The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. GST is an indirect federal sales tax that is applied to the cost of certain goods and services. The business adds the GST to the price of the product and a customer who buys the product pays the sales price plus GST. The GST portion is collected by the business or seller and forwarded to the government. In effect, GST provides revenue for the government.
GST is India’s first major sweeping tax reform in decades. This regime has rationalised tax collection and simplified compliance procedures to a great extent. Businesses that once had to register for a wide range of taxes, i.e., VAT, Excise Duty, Service Tax, CST, Octroi, Luxury Tax and Entertainment Tax, -- now only require a GST registration. GST is strictly an Indirect tax applied to the cost of certain goods and services while Income tax comes under Direct tax. This value-added tax is levied on all goods and service providers in the domestic market. However, not all businesses require a registration.
Businesses that supply goods or services over a value of Rs. 20 lakh (Rs. 10 lakh in North Eastern states) are eligible for GST registration. Remember that the GST is levied on supply, not sales. Therefore, stock-taking, discounts and freebies also come under the GST net. Businesses selling to other states must register for GST, regardless of turnover.
Some of the benefits of GST are:
GST is a comprehensive, value added indirect tax on goods and services, which has made India a unified market.
Some of the key features of GST are:
In March 29, 2017 the Indian government declared the Goods and Service Tax to unify the state economies and enhance the overall economic growth of the country. Act according to which the GST is an indirect tax that subsumes all other taxes. This Act became effective on July 1 2017 and since then GST has replaced all the taxes that were existed previously. ST is a comprehensive tax that is imposed at every stage of sale.
GST is a comprehensive, value-added tax imposed on manufacture, sale and consumption of goods and services. GST is a single unified system that is applied across the country.
As GST removes the cascading effect of taxes and the economic barriers between the states, it will be beneficial for businesses and consumers. For instance, if a product has a tax rate of 20%, this is inclusive of central and state government’s taxes. The seller can manufacture in one state and supply to other states with no taxes. Also, the consumers would be subject to only this indirect tax and no other taxes. GST helps government in creating a common market with common procedures, thereby reducing the corruption.
Why do we need a GST Council?
The GST Council in India is a governing body that regulates the GST act and all its further amendments. The Council takes the key decisions related to GST, which includes changes in tax rates, tax laws, tax deadlines, etc. The GST Council regularly notifies the finance ministry of all the improvisations. One of the primary responsibilities is to ensure that there is one uniform tax across India.
How is the GST Council structured?
According to the Article 279A (1), GST council has to constituted by the President within 60 days of the commencement of the Article 279A. It also states Creation of GST Council Secretariat, Appointment of the Secretary, Inclusion of the Chairperson and an Additional Secretary and four Commissioners in the GST Council Secretariat.
GST Download
Every business that has an annual turnover of more than Rs 20 lakh has to mandatorily register for GST. Other businesses which fall under “special” category are also required to register for GST. Once registered, the GST taxpayer will get a GST registration certificate in Form GST REG-06, which can be downloaded from the GST portal. It has to be noted that the government does not issue physical certificate.
Use our GST calculator, to calculate Goods & Service Tax Amount and submit GST returns without any hassle.
Regular notifications and circulars on GST orders are provided to people. Orders, that are related to compliance, which need immediate attention are issued. The orders and circulars of 2018 are:
India decided to join the other leading countries which have successfully implemented GST. Hence, one of the significant Indian tax reforms, GST is regarded as a “one tax, one nation” that subsumes all indirect taxes. GST facilitates global competitiveness among businesses, simplifies tax collection process, reduces corruption across the nation and make interstate selling of goods easy. The dual GST set up came into force on July 2017, abolishing the complex tax structures that were existing for decades. The main idea of GST was to eliminate the cascading effect of taxes, i.e., tax on tax or double taxes right from manufacturing phase till it reaches the consumer.