GST - Introduction, Meaning, Historical background, Components
Definition of GST - “GST is a tax on goods and services with value addition at each stage having comprehensive and continuous chain of set of benefits from
Content in this Article
GST 2021 Guides - Everything About Goods & Service Tax
Important GST Articles
"Goods and Service Tax FAQ's"
What is GST?
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?
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?
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 SchemeRevised 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?
- 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?
GST Rates in India 2021GST 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 GSTA 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.
ADVANTAGES OF GST
- Single Taxation
- 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 )
|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
- Petroleum crude;
- High-speed diesel
- Motor spirit (commonly known as petrol);
- Natural gas;
- Aviation turbine fuel
- Alcoholic liquor for human consumption
- 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 GSTUnder proposed GST system,
- IGST against IGST
- CGST against IGST
- SGST against IGST