Goods and Services Tax 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.
The GST is governed by the GST council and its Chairman is Union Finance Minister of India
Which are the various Indirect taxes were bound together by Goods and Service Tax?
- Central Excise Duty
- Service Tax
- Countervailing Duty
- Special Countervailing Duty
- Value Added Tax (VAT)
- Central Sales Tax (CST)
- Entertainment Tax
- Purchase Tax
- Luxury Tax
- Advertisement Taxes
- Taxes applicable on Lotteries
What are the advantages Of GST?
Goods and Service Tax 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 GST registration, GST return filing, application for refund and response to notice needs to be done online on the GST Portal; this accelerates the processes.
- Removing cascading tax effect
- Higher threshold for registration
- Composition scheme for small business
- Online GST registration and filing
- Lesser compliance
- Defined treatment for e-commerce
- Increased efficiency in logistics
- Regulating the unorganised sector
What are the components of Good and Service Tax?
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)
In the GST Regime, businesses whose turnover exceeds Rs. 20 lakh (Rs 10 lakh 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.
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. 20 Lakh (Rs. 10 Lakh 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
Documents Required for GST Registration (Goods and Service Tax Registration):
- PAN of the Applicant
- Aadhaar card
- Proof of business registration or Incorporation certificate
- Identity and Address proof of Promoters/Director with Photograph
- Address proof of the place of business
- Bank Account statement/Cancelled cheque
- Digital Signature
- Letter of Authorization/Board Resolution for Authorized Signatory
What is the penalty for not registering under Goods and Service Tax?
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