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GST Guide: Everything You Need To Know About It

Written by Naveen Puli

Now everyone searching for Goods and Services Tax(GST). We are providing GST Guide: Everything You Need To Know About It at here. If you are looking for detailed information on GST, then this post will be helpful for you.

So many Indians worrying about the costs of the products after GST roll out. We are trying to clarify everyone’s doubts or questions through this GST Guide.

What is GST?

Goods & Services Tax (GST) is an indirect tax throughout India to replace taxes levied by the central and state governments. It is introduced as The Constitution (One Hundred and First Amendment) Act 2016, following the passage of Constitution 122nd Amendment Bill.

Under GST, goods and services will be taxed at the following rates, 5%, 12%, 18%, 28%. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold.

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This is India’s biggest tax reformation, means GST will bring state economies together and improve overall economic growth of the nation. The proposal of 2 tax rates at both state and central levels for first 2 years. Then it will be merged into a single tax.

GST Guide: Everything You Need To Know About It

Goods and Services Tax: Formally knows as GST, this will replace all the different axes of state and central. GST is launching from 30 June 2017 midnight itself. PM Modi will be implementing GST in parliament in presence of opposition Parties.

How Does GST Work?

When GST implemented then there will be three kinds of applicable Goods and Services Taxes are as follows.

SGST: Where the revenue will be collected by the State Governments for intra-state sales.

CGST: Where the revenue will be collected by the Central Government.

IGST: where the revenue will be collected by the Central Government for inter-state sales.

See below example to find out how SGST and CGST will work within the state. Also, explains how the tax will be collected in various stages.See below example to find out how IGST will work. Integrated GST is for interstate transactions.

IGST working example

Exports will be treated as zero-rated supplies which mean no tax will be collected on exports of goods or services.

GST is the tax which is levied only on the value addition at each stage of retail, supply and production based on the value assigned to the product by retailers, suppliers and producers individually.

Click here to check Frequently Asked Questions (FAQs) on Goods and Services Tax (GST)

Course on GST:

GST Course

Types of taxes included under GST:
Indian Government included below following central taxes in Goods and Services Tax.

  • The Excise Duty levied under the Medicinal and Toiletries Preparations (Excise Duties) Act 1955
  • Central Excise Duty (CENVAT)
  • Service Tax
  • Central Sales Tax to be phased out.
  • Additional Excise Duties
  • Special Additional Duty of Customs – 4% (SAD)
  • Additional Customs Duty, commonly known as Countervailing Duty (CVD)
  • Surcharges and Cesses levied by Centre are also likely to be subsumed. This may include cess on rubber, tea, coffee, national calamity contingent duty etc.
Below State Taxes are subsumed under GST
  • VAT / Sales tax
  • Purchase Tax
  • Entertainment tax (unless it is levied by the local bodies)
  • Octroi and Entry Tax
  • Luxury tax
  • Taxes on lottery, betting and gambling
  • State Cesses and Surcharges in so far as they are related to supply of goods and services
Taxes that are not included under GST
The following taxes are not subsumed in Goods and Services tax.

  • Basic Customs Duty: These are protective duties levied at the time of Import of goods into India.
  • Road & Passenger Tax: These are in the nature of fees and not in the nature of taxes on goods and services.
  • Exports Duty: This duty is imposed at the time of export of certain goods which are not available in India in abundance.
  • Toll Tax: These are in the nature of user fees and not in the nature of taxes on goods and services.
  • Property Tax
  • Stamp Duty
  • Electricity Duty
  • GST shall be levied in place of existing sales tax, VAT, excise duty, customs, service tax, luxury tax etc. GST is an indirect tax which is applicable on all supply of goods & services in India.

What are the benefits of GST?

Goods and Services tax system is an effective tax system which is totally online based. Check the advantages of GST in below in detail.Benefits of GST
Reduces the corruption: Number of taxes will be reduced after GST implementation. Means the number of visits to multiple departments will be reduced.

Reduces transaction and unnecessary charges: A single tax registration system for both SGST and CGST provided government produces functional IT infrastructure and integration of states level with the union.

Reduces average tax burdens: GST would reduce the average tax burdens on the consumers. Means the cost of tax that consumers have to bear will be certain.

Threshold Limit For Registration: If we consider current VAT structure any type of business with more than 5 lacks needs to pay VAT. Coming to service tax turnover less than 10 lacks are exempted. Under Goods and Service Tax(GST), threshold increased to 20 lacks. Which means GST exempting many small service providers.

Reduce the number of compliance: According to the current tax regime, Excise VAT and service tax both have their own returns and compliances.

GST will unify all of below taxes, which means reducing the number of returns and the time spent for tax compliances. There are about 11 returns under Goods and Service Tax, but only 4 are basic returns which apply to all taxable persons under the GST.

There are about 11 returns under Goods and Service Tax, but only 4 are basic returns which apply to all taxable persons under the GST.

TaxReturn Filing
ExciseMonthly
Service taxProprietorship/Partnership- Quarterly

Company/LLP- Monthly

VATDifferent for different states

Some states require monthly returns over a threshold limit. Some states like Karnataka require a monthly return

GST Registration Situations Table:

Situation

Nature of supply

Registration required

1

Taxable inter-state supplyYes

2

Exempted inter-state supplyNo

3

Intra-state supply (up to ₹ 9 lacs)No

4

Intra-state supply (exceeding ₹ 9 lacs)Yes

5

Intra-state supply (up to ₹ 9 lacs)

Exempted inter-state supply of any value

No

6

Casual Taxable personYes

7

Reverse charge – for personal use up to prescribed limitNo

8

Reverse charge – for personal use beyond prescribed limitYes

9

Reverse charge – Other than personal useYes

10

Non-resident personsYes

11

Persons required to deduct TDS providing intrastate supply up to ₹ 9 lacsYes

12

Input service distributorYes

13

Agent or the likeYes

14

Intra-state supply up to ₹ 9 lacs

As an agent

Yes

15

Electronic commerce operatorYes

16

Supply through electronic commerce operator – Branded or otherwiseYes

17

Aggregator – supplying servicesYes

18

Intra-state supply – Exempted ₹ 5 lacs

Intra-state supply – Taxable ₹ 5 lacs

Yes

As the aggregate turnover exceeds ₹ 10 lacs.

How To Register Goods and ServicesTax (GST Registration) India

It’s mandatory to register for GST if you are providing services in India. GST registration is totally based upon the online procedure. You can register for Goods and Services Tax directly through GSTN website. We are dividing the whole procedure into 3 stages like below.

Stages of GST Registration
  1. Arranging your documents: First, you need to arrange the required documents for GST registration. GST is a new tax, so better to check your documents before applying for GST with professional like CA.
  2. File Application: After checking your documents, you should file the documents along with the online application which is on GSTN website. Make sure your documents are in GST acceptable document sizes.
  3. GST Registration: After Govt officer finds all of your documents, then that will issue GST Registration certificate. Usually, it will take 3 to 5 days to get GST registration certificate by India.

GST Action Plan

 

GST Registration - Required Documents:

You need to submit below documents in order to get GST Registration certificate.

Business-related proof:

  • Passport Size Photo
  • Partnership Deed/Registration Proof like COI
  • Copy of Bank Statement
  • Authorization Form

For Address Proof:

  • Ownership Proof (Electricity Bill etc) – if the property is owned.
  • Rent Agreement (if property is on rent)
  • NOC (Download format)
GST Registration Mandatory Requirements

GST is a newly implemented tax system by Government of India and it is rollout on June 30 midnight. So you need to have some mandatory documents for GST registration.

  • Passport size photograph
  • Electricity bill/registry proof in property is owned or rental agreement in case property is on rent
  • Registration certificate in case of company, AOP, society and registration deed in case of partnership/trust
  • Authorization letter for GST registration
  • Bank statement/passbook first page containing MICR code, IFSC code and Account number

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Mandatory/Compulsory Registration for GST

The following information is very important for those who are going to register for GST. Check the categories carefully because if you are in below categories then GST Registration is compulsory regardless of your turnover.

  • Persons who are making inter-state supply, irrespective of any threshold limit
  • Persons who are required to pay tax under reverse charge
  • The casual taxable person making any taxable supply.
  • Supply of goods or services through E-commerce operator like Flipkart, Amazon, Paytm etc.
  • Aggregator who supplies service under his brand name or his trade name
  • Person supplying goods/services on behalf of someone else like agent
  • Persons who are required to deduct tax under section 37 (TDS)
  • A non-resident taxable person making any taxable supply.
  • Every person providing online information database access from outside India – AWS, Godaddy etc.
  • Input service Distributor – Whether or not register.
  • A person selling on e-commerce platform like Flipkart, Amazon etc.
  • Anything else notified by the Government from time to time.
  • In the situation other than above categories:
  • Transferee in the case where business is transferred.
    1. Supplier liable to be registered where it makes a taxable supply of goods of services if its aggregate turnover in a financial year exceeds ₹ 4 lacs. (for NE states including Sikkim)
    2. Suppliers liable to be registered where it makes a taxable supply of goods of services if its aggregate turnover in a financial year exceeds ₹ 9 lacs.
  • Persons who were already registered under the earlier law subject to point (1) and (2) above.

If you are in above categories then start your GST Registration process because turnover is not considered for these. Means if you are earning less amount like 100 rupees then also you need to register.

GST Registration for Indian Bloggers – How blogging will be taxed under GST

According to the laws of GST, it is very clear that everyone should register fir GST. As per the Sectio 24 of GST act, every person who is earning any income from outside the country or outside the state is required to get GST registration and the exemption limit shall not apply.

Clearly, the exemption limit of Rs.20 lakh is only valid for small dealers/service providers who generate their income from within the state, but if you are a service provider i.e. blogger, and generating income from outside India (export of services), then GST registration is mandatory and exemption limit shall not apply.

What type of services called as export of services under GST?

Check below conditions for services which can be called as export of services under Goods and Service Tax. Export of services means the supply of services when:

  • The supplier (blogger or freelancer) of service is located in India
  • The recipient of service is located outside India – If you are receiving payment from Google India, then it shall
  • NOT be treated as export of services and you shall be liable to PAY GST.
  • The place of supply of service is outside India – Explained in next step
  • The payment of such service has been received by the supplier of service in convertible foreign Exchange.
  • Not relevant for bloggers
As per section 16(1) “zero-rated supply” means any of the following supplies of goods or services or both, namely:

(a) export of goods or services or both; or ………

Below two terms covers all types of services provided through internet under CGST Act, 2017 and IGST Act, 2017

(17) “online information and database access or retrieval services” means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,––

  • advertising on the internet
  • providing cloud services
  • provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet
  • providing data or information, retrievable or otherwise, to any person in electronic form through a computer network
  • online supplies of digital content (movies, television shows, music and the like)
  • digital data storage and
  • online gaming
(110) “telecommunication service” means service of any description (including electronic mail, voice mail, data services, audio text services, video text services, radio paging and cellular mobile telephone services) which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means;
(44) “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network;
(45) “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce;

Click below buttons to check all GST acts:

Consider this GST Guide as a reference for your tax related queries and manage your tax returns.

Tax Calculation Under GST: See below table to check the difference in the amount of tax and the advantage of input credit available to manufacturer/dealer. Also check the prices including all taxes, currently.

ParticularsValue and Tax amount based on current rates (in INR)Value and Tax amount under GST (in INR)
Value to the Manufacturer
Cost of Production1,00,0001,00,000
Addition of 10% Profit Margin10,00010,000
12% Excise Duty13,200
Total Cost of the Production1,23,2001,10,000
Addition of 12.5% VAT15,400
Addition of 6% SGST6,600
Addition of 6% of CGST6,600
Invoice Value for the manufacturer1,38,6001,23,200
Value to the wholesaler
Cost of products1,38,6001,23,200
Addition of profit margin @10%13,86012,320
Total Value1,52,4601,35,520
Addition of 12.5% VAT19,058
Addition of 6% SGST8131
Addition of 6% CGST8131
Invoice value to the wholesaler1,71,5181,51,782
Value to Retailer
Cost of products1,71,5181,51,782
Addition of profit margin @10%17,15215,178
Total Value1,88,6701,66,960
Addition of 12.5% VAT23,584
Addition of 6% SGST10,018
Addition of 6% CGST10,018
Invoice value to the wholesaler2,12,2541,86,996

Conclusion: We hope that you liked this GST Guide: Everything You Need To Know About It post well. If you have any questions or suggestions on this post then feel free inform us through comment section. We are always happy to assist you regarding GST Guide and Registation.

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About the author

Naveen Puli

Naveen is a CEO and Founder of Effective Information. Also, he is a Blogger, Freelance Writer, Graphic Designer, and Internet Marketer. Passionate about his work, always trying to learn new things and implement them in a proper way.

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