GST in India Goods & Services Tax Law :
GST 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.
What is GST ?
In simple words, Goods and Service Tax is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.GST is one indirect tax for the entire country.
Under the GST regime, the tax will be levied at every point of sale. In case of interstate sales, Central GST and State GST will be charged. Intra-state sales will be chargeable to Integrated GST.
Advantages of GST:
- GST will mainly remove the Cascading effect on the sale of goods and services. Removal of cascading effect will directly impact the cost of goods. Since tax on tax is eliminated in this regime, the cost of goods decreases.
- GST is also mainly technologically driven. All activities like registration, return filing, application for refund and response to notice needs to be done online on the GST Portal. This will speed up the processes.
Registered GST Dealer :
Any business can be a registered GST Dealer. But the businessses having turnover below 20 lakh can deny from registration under GST. Businesses having turnover more than or equal to 20 lakh have compulsion to be registered under GST.
For sale having amount less than Rs. two hundred, Sale Bill is not neccessary.
Registered GST Dealers are of two types
Tax Invoice with detailed description of collected tax is used for Sale Bill.
Bill of Supply is used for Sale Bill.
POS (Place of Supply)
It is usually be the state of the party. for eg. Maharashtra, Gujarat, etc. From POS, we can determine either IGST have to apply or CGST+SGST have to apply in the bill.
What are the components of GST ?
There are 4 taxes applicable under this system : CGST, SGST, IGST & UTGST.
- CGST : Central Goods and Services Tax. Collected by the Central Government on an intra-state sale (Eg: Within Maharashtra).
- SGST : State Goods and Services Tax. Collected by the State Government on an intra-state sale (Eg: Within Maharashtra).
- IGST : Integrated Goods and Services Tax. Collected by the Central Government for inter-state sale (Eg: Maharashtra to Tamil Nadu).
- UTGST : Union Territory Goods and Services Tax. It is the GST applicable on the goods and services supply that takes place in any of the five Union Territories of India, including Andaman and Nicobar Islands, Dadra and Nagar Haveli, Chandigarh, Lakshadweep and Daman and Diu.
In most cases, the tax structure under the new regime will be as follows:
- Let us assume that a dealer in Gujarat had sold the goods to a dealer in Punjab worth Rs. 50,000. The tax rate is 18% comprising of only IGST.
In such case, the dealer has to charge Rs. 9,000 as IGST. This revenue will go to the Central Government.
- The same dealer sells goods to a consumer in Gujarat worth Rs. 50,000. The GST rate on the good is 12%. This rate comprises of CGST at 6% and SGST at 6%.
The dealer has to collect Rs. 6,000 as Goods and Service Tax. Rs. 3,000 will go to the Central Government and Rs. 3,000 will go to the Gujarat government as the sale is within the state.
These are returns of GST tax for any businesses. Following returns have to fill-up on every month.
- GSTR1 : It contains information of "Sales" in a particular month. Last date of this return will be 10th of next month.
- GSTR2 : It contains information of "Purchases" in a particular month. Last date of this return will be 15th of next month.
- GSTR3 : It contains information of actual GST tax amount to pay to the government. Last date of this return will be 20th of next month.
- GSTR4 : A dealer registered under composition scheme of GST is required to furnish GSTR-4 by 18th of the month succeeding quarter.
- If supplier and customer are from same state, then CGST+(SGST or UTGST) are applicable.
- If supplier and customer are from different state, then IGST is applicable.
- If anyone imports goods (purchases from outside country), then IGST + basic customs are applicable.
These GSTR can be submitted directly on government's portal : www.gst.gov.in
GST Invoices Format
What is a GST Invoice?
An invoice or a bill is a list of goods sent or services provided, along with the amount due for payment.
Bill Of Supply Format
What is a Bill of Supply ?
A Bill of Supply is similar to a GST invoice except for that bill of supply does not contain any tax amount as the seller cannot charge GST to the buyer.
A bill of supply is issued in cases where tax cannot be charged:
- Registered person is selling exempted goods/services.
- Registered person has opted for composition scheme.
What changes has GST brought in ?
- In the pre-GST regime, every purchaser including the final consumer paid tax on tax. This tax on tax is called Cascading Effect of Taxes.
- GST avoids this cascading effect as the tax is calculated only on the value-add at each stage of transfer of ownership.
- GST also brought with it a single nation-wide system of waybills by the introduction of “E-way bills”. This system started on 1st April 2018 for Inter-state movement of goods and 15th April 2018 for intra-state movement of goods in a staggered manner. By this system, manufacturers, traders & transporters are benefitted by a common portal where e-way bills can be generated and presence of its visibility to all stakeholders in the process of moving goods from the place of its origin to its destination. Tax authorities are also in vantage as this reduces the time at check -posts and help reduce tax evasion.