What is GST? All you need to know about Goods and Service Tax
After much ado and economical and parliamentary debates the Goods and Service Tax (GST) is being positioned for a roll out from 1st July 2017.
The tax mechanism in India, especially the Indirect tax system, is cumbersome and complex. The moto of GST is to integrate the prevailing intricate indirect tax structure into a single and simple scheme.
The current tax structure includes Central taxes [comprising of Central Excise Duty, along with other duties, service tax, surcharge and cess] and State taxes [including VAT, Sales tax, Central sales tax, purchase tax etc.]. The introduction of GST and the consequent amendment to the Constitution will allow both the Central and State Government to levy a singular tax component- GST.
Also Read: Advantages of GST – The bright side
Some notable feature of GST are as follows:
- Rate slabs for GST are 5%, 12%, 18% and 28% the lowest rate being for essential items and the highest rates being reserved for luxury supplies.
- With regards to Intra state transactions of goods and services Central GST (CGST) and State GST (SGST) would be levied by the Central and State respectively at the prescribed rate.
- Whereas on Interstate transactions of goods and services Integrated GST (IGST) would be levied by the Central Government at the prescribed rates.
- The tax would be levied on supply of goods and services rather than the manufacturing of goods or the provision of sale of goods or services.
- The leaving of GST would be subject to the crossing over of the exemption threshold, currently which is set at Rs. 20 Lakhs- annual turnover. The earlier proposed limit was Rs. 10 Lakhs.
- GST will be paid on the value of the transaction i.e. the price actually paid or to be paid for the supply of the particular goods or service.
- Input Tax Credit (ITC) will be available in respect of taxes paid on the supply of goods and services on most B2B transactions where the said good/services are intended to be used further for creating taxable supplies.
- The ITC would be subject to- Possession of the actual invoice, receipt of goods and services, tax paid to the government, filing and furnishing of returns.
Every person who is liable to registration under the previous law will have to register under GST. Also, those persons who have crossed the exemption threshold would be liable for registration. Registration for GST would be a simple online process.
For payment of the tax, all major payment platforms can be used.