Goods & Service Tax is an indirect tax applicable throughout India which replaced multiple cascading taxes levied by the central and state government. It is applied on services and goods at national level with purpose of achieving overall economic growth. So let’s see GST in detail.
- State VAT
- Central Sales Tax
- Excise Duty
- Special Additional Custom Duty
- Service Tax
- Entry Tax
- Luxury Tax
- Entertainment Tax
However, following taxes will continue
- Basic Customs Duty
- Professional Tax
- Stamp Duty
- Motor Vehicle Tax
- Electricity Duty
- VAT on Petroleum Products
- Toll Taxes
GST Council is the apex body created by Parliament for governance of this Act. It includes Finance Secretaries of Central as well as various State Governments
GST Rates – 5%, 12%, 18% & 28%
GST Exempt goods / services – 0%
Old VAT / Excise TIN will go and new PAN based Registration Number for GST is essential. Structure of this number is as under:
Out of which first two digits are state code (in which Registration is taken) – ’27’ is for Maharashtra.Next 10 digits (AAAAA0000A) are PAN number of the assesse and last 3 digits are serial number
Incidence of GST is on following:
- Supply of Goods / Services
- Agreed to Supply Goods / Services for Consideration (either in cash or kind)
- ‘Destination based’ Tax is charged (If source & destination are in same state, it is Transaction within state, if Source & Destination are in different states, then it is Interstate Transaction)
- Branch Transfer / Stock Transfer will attract GST
GST Registration is MANDATORY if Annual Turnover of Goods or Services or both is Rs.20 Lacs or above.
Three types of GST are there:
- Central Goods & Service Tax (CGST)
- State Goods & Service Tax (SGST)
- Integrated Goods & Service Tax (IGST)
Rates under GST
- Rates of CGST & SGST shall be equal and will be 50% of the rates stipulated for those specific Goods or specific Services. g. if the goods under transaction attract 18%, then CGST for them is 9% and SGST for them is 9%.
- In case of Local Invoice or Within State Invoice, CGST and SGST both need to be charged SEPARATELY and to be mentioned in the Return accordingly.
- Rates of IGST are equal to sum of rate under CGST and rate under SGST. Thus in above example, rate under IGST is 18% (9 + 9).
- Tax Credit (or set-off, as was said in earlier days), shall be available for all these three taxes viz. CGST, SGST & IGST.
- Earlier, in spite of ‘C’ or ‘H’ or ‘F’ forms, 2% Tax was a cost to the assessee. Now since these forms are done away with, this 2% cost is avoided, since full set-off or ITC of all Interstate Transactions is allowed now.
- There will be GST chargeable on FREE Items such as Medical Samples, Buy 1 get 1 Free etc. Valuation of such Free Items will have to be made, at par with sale of these items. Thus if your are giving 1 free for purchase of 10, You will have to Invoice for 11, levy GST and then you may give credit for the basic value of 1 being Free Item. Thus GST needs to be paid on all items, being delivered to the customer.
- Invoice is allowed to be cancelled ONLY by way of issuing Credit Note and that too within a period of 6 months from the dateuch invoice.
- It is available for all assessees having Turnover < Rs.75 lacs
- Under this scheme, 2.5% tax is applicable for Manufacturing Companies and 1% tax is applicable for all others.
- No Set-off or Tax Credit shall be available under this scheme.
- This is optional
- Assessee has to apply for this and then GST Official’s permission is required to opt for this.
- If this scheme is availed, GST cannot be charged in the Invoices raised by the Assessee and thus the cost of GST has to be borned by the Seller / supplier of goods/service.
- If this is availed in one year and for next year you intend to do away with this, you can apply to GST officials and take permission for the same i.e. either to Opt-in or Opt-out of the scheme.
Immovable Property is NOT Taxable under GST:
Thus, if the flat is booked before Completion Certificate, it is TAXABLE under GST, whereas, if the flat is purchased after Completion Certificate (Ready-possession flat), it is NOT Taxable under GST
GST is applicable on Advance from Customer, as and when it is received from the customer, before raising invoice for the same. It needs to be declared in the Output GST Return (GSTR-1)
URD Purchases (Purchases from Unregistered Dealers / Suppliers)
If the Assessee has purchases from Unregistered Dealers, Assessee has to ACTUALLY pay GST on the same Reverse Charges). Assessee can take set-off (credit) of the same in next month.
No Revised Return is allowed under GST
Input Tax Credit (ITC) (similar to set-off under old system)
- Assessee has to be in possession of Tax Invoice, or Debit Note or Credit Note.
- Payment has to be made to the Supplier within 180 days. If the payment is not made to the supplier within this period the ITC has to be reversed by the Assessee. It can later be availed, as and when actual payment of this is made to the Supplier.
- ITC for Reverse charges (GST paid on URD purchase or other specific services), can be availed in the next month, of the month of their actual payment
- There will be GST Rating (just like CIBIL Credit Ratings) in respect of Assessee, in consideration of timely filing of Returns, timely GST payment and other discipline followed by the Assessee.
- This can be viewed by the Assessee, as also by others.
- Thus while selecting the Supplier, his GST Rating can be viewed beforehand.
- It will also be viewed by bankers, financial institutions while lending money to the Assessee.
Set-off (ITC) under GST
ITC under GST shall be available under GST in following order
INPUT CREDIT TAX OUTPUT CREDIT LIABILITY
RETURN Filing Due Dates
- 10th of Next Month – Output GST (including Advance from Suppliers) i.e. Sale Return (GSTR-1)
- 11th to 15th – system will be closed / blocked for any entry, but entries can be viewed during this period, including Entries of your suppliers. View Supplier’s sales entries, and ensure if they match with your purchase entries in your books.
- 17th of Next Month – Input GST i.e. Purchase Return (GSTR-2) These entries HAVE TO MATCH with the entries made by your suppliers in their Sales Return.
- 21st if Next Month – Monthly Return in GSTR-3, alongwith payment. Liability of Payment shall be calculated by the System itself, after filing of GSTR-1 & 2 as mentioned above.
- 31st December of Next Financial Year – Annual Return (GSTR-9), alongwith Audit Report. Audit is compulsory for Assessees having Turnover of Rs.1 Crore and more.
If the Assessee is caarying out business at more than one places, he has to obtain GST Registration at each of such place and has to file Returns for each of such place of business.
Reverse Charges – GST to be paid on Self-Invoicing
- URD Purchases (with Names & Addresses of such suppliers)
- Services such as a. Goods Transport, b. Advocates Fees, c. Sponsorship, d. Rent a Cab.
TRANSITION PROVISIONS (For the period of switching over from present Tax System to GST)
- Transit-1 Return to be filed within 90 days. Set-off or ITC for these items shall be pending till this is filed.
2. June 29 – Reverse Charges to be paid