GOODS AND SERVICES TAX (GST)
👉 Brief Information
✍ It replaces Central Excise Duty/ Additional Duties of Excise/ Excise Duty under MTPA/ CVD/ SAD/ Service Tax/ Surcharge & Cesses/ VAT/ CST/ Purchase Tax/ Entertainment Tax/ Luxury Tax/ Entry Tax/ Taxes on Lottery.
✍ GST Council is the apex body created by Parliament for governance of this Act. It includes Finance Secretaries of Central as well as various State Governments.
✍ GST Rates- 0%, 5%, 12%, 18% & 28%.
✍ Old Sales Tax/ Manufacturing Tax/ Service Tax Registration Numbers will go and new PAN based Registration Number for GST is essential. Structure of this number is as under:
Out of which first two digits are state code (in which Registration is taken)- ’07’ is for Delhi,
Next 10 digits (AAAAA0000A) are PAN number of the assessee
and last 3 digits are serial number.
✍ Incidence of GST is on following:
- Supply of Goods or Services.
Agreed to Supply Goods or Services for Consideration (either in cash or in kind).
Destination based Tax will be charged (If source & destination are in same state, then it is Intrastate Transaction, if source & destination are in different states, then it is Interstate Transaction).
Branch Transfer/ Stock Transfer will also attract GST.
Now concept of Statutory Forms such as ‘C’ form/ ‘F’ form become outdated.
✍ GST Registration is mandatory, if Annual Turnover is Rs. 20 Lacs or more. However if you are engaged in Interstate transactions, Limit of Rs. 20 Lacs will not be applicable and you have to take Registration in all cases.
✍ Three types of GST are there:
Central Goods & Service Tax (CGST)
State Goods & Service Tax (SGST)
Integrated Goods & Service Tax (IGST)
✍ Rates under GST:
Rates of CGST & SGST shall be equal and will be 50% of the rates stipulated for those specific Goods or specific Services. e.g. if the goods under transaction attract 18%, then CGST for them is 9% and SGST for them is 9%.
In case of Local Invoice or Intrastate Invoice, CGST and SGST both need to be charged separately and to be mentioned in the Return accordingly.
Rates of IGST shall be equal to the sum of rate under CGST and rate under SGST. Thus in above example, rate under IGST is 18% (9 + 9).
In case of Central Invoice or Interstate Invoice, IGST need to be charged and to be mentioned in the Return accordingly.
Input Tax Credit shall be available for all these three taxes viz. CGST, SGST & IGST except in some cases.
Earlier, in spite of ‘C’ or ‘H’ or ‘F’ forms, 2% tax was a cost to the assessee. now since these forms are done away with, this 2% cost is avoided, since full set-off or ITC of IGST on all Interstate Transactions is allowed now.
GST will also be chargeable on Free Items or Samples given. Thus GST needs to be paid on all items being delivered to the customer.
✍ Composition Scheme:
It is available for all assessees dealing in goods having Annual Turnover <= Rs. 75 Lacs.
Under this scheme, 2% tax is applicable for Manufacturing Organisations, 5% tax is applicable for Restaurants/ Dhabas and 1% tax is applicable for all others.
No Set-off or Input Tax Credit shall be available under this scheme.
This Scheme is Optional.
Assessee has to apply for this and then GST Official’s permission is required to opt for this.
If this scheme is availed, GST cannot be charged in the Invoices raised by the Assessee.
If this scheme availed in one year and for next year you intend to opt out of this scheme, you can apply to GST officials and take permission for the same i.e. either to Opt In or Opt Out of the scheme.
Service Providers shall not be eligible for the Composition Scheme. ✍ Immovable Property is not Taxable under GST. Thus, if the flat is booked before Completion Certificate, it is Taxable under GST, whereas if the flat is purchased after Completion Certificate (Ready Possession Flats), it will not be Taxable under GST.
✍ GST is also applicable on Advance from Customers, as and when it is received from the customer, before raising invoice for the same. It needs to be declared in the Output GST Return (GSTR-1).
✍ URD Purchases (Purchases from Unregistered Dealers/ Suppliers):
If the Assessee Purchased from Unregistered Dealers, Assessee has to ACTUALLY Pay GST on the same Purchases under Reverse Charge. However, Assessee can take set-off or Input Tax Credit of the same.
✍ No Revision of Return is allowed under GST.
✍ Input Tax Credit:
- Assessee has to be in Possession of Tax Invoice or Debit Note or Credit Note and Goods or Services must have been received by the Recipient.
Payment has to be made to the Supplier within 180 days. If the payment is not made to the supplier within this period, the ITC has to be reversed by the Assessee. It can later be availed, as and when actual payment of this is made to the Supplier.
ITC of GST paid under Reverse Charge (GST paid on Unregistered Purchase or on Other Specified Services under Reverse Charge) can be availed.
✍ GST Rating:
- There will be GST Compliance Rating (just like CIBIL Credit Rating) in respect of Assessee, in consideration of timely filing of Returns, timely GST Payments and other discipline followed by the Assessee.
This can be viewed by the Assessee and also by others.
Thus while selecting the Supplier, his GST Compliance Rating can be viewed beforehand.
It will also be viewed by Bankers, Financial Institutions while lending money to the Assessee.
✍ Input Tax Credit under GST shall be used in the following manner and in the same sequence:
ITC of CGST shall be used
- For payment of CGST
For payment of IGST
ITC of SGST shall be used
- For payment of SGST
For payment of IGST
ITC of IGST shall be used
- For payment of IGST
For payment of CGST
For payment of SGST
✍ Return Filing Due Dates:
- 10th of Next Month- Output GST i.e. Sales Return (including Advances received from Recipient) (GSTR-1).
15th of Next Month- Input GST i.e. Purchase Return (GSTR-2). These entries have to match with the entries made by your suppliers in their GSTR-1.
20th of Next Month- Net GST Payment i.e. Final Return (GSTR-3). Liability of GST Payment shall be calculated by the System itself, after filing of GSTR-1 & GSTR-2 as mentioned above.
31st December of Next Financial Year- Annual Return (GSTR-9), alongwith Audit Report. Audit is compulsory for the Assessees having Annual Turnover of Rs. 2 Crore and more.
Thus during the year, total 37 Returns (12 months X 3 each month = 36 plus 1 Annual Return) are to be filed by the Assessee for each Place of Business. If the Assessee is carrying out business at more than one places, he has to obtain GST Registration at each of such place and has to file 37 Returns for each of such place of business.
Quarterly Return instead of Monthly Return is prescribed for Composition Dealers.
✍ GST to be paid under Reverse Charge in the following cases:
- Unregistered Purchases (with Names & Addresses of such suppliers).
Services such as Goods Transportation, Advocates Fees, Sponsorship Services, Director Sitting Fees, Rent a Cab etc
A very good morning