Goods and Services Tax or GST is an indirect tax levied on supply of goods and services.
GST was introduced in India on July 1 ,2017.
GST replaced all other existing indirect taxes such as VAT, Excise and Service Tax among others.
In this article I will write to explain you basic concepts of GST.
GST is an indirect tax levied on supply of Goods and Services.
Full form of GST is Goods and Services Tax.
Prime Minister Narendra Modi calls it Good and Simple Tax, however so far it has not become a good and simple tax.
GST registration means registering your business under GST.
You have to register yourself under GST when your turnover in a single financial year cross Rs. 20 lakhs. However if you are located in any of special state than turnover limit is Rs. 10 lakhs.
Procedure to register under GST is very simple and can be done online. However to avoid any mistake you can help of a professional. KnowyourGST team also helps in GST registration.
Other than turnover condition, there are other factors that can make you liable for GST registration such as RCM applicability.
Once you are registered under GST, you need to file different returns under GST.
If your turnover is below 1.5 crore you need to file returns on quarterly basis, otherwise returns are on monthly basis.
However currently GSTR-3B is to be filed on monthly basis by all tax payers regardless of turnover.
Further if you are registered as a composition tax payer, you need to file only a single return on quarterly basis.
Main returns to be filed by a regular tax payer are GSTR-1, GSTR-2 and GSTR-3. However as system is not completely ready, in place of GSTR-3 currently GSTR-3B is being filed on monthly basis and GSTR-2 is postponed till July 2018.
Main difference is that a regular tax payer has to charge tax on each supply and can take input credit on inward supplies, whereas a composition tax payer cannot charge tax to customer and cannot take input tax credit on inward supplies.
Further composition scheme is for small tax payers.
A composition tax payer need to file only 4 returns during the year instead of multiple returns to be filed by regular tax payer.
Composition tax payer is not required to upload details of outward and inward supplies with tax authorities.
Only supplier of goods can opt for composition scheme.
Under RCM or Reverse Charge buyer of goods or services has to comply with GST instead of seller.
For example in case of GTA services, one who receives services need to create invoice and pay tax under RCM.
RCM is a new concept for many, however it was being practiced under erstwhile service tax law.
For those who were under VAT, earlier it was a new concept.
Under GST, RCM is applicable on supplies listed in notification issued by government. RCM is also applicable if you make an inward supply from an unregistered person and value of supply is more than Rs. 5000 however these provisions are deferred till July 2018.
If you fail to file return on time, you will be liable for late filing fee.
Late filing fee as on data is Rs. 50 per day and Rs. 20 per day for nil return.
Further fee has to be paid under SGST and CGST heading.
If you are not filing returns on time or not complying with GST law properly, you will see downgrading of your compliance rating which can cause big damage to you business.
It is advised to file your returns on time to avoid late filing fee and penalties.
Under GST, taxes are collected by both state government and central government.
SGST stands for State GST, CGST for Central GST, IGST for Integrated GST.
GST is to be paid under different heads, so that states and center gets their portion of tax.
SGST and CGST is to be charged on intra-state supplies (within state), IGST is to be charged in case of interstate supplies (outside of your state).
GST administration is taken care by both state governments and central government.
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