The Goods & Services Tax (GST) which was initiated on 1 April 2017 extends to all Indian service providers as well as freelancers, merchants, and manufacturing companies. The GST Tax will be an all-in-one tax subsuming a number of state taxes (Entertainment Tax, VAT, Luxury tax) and federal taxes (Utility tax, CST, Excise tax).
GST is to be paid at each point of the supply chain, with maximum set-off advantages. Goods & Services Tax process is completely electronic, so no manual interference is needed.
In short, GST is an extremely comprehensive, destination-based tax that will be levied on each and every value addition.
It is a known fact that every product goes through various stages from the buying of raw materials, manufacturing it, distributing it to wholesalers, and from them to the retailers and final consumers. At every stage of this process, GST will be charged which also includes the value addition and the point of consumption.
What Constitutes GST?
The Goods And Service Tax (GST) has 3 main components namely SGCT (State Goods And Services Tax), CGST (Central Goods And Services Tax), and interstate transactions will be subjected to IGST (Integrated Goods And Service Tax).
Input Tax Credit: What Is It?
Input Tax Credits will let an individual reduce his taxes that he may have already paid on inputs and pay the due when paying the tax.
You pay sales tax whenever items are bought from a licensed retailer and you also collect tax if you happen to sell the item. With input credit, you could even tweak the taxes paid during the time of acquisition to the sum of sales tax (output tax) and pay off the remaining sum of tax liability, i.e. sales tax minus the purchase tax.
GST Registration: For Whom Is It?
Any company or organization associated with the purchase and selling of services and the products must register for GST. Registering for a Goods & Services Tax is compulsory for businesses whose revenue is greater than Rs.20 lakhs annually. All enterprises making external interstate deliveries of goods must also enroll for a GST. The same is true for companies making tax-deductible deliveries on behalf of other taxable individuals, such as brokers and agents. Additionally, e-commerce vendors/aggregators should not file if cumulative transactions are below Rs.20 lakhs according to the latest notice.
Mentioned below are the GST Tax Rates, also it should be noted that products considered essential do not come under GST
- Electronics and Processed Food will be taxed at 12%
- Live saving medicines and household items will be taxed at 5%
- Luxurious items will be taxed at 28%
- General commodities, industrial intermediaries will be taxed at 18%
You can visit the GST Website/Portal for the tax rates of all products.
GST Return: What Is It?
A GST Return is a report that includes income details that have to be submitted with authorities as mandated by law. With the Goods & Services Tax Act in place, an individual is expected to file three monthly returns and one more return yearly. All taxes will be filed electronically. Please notice that no arrangement is made for amending the returns.
All invoices which went unreported for the preceding tax cycle should be incorporated in the present month. Within the Goods & Services tax law, a licensed trader must file GST returns that include: Transactions, Inventory, Production, GST (On Selling) and Input Tax Credit (GST charged on Purchases).
Section 8 (non-profit), nongovernmental, private limited corporation is the Goods and Service Tax Network (or GSTN). After all, for all your tax system needs GSTN is a one-stop solution. GSTN is accountable for the management of GST’s Indirect Taxation Portal to aid you to register, file, fix returns, and settle indirect tax liabilities.
Businesses who register for GST will get a unique 15-digit Goods And Services Tax Identification Number which substitutes the initially established Tax Identification Number (TIN), which was assigned to companies for registration under VAT by state government authorities. GSTIN is a special identification issued to every taxpayer in support of GST. With that being said, an individual with a Goods & Services Tax number may sign on to the GST website to confirm their GSTIN number.