GST Info

GST FAQs

Goods & Service tax is proposed indirect tax in India. GST arose from:-
  • The need to cut down multiple indirect taxes such as excise duty, VAT, Octroi, Entry Tax, Luxury tax etc and have a uniform indirect tax across the country.
  • The need to reduce the impact of taxes being imposed on taxes and thereby limit the overall inflationary impact on the common man.
  • The need to create a single common market by eliminating distortion caused by varying tax rates in different states.
  • The need to have a destination based consumption tax.
  • GST is levied on supply of goods and services other than alcohol for human consumption
  • The word Goods denotes every kind of movable property excluding money and securities but including actionable claims. Service means anything other than goods excluding money and securities.
  • Supply can be either within a State or between States.
  • Supply within a State attracts Central GST (CGST) and State GST (SGST) while Supply between States is subject to Integrated GST (IGST).
  • Taxation of GST is governed by three separate laws viz., SGST Act, CGST Act and IGST Act along with accompanying rules.
  • The proposed rates are Nil, 5%, 12%, 18% and 28%.
  • Exports would be zero rated meaning that the taxes paid on inputs would be refunded.
  • Information Technology infrastructure is provided by GST Network.
GST would be applicable after the enactment of the three separate laws. The law is expected to come into force from 1st July 2016.
Aggregate all India turnover of Rs 20 lacs in a financial year would make a person subject to GST. Threshold limit for special category states is Rs 10 lacs.

The turnover would include supplies made as an agent. The supplier is required to pay GST while for specific goods/services the recipient will be required to pay GST on reverse charge basis.

GST will be administered by Central Govt and State Govt. Central Excise & Services Tax department at the Central level and Commercial taxes department at the State level would be re-designated for implementing GST. The administration will be divided on mutually agreed basis based on turnover.
Most of the existing indirect taxes would be subsumed under GST.

Composite Supply refers to naturally bundled supply of two or more goods or services or any combination and supplied in conjunction usually as normal business practice where one of which is considered as principal supply.
Eg., Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is principal supply.
Provision of water bottle in luxury bus for long distance journey is an example of natural bundling with transportation service being the principal supply.

Mixed Supply refers to two or more supply of goods or service or combination thereof for a single price and such supply is not a Composite Supply.
The differentiating aspect between Composite Supply and Mixed Supply is whether the bundling is naturally done in the ordinary course of business.
Eg., A Supply of package containing Sweets and Aerated drink for a single price would be mixed supply.
Mixed Supply is taxed at the highest rate applicable for the goods comprised in the bundle.
Time of Supply of goods or services is the earlier of
  • the date of invoice or
  • date on which payment is entered in the books or credited to the supplier’s bank account.
A supplier of goods has to issue invoice within the time period given below:-
  • Supply involves movement of goods- Time of removal of goods.
  • Sale on approval basis- 6 months from date of removal or approval whichever is earlier
  • Other cases-When goods are made available to the recipient
A supplier of service has to issue invoice before supply or within 30 days of supply of service. The Due date for issue of the invoice in case of continuous supply of goods involving a successive statement of accounts or successive payment is governed by separate rules.
Inter-State supply is one where the Location of Supplier and Place of Supply are in different states.

Supply to Special Economic Zone or from a unit in Special Economic Zone will always be inter-state supply regardless of the location and place of supply.

GST law provides detailed rules for determining the location of supplier as well for the place of supply.

Inter-state supply attracts IGST Intra- state supply is taxable under CGST & SGST
Composition levy implies taxing at concessional rate with reduced burden of compliance for specified category of Suppliers.

GST law proposes to provide this concessional option to suppliers with turnover below prescribed limit.

The concessional tax rate is 2.5% for the manufacturer and 1% for others.

The supplier cannot take input credit and cannot collect tax from the recipient.
  • Supplier having aggregate turnover below threshold limit of Rs 50 lacs
  • Supplier having inter-state outward supply irrespective of turnover
  • Supplier of services including deemed services irrespective of turnover
  • Supplier of non-taxable goods and notified goods irrespective of turnover
  • Supplier supplying through e-commerce operators irrespective of turnover
  • An eligible Supplier can look into the following factors before deciding on the option of Composition levy:-
  • The stage in the value chain where the goods are supplied ie whether the supplier is a manufacturer, wholesaler or retailer.
  • The length of the value chain before the goods reaches the consumer.
  • The rate of composition levy vis-à-vis the normal rate of GST for the product.
  • Cost- benefit analysis of the input credit that would be lost if the option is chosen.
  • Based on value of Supplies (excluding supplies made as job worker)
    • Supplying goods or services in North Eastern States, HP, Uttarakhand or Jammu & Kashmir called special category states
    • Supplying goods or services in states other than special category states
    • Person already registered under existing law either Excise, Service Tax or VAT is required to be registered based on the value of supplies
    • Successor to a business from the date of transfer
    • New company on amalgamation or demerger

    Compulsory registration regardless of value of supplies
    • Person making inter-state supply
    • Casual taxable person
    • Person required to pay tax under reverse charge
    • Person required to pay tax under composition levy
    • Non- resident taxable person
    • Person required to deduct tax under GST
    • Person required to collect tax under GST
    • Person who supplies goods or services on behalf of another taxable person
    • Input service distributor
    • Person who supplies goods or services through electronic commerce operator
    • Electronic commerce operator
    • Person supplying online information and database access or retrieval services
    • Any other person notified by the Govt

    Registration is under CGST, SGST and IGST. Registration is required in every state of supply.
    The registrant can opt for separate registration in each state if he has more than one business vertical ie more than one segment of business.
    • An agriculturist for the purpose of agriculture
    • A supplier who supplies exclusively only those goods and/or services that is not taxable or exempt from GST
    • A casual taxable person or non-resident taxable person need to apply at least five days prior to commencement of business.
    • Any other person who is required to be registered is permitted to register within 30 days from the date on which he becomes liable to register.
    • A taxable person can opt for voluntary registration even if he is not legally required to register.
    • PAN is compulsory for registration. Only exception is for non- resident taxable person.
    • There is provision for unique identity number to be given for notified agencies.
    • A certificate of registration is issued in prescribed format with effective date. The registration number is combination of PAN + State Code +Business vertical and is made up of 15 digits.
    • A casual taxable person or non-resident taxable person is registered for a specified period or 90 days and is required to estimate the tax liability and pay the tax in advance.
    Failure to register within 30 days would disentitle the person from claiming input tax credit in respect of goods held in stock or contained in finished or semi-finished goods held in stock.
    • When Business is discontinued or transferred
    • When there is change in constitution of the business
    • When registration has been obtained in violation of the provisions of the Act
    • When the person is no longer liable to be registered like turnover going below threshold limit etc.
    • When a composition supplier has not furnished returns for 3 consecutive tax periods. For other suppliers, the default must be for continuous period of 6 months
    • When business has not commenced within six months from date of registration
    • Where registration has been obtained through mala fide acts, the cancellation can be done retrospectively.
    GST law has been framed on the principle of self-assessment of tax by the taxpayer. Returns constitute the formal process of determining the tax liability and communicating with the Tax department.
    In order that self-assessment process operates with adequate checks and balances, the GST law requires sequential filing of the returns.

    Every registered taxable person is required to file returns. However, the number of returns to be filed varies depending on the nature of the business carried on by the taxable person.
    Non-filing of returns beyond specified number of consecutive tax periods would attract penal consequence by way of cancellation of registration.

    Discipline in filing returns can fetch positive compliance rating for the taxable person.
    Return filing is mandatory even if there is a lull in business activity during the relevant period.
    Returns applicable to all taxable persons who are carrying on business excluding suppliers who have opted for composition levy are as follows
    • GSTR-1 (Return of Outward Supplies)
    • GSTR-2 (Return of Inward supplies)
    • GSTR-3 (Monthly Return)
    • GSTR-8 (Annual Return)
    Note: A casual taxable person, Non-Registered taxable person, Input service distributor, Tax deductor are not required to file annual returns.

    Returns applicable for a supplier opting for composition levy are:-
    • GSTR-4 (Quarterly Return)
    • GSTR-8 (Annual Return)
    Other returns to be filed by specified taxable persons are:-
    • GSTR-5 (Return by non- resident tax payers)
    • GSTR-6
    • GSTR-7
    • All the returns are electronic returns
    • Transactions are divided into Business to Business (B2B) and Business to Consumer (B2C). Former covers a business entity selling a product to another business entity while a transaction involving supply to ultimate consumer falls within the latter category
    • B2B transactions are to be uploaded invoice wise. In other words, details of every taxable supply to another business are uploaded
    • Invoice wise details for B2C transactions are required to be uploaded only for specified type of transactions exceeding certain limits
    • Uniform identification of goods using HSN codes and services using Accounting code for services
    • Late filing of annual return attracts fee of Rs 100 per day of default subject to 0.25% of turnover while late filing of other returns attract fee of Rs 100 per day of default subject to Rs 5000/-
    • Compile the details of outward Supplies
    • File GSTR-1 by 10th of next month
    • Taxable person is provided with GSTR-2A which displays the details of inward supplies as extracted from GSTR-1 filed by the suppliers
    • Taxable Person can either accept or modify or reject the inward supplies displayed in GSTR-2A
    Note: Taxable person can claim input tax only for supplies that are matched
    • Taxable person to file GSTR-2 ( Return of Inward Supplies) by 15th of the next month
    • Supplier permitted to accept modifications up to 17th of next month
    • Supplier to pay the net tax and file GSTR-3 by 20th of the month
    • Rectification of any errors & incorrect particulars allowed on payment of interest till date of filing annual return or 20th of Oct of next year whichever is earlier
    • Where the recipient has claimed an inward supply and that is unmatched by the outward supply of supplier, then the said supply is added as Output tax liability of the recipient
    • However, output liability of the recipient abates as and when the supplier accepts the supply and the same is added to the output liability of the Supplier along with interest

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