A step by step process to register for GST.
A step by step process to register for GST.
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India is one of the largest economies in the world, and also a complex one. Both central and the state governments have their share of powers to charge multiple direct and/or indirect taxes throughout the value chain. This has, in due course, complicated the economic activities across the nation, and led to increase in prices for everyone.
Goods and Services Tax (GST) is an attempt by central government to ease the indirect taxes. The implementation of GST is expected to bring in numerous benefits for all the stakeholders. The consumers would benefit from lower prices; trade and industry will benefit from a uniform single indirect tax throughout the country. The manufacturers will find sourcing of raw materials and locating facilities easier, and the central and the state governments will experience tax buoyancy along with shrinkage in tax collection costs.
Here's everything you’d want to know about GST:
What is GST (Goods & Services Tax)?
GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. GST is aimed at making India one unified common market, reduce the administrative complications, and simplify the indirect tax system. The Constitution (122nd Amendment) Bill was introduced throughout India on 1st July 2017, replacing the indirect taxes being levied by the central and state governments.
GST will now replace at least 17 state and federal taxes, and be far simpler than the current system, where goods are taxed several times at varying rates. The whole idea is to tax goods at the point of consumption rather than during production, thus steering clear of double taxation. This means that the end consumer will only bear the GST charged by the last dealer in the supply chain.
GST is governed by GST Council, chaired by Mr. Arun Jaitley, the Union Finance Minister of India. Introduction of Goods and Services Tax is a step towards reforming the indirect taxation process in India and comes with several benefits, which include:
For an efficient implementation of GST, the central government will bear all the losses incurred by the states and will offer compensations for the first five years as well.
Which taxes will be included into GST?
The GST rate slabs finalized by the council will be applicable across 1,200 goods and 500 services in the tax brackets of 0, 5, 12, 18 and 28%. To know more about the rate slabs click here The taxes that will be subsumed under GST are:
How will GST be Administered?
Taxes will be levied on supply of goods and services. Keeping in mind India's federal structure, India will assume a dual GST model, wherein GST will be administered and collected by both, Central and the State Governments across the value chain. There will be three components to this GST model –
Central GST (CGST): Revenue will be collected by the central government
State GST (SGST): Revenue will be collected by the state governments for intra-state sales
Integrated GST (IGST): Revenue will be collected by the central government for inter-state sales
Technological optimization of GST
Goods and Services Tax Network (GSTN) has been set up jointly by the central and state governments to help in the implementation of GST by providing three front end services, namely registration, payment and return to taxpayers. In addition to this, GSTN will develop back-end IT modules for all the participating States.
What are the main components of registration?
Businesses carrying out supply of goods or services with turnover exceeding specified threshold limits of Rs. 20 Lac and 10 Lac respectively will be required to do GST registration, which will enable them to avail various benefits including seamless input tax credit.
The registration process will be performed online through a portal maintained by Central Government of India. GSPs (GST Suvidha Providers) will also be appointed by the government to help in the registration process.
What are the documents required for registration?
Migration to GST
To migrate to GST, all existing Central Excise and Service Tax assessees and VAT dealers will be provided a Provisional ID and Password, which they can use to login to the GST Common Portal (https://www.gst.gov.in) and submit duly filled Form 20 along with supporting documents.
An assesses may not be provided a Provisional ID if: 1. The PAN associated with the registration is not valid 2. The PAN is registered with a State Tax authority and Provisional ID has been supplied by the said State Tax authority.
What are the main components of returns filing?
The main components of the proposed returns filing procedures are as follows:
How can you make payments under GST?
Under GST, all challans will have to be prepared by taxpayers on the GST portal. This is to ensure that bank tellers do not enter wrong information from hand written challans. Once a challan is created, the taxes can be paid using either of the options given below:
Every business will need to become GST compliant. Hence updating your accounting software too becomes an imperative step, as it will help you generate GST compliant invoices, record expenses, and automate preparation of GST-ready tax returns.
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