GST - Goods and Services Tax

GST is a multi-stage tax system which is comprehensive in nature and applied on the sale of goods and services. The main aim of this taxation system is to curb the cascading effect of other Indirect taxes and it is applicable throughout India.

Latest GST Updates and Announcements

  • GST rates revised in 44th GST Council for crucial Covid-19 relief goods till September 2021
  • Under the exempted category, import of Amphotericin B (medicine for black fungus) has been included.
  • Know More about GST Latest News in Detail

What is GST & how it works?

GST stands for Goods and Services Tax. It is an Indirect tax which introduced to replacing a host of other Indirect taxes such as value added tax, service tax, purchase tax, excise duty, and so on. GST levied on the supply of certain goods and services in India. It is one tax that is applicable all over India.

Given below is how will GST works:

  • Manufacturer: The manufacturer will have to pay GST on the raw material that is purchased and the value that has been added to make the product.
  • Service Provider: Here, the service provider will have to pay GST on the amount that is paid for the product and the value that has been added to it. However, the tax that has been paid by the manufacturer can be reduced from the overall GST that must be paid.
  • Retailer: The retailer will need to pay GST on the product that has been purchased from the distributor as well as the margin that has been added. However, the tax that has been paid by the retailer can be reduced from the overall GST that must be paid.
  • Consumer: GST must be paid on the product that has been purchased.

History Of GST

On July 1st 2017, the Goods and Services Tax implemented in India. But, the process of implementing the new tax regime commenced a long time ago. In 2000, Atal Bihari Vajpayee, then Prime Minister of India, set up a committee to draft the GST law. In 2004, a task force concluded that the new tax structure should put in place to enhance the tax regime at the time.

In 2006, Finance Minister proposed the introduction of GST from 1st April 2010 and in 2011 the Constitution Amendment Bill passed to enable the introduction of the GST law. In 2012, the Standing Committee started discussions about GST, and tabled its report on GST a year later. In 2014, the new Finance Minister at the time, Arun Jaitley, reintroduced the GST bill in Parliament and passed the bill in Lok Sabha in 2015. Yet, the implementation of the law delayed as it was not passed in Rajya Sabha.

GST went live in 2016, and the amended model GST law passed in both the house. The President of India also gave assent. In 2017 the passing of 4 supplementary GST Bills in Lok Sabha as well as the approval of the same by the Cabinet. Rajya Sabha then passed 4 supplementary GST Bills and the new tax regime implemented on 1st July 2017.

Tax Laws Before the Implementation of GST

  • The Centre and the State used to collect tax separately. Depending on the state, the tax regimes were different.
  • Even though import tax was levied on one individual, the burden was levied on another individual. In the cases of direct tax, the taxpayer must pay the tax.
  • Prior to the introduction of GST, direct and indirect taxes were present in India.

Types of GST

The four different types of GST are given below:

  1. Central Goods and Services Tax : CGST is charged on the intra state supply of products and services.
  2. State Goods and Services Tax : SGST, like CGST, is charged on the sale of products or services within a state.
  3. Integrated Goods and Services Tax : IGST is charged on inter-state transactions of products and services.
  4. Union Territory Goods and Services Tax : UTGST is levied on the supply of products and services in any of the Union Territories in the country, viz. Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. UTGST is levied along with CGST.

Who is Eligible for GST?

The below mentioned entities and individuals must register for Goods And Services Tax:

  • E-commerce aggregators
  • Individuals who supply through e-commerce aggregators
  • Individuals who pay tax as per the reverse change mechanism
  • Agents of input service distributors and suppliers
  • Non-Resident individuals who pay tax
  • Businesses that have a turnover that is more than the threshold limit
  • Individuals who have registered before the GST law was introduced

Registration of GST

Any company that is eligible under GST must register itself in the GST portal created by the Government of India. The registered entities will get a unique registration number called GSTIN.

It is mandatory for all Service providers, buyers, and sellers to register. A business that makes a total income of Rs.20 lakhs and more in a financial year must be required to do GST registration. It takes 2-6 working days to process.

Know the GSTIN – GST Identification Number

A 15-digit distinctive code that is provided to every taxpayer is the GSTIN. The GSTIN will be provided based on the state you live at and the PAN. Some of the main uses of GSTIN are mentioned below:

  • Loans can be availed with the help of the number.
  • Refunds can be claimed with the GSTIN.
  • The verification process is easy with the help of the GSTIN.
  • Corrections can be made.

Verify GST Number Online by visiting https://services.gst.gov.in/services/searchtp. Enter the GSTIN mentioned on the invoice in the search box and followed by captcha, Final click "enter" to view the details.

GST Certificate

A GST Certificate is an official document that is issued by the concerned authorities for a business that has been enrolled under the GST system. Any business with an annual turnover of Rs.20 lakh or more and certain special businesses are required to be registered under this system. The GST registration certificate is issued in Form GST REG-06. If you are a registered taxpayer under this system, you can download the GST Certificate from the official GST Portal. The certificate is not issued physically. It is available in digital format only. GST Certificate contains GSTIN, Legal Name, Trade Name, Constitution of Business, Address, Date of liability, Period of Validity, Types of Registration, Particulars of Approving Authority, Signature, Details of the Approving GST officer, and Date of issue of a certificate.

GST Returns

A GST Returns is a document that contains information about the income that a taxpayer must file with the authorities. This information used to compute the taxpayer’s tax liability. Under the Goods and Services Tax, registered dealers must file their GST returns with details regarding their purchases, sales, input tax credit, and output GST. Businesses are expected to file 2 monthly returns as well as an annual return.

GST Rates

The GST Council has assigned GST rates to different goods and services. While some products can be purchased without any GST, there are others that come at 5% GST, 12% GST, 18% GST, and 28% GST. GST rates for goods and services have been changed a few time since the new tax regime was implemented in July 2017.

Name of Item Applicable GST Rate
Mobile Phone 18%
Sanitizer 18%
Gold Jewellery 3%
Two wheeler 28%
Car 28%

How do I calculate GST?

Calculating the amount that needs to be paid as GST when filing your returns can be quite tedious. Several aspects and factors must be taken into consideration, such as ITC, exempted supplies, reverse charge, etc. Failure to pay the entire GST amount can see you slapped with an 18% interest on the shortfall, thereby making it necessary to ensure that you pay the right amount towards GST.

The GST Calculator makes it simple for taxpayers to calculate the amount that needs to paid as GST. You will have to enter all the required details such as the month for which you are calculating GST, the due date for filing returns for the particular month, the actual date on which the returns are filed, the tax liability for the month, the purchases that attract Reverse Charge Mechanism, the opening balance of your cash ledger as well as your credit ledger and the eligible ITC.

Here is an example showing how you can calculate your GST liability:

Particulars Amount
Overall value of interstate sales Rs.20 lakh
Overall value of intrastate sales Rs.25 lakh
Advance received Rs.8 lakh
SGST Rs.25 lakh x 9% = Rs.2.25 lakh
CGST Rs.25 lakh x 9% = Rs.2.25 lakh
IGST Rs.20 lakh x 18% = Rs.3.6 lakh
Rs.8 lakh x 18% = Rs.1.44 lakh
Total = Rs.5.04 lakh

GST Payments

Currently, the GST must be paid every month. The GSTR-1 and GSTR-3B must be filed. In the case of refunds, the relevant forms must be submitted as well. GST payments can be made both online and offline. Once the payment has made, a challan must be generated.

GST E-Way Bill

An electronic document that is generated to show proof of goods movement is the E-Way bill. You can generate the bill from the GST portal.

Advantages of GST

The following are the advantages of goods and services tax in India

  1. Regulation of the unorganised sector
  2. E-commerce operators no longer suffer from differntial treatment
  3. Fewer complications
  4. Composition scheme
  5. Registration process and filing of returns are simple
  6. Higher threshold
  7. Elimination of the cascading tax effect

GST Council

Any recommendations that are made to the State and Union Government regarding any issues that are related to GST is done by the GST Council. The chairman of gst council is Union Finance Minister of India. The other members of the GST Council are the Union State Minister of Revenue or Finance of all the states.

GSTN - Goods and Service Tax Network

The GSTN is the Goods and Services Tax Network which is responsible for managing the IT system concerning the GST Portal. It is a non-profit, non-government organization and is the database for the official GST Portal.

The current structure of the GST Network can be summed up as follows:

  • Central Government – 24.5%
  • State Governments and EC – 24.5%
  • LIC Housing Finance Ltd. - 11%
  • 01ICICI Bank, HDFC, NSE Strategic Investment Co., and HDFC Bank – 10% each.

Features of GSTN

The salient features of the GST Network can be listed as follows:

  • Keeping the information of all the taxpayers safe and secure.
  • Maintaining confidentiality of the taxpayers’ information.
  • It is a trusted National Information Utility (NIU).

Functions of GSTN

The main functions of the GST Network or GSTN can be summed up as follows:

  • It is responsible for handling the invoices
  • It is responsible for handling the regstrations
  • It is responsible for handling the payments and refunds (if any)
  • It is responsible for handling different types of returns.

GST Helpline

Taxpayers who have any confusions or doubts in regard to their GST filing can get in touch with the concerned authority through the GST Helpline. Earlier, taxpayers could get in touch through the helpdesk email ID – helpdesk@gst.gov.in. However, it should be noted that this email ID has been discontinued.

The GST Helpline details are as follows:

Toll Free Phone Number 1800 1200 232
Self Help Portal https://selfservice.gstsystem.in/

GST App

There are a handful of GST applications which have been designed to run on smartphones. Out of all the apps, there is a Government-issued application as well which is called the CBEC GST. It can be downloaded from the Google Play Store for your Android smartphone.

In addition to that, there are a host of third-party applications as well. The main aim of these applications is to help taxpayers familiarise themselves with the idea of GST and in turn, ensure that they smoothly transit to the new taxation system.

FAQs on GST

  1. Is it necessary for all traders to register under the GST?
  2. All traders who earn turnovers in excess of Rs.20 lakh in a financial year will have to register under the Goods and Services Tax.

  3. When was GST implemented in India?
  4. The midnight of 01 July 2017 GST came into effect after the Goods and Service Tax Act passed in the Parliament.

  5. What is official website to register GST?
  6. The Indian government's official GST website is www.gst.gov.in

  7. What kind of tax is goods and services tax?
  8. GST is an indirect tax, which has replaced many indirect taxes in India.

  9. What is the main aim of GST?
  10. The main aim of GST is to simplify taxation process.

Latest News on GST 2021

  • GST Council Decides to Fix the Inverted Duty Structure to Reduce Tax Burden on the Leather Industry

    The GST council’s decision to correct the inverted duty structure on leather footwear will come into effect from 1 January 2022. This decision by the council may help reduce the sector's tax burden and stimulate domestic manufacturing of manmade fiber (MMF) fabrics and garments. Sanjay Leekha, Chairman of the Council for Leather Exports (CLE), said that the GST (goods and services tax) on leather footwear costing less than Rs.1,000 is 5%, while the tax on footwear worth more than that is 18%, but the GST on inputs for these footwears might be as high as 18%.

    20 September 2021

  • GST Council to fix duty structure

    After considering the revenue trend that dipped below the neutral levels, the Goods and Services Tax (GST) Council Are looking into measures like rate rationalizations for correcting the duty structure and to also take steps to increase revenues. The decision comes after four years of release of the indirect tax regime, with an acknowledgement that rate cuts across the years and spanning over 500 items led to the strain on finances of central and state governments. The Council will try to make corrections to the inverted duty structure for items like footwear and textiles sectors starting from 1 January. The inverted duty structure arises when taxes on output is lower than the inputs taxes. This creates an inverse accumulation of input tax credit which has to be refunded. The inverted duty structure has implied revenue outflow for the government and has driven the government to look into the duty structure.

    20 September 2021

  • The Finance Ministry Extended the Deadline for Applying for the GST Amnesty Scheme till 30 November 2021

    The Finance Ministry extended the deadline for applying for the GST amnesty plan, which allows taxpayers to pay a reduced cost for filing monthly returns late, by three months till 30 November 2021. In May, the GST council, chaired by Finance Minister Nirmala Sitharaman and made up of state ministers, decided to introduce an Amnesty Scheme to give taxpayers relief from late fees for pending returns. For those taxpayers who did not have any tax burden, the late fine for non-furnishing of GSTR-3B from July 2017 to April 2021 has been restricted at Rs 500 per return. Taxpayers who owe money will be penalised a maximum of Rs 1,000 in late fines if their returns are not filed by 31 August 2021.

    30 August 2021

  • GST Revenue Surpasses Rs.1 lakh Crore as the Economy Improves

    The gross Goods and Services Tax (GST) for July 2021 (for June 2021) surpassed Rs.1 lakh crore and reached Rs.1,16,393 crore. In July, GST receipts climbed by 33% compared to the same month last year and by 25.4 percent over the preceding month. This indicates a pick in the economy after the second wave of Covid-19 that resulted in lockdowns all over India which affected commercial activities. Due to the lockdowns, revenues fell to a 10-month low of Rs.92,849 crore in June (for sales in May) after eight months of exceeding the Rs.1 lakh crore mark.

    4 August 2021

  • Schools, food supplies, and entrance test exempted from GST

    Several tweets were written by the Central Board of Indirect Taxes (CBIC) in regard to the exemption of GST. The clarifications were based on the 43rd GST Council meeting. According to CBIC, GST is exempted in case food is supplied to schools under the mid-day meal scheme. The CBIC further added that catering services to educational institutions will also be exempted from GST. GST has also been exempted in case students have paid a fee to the National Board of Education, state education board, or Central education board for examinations.

    21 June 2021

  • GST rates revised for crucial Covid-19 treatment goods till September 2021

    The Goods and Services Tax (GST) Council has reduced GST rates on several commodities that are essential for the treatment of Covid-19. These rates will be applicable till the month of September 2021. However, vaccine GST rates remain the same at 5%. The levy of 5% on vaccines will ensure that the chain for tax paid on input credit will remain intact.

    14 June 2021

  • 8th month in row GST mop-up tops Rs.1 lakh crore; lockdown impact muted

    The gross GTS (Goods and Services Tax) collection for the month of May was recorded to be at Rs.1 lakh crore for eighth month in a row which Indicated a lower-than-expected impact of lockdowns in the second wave of the Covid-19 pandemic.
    The GST collection was recorded to be at Rs.1.02 lakh crore which was however, lower than April’s record collections of Rs 1,41,314 crore despite many Indian states imposing strict lockdown restrictions.
    The GST collections during May 2020, had been recorded at Rs.62,009 crore. In the previous year, the GST collections had slipped to a record low of Rs.32,172 crore in April after the lockdown was announced.
    It took six months for the collections of GST to recover and go above the Rs 1.lakh crore mark in the month of October to be recorded at Rs.1.05 lakh crore.

    04 June 2021

  • IGST exempted for COVID-19 relief items and Amphotericin-B drug for Black Fungus 31 May 2021

    The GST Council had recently held the 43rd Council meeting and it was decided in the meeting that items for COVID-19 relief which are being brough into the country will be exempted from IGST till the 31st of August 2021.

    The Finance Minister of India Nirmala Sitharaman has recently made the announcement. With the rising cases of Black Fungus across the country, the medicine for the same Amphotericin-B has been added to the list of exemption as well. The FM has also mentioned that the exemptions will be applicable irrespective of the fact that the relief items and medicines are being purchased or being donated to the government or to relief agency as per the state authorities’ directives.

    31 May 2021

  • Gross revenues from GST hit record high in April 2021

    GST revenues touch all-time high of Rs.1.41 lakh crore in April. April’s GST collections surpassed the previous highest collections of Rs.1.24 lakh crore recorded in the previous month i.e., March 2021. The collections were up by 14 percent when compared to March. April was the seventh straight month that GST revenues have crossed the mark of Rs.1 lakh crore. Of the Rs.1,41,384 crore GST collected in April, Central GST (CGST) collections stood at Rs.27,837 crore while State GST (SGST) collections stood at Rs.35,621 crore. Integrated GST (IGST) and Cess collections stood at Rs.68,481 crore and Rs.9,445 crore respectively. The record collections suggest that economic activity have not yet been badly affected amidst the ongoing second wave of coronavirus as compared to last year. The IGST includes ?29,599 crore collected on import of goods. It needs to be mentioned here that the total revenue of Centre and the States after regular and ad-hoc settlements in April 2021 was Rs.57,022 crore for Central GST and Rs.58,377 crore for the State GST.

    01 May 2021

  • No notice from the finance department regarding payment of maximum GST liability in cash

    In the latest development, the Finance Ministry of India had stated that there were no instructions given to officials regarding the payment of maximum GST liability in cash. This was given as a response to previous reports where GST officers were using phone calls, WhatsApp and messaging services asking many taxpayers to pay the maximum tax liability in cash.

    According to reports, the GST officers were trying to ensure that that their GST revenue collection targets were met for the FY. In the latest statement issued by the Finance Department, the government or the Central Board of Indirect Taxes and Customs have not given any instruction of the sort.

    GST taxpayers will be able to use the Input Tax Credit in their credit ledger to pay off their GST dues for March, as per the notification sent by the Finance Ministry.

    22 March 2021

  • GST field units set to identify defaulters and increase collection

    Goods and Service Tax (GST) officials have authorised field units to identify top taxpayers as well as defaulters to increase tax collections. The top 200 return defaulters for February belonging to the Central jurisdiction and ask them to file the tax returns. The top 300 taxpayers will also be encouraged to make cash payments of the state GST for the financial year 2020. The top taxpayers who are defaulters with 25% decline will be personally contacted by the AC/GSTO and explanations would have to be provided and motivated to increase their contributions to tax in the country. The interest on the cash liability of tax should be levied in major cases within the regulations of the GST Act provisions. There will be notices issued for discrepancies in the GST returns if there are mismatches between the monthly and quarterly returns. There will also be audit and reconciliation statements that have to be filed by taxpayers for the financial years 2018, 2019, 2020, and 2021. This will also be done for mismatches between any input tax credit for GSTR 3B and ITC that is auto drafted in the GSTR 2B.

    15 March 2021

  • E-invoicing under GST regime to become mandatory for entities with a turnover of Rs.50 crore or more

    The government on Monday in a notification stated that e-invoicing under the goods and services tax (GST) regime will become mandatory for entities with a turnover of Rs.50 crore and more from April 1. This will be the third phase of e-invoicing roll out. The government had rolled it out for entities with Rs.500 crore and more turnover from October 1 last year and later extended to entities with Rs.100 crore and above from January 1 this year. It needs to be mentioned here that the government had earlier planned to extend e-invoicing to all entities from 1 April 2021 but it has refrained from doing so after taking into consideration small entities.

    The system is aimed at bringing in more transparency in sales reporting, minimising errors, automating data entry work, and improving compliance. It will also help in preventing tax evasion. Under e-invoicing, companies have to generate an invoice registration number (IRN) from a government portal and shown to the authorities while moving goods.

    10 March 2021

  • GST collection for the month of February stands at Rs.1.13 lakh crore

    According to a data released by the Finance Ministry of India, the total GST collected during the month of February stood at Rs.1.13 lakh crore.

    This is the fifth straight month when the total GST collected has exceeded Rs.1 lakh crore. Comparatively, the total GST collection for the month of February 2021 as compared to the numbers observed for the same month last year saw a growth of 7%.

    The ministry of finance said that the growth in GST collection clearly indicated that the economy is slowly recovering due to the various measures taken by the tax authorities.

    02 March 2021

  • January 2021 GST collections reach all-time high

    The Goods and service tax (GST) collections for January 2021 had reached Rs.1.19 lakh crore since the launch of the GST regime. The GST revenues in January was the highest after the introduction of GST and reached around Rs.1.2 lakh crore mark. This had been more than last month’s record collection of Rs.1.15 lakh crore. The consistent collections of more than Rs.1 lakh crore for the last couple of months and the increasing trend over January had been indicators of teh fast economic recovery after the pandemic.

    02 February 2021

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