• How is GST different from the previous laws?
    • No more cascading taxes - Approximately 20 taxes were levied by the Central and the State government on total value of product at various stages of a supply chain. The process of taxing already taxed goods increased the total tax incidence which was then included in the manufacturing cost. Since the government didn’t provide credit for input tax, the end price of the product would be significantly higher. Under the GST regime, taxes are imposed only on value addition rather than total value of product at each stage. Credit for input tax paid can be claimed, thereby reducing the overall cost.
    • Interstate movement of goods - Earlier, when goods were moved from one state to another, a Central Sales Tax of 2% would be levied on the total value of goods. This again led to an increase in the price of products. Also, the arrival would be delayed because of time being wasted at tax checkpoints. On the other hand, toll nakas were dismantled on the eve of GST launch. Although toll, mandi charges, and vehicle entry fee continue, there’s no levy of entry tax on goods movement. Transport efficiency has already increased by 30%.
    • Complex compliance procedure - When there are multiple tax rates that businesses have to comply with, the paperwork increases and the compliance procedures get complicated. Different rates for the same products in different states made interstate trading expensive. Businesses earlier had to maintain & manage piles of papers specific to the state’s tax laws they traded with. In the GST regime, tax rates for the same product are same throughout the country.
  • Why multiple rates?

    India is the second most populous country with its population hailing from both ends of the economic spectrum. It would be unfair to tax a Mercedes and a toothpaste at the same rate. Furthermore, if the tax for a commodity was raised from 12% to a standard rate of 18%, it would prove to be inflationary and would disrupt the market. For this reason, different slabs were decided.

  • What is GST Cess?

    An additional tax levied on a tax is known as cess. It is levied by the central government for a specific purpose. It is generally imposed till the time the government gets enough money for that purpose, in this case to compensate the states who may suffer revenue loss due to implementation of GST.

  • Revenue loss – The GST (Compensation to States) Act

    GST is a consumption based tax. This means that the state in which goods are consumed or where the services are provided, will be eligible for the revenue on the supply. As a result of this, manufacturing states stand to lose revenue earlier earned from indirect taxes. States like Maharashtra, Gujarat, and Tamil Nadu will therefore be compensated under the GST (Compensation to States) Act for a period of 5 years. Cess has been imposed on demerit goods such as tobacco products, aerated drinks, and luxury cars to collect funds for this purpose.

  • Destination based Tax

    Tax will be charged at every point of sale. When a product is manufactured in one state (for eg Goa) and sold in another (Kerala), the state where the product is sold (Kerala) will be entitled to the GST on the final sale. The manufacturing state (Goa) will, however, collect taxes from manufacturing and warehousing activities.

  • Who needs to register?

    You are required by law to register under GST if your turnover in a financial year exceeds Rs 20lakhs. The lower limit has been set at Rs 10lakhs for special category states. However, if your turnover includes supply of goods and/or services which are exempt under GST, you do not need to register. Following are some cases where it is mandatory to obtain registration:

    - If your business was registered under an earlier law

    - If you undertake inter-state supply of goods and/or services

    - If you are a Casual Taxable Person

    - If you are a Non-Resident Taxable Person

    - If you are an input service distributor

    - If you are an E-commerce operator or aggregator

  • Exemption from registration

    Certain entities are specifically exempt, or may be exempted from registration at a future date, under Goods and Services Tax Act. These bodies shall not be required to register and will be allotted a UIN instead of GSTIN:

    - Any specialized agency of United Nations Organization, or any financial institution and organization notified under the United Nations Act, 1947;

    - Embassies or Consulates of foreign nations;

    - Any other person notified by the Board/Commissioner;

    - Any specific person/s notified by the Central or State governments, based on recommendation of the GST Council.

  • Who is a Casual Taxable Person?

    A Casual Taxable person is someone who doesn’t have a fixed place of business but occasionally supplies goods and/or services as a principal or agent, in a taxable territory.

  • Who is a Non-Resident Taxable Person?

    A Non-Resident taxable person is defined as the one residing outside India and making a taxable supply in India. He/she doesn’t have a fixed place of business but supplies goods and/or services as a principal or agent in a taxable territory.

  • Rules for registration for Casual/Non-Resident taxable person

    A casual taxable person can apply for registration under GST by filing the GST REG-01 whereas GST REG-09 can be filed by a non-resident taxable person. The application must be submitted at least 5 days before the commencement of business. The taxable person has to make an estimate of his tax liability for the period and the deposit the same as advance tax.
    A few other rules:

    - Registration shall be valid for 90 days

    - Registration cab be extended by 90 days by submitting an application in GST REG-11

    - The advance tax deposited shall be used as input credit

  • Voluntary Registration

    There is no compulsion for business owners or service providers to register under GST if their turnover doesn’t cross the limit of Rs. 20 lakh specified by the government. All the same, an assessee can opt to register voluntarily. In such a case, all the provisions of GST will be applicable to him/her. A person who volunteers to register and does so, will be treated as a normal taxable person. Apart from legal recognition and better credit rating, the other benefits of voluntary registration include:

    - More customers: If you are unregistered, manufacturers/service providers might refrain from conducting business with you because they won’t be able to claim credit on inputs. They will have to pay taxes from their pockets, which in turn will have an impact on price of the product making it undesirable.

    - Inter-state sales: Getting registered will make it possible for you to trade with suppliers from other states. You can also register on e-commerce sites to sell goods or to provide services. This widens the potential market.

  • Is there any concept of deemed registration on GST system Portal?

    No. There is no deemed enrolment on the GST portal. All the taxpayers registered under any of the previous Acts (Central Excise, Service Tax, et al) are expected to visit the GST System Portal and enroll themselves.

  • Goods and Services Tax Network (GSTN)

    Everyone is aware that the entire process from registration to return filing and paying taxes has been digitized. Human elements have been eliminated entirely, more or less. The GSTN is the portal shared by the Central and State governments which acts an interface between the taxpayers and the government. It is the IT backbone.

  • Composition Scheme

    A taxpayer registered under GST is required to maintain records, upload invoices summary on GSTN, file three parts of monthly returns and so on. To be GST compliant, small traders will have to install software or hire professionals which would be expensive. The Composition Scheme in GST allows taxpayers to pay taxes at lower rates and also to file returns on a quarterly basis rather than monthly.
    Key points to be kept in mind are:

    - You can apply for composition scheme if your turnover in the previous financial year doesn’t exceed Rs 75 lakhs (Rs 50 lakhs for special states);

    - Service providers, except those operating a restaurant, cannot opt for this scheme;

    - Manufacturers of ice cream and other edible ice, all goods of tobacco & tobacco substitutes, pan masala cannot opt for this scheme;

    - If you engage in interstate outward supply of goods, supply of non-taxable goods, supply through e-commerce platforms you cannot opt for composition scheme.

  • Registration Process

    It is important to note that PAN is mandatory to apply for registration, except for non-resident persons. If a businessman has multiple business verticals in a state, separate registrations have to be obtained for each business vertical.

  • What is 101st Amendment Act?

    A bill is a draft of a proposed law. Since GST was going to replace the previous taxes, and thus the previous laws, an amendment in the Constitution was required. The 122nd Amendment Bill of the Constitution of India was thus tabled in the Parliament. A bill becomes an act after receiving the President’s assent. The 122 nd Amendment bill officially became The Constitution (One Hundred and First Amendment) Act, 2016 after receiving the President’s assent.

  • What is Transitional credit?

    GST combines multiples taxes into one. Provision have been made for smooth transition of Input Tax Credit available under VAT, Excise Duty or Service Tax to GST. In Transitional credit, the regular registered person can claim the pending credit of stocks provided such stock is purchased 6 months before the appointed day. The registered person can also take credit of capital goods as well.

  • Who is an input service distributor?

    When companies have distributed network of manufacturing or service provision but have centralized billing, they receive bills for some common services or common inputs at their centralized billing address. In such a case, centralized billing office distributes the Input Tax Credit to various manufacturing units or service provision offices on the basis of taxable output produced or services provided. The centralized billing officer is termed as Input Service Distributor.

  • TRN

    TRN stands for Temporary Reference Number. You can login using the TRN. After clicking on the REGISTER NOW link on the website, you can opt for the TRN option and enter the number. You will get a One- Time Password (OTP). Proceed after entering the number. You can check the status of your application under the Status column.

  • UIN

    UIN is a Unique Identification Number which shall be allotted only to certain people notified in the GST Act. The GST Act states that the following will be required to obtain a UIN:

    - Any specialized agency of United Nations Organization, or any financial institution and organization notified under the United Nations Act, 1947;

    - Embassies or Consulates of foreign nations;

    - Any other person notified by the Board/Commissioner;

    - Any specific person/s notified by the Central or State governments, based on recommendation of the GST Council.

  • What are the GST rates applicable for a compounding dealer?

    Composition Scheme dealers are required to pay GST at lower rates, depending on their profession.

    Manufacturer – 2%

    Trader – 1%

    Supplier of food or drinks for human consumption – 5%

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