ABOUT GST

GST or say “Goods and Services Tax” is one of the biggest tax reforms (in terms of indirect taxes) in India came into effect from July 1, 2017. Under this fabled tax system, the taxpayers in India will pay a consolidated tax instead of the plethora of taxes such as Value-Added Tax (VAT), Central Excise, Service Tax, Entry Tax or Octroi, Customs Duty, Central Surcharge & Cess, Luxury Tax, Entertainment Tax, and Purchase Tax and a few other indirect taxes. Thereby helping to consolidate, streamline and make easier and more effective the process of indirect taxation.

The tax rates, rules and regulations are governed by the GST Council which comprises finance ministers of centre and all the states. GST simplified a slew of indirect taxes with a unified tax and is therefore expected to dramatically reshape the country. GST is levied at every step in the production process but is refunded to all parties in the chain of production other than the final consumer.

 

With the startup community migrating towards GST, the Do It Yourself (DIY) model has enabled for startup founders to complete taxpayer registration, tax return submission, tax payments, and other related works etc. for all sorts of enterprises irrespective of sector.

Types of GST Registration

With GST, all states in India will have the same tax rate, either on the supply of goods or services or both, which will bring down the logistics costs for many businesses, whether on Supply of Goods or Services or both. However, while filing for GST, they have to execute only two types of registration, one for State-GST and another for Central-GST.

  • Every person has to apply for registration in every State in which he is liable, within thirty days from the date on which he becomes liable to registration.

  • Casual/ non-residents should apply at least five days before their commencement of business.

  • Registration number in GST will be PAN based and hence, having PAN would be a prerequisite for obtaining registration.

  • The assessee must obtain separate registration for each State, as registration under GST will be State-wise,

  • The assessee has an option to obtain a separate registration for each of the ‘business vertical’ in the same State.

Who can collect GST?

Only a registered taxable person can collect GST. The taxable person must prominently indicate the GST amount on tax invoices. Below are showing different types of dealers, who can take registration in different ways:

  1. Regular: Is a customer who has a business which is registered under GST under normal provision either suo-moto or mandatorily, and has a GSTIN (GST tax registration number).

  2. Casual: Is a customer who wishes to set up a seasonal shop or stall can opt for this category. Customer must deposit an advance amount that is equal to the expected GST liability during the time the stall or seasonal shop is operational.

  3. Composition: Is a customer who has a business which is registered under the composition scheme (dealer having an annual turnover of up to Rs. 1.5 crore p.a.) of GST and has a GSTIN. (composition also include customers registered under an SEZ or as EOU's, STP's EHTP's etc.).

  4. Unregistered: Is a customer who has a business which is not registered under GST and does not have any GSTIN. Hence not authorised to collect GST.

  5. Consumer: Is a customer who is not registered under GST and is the final consumer of the service or product sold. Therefore not authorised to collect GST.

  6. SEZ: Is a customer who has a business which is registered under GST, has a GSTIN and is located in an SEZ or is an SEZ Developer.

  7. Overseas: Is a customer who has a business which is located out of India.

  8. Deemed exports- EOU's, STP's EHTP's etc.: Is a customer who has a business which is registered under GST and falls in the category of companies (EOU's, STP's EHTP's etc.), to which supplies are made they are termed as deemed exports.

  9. Input service distributor: They need to separately register as ISD regardless of the turnover.

  10. E-commerce operator or aggregator: Service categories notified under this Section are broadly the services of transportation of passengers (e.g. by Ola, Uber etc.); service of providing accommodation in hotels, inn, campsites; and housekeeping services like plumbing, carpentering etc.

  11. TDS Deductor: Such authorities are required to register separately as a TDS deductor irrespective of the turnover, the operation of tax deduction has been implemented w.e.f 1st October 2018.

  12. UN Embassy/ Body and other notified Organizations: In respect of supplies to some notified agencies of United Nations organisation, multinational financial institutions and other organisations, a centralised unique identification number (UIN) is issued.

Category of Taxes under GST

In India, there has dual GST model, Under this model, tax is levied concurrently by the Centre as well as the States on a common base, i.e.  that taxation is administered by both the Union and the State Governments:

  • GST to be levied by the Centre would be called Central Tax or Central GST (CGST) and that to be levied by the States would be called State Tax or State GST (SGST).
  • State GST (SGST) would be called UTGST (Union territory tax) in Union Territories without legislature.

  • CGST & SGST / UTGST shall be levied on all taxable intra-State supplies.

  • Inter-State supply of goods or services shall be subjected to Integrated tax or called integrated GST (IGST).

Input Tax Credit(ITC) Utilization

The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. GST taxes has been paid after adjustment of credits, The credit would be permitted to be utilized in the following manner:

  • ITC of CGST allowed for payment of CGST & IGST in that order.

  • ITC of SGST allowed for payment of SGST & IGST in that order.

  • ITC of UTGST allowed for payment of UTGST & IGST in that order.

  • ITC of IGST allowed for payment of IGST, CGST & SGST/UTGST in that order.

  • ITC of CGST cannot be used for payment of SGST/UTGST and vice versa.

As per Notification No. 74/2019 – Central Tax dated 26th December 2019, Govt. amended the rule as:

Restriction of ITC Utilisation

Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers in their GSTR-1 under section 37(1), shall not exceed 10 % of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under section 37(1) i.e. ITC shall not exceed now 10% (Earlier 20%) of the eligible credit reflected in GSTR-2A.

Blocking of ITC Ledger

Conditions of use of amount available in electronic credit ledger.-

  • A debit of ITC ledger may be disallowed if

    • ITC availed on the strength of tax invoices/ debit notes etc issued by a non-existent person or without receipt of goods or services or both

    • A person availing ITC is non-existent or is not in receipt of tax invoice/ debit note etc

  • Above restrictions may be removed if conditions for disallowing debit of electronic credit ledger no longer exist, or after the expiry of a period of one year from the date of imposing such restriction.

Rates and HSN/SAC Code of GST

With GST, all states in India will have the same tax rate, which will bring down the logistics costs for many businesses, whether on Supply of Goods or Services or both. However, while filing for GST, they have to execute only two types of registration, one for State-GST and another for Central-GST. The GST Council has finalized major five tax rates slabs of 0%, 5%, 12%, 18% and 28% for goods and services, some products declare as continue to be exempted from tax, (like.. Export of goods and services are zero-rated. Supplies to SEZs developers and SEZ units are also zero-rated), whereas gold and precious stones are taxed as 3% & 0.25% respectively, similarly taxes on the supply of the alcoholic liquor for human consumption and petroleum products are out from GST regime.

HSN means Harmonized System of Nomenclature code used for classifying the goods under the GST and the SAC Code means Services Accounting Code under which services fall under the GST regime is classified in India. HSN is an 8-digit code for identifying the applicable rate of GST on different products as per CGST rules. If a company has turnover up to ₹1.5 Crore in the preceding financial year then they need not mention the HSN code while supplying goods on invoices. If a company has turnover more than ₹1.5 Crore but up to ₹5 Cr then they need to mention the 2 digit HSN code while supplying goods on invoices. If turnover crosses ₹5 Cr then they shall mention the 4 digit HSN code on invoices.

The GST is imposed at variable rates on variable items. For knowing about different GST rate and HSN of goods and services, click to know

Applicability of E-way bill under GST

An e-Way Bill is an electronic permit for shipping goods similar to a waybill. It was made mandatory for inter-state transport of goods from 1st June 2018 in India. It is required to be generated for every inter-state movement of goods of the threshold limit of ₹50,000 and above. Also, It was made mandatory for intra-state transport of goods beyond 10 kilometres.

A unique e-Way Bill Number (EBN) is generated either by the supplier, recipient or the transporter. The EBN can be a printout, SMS or written on the invoice is valid. It is a paperless, technology solution and critical anti-evasion tool to check tax leakages and clamping down on trade that currently happens on a cash basis. The GST Officers tally the e-Way Bill listed goods with goods carried with it. Each e-way bill has to be matched with a GST invoice.

Blocking of E-way Bills

With effect from the 11th January 2020, as per CBIC notification, E-way bill generation shall be blocked if GSTR-1 is not filed for any two months or quarters, as the case may be.

Document Identification Number(DIN)

To begin with, w.e.f 8th November 2019, DIN was used for any search authorisation, summons, arrest memo, inspection notices, and letters issued in the course of any enquiry. This would create a digital directory for maintaining a proper audit trail of such communication. Generation and quoting of Document Identification Number (DIN) on any communication issued by the officers of the CBIC to taxpayers and other concerned persons.

Recipients would get digital facility (https://www.cbicddm.gov.in/MIS/Home/DINSearch) to verify the genuineness of such communication. The digital platform for the generation of DIN is hosted on the Directorate of data management (DDM)’s online portal www.cbicddm.gov.in

Any specified communication which does not bear DIN and is not covered by the exceptions mentioned in the circular no. 122/2019-GST shall be treated as invalid and shall be deemed to have never been issued.

Extension of DINs to all communications:

W.e.f 24.12.2019, all communications (including e-mails) sent to taxpayers and other concerned persons by any office of CBIC would require the generation and quote of DIN.

Standardised formats of search authorisation, summons, arrest memos, inspection notices etc have been uploaded on the DDM site. These will be available for download w.e.f 01.01.2020.


 

Exceptions:

DIN is mandatory, however, in the following circumstances, communications may be issued without auto-generated DIN. Reasons to be recorded in the concerned file and the communication shall state that it has been issued without DIN with Following exigencies-

  • Technical difficulties in generating DIN.

  • When communication is required to urgently issue and the authorised officer is outside office.

  • Such communications issued without DIN shall be regularised within 15 days (By post) facto approval of superior officer, generating DIN after such approval.

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