Understanding GST in India - 20 questions answered!

Understanding GST in India - 20 questions answered!

 We're   committed to simplifying taxes for small business owners in India.   Since GST is configured to replace several indirect taxes, we are going to start this series of frequently asked questions about GST.   This article is the first in this series.   Please feel free to share your thoughts or questions in the comments section at the end of this publication.

1) What is the tax on goods and services (   GST   )?

It is a destination tax based on the consumption of goods and services.   It is proposed that it be applied in all stages, from manufacturing to final consumption, with the credit of taxes paid in previous stages available as compensation.   in a

In a nutshell   , only the added value will be taxed and the tax burden will be borne by the final consumer.

2) What are GST slabs?

The Goods and Services Tax (GST) will be applied at multiple rates ranging from 0 percent to 28 percent.   The GST Board   finished   a four-tier GST tax structure of 5%, 12%, 18% and 28%, with lower rates for essential items and the highest for luxury and value goods that would also attract a   cess   additional   .

Service tax     It will rise from 15% to 18%.   Services subject to taxes at lower rates, due to the provision of the reduction, such as train tickets, will fall on the lower slabs.

To control inflation, essential items, including food, which currently constitute approximately half of the consumer inflation basket, will be taxed at a zero rate.

The lowest rate of 5% would be for commonly used items.   There would be two standard rates of 12 percent and 18 percent, which would fall on most of the goods and services.  This includes fast-moving consumer goods.

The highest tax slab will be applied to items that are currently taxed at 30-31% (special tax plus VAT).

Luxuries Ultra, demerit and goods without (like tobacco and soft drinks), will attract a   Cess   for a period of five years at the top of the GST 28 percent.

The collection of this   ceso   as well as that of clean energy   Cess   would create a pool of income that would be used to offset the states of any loss of income during the first five years of GST application.

The finance minister said that the   cessation   It would be a lapse after five years.

The structure   Agreed   It is a commitment to meet the demand of the highest tax rate of 40% by states like Kerala. 
While the Center proposed imposing a 4% GST on gold, the final decision on this was postponed.   During a press conference, the finance minister, Mr.Jaitley   He said: "The GST rate on gold is   will end one   Once the adaptation to the structure of approved rates of all the elements is completed and there is some idea of ​​the income projections ".

The principle to determine the rate of each element will be to impose and collect the GST in the slab of rate closest to the current fiscal incidence.

The GST will subsume the crowd of   processes   currently in force, including  Swachh Bharat Cess, the Krishi Kalyan Tax  and the Cess Education. Single he Cess of Clean Environment   , whose income will also finance the compensations.

3) Which of the existing taxes does it intend to subsume under GST?

GST is configured to replace several taxes as mentioned below:

Taxes currently collected and collected by the Center:

State taxes that would be subsumed under the GST

to.   Central tax second.   Duties of special taxes (medicinal and grooming preparations) do.   Additional Taxes of Special Taxes (Goods of Special Importance) re.   Additional duties of excise duties (textiles and textile products) my.   Additional Customs Duties (commonly known as CVD) F.   Customs Special Additional Rights (SAD) Sun.   Service tax h.   Surcharges and   central assignments in the   as they relate to the supply of goods and services.

to.   State VAT second.   Central sales tax do.   Luxury tax re.   Entry tax (all forms) my.   Entertainment and entertainment tax (except when imposed by local agencies) F.   Taxes on advertising Sun.   Purchase tax h.   Taxes on lotteries, bets and bets. i.   Surcharges and   state cessions in the   extent they relate to Provision of goods and services.

The GST Council will make recommendations to the Union and to the States on taxes,   assignments   and surcharges raised by the Center, States and local agencies that may be included in the GST.

4) What will be the status of tobacco and tobacco products under the GST regime?

Tobacco and tobacco products would be subject to GST.   In addition, the Center would have the power to impose central excise duties on these products.

Proposed products to stay out of GST	Alcohol for human consumption, oil products viz.   Crude oil, diesel engine (gasoline), high speed diesel, natural gas and aviation turbine fuel and Electricity.
Taxes of such products in the GST regime	The existing tax system (VAT and central excise) will continue with respect to the products mentioned above.

5)     What kind of GST do you propose to implement?

It would be a dual GST with the Center and the States that collect it simultaneously on a common tax base.   The GST that will be charged by the Center in the supply of goods and / or services within the state would be called the Central GST (CGST) and the one that will be collected by the states will be called the State GST (SGST).   In the same way, the Center will impose and administer the Integrated GST (IGST) in each interstate goods and services supply.

6)     Why is Dual GST required?

India is a federal country where both the Center and the States are assigned the powers to collect and collect taxes through appropriate legislation.   Both levels of government have different responsibilities to fulfill according to the division of powers prescribed in the Constitution for which they need to raise resources.   A dual GST, therefore, will be in accordance with the constitutional requirement of fiscal federalism.

7)     What authority will GST impose and administer?

The center will charge and administer CGST and IGST, while the respective states will impose and administer SGST.

8)     How would a particular transaction of goods and services be taxed simultaneously under central GST (CGST) and state GST (SGST)?

The central GST and the state GST would be imposed simultaneously on each transaction of supply of goods and services, except exempt goods and services, goods that are outside the scope of GST and transactions

what   they are below the prescribed threshold limits.   In addition, 8 both would apply to the same price or value, unlike the state VAT that is applied to the value of the goods, including CENVAT.   While the location of the provider and the

the recipient   Within the country it does not matter for the purpose of CGST, SGST would only be charged when the provider and the recipient are located within the state.

Illustration I:     Suppose hypothetically that the CGST rate is 10% and the SGST rate is 10%.   When a steel wholesale distributor in Uttar Pradesh supplies steel bars and rods to a construction company that is also within the     same state for, say Rs.   100, the distributor would charge CGST of Rs.   10 and SGST of Rs.   10 in addition to the basic price of the goods.

You will be required to deposit the CGST component in a Central Government account, while the SGST part does so in the account of the Government of the State in question.   Of course, you do not need to pay Rs.   20 (Rs.10 + Rs. 10) in cash, since it would be entitled to offset this liability against the CGST or the SGST paid for their purchases (for example, inputs).   But to pay CGST you would only be allowed to use the CGST credit paid on your purchases, while for SGST you can only use the SGST credit.

In other words, the CGST credit can not, in general, be used for the payment of SGST.   Neither can the SGST credit be used for the payment of CGST.

Illustration II:     Suppose, again hypothetically, that the rate of CGST is 10% and that of SGST is 10%.   When an advertising company located in Mumbai supplies     advertising services to a soap making company also located in the state of Maharashtra for, say, Rs.   100, the advertising company would charge CGST of Rs.   10, as well as SGST of Rs.   10 to the basic value of the service.

You will be required to deposit the CGST component in a Central Government account, while the SGST part does so in the account of the Government of the State in question.   Of course, you do not need to pay Rs again.   20 (Rs. 10 + Rs. 10) in cash, since you would be entitled to offset this liability against the CGST or SGST paid on your purchase (for example, of supplies such as stationery, office equipment, services of an artist, etc.). ).   But to pay CGST you would only be allowed to use the CGST credit paid on your purchase, while for SGST you can only   use   the SGST credit.

In other words, the CGST credit can not, in general, be used for the payment of SGST.   Neither can the SGST credit be used for the payment of CGST.

9)     What are the benefits that the country will get from GST?

The introduction of GST would be a very important step in the field of indirect tax reforms in India.   By amalgamating a large amount of central and state taxes into a single tax and allowing tax compensation in the previous stage, it would mitigate     the negative effects of the waterfall and pave the way for a common national market.   For consumers, the greatest gain would be in terms of a reduction in the general tax burden on goods, which is currently estimated at 25% -30%.

Introduction     GST would also make our products competitive in national and international markets.   Studies show that this would instantly stimulate economic growth.   There may also be revenue gains for the Center and the States due to the expansion of the tax base, the increase in trade volumes and the improvement of tax compliance.   Last but not least, this tax, due to its transparent nature, would be easier to administer.

10)     What is IGST?

Under the GST regime, the Center would impose and collect an integrated GST (IGST) on the supply of goods and services between States.   Under Article 269A of the Constitution, the GST on supplies in the course of

State commerce or trade will be collected and collected by the Government of India and this tax will be distributed between the Union and the States in the manner established by Parliament by law on the recommendations of

The   Tax Council of Goods and Services.

eleven)     How will GST refunds be archived?

In order to correctly update the invoices, Indian taxpayers and companies have to present certain declarations to the Government.   These statements must be submitted, as any  Failure to comply with them can lead to the cancellation of the tax credit for inputs, in addition to attracting fines and interest, etc. The correct presentation of the information and the approval of the same in the declarations is a mandatory process so that it can be carried out without problems. Flow of credit to the last recipient.

The returns are designed so that all transactions are synchronized with each other and so that no transaction is left unattended between the buyer and the seller.   All data is stored in GSTN, which can be accessed by users / contributors at any time online.

Depending on the type of GST registration (Regular, Compound, etc.), companies must submit   until   37 GST refunds each year.   These statements can be presented using any    GST Return presentation software     or directly from the GSTN portal.

Learn all about     GST returns   .

12)     What would be the role of the GST Council?

A GST Board composed of the Union Finance Minister (who will be the President of the Council), the Minister of State (Revenue) and the Ministers of Finance / State Taxation will be established to make recommendations to the     Union and States in

(   i   )   the   taxes,   assignments   and surcharges raised by the Center, States and local agencies that can be subsumed under the GST;

(ii)   the   goods and services that may be subject to or exempt from the GST;

(iii)   the   date on which the GST will be applied to crude oil, high-speed diesel, sprit engine (commonly known as gasoline), natural gas and aviation turbine fuel;

(iv)   laws   model of   GST, collection principles, apportionment of IGST and the principles that govern the place of supply;

(v)   the   limit   of the   Billing threshold below which goods and services may be exempt from GST;

(saw)   the   rates that include floor rates with GST bands;

(vii)   any   special rate or rates during a specific period to raise additional resources during any natural disaster or disaster;

(viii)   a   provision   special   with respect to the States of the Northeast, J & K, Himachal Pradesh and   Uttarakhand   ;   Y

(ix)   any   another matter related to the GST, as decided by the Council.

13) Who is required to pay GST under the proposal     GST regime?

Under the GST regime, the taxpayer pays the tax on the supply of goods and / or services.   The responsibility to pay taxes arises when the taxpayer crosses the threshold exemption, that is, Rs.10   lakhs   (Rs.5   lakhs   for the States of the NE), except in certain specific cases in which the taxpayer is obliged to pay GST even though he has not crossed the threshold.   The CGST / SGST is payable on all supplies of intrastate goods and / or services, and the IGST is payable on all supplies of interstate goods and / or services.   CGST / SGST and IGST are payable at the rates specified in the Appendices to the respective Acts.

14)     What are the benefits available for small taxes?     Payers under the GST regime?

Taxpayers with an aggregate turnover in a financial year up to [Rs.10   lakhs   ] would be exempt from taxes.

[Aggregate turnover will include the added value of all taxable and non-taxable supplies, exempt supplies and exports of goods and / or services and will exclude taxes. GST.]

The aggregate turnover shall be computed on the   base of the   India   .   For the NE and Sikkim states, the exemption threshold will be [Rs.   5   lakhs   ]   All taxpayers eligible for the threshold exemption will have the option to pay taxes with the benefits of the tax credit for inputs (ITC).   Taxpayers who make interstate or tax-based charges on a collect basis will not be eligible for the threshold exemption.

fifteen)     How will goods and services be classified?     under the GST regime?   What is HSN under GST?

The   code   HSN (   System   Harmonized   of Nomenclature) will be used to classify goods under the GST regime.   Taxpayers whose turnover is greater than Rs.   1.5   Rs.   but below Rs.   5   millions of people   they will use the 2-digit code and taxpayers whose turnover is Rs.   5   millions   of   rupees   and more will use a   code of   4 digits   .   Taxpayers whose turnover is less than Rs.   Not required   1.5   Rs.   to mention the HSN Code on your invoices.   The services will be classified according to the Services Accounting Code (SAC).

Read about     HSN and SAC   .

sixteen)     How will imports be taxed under GST?

Imports of goods and services will be treated as interstate supplies and IGST will be imposed on imports of goods and services to the country.   The incidence of the tax will follow the principle of destination and the tax revenues in

The case   of SGST will accumulate in the State where the imported goods and services are consumed.   Full and complete compensation 14 will be available in the GST paid on the importation of goods and services.

17)     How will exports be handled under GST?

Exports will be treated as zero-rated supplies.   No tax will be paid on exports of goods or services, however, the credit of the entrance tax will be available and it will be available as reimbursement to the exporters.

18)     What is the scope of the composition scheme under     GST?

Small taxpayers with an aggregate turnover in a financial year of up to [Rs.   fifty   lakhs   ] will be eligible for the composition tax.   Under the scheme, a taxpayer must     pay taxes as a percentage of your turnover during the year without the benefit of ITC.

The floor tax rate for CGST and SGST will not be less than [1%].   A taxpayer who chooses a composition tax should not charge any tax to his clients.   Taxpayers who make interstate supplies or pay taxes on the basis of collect charges will not be eligible for the composition scheme.

Note that the composition scheme is optional.

Learn more about     GST composition scheme   .

19)     What   is   GSTN and its role in the GST regime?

GSTN stands for Goods and Services Tax Network (GSTN).   A special purpose vehicle called GSTN has been configured to meet the needs of GST.   The GSTN will provide shared IT infrastructure and services to central and state governments, taxpayers and other stakeholders for the implementation of GST.   The functions of the GSTN would include, among other things:

·                                                  Facilitating the registration;

·                                                  Forwarding returns to central and state authorities;

·                                                  calculation and settlement of IGST;

·                                                  matching of tax payment details with the banking network;

·                                                  provide several MIS reports to central and state governments based on information from the taxpayer's declaration;

·                                                  providing analysis of the profile of the taxpayer;   Y

·                                                  run   the matching engine for the comparison, reversion and claim of the tax credit for inputs.

The GSTN is developing a common GST portal and applications for registration, payment, return and reports / MIS.   The GSTN would also be integrating the common GST portal with the existing tax administration IT systems.

Y   It would be the construction of interfaces for taxpayers.   In addition, the GSTN is developing back-end modules such as evaluation, audit, reimbursement, appeal, etc. for 19 states and UT (model II states).   The CBEC and Model I States (15 States) are developing their GST back-end systems.   The integration of the GST front-end system with the back-end systems should be completed and tested well in advance for     making the smooth transition

twenty)     How will the disputes be resolved?     under the GST regime?

The Constitution (First-Amendment) Act, 2016, establishes that the Goods and Services Fiscal Council shall establish a mechanism to resolve any 16 (a) dispute between the Government of India and one or more States;   or (b) between the Government of India and any State or     States on the one hand and one or more States on the other side;   or    (c) between two or more States, arising from the recommendations of the Council or its implementation.

Learn more about     Sanctions and appeals in GST   .

Is your business ready for GST?

All companies in India must comply with GST after July 1, 2017. GST rules will apply to billing, receipts,   payments of   delivery   and other transactions   .