1. What is GST?
GST is an Indirect Tax which has replaced
many Indirect Taxes in India. The Goods
and Service Tax Act was passed
in the Parliament on 29th March 2017.
The Act came into effect on 1st July
2017; Goods & Services Tax Law in India
is a comprehensive, multi-
stage, destination-based tax that is
levied on every value addition.
In simple words, Goods and Service
Tax (GST) is an indirect tax levied on the
supply of goods and services. This law
has replaced many indirect tax laws that
previously existed in India.
GST is one indirect tax for the entire
country.
So, before Goods and Service Tax, the
pattern is as given below:
2. Journey of GST in India
The GST journey began in
the year 2000 when a
committee was set up to
draft law. It took 17 years
from then for the Law to
evolve. In 2017 the GST
Bill was passed in the Lok
Sabha and Rajya Sabha. On
1st July 2017 the GST Law
came into force.
3. Advantages Of GST
GST has mainly removed the
Cascading effect on the sale of
goods and services. Removal of
cascading effect has impacted the
cost of goods. Since the GST regime
eliminates the tax on tax, the cost
of goods decreases. GST is also
mainly technologically driven. All
activities like registration, return
filing, application for refund and
response to notice needs to be done
online on the GST Portal; this
accelerates the processes.
4. What are the components of GST?
There are 3 taxes applicable under this system: CGST, SGST & IGST.
CGST: Collected by the Central Government on an intra-state sale (Eg:
transaction happening within Maharashtra)
SGST: Collected by the State Government on an intra-state sale (Eg:
transaction happening within Maharashtra)
IGST: Collected by the Central Government for inter-state sale (Eg:
Maharashtra to Tamil Nadu)
Illustration:
•Let us assume that a dealer in Gujarat had sold the goods to a dealer
in Punjab worth Rs. 50,000. The tax rate is 18% comprising of only IGST.
•In such case, the dealer has to charge Rs. 9,000 as IGST. This revenue will go
to the Central Government.The same dealer sells goods to a consumer in
Gujarat worth Rs. 50,000. The GST rate on the good is 12%. This rate
comprises of CGST at 6% and SGST at 6%.
The dealer has to collect Rs. 6,000 as Goods and Service Tax. Rs. 3,000 will
go to the Central Government and Rs. 3,000 will go to the Gujarat government
as the sale is within the state.
5. Tax Laws before GST
In the earlier indirect tax regime, there were many indirect taxes levied by both state and centre.
States mainly collected taxes in the form of Value Added Tax (VAT). Every state had a different set of
rules and regulations. Interstate sale of goods was taxed by the Centre. CST (Central State Tax) was
applicable in case of interstate sale of goods. Other than above there were many indirect taxes like
entertainment tax, octroi and local tax that was levied by state and centre. This led to a lot of
overlapping of taxes levied by both state and centre. For example, when goods were manufactured
and sold, excise duty was charged by the centre. Over and above Excise Duty, VAT was also charged by
the State. This lead to a tax on tax also known as the cascading effect of taxes. The following is the
list of indirect taxes in the pre-GST regime:Central Excise Duty
Duties of Excise
Additional Duties of Excise
Additional Duties of Customs
Special Additional Duty of Customs
Cess
State VAT
Central Sales Tax
Purchase Tax
Luxury Tax
Entertainment Tax
Entry Tax
Taxes on advertisements
Taxes on lotteries, betting, and gambling
6. What is GST Registration
In the GST Regime, businesses whose turnover
exceeds Rs. 40 lakhs* (Rs 10 lakhs for NE and hill
states) is required to register as a normal
taxable person. This process of registration is
called GST registration.
For certain businesses, registration under GST is
mandatory. If the organization carries on
business without registering under GST, it will
be an offence under GST and heavy penalties
will apply.
GST registration usually takes between 2-6
working days. We’ll help you to register for GST
in 3 easy steps.
*CBIC has notified the increase in threshold
turnover from Rs 20 lakhs to Rs 40 lakhs. The
notification has come into effect from 1st April
2019
7. Who Should Register for GST?
Individuals registered under the Pre-GST law (i.e., Excise, VAT, Service Tax
etc.)
Businesses with turnover above the threshold limit of Rs. 40 Lakhs* (Rs. 10
Lakhs for North-Eastern States, J&K, Himachal Pradesh and Uttarakhand)
Casual taxable person / Non-Resident taxable person
Agents of a supplier & Input service distributor
Those paying tax under the reverse charge mechanism
Person who supplies via e-commerce aggregator
Every e-commerce aggregator
Person supplying online information and database access or retrieval
services from a place outside India to a person in India, other than a
registered taxable person
*CBIC has notified the increase in threshold turnover from Rs 20 lakhs to Rs
40 lakhs.
8. Documents Required for GST Registration
PAN of the Applicant
Aadhaar card
Proof of business registration or Incorporation certificate
Identity and Address proof of Promoters/Director with Photographs
Address proof of the place of business
Bank Account statement/Cancelled cheque
Digital Signature
Letter of Authorization/Board Resolution for Authorized Signatory
9. GST Registration Process
The GST Registration looks like this:
The applicant needs to submit his PAN, Mobile number
and E-mail address in Part Aof Form GST REG-
01 on GSTN Portal.
The PAN is then verified on the GSTN Portal while the
Mobile number and the E-mail address are verified
through an OTP (One-time-password). An
acknowledgment will be issued to the applicant in the
Form GST REG-02.
The Applicant then needs to fill the Part B of Form GST
REG-01 and specify the application reference number.
The form can be submitted after attaching the required
documents. The authentication would be done by
signature through DSC or E-Signature.
If any additional information is required, Form GST
REG-03 will be issued. The Applicant needs to respond
in Form GST REG-04 with the required information
within 7 working days from the date of the receipt of
Form GST REG-03.
If applicant has provided all the required information
via Form GST REG-01 or Form GST REG-04, the
registration certificate in Form GST REG-06 for the
principal place of the business as well as for every
additional place of business will be issued. If, however,
the details submitted are not satisfactorily, the
registration application will be rejected using Form GST
REG-05.
The applicant who is required to deduct TDS or
collect TCS shall, however, submit an application in
Form GST REG-07 for the purpose of registration.
10. Penalty for not registering under GST
An offender not paying
tax or making short
payments (genuine
errors) has to pay a
penalty of 10% of the
tax amount due subject
to a minimum of
Rs.10,000.
The penalty will at 100%
of the tax amount due
when the offender has
deliberately evaded
paying taxes
