Under the direction of Atal Bihari Vajpayee, the incumbent Indian Prime Minister at the time, a committee was formed to write the GST Law in 2000. The tax regime and tax structure were suggested to be improved by the committee in 2004. Later, in 2016, GST was implemented after years of delay and debate and was approved by both the Rajya Sabha and the Lok Sabha. On July 1st, 2017, GST (Goods and Services Tax) was introduced in India after a year.
What is GST?
Goods and Services Tax is an indirect tax levied on goods and services. With the introduction of GST, multiple indirect taxes were abolished such as VAT, service taxes, excise duty, etc. You can register under GST, if you fall under the following categories – a business with a turnover of more than ?40 Lakh in a financial year, individuals who are already registered under earlier law (i.e., excise, service tax, VAT, Octroi, Entertainment tax, tax on lottery, luxury tax, Purchase tax, etc.), non-resident individuals who pay tax, TDS Deductor, TCS Deductor, E-commerce aggregators, etc.
- Manufacturer: As a manufacturer, you have to pay GST on the purchase of raw materials and value addition to the product.
- Service Provider: Under the GST scheme, a service provider is responsible for paying GST on both the purchase price of the products and the value added to it.
- Retailer: As a retailer, you will be paying GST on the purchased product and added margin.
- Consumer: The consumer is responsible to pay GST on the purchased product or service.
Advantage of GST
- Uniform tax structure
- Online GST process
- Streamlining the process
- Bring transparency
Types of GST
- Interstate transactions – Interstate transactions occur when a transaction takes place between two states.
- Intra-state transactions – The term intra-state transaction is used when the transactions take place within the state.
There are four types of GST in India:
- SGST – State Goods and Services Tax – SGST is levied on the supply of products and services on intrastate transactions.
- CGST– Central Goods and Services Tax – CGST is charged on the sale of services or products that occurs within a state.
- IGST – Integrated Goods and Services Tax – Any inter-state transaction of products and services is categorized under IGST.
- UGST– Union Territory Goods and Services Tax – When the transaction of services and products occurs between any of the union territories of the country is considered under UGST. Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. UTGST is levied along with CGST.
How to Register GST?
You can register under GST, by following the below-mentioned steps:
Step 1: Visit the GST Portal and submit your GST application.
Step 2: After submission of the application, your ARN (Application Reference Number) will be generated instantly.
Types of GST Return
Under GST, there are 13 returns – GSTR-1, GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-7, GSTR-8, GSTR-9, GSTR-10, GSTR-11, CMP-08, and ITC-04
| Return Form | Frequency | Who can file the GST Return? |
| GSTR-1 | Monthly | GST-registered businesses |
| GSTR-3B | Monthly | GST-registered businesses |
| GSTR-4 | Annually | Dealer under the composition scheme |
| GSTR-5 | Monthly | Non-resident foreigners with businesses in India |
| GSTR-5A | Monthly | Non-resident |
| GSTR-6 | Monthly | Input Service Distributors (ISD) |
| GSTR-7 | Monthly | Businesses that deduct TDS |
| GSTR-8 | Monthly | E-commerce operators |
| GSTR-9 | Annually | GST-registered businesses |
| GSTR-9C | Annually | GST-registered businesses |
| GSTR-10 | Monthly | Businesses with GST registration that was canceled or surrendered |
| GSTR-11 | Monthly | Registered Business with a UIN |
Documents Required for GST
For Individuals – PAN (Permanent Account Number) card, Address proof, Aadhar card, bank account
For Company – PAN, bank details, address proof, article of association or Memorandum of association, certificate of incorporation
GST Rates Slabs
There are mainly four GST tax slabs in India – 5%, 12%, 18%, and 28%. GST slabs are created to keep food items and essential services in lower tax brackets and luxury items and services under higher brackets. There are more than 1,300 goods and 500 services that are divided into four tax slabs.
GST Calculation Formula
GST amount = Original price x GST Rate/100
Net price = Original price + GST amount
For example, you are a seller, selling a camera from Pune to Delhi for ?40,000 and the rate of GST applied on the camera is 18%
GST Amount (40,000 x 18)/100 = Rs.7,200
The net price will be 40,000 + 7,200 = Rs.47,200
Conclusion
This blog will surely help you understand the concept of GST in detail along with the concepts such as interstate, and intra-state transactions, how to apply for GST, types of GST, etc. In conclusion, with the introduction of GST, the taxation system is simplified helping businesses as well as the government.
FAQs
Q.1: What is GST in simple words?
GST in simple words means Goods and Services Tax. It is an indirect tax levied on goods and services.
Q.2: What are the 4 types of GST?
There are four types of GST in India namely SGST (State Goods and Services Tax), CGST (Central Goods and Services Tax), IGST (Integrated Goods and Services Tax), and UGST (Union Territory Goods and Services Tax).
Q.3: How is GST calculated?
GST can be calculated using the below-mentioned formula:
GST amount = Original price x GST Rate/100
Net price = Original price + GST amount
Q.4: Who is the father of GST?
Atal Bihari Vajpayee is the father of GST.
Q.5: What is the current rate of GST?
There are four slabs of GST: 5% GST, 12% GST, 18% GST, and 28% GST.
