GST ( Goods and Service Tax ) Meaning: GST can be defined as “one India, one tax”. GST basically means that their would be only one tax all over applicable and all the taxes between manufacturer and consumer will be deducted. GST as the full form reveals which means “goods and services taxes” and not “goods and service tax” which means it is related to services and not single service. GST can be considered as a VAT(value added tax) system. VAT(value added tax) is not a tax system but it is whatever tax you paid earlier you get a credit of it. GST can be considered as VAT only. VAT is just another name of GST.
GST has not yet came according to sources it will commence sometimes around April 2017 This bill was actually required to be passed by all the state legislative assemblies because every state legislative takes it own decision and if only they will pass the bill all sources get confirmed and the bill will get passed all over the country. GST needed the approval of all the 16 states and the last state whose approval was remaining was Rajasthan, this is India’s biggest tax reform.
Registration process of GST in India Online
The Goods and Services Tax (GST), is a most awaited tax scheme which will soon hit the floor of Indian economy. After many discussion and politics, this scheme will launch is 1st April 2017. Now you can register you name is GST , GST registration process online is given below:
How to register online for GST ?
If you are a Businessman, then you can register for GST online. Central Government of India created its online website in which you can register your name for GST.
- When you click on the GST portal, one FORM GST REG-01 will open on your computer screen. In this form, you have to fill your PAN card number, email address, and mobile number.
- The PAN of the applicant will be verified on the GST Portal and E-mail address and mobile number will be verified with a one-time password (OTP).
- When verification procedure is complete, then you will receive an application reference number on your E-mail Id and on your registered mobile number.
- After this FORM GST REG-02 will open in your system, in which you have filled the application reference number. Enter all the required information that are mentioned in the form and then click on Submit button.
- If Additional documents and information are required in your case, then you have to fill Form GST REG-03 and GST REG-04 with all necessary information within 7 working days from the date of receipt of GST REG-03 form.
- If you filled all the forms correctly, then one registration certificate in Form GST REG –06 will be sent to your business address.
- If you have more than one business than fill separate form for each business.
Documents required for GST Registration in India
- The document which required for GST Registration are-
- PAN card that is issued on the behalf of Company’s name
- Documents of partnership activity, Articles of Association (AOA) / Memorandum of Association (MOA), certificate of incorporation.
- Address proof of the Business place like electricity bill, Latest tax paid receipt etc.
- Your account number with IFSC code , MICR code and other bank branch details.
- One Canceled cheque of your bank account
- Two Passport size photo (Self Attached)
Who Can register for GST?
Many people are confused about who need to register for GST?, here you will get appropriate answer of your question
- If you are taxpayers, then you are liable to enroll under GST Scheme.
- If your are a business man and supplying goods and services whose amount is not more than twenty-five Lakh, then you don’t need to register under GST. In order words, Businessman who are supplying goods and services more than 25 lakh then you have to register in GST scheme.
Effects of GST on Small businesses and Startups
Easy agreements – Their would be easy agreements between the companies and the deals would be transparent and clear as all the work would be online. So it would not be difficult for private firms as well as government fund.
Tax structure will be uniform all over– As all the state legislative have passed the GST scheme it will be uniform all over the country as the taxes paid will be uniform. No extra taxes will be applied to the goods.
It will get rid of cascading- The cascading of taxes will be removed as their were less number of taxes as the taxes that were applies in between from the shopkeeper to the whole seller will be deducted.
The manufacturers and exporters – Because of the taxes that are deducted between the sale and purchase of this goods the manufacturers and the exporters will get a profit.
Types of Taxes:
We all know that there are two types of taxes we are paying
- Direct tax
- Indirect tax
A direct tax is a tax that is that is paid actually by us to the government through our pockets take an example of Income tax.
Indirect taxes actually include almost 18 types of taxes that we actually pay indirectly to the government as the MRP of the clothes you are buying. Let us discuss some of the examples of this indirect taxes that we are paying.
Sales tax where you pay tax because you are selling something and it also depends whether you are selling it within a state or out of state if you are selling out of state then you have to pay central taxes as well.
Service tax which you need to pay only to central government. When you eat food in luxury hotels you need to pay a service tax to them
Entry tax – when you enter for one state to another you need to pay entry tax on the tolls.
Central excise tax- If you are manufactures of something you need to pay central excise tax.
Entertainment tax- When we watch movies somehow we are paying taxes to the government for our entertainment.
All of these taxes actually vary according to the states. The percentage vary from 1-15%.. So indirectly you have to pay tax to the government. These taxes actually include a good amount they include almost 35-40% of the price that we are actually paying for. Sometimes when you are buying something one tax is applicable otherwise 4-5 taxes are applicable one thing.
Advantages of GST in India
If we consider the above example of shopping as how the GST regime will work as their will be no in between taxes that will be involved as in GST regime a lot of taxes usually involved. If GST will apply this taxes will be excluded and the things that we buy would be much cheaper.
Let’s have a look at the GST advantages-
- Some goods will be costlier while some would be cheaper.
- Automobiles price would drop down for about 50 thousand rupees because of the exclusion of many of the taxes.
- You have to pay only 18%of the luxury tax as suppose you eat in a restaurant so many of the taxes will be deducted
- People will need to pay only one tax that will be of central government
- The main advantage is that most of the taxes would be refundable that is the input will be refundable.
- Central excise tax on manufacturers, sales tax and all taxes will not be applicable, so these tax on tax will not be applicable
- Double taxation will not be allowed.
- Less paperwork will be there as the amount of taxes applied will be less government headache will be less as they do not need to keep records of each and every tax.
- It will be also a less time-consuming process.
- Online portals are going to be made for this which will make it simpler and easier to keep records of the taxes.
What is GST and NON-GST regime?
Let us understand this simple concept with example of shopping-
For example, you want to buy a dress now consider what happens to the dress actually from beginning-
when you buy a dress from
Non-GST regime = it costs 208.33
GST regime= it costs 166
Why this difference??? of 42.23???
Here’s how the price arrived at Non-GST regime A manufacturer let’s say buy raw materials worth rupees 100(inclusive of rs 10 tax)
The manufacturer then adds Rs.30 to the dress and the cost became total 130 rs assuming that he will have to pay 10% as a tax that is rs 13 as the tax.
So the dress is sold to the whole seller at 130+13=143rs
The wholesaler adds a price of rs 20 as a margin to his dress now it is priced.
After adding tax at 10% which is 16.3 the total cost became
The retailer now buys this dress at 179.30 and adds a margin of rs 10.
Now the cost became
Then he added a tax of 10% to the final price now the price became.
So the total tax that is paid till now will be
So we can see that in an NON-GST regime there is a cascading burden of “tax on tax”
Now we will consider GST regime and how it is different from NON-GST.
A manufacturer makes a dress of rs 100(Inclusive of taxes)
He adds 30rs to the dress and now the dress cost 130 rs
No taxes will be involved and the dress is directly sold to the wholesaler who adds a price of 20.
The retailer now buys it and adds a margin of 10.
The final price of the dress will be around 166rs as the tax will also be paid.
So this is how GST and NON-GST make a difference.
Types of GST ( Goods and Service Tax)
CGST and SGST full form and meaning
CGST(central GST) and SGST(state GST) are not different. when GST did not come into existence people paid a total of this two but now with GST people will know how much they are paying for CGST and SGST
FOR example earlier when you bought clothes you used to pay 12% tax total now you have to pay 6% CGST and 6% SGST.
What is the meaning and full form of IGST?
IGST is interstate goods services and taxes. Which means goods movement from one state to another state. If you have purchased some goods in one state and you want to take them to another state you will need to pay interstate taxes for that. Actually IGST=SGST+CGST. IGST is not a final tax it is actually a tax that is paid in between.
How to file GSTR (Goods and Services Tax returns)?
India’s biggest tax transformation GST (Goods and services tax) Bill is all set to hit from April 2017. In our previous articles, we have read about what is GST, How it will change the working of Indian financial market? What will be the impact of GST on small or big businesses? Now in this article, we are going to learn how to file GSTR i.e. Goods and Services tax returns. Well, alike you do now, you have to fill all the details of your business in the form for applying returns but in a different way. Before going into details how to file your GDTR? You need to know how many types of returns are there?
So, there are eight different types of GSTR starting from GSTR 1 to 8. Every type of return made for the different purpose, for the type of business. Some of those may applicable on your business some may not, it totally depends on what type of business you are doing.
One thing that is good in GST bill is that maximum of the things you can do online on GST online portals which are easier than ever before.
Types of GSTR And What Type of GSTR we should apply for?
GSTR-1 – The first type of GSTR is GSTR-1 which is made for outward suppliers. If you are an outward supplier and if you are a taxpayer then you have to file GSTR-1. Till now all suppliers furnishing all the details of their sales to the sales department on that basis assessments has been done. In the same way, all the details of outward supplies made by taxpayers will file in the GSTR-1. You have to file GSTR-1 on 10th of every month that you can fill easily on GST government online portal. You have to complete all the details of outward supplies until 10th of every month.
GSTR-2 – GSTR – 2 is for inward Suppliers. If you are an inward supplier then you have to file GSTR 2. But, if you are a buyer and seller too then you have to file both GSTR 1 and GSTR 2. For example – If you are a seller of clothes than either you are also the manufacturer of clothes or you are buying clothes from the manufacturers, if you are buying clothes from the manufacturer then you are liable to file both GSTR-1 and GSTR -2. All the details of inward supplies will fill in GSTR-2 on 15th of every month.
GSTR -3 – The third form of GSTR is GSTR-3 is for Monthly returns. This type of GSTR will be filled by everyone on 20th of every month. If we talk about most common cases then GSTR 1,2,3 and 8 is filled by everyone but not in all cases.
GSTR-4 – This type of GSTR is applicable on compounding taxpayers. If you are a small business owner then you come under compounding taxpayer where you have to file GSTR after the completion of every quarter of the months. You have to file GSTR- 4 on 18th of every quarter i.e. after the end of the quarter you have to file GSTR-4 until 18th of Next month. GSTR 1,2 and 3 are not applicable on compounding tax payers.
GSTR-5- It is for resident or nonresident foreign taxpayers. Where they have to file GSTR-5 on 20th of every month.
GSTR-6- This type of GSTR is for Input service distributors (ISD). Where they have to file GSTR-6 on 15th of every month.
GSTR-7 This is for TDS (Tax Deducted act source). Where they have to file GSTR-7 on 10th of every month.
GSTR-8 – It is about the Annual return. You have to fill the return annually on 31st Dec of everyyear. Your annual return of April to Mar should be paid till 31st Dec of every year.
How GSTR system works?
Most of the process involved in GSTR is online. With the involvement of Internet, all the things are automated when you submit all the details of sells in terms of GSTR-1 on 10th of every month in the same time it will automatically add to the buyer’s online account. If you are a supplier then you have to fill GSTR-1 it can be Nill but filling GSTR is compulsory.
In the most common cases, GSTR-1,2,3 and 8 levied on everyone but not for all. There are two kinds of taxpayers are not liable to pay GSTR-1,2 and 3, first one is compounding tax payer and the second one is ISD (Input service distributors).
How to file GSTR online in India?
Here, we have defined some main steps that you have to follow while filling your GSTR Online.
- First, you need to visit GST online portal and register your account with PAN card number and mobile number.
- After the completion of registration, you will get a 15-digit GSTIN (Goods and services tax identification number) that is based on state code and PAN number.
- Either you can do it by yourself or can take help of CAs who can process your tax filling process either from GST online portal or through GST accounting software. If you are doing it by yourself then you must be careful before entering each detail as the wrong one can cause you big.
- This time filing process is comparatively less complex and taxpayers will have to fill a maximum of 4 forms.
GST (Goods and Services Tax) bill will prove a game changer for the taxation system of Indian economy. The impacts of GST will be seen in every sector of business either it is a product or service industry or supply chain management or anything else. This GST amendment of One Tax for all will vanish the huge price difference of products and services. Some business sectors will take a sigh of relief but some must be in unfavorable situations. And if we talk about buyers then GST will bring positive and negative aspects for buyers also. These Goods and Services Tax amendment can cause you some inconvenience initially but, one thing is definite that it will make the working of Indian economy more transparent.
Well, we have learned all basics of GST bill India in above article. Currently, statewise GST registration process running around the country. Then it is expected to start imposing GST on all businesses from April 2017. If you are still having some doubts about GST amendment then you do not need to worry as we will make you aware of each and everything related to GST bill and GSTR. You just need to stay tuned will us.