Goods and Services Tax: All you need to know about GST

What is GST or Goods and Services Tax? Once you have dealt with this beginning question, you might face initial doubts about GST registration, types of GST, benefits of GST, formula for GST calculation and more.

Let us have a snapshot of all the GSt nitty-gritty with the help of twelve questions. 

What is GST?

The full form of GST is Goods and Services Tax. This is a new tax regime launched on July 1, 2017. It is applicable to the sale of goods and services. GST’s meaning or meaning of GST is easy to understand in terms of its applicability, types, features, and calculations. 

While understanding the history of GST, you can understand the significance and simplicity of the definition of GST, which simply means an indirect tax applicable on the sale of taxable goods and services.

What are the types of GST? 

Presently, there are four types of GST components in India. These are CGST (Central Goods and Services Tax), SGST (State Goods and Services Tax), IGST (Integrated Goods and Services Tax) and UTGST (Union Territory Goods and Services Tax). 

The type of GST applicable to your transactions depends on whether your transaction of taxable goods and services is inter-state or intra-state. 

What are the GST rates applicable in India?

The GST rates are different for different types of GST as well as for different kinds of goods or services under consideration. 

The CGST rate range is 2.5% to 14% for different goods/ services in India. This range is similar to SGST. 

Furthermore, IGST rates can range from 5% to 28% for various goods and services types.

What are the features of GST?

The following are the salient features of GST in India. 

1) One Nation, One Tax 

GST in India helped replace multiple indirect taxes such as excise duty, value-added tax (VAT), service tax, and more. This helped in reducing the indirect tax’s cascading effect and introducing a uniform tax structure. 

2) Dual Structure and Destination Tax

GST in India is destination-based. It operates in a dual structure, where CGST and SGST are for interstate sales, and IGST is for intra-state sales of goods and services. 

3) ITC 

The utilisation of Input Tax Credit (ITC) is applicable in GST, where businesses can increase their overall revenue. Companies can do this by adjusting their GST input tax credit with their payable output GST. 

4) Applicability and Non-Applicability 

Alcohol for human consumption is exempted from GST in India. Tobacco, tobacco products and specified petroleum products are subject to GST. Excise duty is applicable in addition to the GST for tobacco and tobacco products. 

5) Threshold Exemption 

Small businesses with a turnover threshold of ₹40 lacs in a year are exempted from GST. 

6) Composition Scheme 

Businesses under the composition scheme are required to pay a fixed proportion of GST. For this, the turnover prescribed limit would be ₹1.5 crores for normal businesses and ₹75 lacs for special category businesses. 

7) Online Compliance 

For GST registration, GST registration documents upload, and methods on how to download GST certificate, the GST portal is equipped with simplicity and enhanced user experience. 

8) Anti-Profiteering 

To ensure the advantages of GST or benefits of GST, the Government of India (GoI) has established the National Anti-Profiteering Authority (NAA). This is to discourage the evil of unfair profiteering and pricing through GST. 

9) Increased Transparency

The core of GST is to enhance transparency and encourage compliance. Its increased transparency feature is to curb tax evasion. 

10) Sectoral Exemptions 

GST rates differ for different sectors and are considerably lower for healthcare, food grains and education. Some exemptions are in place to encourage the equitable distribution of these products and services. 

Are there any disadvantages of GST?

At present, there are no specific disadvantages to GST. Like every tax system, there can be advantages and disadvantages of GST. 

How to get a GST number?

To get a GST number, one can follow the GST registration process. They can submit documents based on their business constitution or the nature of GST registration. The GST registration procedure can be observed in the online GST portal. 

What documents are required for GST registration?

The documents required for GST registration are different for different categories of taxpayers. The different individual and business categories for GST registration are:

• Individuals or sole proprietors
• Limited Liability Partnership (LLP) or partnership firms
• Hindu Undivided Family (HUF)
• Companies (Public, Private, Indian or Foreign) 

The types of documents required for registration are also different for different GST registrations. These are normal taxpayers, GST practitioners, TDS registration, TCS registration, Non-resident OIDAR (Online Information Database Access and Retrieval) providers, Non-Resident taxable persons (NRTP), casual taxable persons and embassy or UN bodies. 

How to get a GST certificate?

To get a GST certificate, you need to complete your GST registration process through the online GST portal. 

GST registration is not mandatory for all businesses. There are specific turnover thresholds and business types for which it is compulsory to register for a GST. The absence of GST would attract a penalty for these specified individuals and businesses.

What is the structure of GST?

GST is designed in a four-tier structure set at zero per cent, 5 per cent, 12 per cent and 18 per cent to offer comprehensive sectoral coverage of indirect taxes. These are the four tax slabs of GST. These slabs are amended from time to time according to the government reviews of the GST tax structure. 

How to pay GST online? 

One can pay GST online using the online GST portal. Here are the steps for online GST payment.

• Visit the GST portal and log in using your credentials.
• Access your generated GST payment challan.
• Choose the CPIN link through which you want to make the payment. 
• Select the mode, for example, NEFT/RTGS, E-Payment and Over The Counter (OTC).
• Make the payment offline by visiting your bank or online through mobile or net banking. 

What are GST late fees? 

If a taxpayer is unable to file GSTR returns within the prescribed due date, there will be applicable penalties. These penalties are in the form of late fees and are different for different GST types. 

• ₹25 for SGST and ₹25 for CGST (total ₹50) per day for normal scenarios 
• ₹10 for SGST and ₹10 for CGST (total ₹20) per day for zero tax liability scenarios
• In case of zero tax liability, the GST late fee threshold would be ₹5000 per return. 

What is RCM in GST? 

RCM or Reverse Charge Mechanism is the process where the GST is to be paid by the receiver of goods and services instead of the seller. Here, the registered buyer has to do self-invoicing for the goods purchased and services availed. 

Conclusion

By understanding different questions like ‘What is the full form of GST?’, ‘What is RCM in GST?’, ‘What is ITC meaning in GST?’, ‘What is the formula to calculate GST?’ and more, one can further learn about the tax system nitty gritty and make better accounting and tax management decisions. 

Related Articles:

• How to Cancel GST Registration in India?