What is GST?

GST is the new legislation which enacted by the Government in order control over the taxing system in India. The process of such legislation was started in 2000, it took 17 years to draft the bill and to get it passed by parliament, finally enacted in July, 2017. The object of the legislation is to uniform the multiple and complex tax system in India, it was done on the motive of ‘One Nation One Tax’. Now GST is mandatory for the entities which buying and selling the products and services. It levies taxes on every stage of products on where the value addition occurs. The GST replaced the all earlier taxing rules and statues, and it has dual GST by the central government(CGST) and the state government (SGST) because India is a quasi-federal. For the interstate business, the tax will be imposed by the central as IGST. There are various advantages made by the GST, some them were it allows to run the tax system flawlessly, avoids multiple and double taxations, it allows the government to check on the financial status of the businesses, etc. It is also considered as a combustion of various tax statues and rules on the motive to avoid multiple of tax on the same subject matter which leads to hike in price and ultimately affects the consumers i.e. the people. GST subject to pay tax about 5%, 12%, 18% and 28% based on the commodities and services. 5% for the commodities like agarbatti, frozen vegetables, fertilizers, floor covering, apparels up to Rs.1000, insulin, edible oils, coir mats, medicines, rusk, fish fillet, foot wear up to Rs.500, revenue stamps, braille watches and typewriters, Tea, sugar etc. 12% for the commodities like apparel above Rs.1000, ghee, jelly, mobile, Ayurveda medicines, Frozen meat product, fruit chess board, fruit, fruit juice, carom board, Ladles, Diagnostic kits and reagent, tooth powder, spoons, forks, playing cards, umbrella, etc. 18% for the commodities like bamboo, hair oil, biscuits, CCTV, ice cream, camera, instant food mixes, computers, aluminium foil furniture, branded garments, soaps, mineral water, preserved vegetables, printers, flavoured refined sugar, steel products, pastries, speakers etc. 28% for the commodities like beedies, after shave, hair shampoo, pan masala, deodorants, dye, ceramic tiles, water heater, paint, vending machines, automobiles motorcycles, washing machines etc. Similarly, services subject to 5% GST were Air travel in economy class, small restaurants earning turnover up to Rs.50 Lakhs, supply of tour operators services, railways, radio taxes and motor cabs, etc. 12% for services like Air tickers by business class, guest houses& hotels tariff range between Rs.1000 – Rs.2500 per night, etc. 18% for the services like IT services, Telecom services, Guest houses & hotels with tariff from Rs.2500-Rs.5000, AC hotels serving alcohol to the customer, etc. 28% for the services like 5-star hotels, gambling and race clubs, cinema and entertainment, guest houses & hotels which having tariff above Rs.5000. And few are exempted from GST such as milk, bread, vegetables, newspapers, fish, eggs, hoof meal, bangles, natural honey, fresh fruits, buttermilk, salt, judicial papers, etc.

Registration is mandatory for a business which has an annual turnover of 20 Lakhs and above and certain specified business which has an annual turnover of 10 Lakhs and above. And there are various other criteria also exist for mandatory registration irrespective of turnover like business which involves interstate supply of goods and services, those who registered under earlier tax laws, causal taxable persons, non-resident taxable person, input service distributor, agents of the supplier, those who paying under reverse tax mechanism, e-commerce operator, etc. Where the business is registered and transferred, the person who got transferred have to register with respect to the date of effect of transfer. The registration can be done through online. The online makes to avoid physical interaction and other paper works. The registration is also through the common portal and common procedures for all. The registration procedure starts with filling up the personal details in the application and followed by addition of mobile number, mail id, and pan card, then the confirmation of such number and mail id thorough OTP. The by filling various other Relevant forms with respect to the business. The documents which are required for the registration are PAN card of the company’s registration certificate, proof for the place of business via EB bill, or any agreements like rental etc., the bank account details, the core members or the partner’s details and their address proof, in case of company its address and proof. In case if the business made liable to registration he should be applied within 30 days of such notification, on failure to do, he will not allow to collect tax until the registration is granted. Because registration is must for collecting the tax from the consumers without such thing he can’t claim for taxes.

There are various benefits are there for the registered business some of them are they are legally allowed to do their business because without the registration none allowed to do the business of goods and services and also it is a proof as to show as an authorised supplier of goods and services, the businesses also authorised to impose tax on the consumers and pass on the credits and also can add tax for the tax which he paid already like to the suppliers, etc. It restricts the imposing of multiple indirect taxes like service tax, value added tax, entry tax, purchase tax, etc. and compiled all such taxes into one as GST which ultimately helps in decreasing transaction costs. The businesses are now having uniformity in taxation. The cascading of taxes will be prevented. However, GST will operate on a common platform so all GST relates issues can be cleared out in online and also transparency exist. It also creates various benefits for the government and public at large, like it helps the government to administer the taxing system and it also results in higher revenue efficiency, regulation of unorganised industries, lowered tax burden on industry and trade, small businesses were free from tax burdens and also the system imposes tax based upon the income and annual turnover which results in fairness to the business world.

Further reading/reference:

GST Professional Certification Course