GST (Goods and Service Tax) – Overview

The Goods and Services Tax (GST) is a type of tax on the consumption of goods and services in countries, collected by businesses from consumers and paid to the government.It was introduced officially in India on 1 July 2017, replacing the earlier system of multiple taxes, such as excise duty, service tax, and value-added tax (VAT).

The 101st Constitutional Amendment / One Hundred and First Amendment Act, 2016 of the Constitution of India is a significant piece of legislation that has had a prominent impact on the Indian economy. It was passed in 2016 to introduce the Goods and Services Tax (GST), a value-added tax (VAT) that has simplified the tax system and boosted economic growth. This constitutional amendment was introduced as a nationwide Goods and Services Tax (GST) concept in India.

GST registration is mandatory for all businesses with an annual turnover of more than ₹40 lakhs (₹ 20 lakhs for businesses in special category states).

What is GSTIN?

GSTIN stands for Goods and Services Tax Identification Number. It is a unique 15-digit number assigned to every taxpayer registered under the GST regime in India. The GSTIN is used to identify taxpayers and to track their transactions.

The GSTIN is structured as follows:

• The first two digits represent the state code.
• The next ten digits are the PAN card number of the taxpayer.
• The thirteenth digit is an entity code used to distinguish between different types of taxpayers.
• The fourteenth digit is a fixed alphabet ‘Z’.
• The fifteenth digit is a check digit, which is used to verify the accuracy of the GSTIN.

What is the GSTN (Goods and Service Tax Network)?

The Goods and Services Tax Network (GSTN) is a non-profit, non-government organisation that provides the shared IT infrastructure and services to the Central and State Governments, taxpayers and other stakeholders to implement the Goods and Services Tax (GST) in India.

The GSTN is responsible for developing and maintaining the GST portal, which is the online platform that taxpayers use to register for GST, file returns, and make payments.

The GSTN also provides several other services, such as:

• E-invoicing
• E-way bill
• Input tax credit reconciliation
• GST compliance reporting

The GSTN is a critical component of the GST system in India. It provides the IT infrastructure and services that enable taxpayers to comply with the GST laws and the government to administer the GST system.

What is a GST Certificate?

A GST certificate is a document issued by the Government of India to a taxpayer or entity that has registered under the GST system. It is proof of registration and authorises the taxpayer to collect GST from customers on behalf of the government.

The GST certificate contains the following information:

• GST Identification Number (GSTIN)
• Name of the taxpayer
• Address of the taxpayer
• Date of registration
• Type of registration (regular, composite, or non-resident)
• Business category
• Signature of the authorised officer

Components of GST

The components of Goods and Services Tax (GST) in India are:

Central Goods and Services Tax (CGST)

This is levied by the central government on all intra-state and inter-state supplies of goods and services. The CGST rate is the same for all states and union territories.

State Goods and Services Tax (SGST)

This is levied by the state government on all intra-state supplies of goods and services. The SGST rate varies from state to state.

Integrated Goods and Services Tax (IGST)

This is levied by the central government on all inter-state supplies of goods and services. The IGST rate is the sum of the CGST and SGST rates.

Union Territory Goods and Services Tax (UTGST)

This is levied by the central government on all supplies of goods and services made within a union territory. The UTGST rate is the same as the SGST rate.

Who Needs a GST Registration Service?

• Any individual or business entity that carries out taxable supplies of goods or services
• Annual turnover of the business exceeds the prescribed threshold limit (currently ₹20 lakhs for most businesses)
• E-commerce operators that facilitate the supply of goods and services through their platform
• Non-resident taxable persons who occasionally supply goods or services in India
• Businesses that are involved in inter-state supply of goods or services
• Input service distributors who distribute input tax credit to their branches or units
• Casual taxable persons who supply goods or services occasionally in India
• Businesses that were previously registered under the old tax regime (VAT, Service Tax, etc.) and have migrated to GST.

Objectives of GST

The objectives of the Goods and Services Tax (GST) in India are to:

Create a unified and simplified tax system

GST is a single tax that replaces multiple indirect taxes levied by the central and state governments. This makes it easier for businesses to comply with tax laws and reduces the cost of doing business.

Eliminate the cascading effect of taxes

The cascading effect of taxes occurs when a tax is levied on a product or service that already includes other taxes. This can lead to higher prices for consumers. GST eliminates the cascading effect of taxes by allowing businesses to claim input tax credits on the taxes paid on their inputs.

Promote economic growth and development

GST is expected to boost economic growth and development in India by creating a single market for goods and services. This will make it easier for businesses to trade across state borders and will lead to lower prices for consumers.

Increase tax revenue

GST is expected to increase tax revenue for the government by widening the tax base and reducing tax evasion. This will help the government to fund essential public services.

Who Has to Obtain GST Registration Compulsorily?

Documents Required For GST Registration

GST Registration Process

To apply for a GST number online, you can follow these steps:

• Go to the GST portal and create an account.
• Once you have created an account, login and click on the ‘New Registration’ tab.
• Select the appropriate category of registration for your business.
• Fill in the required details in the application form.
• Upload the required documents.
• Pay the registration fee.
• Submit the application form.

GST Registration Fees

Getting a GST registration is a legal process that requires you to submit a lot of information about your business and scanned copies of certain documents. Vakilsearch offers a GST registration plan that can save you a lot of time and hassle. With our plan, a GST professional will help you with the entire process from start to finish.

GST Registration Threshold Limits

Certain businesses are required to register for GST regardless of their turnover, such as

GST Compliances

Benefits of GST Registration for Individuals and Businesses

• Avail input tax credit: Registered businesses can claim input tax credit (ITC) on the GST paid on their purchases of goods and services. This reduces the overall tax burden on the business and makes it more competitive.
• Conduct interstate business without restrictions: Registered businesses can freely conduct interstate trade without any restrictions. This is a major advantage for businesses that operate in multiple states.
• Easily register on online & e-commerce websites: Many online and e-commerce websites require businesses to be GST-registered in order to sell their products and services.
• Get a competitive advantage compared to other businesses: GST registration is a sign of business credibility and reliability. It can give businesses a competitive advantage over unregistered businesses.
• Be eligible for several government benefits: Registered businesses are eligible for several government benefits, such as tax breaks, subsidies, and loans.
• Composition scheme: Small businesses with an annual turnover of up to Rs. 1.5 crore can opt for the GST composition scheme. This scheme allows businesses to pay a fixed rate of GST on their turnover instead of having to calculate and pay GST on each individual transaction. This can simplify tax compliance for small businesses.
• Higher threshold for registration: Businesses with an annual turnover of up to Rs. 40 lakh are not required to register for GST. This is a relief for small businesses, as it reduces their compliance burden.

GST Registration Status

There are two ways to check your GST registration status online:

Using your ARN (Application Reference Number)

• Application Status’.
• Select ‘Registration’ from the drop-down menu.
• Enter your ARN in the box provided.
• Enter the captcha code and click on ‘Search’.
• Your GST registration status will be displayed on the screen.

Using your PAN (Permanent Account Number)

• Go to the GST portal and click on ‘Search Taxpayer’.
• Select ‘Search by PAN’.
• Enter your PAN in the box provided.
• Enter the captcha code and click on ‘Search’.
• Your GST registration status will be displayed on the screen.

Gst Status Codes

Penalty for Failure to Register for GST

Penalty for failure to register for GST in India

• Late fee of Rs. 100 per day, per Act (₹ 200 per day for CGST and SGST)
• Penalty of 10% of the tax due, subject to a minimum of ₹ 10,000
• Imprisonment of up to six months for willful evasion of GST

Please note that the imprisonment penalty is typically imposed only in cases of willful evasion of GST, which is a serious offence.

Waiver of Penalty

The penalty for failure to register for GST can be waived if the business registers for GST within 30 days of the date on which it was required to register.

Taxable Person Under GST

A taxable person under GST is any person who is registered under GST or required to be registered under GST. Any person who engages in economic activity including trade and commerce is treated as a taxable person.

Types of taxable persons under GST:

• Individuals
• Hindu Undivided Families (HUFs)
• Companies
• Partnerships
• Limited Liability Partnerships (LLPs)
• Associations of Persons (AOPs) or Bodies of Individuals (BOIs)
• Corporations established by or under any Central, State or Provincial Act, or a Government Company
• Body corporate incorporated by or under the laws of a country outside India
• Co-operative society registered under any law relating to cooperative societies
• Local authority
• Government
• Society as defined under the Societies Act, 1860

Persons who are required to register for GST

• Businesses with an annual turnover of more than ₹40 lakhs (₹20 lakhs for businesses in special category states)
• Businesses that make inter-state supplies of goods and services
• Businesses that import or export goods and services
• Businesses that provide e-commerce services
• Businesses that operate through e-commerce aggregators
• Businesses that are registered under the reverse charge mechanism
• Businesses that are required to collect and deposit taxes on behalf of the government

Voluntary Registration Under GST

Voluntary registration under GST is registering for GST even if you are not required to do so by law. There are several benefits to voluntary registration, including:

• You can claim input tax credit on the taxes paid on your inputs. This can reduce your tax liability
• You can participate in inter-state trade
• You can get a GST certificate and proof of compliance with the GST laws
• You can build a good reputation with your customers and suppliers
• You can avoid having to register for GST later if your turnover exceeds the threshold limit.

GST Tax Rates

GST Return Filing

GST return filing is the process of submitting GST returns to the government. GST returns are required to be filed by all businesses that are registered for GST. The frequency of GST return filing depends on the type of business and the turnover of the business.

Types of GST Returns

• GSTR-1: This return is required to be filed by all businesses that are registered for GST. It contains details of all outward supplies made by the business during the month.
• GSTR-2: This return is required to be filed by all businesses that are registered for GST. It contains details of all inward supplies received by the business during the month.
• GSTR-3: This return is required to be filed by all businesses that are registered for GST. It is a consolidated return that contains details of all outward and inward supplies made and received by the business during the month.
• GSTR-4: This return is required to be filed by composition taxpayers. It contains details of all outward supplies made by the business during the quarter.
• GSTR-5: This return is required to be filed by non-resident taxpayers. It contains details of all outward supplies made by the business during the month.
• GSTR-6: This return is required to be filed by input service distributors (ISDs). It contains details of all input services distributed by the ISD during the month.
• GSTR-7: This return is required to be filed by taxable persons who have opted for the reverse charge mechanism. It contains details of all reverse charge supplies made by the business during the month.
• GSTR-8: This return is required to be filed by e-commerce operators. It contains details of all monthly taxable supplies made through the e-commerce platform.
• GSTR-9: This return is required to be filed by all businesses that are registered for GST. It is an annual return that contains details of all outward and inward supplies made and received by the business during the year.
• GSTR-10: This return is required to be filed by businesses that are cancelling their GST registration. It contains details of all outward and inward supplies made and received by the business during the period from the date of cancellation to the date of filing the return.
• GSTR-11: This return is required to be filed by businesses that are required to reconcile their input tax credit (ITC) with the ITC claimed by their suppliers. It contains details of all the ITC claimed by the business during the month.

How Can We Help You – Why Vakilsearch?

• We offer a hassle-free online GST registration process, with complete guidance from our experienced legal representatives.
• We take care of all your GST compliance needs, so you can focus on running your business.
• We ensure that all your GST returns are filed on time and accurately.
• Although the GST portal has a user-friendly interface, the GST Forms have a lot of complex fields.

The GST Glossary

• GST: Goods and Services Tax, a consumption tax levied on most goods and services sold in India.
• TRN: Temporary Registration Number, a unique 15-digit number generated when you start filling out the GST application.
• ARN: Application Reference Number, the number you get after filing the GST application.
• DSC: Digital Signature Certificate, a certificate that proves your identity in the digital world and protects your data.
• SGST: State Goods and Services Tax, a part of GST levied by the state government.
• CGST: Central Goods and Services Tax, a part of GST levied by the central government.
• IGST: Integrated Goods and Services Tax, a part of GST paid on interstate supplies of goods and services.
• UGST: Union Territory Goods and Services Tax, a part of GST levied by the union government.
• GSTIN: Goods and Services Tax Identification Number, a unique 15-digit number given to businesses that register for GST.
• GSTR: GST Return, a document that taxpayers must file with the authorities to calculate their tax liability. There are 11 types of GST returns.
• GSTN: Goods and Services Tax Network, a non-profit company that provides IT infrastructure and services for the implementation of GST.
• ITC: Input Tax Credit, the credit that businesses receive for paying taxes on inputs used in their businesses.
• HSN Code: Harmonised System of Nomenclature code, a 6-digit code that classifies over 5,000 products and is accepted worldwide.
• SAC Code: Services Accounting Code, a code used to classify services under GST. Each service has a unique SAC code.
• Reverse Charge: A mechanism where the recipient of goods is liable to pay tax instead of the supplier.
• Aggregate Turnover: The total value of all taxable supplies, used to determine the threshold for GST registration.
• Taxable Person: Any individual engaged in economic activity in India who is or is required to be registered under GST.
• Mixed Supply: A supply of two or more individual supplies of goods and/or services made together by a taxable person for a single price, when it does not form a composite supply.
• Composite Supply: A supply that consists of two or more goods and/or services, which are naturally bundled and provided together, where one is the principal supply.
• Continuous Supply: A supply that is provided at a specific interval (e.g., weekly or monthly) and the payments are made accordingly.
• GST Compliance Rating: A score between 0 and 10 assigned to all taxpayers, which depicts their GST compliance.
• Assessment: The process of determining the tax liability. There are six types of assessment in GST.