Goods and Service Tax (GST)

Goods and Services Tax (GST) is a proposed system of indirect taxation in India merging most of the existing taxes into single system of taxation.

"Goods and Services Tax" would be a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India, to replace taxes levied by the central and state governments.

Goods and Services Tax would be levied and collected at each stage of sale or purchase of goods or services based on the input tax credit method.

This method allows GST-registered businesses to claim tax credit to the value of GST they paid on purchase of goods or services as part of their normal commercial activity.

GST Definitions

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Procedure of migration of existing Sales tax holder to GST

• If you are a taxpayer in Goa, then you should read the notification and get yourself enrolled before November 29, 2016.
• For rest of India, the dates have also been announced. The table is as follows:

Procedure of migration of existing Central Excise and Service tax assessees to GST

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Cost of services to increase:

As against the current service tax rate of 15%, proposed rate of GST around 18% shall result, increase in the cost of services. Hence the final consumer shall have to bear the burden of increased rate.

Boost to exports:

Currently, exports are reimbursed for central indirect taxes (excise and customs duties) but don’t get full offsets for CST and certain state level taxes such as entry taxes and octroi. Post GST, this non-rebated indirect tax-induced distortions would be removed, enhancing competitiveness of Indian exporters. Based on study done by CRISIL, GST will be largely a beneficiary for Automobiles, Cement, Media and Entertainment sector. GST will have a negative impact on service industries such as restaurants and quick service restaurants (QSR). Impact of GST on real estate will depend on its treatment with regard to abetment value.

Supply chain to improve:

Since all the procedures under GST will be online, physical check posts shall be dismantled. Further there will be online verification of tax credits, check posts will not be required. This shall result in speeding up the movement of goods.

Savings will accrue as a result of phasing out of the central sales tax (CST), consolidation of warehouse space, faster transit of goods since local taxes will be subsumed into the GST and as state level check posts will be dismantled.

Organized sector to gain further:

Since GST shall cover the entire chain of transaction upto end consumer, the scope to hide the transactions from regulatory authorities shall reduce drastically. Hence the organized sector which as such is currently paying the taxes shall have a level playing field with the unorganized sector which currently has the cost advantage by choosing not to pay the taxes. This shall benefit the organized sector tremendously.

Every supplier shall be liable to be registered under GST in the state from where he makes taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds threshold limit as announced by GST Council on 24.09.2016 of :

• 20 lakh;
• 10 lakh in North Eastern States including Sikkim.
• If you are purchasing or selling goods outside the state irrespective of the limit mentioned in point 1.
• If you are receiving or providing services outside the state irrespective of the limit mentioned in point 1.
• If you are required to pay tax under reverse charge.
• If you are non-resident taxable person irrespective of the limit. Input Service Distributor
• An aggregator who supplier services under his brand name or his trade name irrespective of the limit mentioned in point 1.
• Every electronic Commerce operator like Flipkart, Amazon, etc., irrespective of the limit
• A person who supplies goods and services through electronic commerce. In other words, if you want to sell on Flipkart, Amazon, then you will need to register yourself first irrespective of the limit mentioned in point 1.
• Any person who is required to deduct TDS under GST (not under Income Tax Act, 1961).

2. Every person who is liable to be registered under this Act shall apply for registration in every such State in which he is so liable within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed.

3. A person having multiple business verticals in a State may obtain a separate registration for each business vertical, subject to such conditions as may be prescribed.

4. A person, though not liable to be registered under Schedule V, may get himself registered voluntarily, and all provisions of this Act, as are applicable to a registered taxable person, shall apply to such person.

1. Every registered taxable person, other than an input service distributor and a person paying tax under the provisions of section 8 or section 37, shall furnish, electronically, in such form and manner as may be prescribed, the details of outward supplies of www.gstindia.com goods and/or services effected, during a tax period on or before the tenth day of the month succeeding the said tax period and such details shall be communicated to the recipient of the said supplies within the time and in the manner as may be prescribed.

2. Penalty For Late Filing:

• Annual Return: Rs 100 /day for each day of default(max 0.25% of aggregate turnover)
• Other than annual return: Rs 100 /day for each day of default (max Rs 5000)

• Input Tax Credit (ITC) is Goods & Services Tax (GST) paid or payable by a registered person on the purchases or expenses incurred for the business activities.
• Input tax is defined as IGST, CGST or SGST charged on any supply of goods and / or services. So, in the IGST Act, input tax consists of all three taxes, IGST, CGST and SGST. It implies that credit of all three can be used for discharging IGST liability.

Notwithstanding anything contained in this section, but subject to the provisions of section 36, no registered taxable person shall be entitled to the credit of any input tax in respect of any supply of goods and/or services to him unless,-

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying document(s) as may be prescribed;
(b) He has received the goods and/or services;
(c) The tax charged in respect of such supply has been actually paid to the account of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and
(d) He has furnished the return under section 34: PROVIDED that where the goods against an invoice are received in lots or installments, the registered taxable person shall be entitled to take credit upon receipt of the last lot or installment: PROVIDED FURTHER that where a recipient fails to pay to the supplier of services, the amount towards the value of supply of services along with tax payable thereon within a period of three months from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in the manner as may be prescribed.

Input Service Distributor (ISD) means an office of supplier of Goods and/or Services , which receives tax invoices issued under section 23 towards receipt of input services and issues tax invoices or such other document as prescribed for the purposes of distributing the credit of CGST (SGST in State Acts) and/or IGST paid on the said services to a supplier of taxable goods and/or services having same PAN as that of office referred to above.

A registered taxable person paying tax under the provisions of section 9 shall, for each quarter or part thereof, furnish, in such form and in such manner as may be prescribed, a return, electronically, of inward supplies of goods or services, tax payable and tax paid within eighteen days after the end of such quarter.

Every taxable person registered as an Input Service Distributor shall, for every calendar month or part thereof, furnish, in such form and in such manner as may be prescribed, a return, electronically, within thirteen days after the end of such month.

• The supply of the alcoholic liquor for human consumption will be out of the GST. Alcohol products for human consumption would continue to be exclusively taxed by the States.
• The States would continue as per the current laws to impose Value Added Tax (VAT) on Petroleum Crude/ High Speed Diesel/ Motor Spirit/ Natural Gas/ Aviation Turbine Fuel on intra-state sales while inter-state sales would continue to attract Central Sales Tax (CST). These products would be transitioned into the GST regime from a future date to be notified by the GST Council.

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GST may not subsume the following taxes within its ambit:

• Basic Customs Duty: These are protective duties levied at the time of Import of goods into India.
• Exports Duty: This duty is imposed at the time of export of certain goods which are not available in India in abundance.
• Road & Passenger Tax: These are in the nature of fees and not in the nature of taxes on goods and services.
• Toll Tax: These are in the nature of user fees and not in the nature of taxes on goods and services.
• Property Tax
• Stamp Duty
• Electricity Duty

Click Here to read GST_Bare Law

FAQ's on Goods and Service Tax (GST)

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HSN/SAC Code

• What does SAC code mean?
• SAC stands for Service Accounting Codes which are adopted by the Central Board of Excise and Customs (CBEC) for identification of the services.
• How does HSN code work under GST system in India?
• HSN stands for Harmonized System of Nomenclature which is internationally accepted product coding system used to maintain uniformity in classification of goods.
• Check Out The HSN code with the help of Following:

  Click Here to read HSN/SAC Code of your Goods

Any person, who contravenes any of the provisions of this Act or any rules made there under for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to twenty five thousand rupees.

Any registered taxable person who repeatedly makes short payment of tax shall be liable to a penalty of rupees ten thousand or ten percent of the tax short paid, whichever is higher – clause 66(2) of GST Model Law, 2016.

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