GST 2021 Guides - Everything About Goods & Service Tax

Important GST Articles

"Goods and Service Tax FAQ's"

What is GST?

GST is a destination based tax and levied at a single point at the time of con sumption of goods or services by the ultimate consumer. GST is based on the principle of value added tax. Goods and Services Tax (GST) is a comprehensive tax levy on manufacture, traders, sale and consumption of Goods and Services at national level and is expected to remove the cascading effect of tax-on-tax which is prevalent presently. The term GST is defined in Article 366 (12A) to mean “any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption”

Which all taxes will GST replace?

It will replace all the indirect taxes currently levied and collected by the Central and State Govt like - VAT, Excise Duty, Luxury Tax, Entertainment Tax, Purchase Tax, Central Sales Tax, Additional Duties of Excise on businesses etc.

What are the Benefits of GST?

• Mitigation of cascading taxation
• Cascading tax effect (meaning tax on tax) will no longer exist
• Elimination of multiple taxes and double taxation
• Input Tax Credit will be easier to avail
• Returns and compliances will be consolidated
• Creation of unified national market:

How to Migrate for GST?

Every person registered under any of the earlier laws and having a valid PAN shall be issued a certificate of registration on a provisional basis.  You can enroll for GST via the common portal of GST. CAknowledge.in Team can also help you with your enrollment. For more details about GST Registration click here.

Can I have multiple GST Registrations?

A person with multiple business verticals in a state may obtain a separate registration for each business vertical (in each state).

How many Returns are required to be filed under GST?

A normal taxpayer will be required to furnish three returns monthly and one annual return. Similarly, there are separate returns for a taxpayer registered under the composition scheme, taxpayer registered as an Input Service Distributor, a person liable to deduct or collect the tax (TDS/TCS)

Do I need to enrol for GST?

All existing taxpayers registered under any of the Acts as specified, will be transitioned to GST. The enrolment for GST will ensure smooth transition to the GST regime. The data available with various tax authorities is incomplete and thus fresh enrolment has been planned. Also, this will ensure latest data of taxpayers is available in the GST database without any recourse to amendment process, which is the norm to update the data under tax statutes today.

Is Input Tax Credit Available under GST?

Yes. Yes, under the Revised Model GST Law the input tax credit on capital goods is allowed in one installment except in respect of pipelines and telecommunication towers fixed to earth by foundation or structural support including foundation and structural support thereto. One of the fundamental features of GST is the seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country.

What is Composition Scheme

Revised GST Law under Section 9 provides that small taxpayer can opt for the scheme of composition tax instead of opting for paying tax under the regular supply of goods. Small businesses and taxpayers having a turnover less than Rs. 50 lakhs can opt for the Composition scheme where they will be taxed at a nominal rate of 0.5% or 1% (for manufacturers) CGST and SGST each (rates as per the latest proposed changes in the GST bills). Composition levy is available to only small businesses dealing in goods. It is not available to interstate sellers, e-commerce traders and operators, and service providers.

Who is an existing taxpayer?

An existing taxpayer is an entity currently registered under any State or Central laws, like Value Added Tax Act, Central Excise Act and Service Tax Act. Existing taxpayers include taxpayers already registered under :-

• Central Excise
• Service Tax
• State Sales Tax or VAT (except exclusive liquor dealers if registered under VAT)
• Entry Tax
• Luxury Tax
• Entertainment Tax (except levied by the local bodies)

What is HSN Code?

HSN (Harmonised System of Nomenclature) code shall be used for classifying the goods under the GST regime. Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall use 2 digit code and the taxpayers whose turnover is Rs. 5 crores and above shall use 4 digit code. Taxpayers whose turnover is below Rs. 1.5 crores are not required to mention HSN Code in their invoices. Check Out to Download HSN Code List

Why is HSN Code required?

Without HSN, the system will not be able to pick tax rate for goods declared at the time of registration.

GST Rates in India 2021

GST Rates Finalised, GST Rate Slabs is 5%, 12%, 18% & 28%. the GST Council decided a four-tier GST tax structure of 5%, 12%, 18% and 28%, with zero rate for essential items and the highest for luxury and de-merits goods which are also expected to attract an additional cess. Know more for GST Rates 2021

Historical background of GST

A task force that was headed by Vijay L. Kelkar the advisor to the finance ministry, indicated that the existing tax structure had many issues that would be mitigated by the GST system.But the First  Discussion Paper on Goods and Services Tax in India was presented by  the Empowered Committee of State Finance Ministers dtd.10th Nov,2009.

In 2011, the Constitution (115th Amendment) Bill, 2011 was introduced in Parliament to enable the levy of GST. However, the Bill lapsed with the dissolution of the 15th Lok Sabha.

Subsequently, in December 2014, the Constitution (122nd Amendment) Bill, 2014 was introduced in Lok Sabha. The Bill was passed by Lok Sabha in May 2015 and referred to a Select Committee of Rajya Sabha for examination.

In August 2016, The Congress-led opposition finally agrees to the Government’s proposal on the four broad amendments to the Bill. The Bill was passed in the Rajya Sabha. In September 2016, The Honourable President of India gives his consent for the Constitution Amendment Bill to become an Act.

ADVANTAGES OF GST

• Single Taxation
• Transparency
• Lesser compliances
• Elimination of cascading effect of tax
• Online filing of returns which makes it easy for everyone

Components of GST 

• CGST: Collected by the Central Government on an intra-state sale (Eg: transaction happening within same state like Rajasthan )
• SGST: Collected by the State Government on an intra-state sale (Eg: transaction happening within same state like Rajasthan )
• IGST: Collected by the Central Government for inter-state sale (Eg: transaction happening between two states like Rajasthan and Gujarat )

In general, the tax regime under the GST act will be as follows:

Transaction	As per GST	As per earlier acts applicable	Comments
Sale within the State	CGST + SGST	VAT + Central Excise/Service tax	Revenue will be shared equally between the Centre and the State
Sale to another State	IGST	Central Sales Tax + Excise/Service Tax	There will only be one type of tax (central) in case of inter-state sales. The Centre will then share the IGST revenue based on the destination of goods.

Non applicability of GST on certain products:

 (and therefore to continue with the Union or State as the case may be) are:

• Petroleum products such as
  1. Petroleum crude;
  2. High-speed diesel
  3. Motor spirit (commonly known as petrol);
  4. Natural gas;
  5. Aviation turbine fuel
• Alcoholic liquor for human consumption 

in respect of following transactions only:

• Resale
• Use in manufacturing or processing
• Use in the telecommunication network or in mining or in the generation or distribution of electricity or any other power

Credit Mechanism under GST

Under proposed GST system,

CGST credit would be taken against CGST

SGST Credit shall be available against SGST.

It means, already paid CGST will not be available as credit against SGST and amount of already paid SGST will not be available as credit against CGST.

Furthermore, in case of Interstate Supply of goods and services i.e. in case of IGST, Credit shall be available in the method given hereunder:

1. IGST against IGST
2. CGST against IGST
3. SGST against IGST