Goods & Services Tax GST (India) What is GST?
What is GST in India
GST is Goods and Services Tax. It is an indirect tax which has replaced other indirect taxes in India The Goods and Service Tax Act came into effect on 1st July 2017.Goods and Service Tax (GST) is levied on the supply of goods and services. GST is a comprehensive, multi-stage, destination-based tax that is levied on value addition Under the GST tax regime, the tax is levied at every point of sale. In the case of intra-state sales, CGST and State GST are charged. All the inter-state sales are chargeable to the Integrated GST.
Features of GST Multi-stage
An item goes through multiple stages eg:-
Raw Material > Manufacturing (Production) > Wholesalers > Retailers > Final Consumers, these are different stages where tax is levied.
Feature Value Addition
A manufacturer who makes tyres buys rubber, chemicals and other material. The value of the inputs increases when the rubber and chemical are mixed to manufacture tyres. The manufacturer then sells these tyres to whole sellers After this, whole seller sells it to the retailer.
The retailer sells tyre in smaller quantities GST is levied on these value additions, i.e. the monetary value added (profit margins) at each stage to achieve the final sale to the end customer.
Consider goods manufactured in Kerala sold to consumer in tamilnadu. Since the Goods and Service Tax is levied at the point of consumption, the entire tax revenue will go to Tamlinadu and not Kerla.
Advantages Of GST
has removed cascading effect on sale of goods and services. This has resulted into decrease in final price of goods and services. GST uses IT technology for its compliances GST Registration of GST return filing, refund needs to be done online on the GST portal
Components of GST
There are three components of GST:
CGST: It is the tax collected by the Central Government on an intra-state sale (Sales within State)
SGST: It is the tax collected by the state government on an intra-state sale (Sales within State)
IGST: It is a tax collected by the Central Government for an inter-state sale (sales with in two states)
Compliances Under GST
There are many GST compliances like filing of GSTR1, 2A, 2B e way bill, which has to be online updated periodically at GST portal.
GST created system of e waybills for intra-state movement of goods in a close monitored manner.
Under the e-way bill system, manufacturers, traders and transporters can generate e-way bills for the goods transported from the place of origin to its destination Tax authorities are also benefited from this system to reduce tax evasion.
The e-invoicing is required where annual aggregate turnover of more than Rs.500 crore and was extended to those with an annual aggregate turnover of more than Rs.100 crore.
These businesses must obtain a unique invoice reference number for every business-to-business invoice by uploading on the GSTN’s invoice registration portal. The portal verifies the correctness and genuineness of the invoice. Thereafter, it authorises using the digital signature along with a QR code.
IPA offers GST Certification Course