The Prime Minister approved “The constitution amendment bill for Goods and Service Tax”(GST) in the Parliament Session (Rajya Sabha on 3 August 2016 and Lok Sabha on 8 August 2016) along with the ratification by 50 percent of state legislatures. Thus, the current indirect taxes levied by state and centre are all set to be replaced with proposed implementation of GSTby April 2017. This would be the biggest tax reform since independence and a boon to the economy as it will eradicate the shortcomings of the current tax structure and provide a single tax on supply of all goods and services.
Benefits of GST
☞ Eliminating cascading effect of taxes.
☞ Tax rates will be comparatively lower as the tax base will widen.
☞ Seamless flow of Input tax credit.
☞ Prices of the goods and services will fall.
☞ Efficient supply change management.
☞ Promote shit from unorganized sector to organized sector.
However the transition from current tax structure to GST would bring several complex challenges that may prove disruptive initially. The compliance will be more tedious and time consuming.
But we believe with the promised advantages will be very beneficial to the country businessmen and consumers at a whole in the long run.
Goods and Service Tax is a tax proposed to be levied on supply of goods and services right from the point of manufacturing to final consumption by user. In short it is a destination based tax accruing at the place of sale/supply.
The following central and state level tax regimes will end with introduction of Goods and Service Tax (GST)
Taxes under the control of Central Government:
Taxes under the control of State Government :
Certain commodities namely Alcohol for human consumption and petroleum products will continue to be taxed under existing regimes ( VAT and Excise).
GST is proposed to be levied on dual basis i.e both Central and State Government. CGST is tax levied by central government on supplies of goods and services within the state while that levied by state government will be called SGST.
IGST is tax levied by central government on inter-state supply of goods and services. Import of goods and services will be covered under inter-state supply of goods and services hence will be subject to IGST in addition to customs duty.
If you have a business entity that is currently registered under any of the existing tax regimes then you are compulsorily required to migrate under GST law irrespective of the threshold limits.
But if you are supplying goods and services and not registered under any existing tax legislative then you are liable to register only if the aggregate turnover in any financial year exceeds the threshold limit.
Every supplier of goods and services is required to get registered under GST if his aggregate annual turnover during the financial year exceeds 20 lakhs (for north eastern states the threshold limit is 10 lakhs).
Suppliers who are engaged in supply of following goods or services listed below:
No, the below listed category of suppliers will have to get registration even if they do not exceed the threshold limit:
Thus above person will have to get registered even if their aggregate turnover during a financial year does not exceed the threshold limit.
No , there is no concept of central registration under GST. Every person will have to obtain a separate registration for every state in which he has a business establishment whether by same name or a different name. Even if person is having same PAN number and has operations in different states every operational unit will have to apply for separate registration.
Yes, business units even though registered with the same name and under the same PAN will have to apply for separate registration for each such unit within the same state.
This scheme is introduced for small tax payers to reduce the compliance burden on them. Business registered under composition scheme will be liable to pay tax only to a maximum of 2.5% for manufacturers and 1% for other than manufacturers. They would not be part of credit chain and hence cannot collect any tax from consumers.
Only those persons whose annual turnover is below 50 lakhs in preceding financial year and who is supplying goods and services within the same state only are eligible to apply for composition scheme. If supply of goods and services are effected inter-state then this scheme won’t be available for that person.
Every person or business registered under GST or who crosses threshold limit of 20 Lakhs ( 10 lakhs for north eastern states) is liable to file GST Return specified for his dealer category. For a person who crosses the threshold limit will first have to apply for registration and then file the return.
If the return is not filed within the due date then the tax payer is penalized with late fee of Rs 100 per day upto a maximum of Rs. 5000/-.
|Return||Category of taxpayer||Monthly||Due Date|
|GSTR – 1||Regular taxpayer including Casual Taxpayers (Outward Supplies)||Monthly||10th of Next month|
|GSTR – 2||Regular taxpayer including Casual Taxpayers (Inward Supplies)||Monthly||15th of next month|
|GSTR – 3||Regular taxpayer including Casual Taxpayers (Summary of Outward and Inwards)||Monthly||20th of next month|
|GSTR – 4||Compounding taxpayer||Quarterly||18th of month after end of quarter|
|GSTR – 5||Non Resident Foreign taxpayer||For the period of registration||7 Days from the registration date|
|GSTR – 6||Input Service Distributor||Monthly||13th of Next month|
|GSTR – 7||Taxpayer Deducting Tax at Source||Monthly||10th of next month|
|GSTR – 8||Regular taxpayer including Casual Taxpayers (Annual Return)||Annually||31st Dec of next FY|
A regular taxpayer has to file GSTR 1 monthly in furnishing the details of outward supplies i.e. sales made during a month with clear bifurcation for goods supplied to registered persons, to unregistered persons, zero rates supplies , exports, exempted supplies etc.
No, uploading is invoice is not mandatory to file GSTR 1 return.
No, all invoice details are not required. Only for sales made to registered persons i.e. B2B supplies, details of individual invoices are required such as GSTIN, Invoice Number, HSN Code, Value of Goods, tax collected etc. These details are required so that ITC matching can be done.
But for sales and services supplied to unregistered persons i.e. B2C supplies, only details for invoices for more than 2.5 lacs will be required on individual invoice basis whereas for those below 2.5 lakhs a summary of invoices or an aggregate amount of sales and tax collected is sufficient.
All the details relating to purchases are to be furnished in GSTR 2. These details are generally auto populated on the basis of GSTR 1 filed by suppliers. Other than these a taxpayer will have to enter invoice details for imports, purchases from compounding taxpayers and from unregistered persons. Also invoices if any invoiceshave been missed by the registered supplier i.e. not reflected in auto populated fields then those details can also be added. In such a case supplier will be intimated.
In such a case the claim of ITC Credit will be reversed and will be intimated to both the parties. If the mismatch is due to mistake made by the buyer then the reverse will continue, but if mistake is at the supplier end i.e. he collected the tax but did not pay it to the government then suitable action will be taken against the supplier by the government.
Taxpayers who opted for composition scheme will have to file quarterly return in GSTR 4. They are not required to file GSTR 1 or GSTR 2 as they are not eligible to avail ITC and hence the details required in GSTR 1 and GSTR 2 will be of no relevance.
ISDs need to file return a monthly return in GSTR 6 only.
For TDS deducted by the supplier a return will be furnished by him in GSTR 7. These details will be auto populated in the GSTR 2 of the person whose tax has been deducted and can avail credit by uploading this return. Thus no certificate will be required for availing credit.
Annual return is to be filed by regular taxpayers and those who have opted for composition scheme. No annual return is to be filed by casual taxpayers, non-residents and ISDs.
There is no requirement for revising the returns in GST. Instead the changes required in returns already submitted can be made inspecific tables thathave been provided in future GSTR 1 or GSTR 2 for the same.
If you registered to file the return and files it beyond the prescribed date then, there will be a fine of Rs. 100/- for every day of delay subject to a maximum amount of Rs. 5000/- .