, which include goods, purchases, monthly income and annual income.
- Small taxpayers have an option to file quarterly returns under the Composite Scheme
- The process of filing return will be done completely through online mode.
How to Register under New GST System?
- Existing VAT, Central Excise and Service Tax vendors need not apply for fresh registration.
- However, for new dealers who have not registered before, there is an application form which needs to be filed. It will be based on the person’s PAN and will serve central and state level purposes. Within three days, once the approval is given, each trader will get a unique GST ID.
Convenience for taxpayers
In order to meet the needs of non IT savvy taxpayers, the following facilities should be available:-
- Tax Revenue Producer (TRB):
- A taxable person can prepare his registration application / return himself or approach TRP for assistance.
- TRP will return the specified registration document / in the prescribed format based on the information provided to him by the taxable person.
- The legal responsibility for the correctness 38 39 of the information contained in the forms prepared by TRP rests solely with the taxable person and TRP is not responsible for any errors or incorrect information.
- Facility Center (FC)
- Responsible for digitizing and/or uploading forms and documents including summary sheet issued by taxable person duly signed by authorized signatory.
- After uploading the data in the common portal using the FC’s ID and password, a printout of the acknowledgment is taken by the FC and signed and handed over to the taxable person for his records.
- FC will scan and upload the summary sheet signed by the authorized signatory