Basics of GST: Meaning, Features & Benefits

Goods and Service Tax (GST) has come into effect on 01 July 2017. GST is the indirect tax law which was introduced to subsume various indirect taxes with the objective to bring in ease in making business and to reduce compliance burden of tax payers. The GST Act has three parts

1. The Integrated Goods and Service Tax Act.

2. The Central Goods and Service Tax Act.

3. The State Goods and Service Tax Act.

GST is applicable on supply of goods and service in the course of business. Depending on type of transaction GST is to be paid under different heads. Incase in Intra state transactions GST is to be paid under head SGST and CGST in equal proportion. Incase of interstate transaction GST is to be paid under head IGST. Even though the heads of GST are differing depending on type of transaction the rate of GST remains same.

What is Intra Sate Transaction?

Intra state transaction is transaction where movement of goods or provision of service is within the state. The origin and destination of goods is within state or service provider and place of supply is within state.

What is Inter state transaction?

Inter state transaction is transaction where movement of goods or provision of service is within two states. The origin of goods is in one state and destination of goods is in another state or service provider and place of supply is in different state.

Registration

Following category of persons shall obtain GST registration

1. Every person who’s aggregate value of supply exceeds Rs. 40 lacs (incase of goods) and Rs. 20 lacs (incase of service).

The aggregate turnover limit is Rs. 10 lacs incase of special category states.

2. Any person doing inter state supply.

3. Ecommerce operators

4. Person supplying goods or services through e-commerce operator

5. Person liable to pay GST under RCM

6. Input service Distributor

7. Casual Taxable person

8. Person liable to deduct or collect tax.

Benefits of obtaining GST Registration

The major benefit of GST is it eliminates the cascading tax effect and in turn brings in efficiency in costing or pricing of product or service. Under GST the input tax credit of GST paid on any inward supply used in course of business is allowed to claim and set-off against the output tax liability. This helps reduce the cost of production and avoids higher pricing of products due to overlapping taxes.

Compliances

The person registered for GST needs to file various GST returns as may be applicable. The small taxpayers have option to choose monthly returns filing or quarterly returns under QRMP Scheme.

QRMP is quarterly filing and monthly payment scheme where taxpayer will pay tax on monthly basis and file returns on quarterly basis.

For payment of tax one needs to file FORM GSTR 3B.

For reporting outward supply GSTR 1 needs to be filed.

For taxpayer having aggregate turnover below 2 crores (incase of goods) and 50 lakhs (incase of services) can apply for composition scheme and register as composition dealer. Composition dealer is required to file return in Form GSTR 4 on yearly basis.

Other than QRMP and Composition taxpayers other taxpayers have to file GSTR 3B and GSTR 1 on monthly basis.

Disclaimer :

The information comments and analysis expressed above is for informational purpose only and should not be considered or interpreted as any professional or legal advice. We have made efforts to ensure the information given above is reliable however we do not warrant for its accuracy or completeness. We shall not be liable for loss or damages (if any) for any decisions taken based on above content. We recommend obtaining proper professional advice before acting on basis of information contained herein.