All Indian service providers (including freelancers), dealers, and manufacturers are subject to the Goods and Services Tax, which entered into force on July 1, 2017. A variety of government taxes, including Service Tax, Excise Duty, and CST, as well as state taxes, such as Entertainment Tax, Luxury Tax, Octroi, and VAT, were consolidated into one tax, GST, on July 1, 2017.
GST will be charged at every point throughout the supply chain, with full set-off benefits. There is no manual intervention in the GST procedure because it is entirely online. The GST structure in India is made by the brightest minds of top economists of India.
In the supply chain, every product goes through numerous processes, including sourcing raw materials, manufacturing, selling to a wholesaler, selling to a retailer, and lastly selling to the customer. Surprisingly, GST would apply to all three periods. If a product is made in West Bengal but consumed in Uttar Pradesh, the entire revenue is distributed to Uttar Pradesh.
Components of GST & Input Tax Credit
Taxpayers with a turnover of less than Rs.1.5 crore can use the composition scheme, which eliminates time-consuming GST processes, GST registration forms and allows them to pay GST at a fixed rate based on their sales. GST platform will include three tax components: a central component (Central Goods and Services Tax or CGST) and a state component (State Goods and Services Tax or SGST), with both the center and states levying GST on all entities, i.e. when a transaction occurs inside a state.
The Integrated Goods and Services Tax (IGST), which will be charged by the central government, will apply to inter-state transactions, i.e. when a transaction occurs from one state to another.
You can use an input tax credit to deduct the tax you’ve already paid on inputs and pay the difference when you file your taxes. You pay taxes when you acquire something from a registered vendor, and you collect taxes when you sell it. With input credit, you can use the amount of sales tax (output tax) to offset the taxes paid at the time of purchase and pay the residual tax liability, i.e. sales tax minus buy tax.
Any firm or entity that buys and sells goods or services must register for a GST invoice. GST registration is necessary for businesses with a yearly turnover of more than Rs. 20 lakhs (for service sales) or Rs. 40 lakhs (for goods sales).
Businesses that make outbound interstate product supplies must also register for GST. Businesses that make taxable supplies on behalf of other taxable people, such as Agents and Brokers, are subject to the same limits. According to a recent notification, e-commerce sellers/aggregators do not need to register if their total sales are less than Rs.20 lakhs.
GST Tax Rates
Exempt items are those that are considered basic necessities and hence are not taxed. For example, household staples and life-saving drugs are taxed at 5%. Computers and processed foods are subject to a 12% tax. Hair oil, toothpaste, and soaps, as well as capital products, industrial intermediaries, and services, are all taxed at 18 percent.
Luxury products are subject to a 28 percent tax.
A GST return is a document that provides income information that must be filed with the tax authorities according to legislation. The GST Act requires a taxpayer to make two monthly returns and one annual return.
Electronic submissions are required for all returns. Please bear in mind that refunds are not subject to change. Invoices from the previous tax period that were not reported must be included in the current month.
Purchases, sales, output, GST (on sales), and input tax credit are all required to be included in a registered dealer’s GST filings (GST paid on purchases).
Each GST taxpayer is given a unique identification number or GSTIN during the GST registration procedure. By logging into the GST system, a person with a GST number can validate a GSTIN number. The GSTN (Goods and Service Tax Network) is a private limited corporation that operates under the Companies Act, Section 8. (non-profit). GSTN manages the GST Indirect Taxation portal, which helps you to plan, file, revise, and pay your indirect tax obligations.
GST Application Procedure Explained
One of the GST representatives will gather the necessary documents before submitting the GST application using the iCFO platform. Application Processing and Filing: Once all of the relevant documents have been collected, the application will be processed and filled out. Certificate of GST Registration: After the GST officer has verified the GST application and other needed documents, the GST registration certificate, and GSTIN will be issued. The GST registration certificate can only be obtained through the GST Portal; no physical copies will be provided.
Failure to Register for GST: Under Section 122 of the CGST Act, all taxable persons in India who fail to register for GST face a direct penalty. Although it is not needed by law, any small firm with a revenue of less than Rs.20 lakh can voluntarily register for GST. Registration for GST on a voluntary basis has its own set of advantages.
A GST Return Filing is a document that contains information about the taxpayer’s earnings. The GST administrative authority must receive it. The document is used by tax authorities to compute a GST taxpayer’s tax liability.
The following information is to be entered into a GST Return Filing form. Sales, Input tax credit (GST paid on purchases), Purchases, Output, GST (on sales), Output, GST (on purchases), Purchases, Purchases, Purchases, Purchases, Purchases, Purchases, Purchases, Purchases GST-compliant sales, and purchases, as well as invoices, are required when filing a GST Return.
For swift GST registration online, you can contact Smart Accountants for quick filing of your GST. GST registration charges may vary depending upon the package chosen by the client.