Goods and Services Tax (GST)  Fundamentals Described: An Introductory Manual for Indian Companies

One of India’s biggest tax changes, the Goods and Services Tax (GST), was implemented with the intention of streamlining the tax structure and establishing uniformity. Understanding GST is essential for business owners in order to maintain compliance and stay out of trouble. The definition, structure, registration, filing, and compliance requirements of GST will all be covered in detail in this handbook.

What is GST?

The supply of goods and services is subject to the unified indirect tax known as GST. It has simplified tax collection and lessened the cascading effect of taxes by replacing a number of indirect taxes, including VAT, Service Tax, and Excise Duty.

Important aspects of GST include:

One Nation, One Tax: There is just one tax on the supply of goods and services that applies across the nation (except some notified goods and services).

Destination-Based Tax: GST is a destination-based tax that is assessed at the place of consumption rather than at the place of supply of goods/services.

Dual Structure: Contains Integrated GST (IGST) for interstate transactions and both Central GST (CGST) and State GST (SGST) for intrastate transactions.

Input Tax Credit (ITC): By allowing businesses to claim credit for taxes spent on purchases, the Input Tax Credit (ITC) lowers the overall tax burden.

GST Types in India

• Central Goods and Services Tax (CGST): The Central Government imposes CGST on intrastate transactions.
• State Goods and Services Tax (SGST): State governments impose SGST on sales made inside their borders.
• Integrated Goods and Services Tax (IGST): Imports and interstate sales are subject to IGST.
• Union Territory Goods and Services Tax (UTGST): In Union Territories where SGST is not applicable, UTGST is applied.

Who Must Register for GST?

Registration for GST is required for:

• Companies with supply of goods of more than ₹40 lakh during a financial year (₹20 lakh for special category states/union territories).
• Sellers and aggregators of e-commerce.
• Companies making inter-state supply.
• Companies engaged in import/export.
• Non-resident taxable persons and casual taxable persons.
• Companies paying taxes on an RCM basis.

How Can I Register for GST?

The online GST registration procedure entails:

• Go to www.gst.gov.in, the GST portal.
• Complete the GST REG-01 registration application.
• Upload the necessary documents (bank account information, Aadhaar, PAN, and proof of business).
• Obtain, after approval, the GST Identification Number (GSTIN).

GST Tax Slabs

India’s GST rates differ according to the type of goods and services:

• 0%: Basic products such as essential produce and some medical services.
• 5%: Essentials under ₹1,000, like packaged food and coal.
• 12%: Cell phones and processed foods.
• 18%: IT services, financial services, and consumer products.
• 28%: Luxurious goods such as expensive consumer devices, tobacco, and cars.

Regular Filing of GST Returns

Regular filing of GST returns is mandatory for registered firms. Among the main returns are:

• GSTR-1: Monthly return for outward supplies (sales) of goods and services.
• GSTR-3B: Monthly summary return of outgoing and incoming supplies and claim of ITC.
• GSTR-4: Quarterly return for persons registered under the Composition Scheme.
• GSTR-9: The annual return that summarizes the transactions of the financial year.
• GSTR-9C: The reconciliation statement in Form GSTR-9C to be filed along with GSTR-9 in case turnover exceeds ₹5 Crore during the financial year.

GST’s Advantages for Businesses

• Simplified Taxation: Multiple indirect taxes are replaced by a simplified taxation system, reducing paperwork and compliance requirements.
• Elimination of Cascading Effect: Input Tax Credit ensures that taxes are only applied to value addition.
• Transparency: Tax evasion is reduced through digital invoicing and record-keeping.
• Increases Competitiveness: Companies can expand across the country without dealing with multiple state tax levies.
• Promotes Ease of Doing Business: A uniform tax system facilitates easier business operations.

Difficulties with GST Compliance

• Regular Changes: Businesses must stay informed as GST laws and rates are subject to frequent updates.
• Complicated Submissions: Efficient accounting procedures are necessary for routine return submissions.
• ITC Restrictions: To claim Input Tax Credit, accurate bookkeeping and appropriate documentation are required.

GST has revolutionized the Indian tax structure by bringing uniformity, transparency, and ease of doing business. For businesses, understanding GST basics, registration, and compliance is crucial to avoid penalties and leverage benefits.

If you need expert guidance in GST filing, registration, or compliance, Sahil Jain & Associates can help you navigate the process effortlessly.

For professional GST consultation, reach out to us today!