Goods and Services Tax GST (India) What is GST?
What is GST in India
GST is Goods and Services Tax. It is an indirect tax that 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 Goods and Services Tax 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 tires buys rubber, chemicals, and other material. The value of the inputs increases when the rubber and chemical are mixed to manufacture tires. The manufacturer then sells these tires to whole sellers After this, the whole seller sells them to the retailer.
The retailer sells tires 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 consumers in Tamilnadu. Since the Goods and Service Tax is levied at the point of consumption, the entire tax revenue will go to Tamilnadu and not Kerla.
Advantages Of GST
has removed cascading effect on the sale of goods and services. This has resulted in a decrease in the 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 within two states)
Compliances Under GST
There are many GST compliances like filing of GSTR1, 2A, 2B e waybill, which has to be online updated periodically at the GST portal.
GST created a system of e waybills for intra-state movement of goods in a closely 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 their 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 it on the GST’s invoice registration portal. The portal verifies the correctness and genuineness of the invoice. Thereafter, it authorizes using the digital signature along with a QR code.
IPA offers GST Certification Course