EduVibes: What is GST & What are the Benefits of Goods & Services Tax?

What is GST?

Goods and Services Tax is the new unified, multi-stage and consumption based tax levied on manufacture, sale and consumption of Goods and Services at national level to replace all the existing national and state tax systems like VAT, Service Tax, Excise Duty, etc. It is expected to remove the cascading effect of tax-on-tax which is prevalent presently. It is applicable to you if you are into Manufacturing, Trade, E-commerce or Services.

What are the Benefits of Goods & Services Tax?

Cascading tax effect (meaning tax on tax) will no longer exist
Input Tax Credit will be easier to avail
Returns and compliances will be consolidated
Increased efficiency in Logistics
Subsumes variety of Indirect Taxes
Higher threshold for Registration
Composition scheme for smaller businesses
Online simpler procedure
Regulating the unorganised sector

Can I have multiple Registrations?

Yes. A person with multiple business verticals in a state may obtain a separate registration for each business vertical (in each state).

Is Input Tax Credit available under GST?

Input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs. One of the fundamental features of Goods & Services Tax is the seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country.

What is GST Compliance Rating?

GST Compliance Rating is a numerical rating given to businesses depending on their level of compliance with Goods & Services Tax rules. Refund claims under the GST regime will also be processed on merit basis, i.e on the GST compliance rating of the registered taxpayer. It is expected that certain slab rates will be maintained for various taxpayers falling under various bandwidths of compliance rating and the refunds will be made in terms of percentage amount based on the individual rating of the taxpayer. Higher compliance ratings will make the refunds process easier for businesses.

Which all taxes will GST replace?

It will replace all the taxes currently levied and collected by the Centre (such as Central Excise Duty and CVD) and by the State (such as VAT and CST), on businesses.

How to Enroll for GST?

You can enroll for GST via the common portal of Goods & Services Tax. ClearTax can also help you with your enrollment. For more details click here.

How many Returns are required to be filed under GST?

A normal taxpayer will be required to furnish three returns monthly and one annual return. Similarly, there are separate returns for a taxpayer registered under the composition scheme, taxpayer registered as an Input Service Distributor, a person liable to deduct or collect the tax (TDS/TCS)

What is Composition Scheme?

Small businesses and taxpayers having a turnover less than Rs. 50 lakhs can opt for Composition scheme where they will be taxed at a nominal rate of 0.5% or 1% (for manufacturers) CGST and SGST each (rates as per the latest proposed changes in the Goods and Services Tax bills). Composition levy is available to only small businesses dealing in goods. It is not available to interstate sellers, e-commerce traders and operators, and service providers.

What is HSN Code?

The Harmonized Commodity Description and Coding System generally referred to as “Harmonized System of Nomenclature” or simply “HSN” is a multipurpose international product nomenclature developed by the World Customs Organization. It comprises about 5,000 commodity groups; each identified by a six digit code, arranged in a legal and logical structure and is supported by well-defined rules to achieve uniform classification. Without HSN, the system will not be able to pick tax rate for goods declared at the time of registration.

Analysis and Opinion

GST Rates for Textile Manufacturers

The GST Council's fitment committee has announced the rates for most products. Here are the tax rates for products used by the textile manufacturers.

Further Clarifications Are Required for GST Rates

The GST rates for 90% of the goods have been announced, but there is still some doubt regarding taxation for certain categories. Read our expert analysis.

Impact of GST on Healthcare and Pharma Sector

Read our research and analysis on the impact of GST on healthcare and pharma sector in India.

GST Rate Structure

Read about GST rates announced by GST council for July 1 rollout. Find out about proposed GST rate structure that will be applicable on different goods & services.

What is GST? Goods & Services Tax Law Explained for Beginners

The Goods and Services Tax or GST is scheduled to be launched on the 1st of July. But what is GST and how will it reform the current tax structure?

Seizure, Detention & Confiscation- For Goods in Transit

Updated: 4/4/17. When any person transports any goods against GST Act then the goods will be seized. In cases of tax evasion, goods will be confiscated.

Featured Articles

When will GST Enrollment Reopen?

The Enrollment under Goods and Services Tax was stopped recently and there are many such businesses which are yet to enroll themselves under Goods & Services tax. As per the available data, approximately 2 million businesses are yet to register under Goods and Services Tax. GST enrollment will be opened for one last time from June 1 to June 15.

E-way bill rules and compliance

E-way bill or electronic-way bill is used for movement of goods which can be generated on the GSTN portal. A ‘movement’ of goods of more than Rs 50,000 in value can not be made without an eway bill. Learn everything about the rules and compliances of eway bill under the Goods and

Services tax regime.

Voluntary Registration

Every business is eligible for voluntary registration under Goods and Services tax irrespective of the threshold limit. A person may opt for voluntary registration under Goods & Services Tax, even if he is not liable to be registered. All the provisions of the new tax system are applicable to a registered taxable person will similarly apply to such a voluntarily registered person also, i.e. he will be treated as a normal taxable person.

GST Council Meeting in Srinagar – Day 1 Briefing

The GST Council's fitment committee is currently discussing the rates for various products. Here are the updates from Day 1 of the meet in Srinagar today.

Will GST Bring Down Prices? New Tax Rates Will Tell

Businesses have made their GST calculations, and are not entirely sure if the new tax will lower prices. Much depends on the Council's decision this week.

Majority of Businesses May Still Not Be GST-Ready: Survey

The countdown to GST is on and the news that majority of Indian businesses are still not ready is a bit unsettling. A survey from Ginesys gives the numbers.

GST Guides - Browse by Topics

GST Software

Goods & Services Tax will impact accounting and invoicing processes across industries for both Chartered Accountants and Businesses. After July 1, businesses and accountants will have to adopt software and ERPs which are capable of managing taxation, invoicing & accounting as per the new tax regime. Cleartax being a pioneer in the industry will help you understand the technical aspects of the implementation of Goods and Services Tax, the impact on ERP systems, and what you need to do to be tax compliant in this section.

Terms & Definitions

The Goods and Services Tax Law has brought new opportunities for all accountants and tax practitioners to grow their tax practice. It also requires us to learn and know about various terms and definitions related to the new tax regime. Read about some of the most common and basic terms used under the Goods and Services Tax Law in this section.

Registration

From 1st July, 2017 Goods and Services Tax will replace Central and State level indirect taxes like VAT, Service tax, Excise etc. Businesses that are registered under VAT or Service Tax need to migrate to Goods & Services tax as per the enrolment plan of State Governments. It is applicable to you if your annual turnover is Rs. 20 lakh or above. In case of North Eastern states (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura) and hilly regions i.e. Himachal Pradesh, Uttarakhand, Jammu & Kashmir and Sikkim, the threshold limit is Rs. 10 lakh. Read our articles to understand more about registration process, its applicability and rules.

Transition to GST

All existing Central Excise and Service Tax assessees and VAT dealers will be migrated to GST. To migrate to the new tax system, assessees would be provided a Provisional ID and Password by CBEC/State Commercial Tax Departments. Learn more about the process. All businesses plan your transition into the new Goods & Services Tax regime with our guides available here and make a smooth transition. Find out how you can carry forward your input tax credit from existing tax regime to GST. Read all about the transition provisions in our articles.

Invoice

Invoice is issued on every sale/purchase. The invoice contains S.No., details of the product such as product name, description, quantity, etc along with the details of supplier, purchaser, tax charged and other particulars such as discounts, terms of sale etc. Every business is required to furnish a GST invoice as per the new law. Find out all the details your invoice must have through our articles on the topic.

Accounts and Record

Our guides will help you determine all compliance requirements related to business accounting. Here you will find the list of accounts required to be maintained under Goods & Service Tax. You will also find an article on bookkeeping with the accounting entries required to be passed.

GST Returns

A return is a document that a taxpayer is required to file as per the law with the tax administrative authorities. Under the Goods & Services Tax law, a normal taxpayer will be required to furnish three returns monthly and one annual return. Similarly, there are separate returns for a taxpayer registered under the composition scheme, taxpayer registered as an Input Service Distributor, a person liable to deduct or collect the tax (TDS/TCS). Use our expert guides to understand how to file various returns under Goods and Services Tax for your business.

Payments and Refunds

Refer our guides to understand various provisions and laws related to payment, refunds and settlement of Goods and Services Tax. All payments & refunds will be made online through the electronic ledgers. You will also find a list of the electronic ledgers which will be maintained on Goods & Services Tax portal. Read more.

Input Tax Credit

Goods and Services tax allows businesses to claim input credit on the taxes paid on the purchases at the time of paying tax on output, you can reduce the tax you have already paid on inputs. It means that if you are a manufacturer, supplier, agent, e-commerce operator, or aggregator then you are eligible to claim input credit for tax paid by you on your purchases. Learn everything about the Input tax credit under the Goods and Services tax regime.

Composition Scheme

Composition scheme is available for tax payers whose turnover is not more than 50 Lakhs. Under this scheme the taxpayer need not maintain every record that is required under Goods & Services tax and he has to pay tax at the specified rate on the total turnover of the month. Learn about the advantages, drawbacks, transition provisions and conditions to be eligible for the composition scheme in the articles of this section.

GST Procedure

Read our guides on various procedures defined under the Goods and Services tax law related to audit, advance ruling and related aspects. You will pay Goods & Services Tax through self-assessment. Read about provisions of self-assessment and other types of assessments (done by tax authorities). Find out about advance ruling when you are confused regarding the applicable rate of tax or valuation of supply. Read more.

Penalties and Appeals

Avoid penalties and prosecution under the Goods & Services Tax regime. Learn about the various offences under Goods and Services tax to avoid them. Learn about various penalties that can be levied and scenarios for prosecution under the Goods & Services Tax. Read about the inspection provisions. Remember to carry the prescribed documents while transporting goods as they can can be intercepted and inspected. Read more.

Time, Place and Value of Supply

Under Goods and Services Tax, it is critical to determine the term “Supply”. There are three important factors to determine the Supply under Goods and Services Tax viz., Place of Supply of Goods/Services, Time of Supply of Goods/Services, Value of Supply of Goods/Services. These three factors determine whether the Product/Service is taxable or not. Refer our guides to understand the concept of Time, Place and value of Supply under Goods & Services Tax. Read more.