Frequently Asked Questions about Goods and Service Tax
Since the implementation of GST, there are many doubts and questions from taxpayers and business entities and we’re here to address them. So let’s dive into it.
1. Basic information on GST
Goods and Service Tax, aka GST, is the one indirect tax for the whole nation conducting business through goods/services. This tax covers most of the heads of business right from manufacturer to consumer eliminating quite a few tax heads prior to this. It is born by all stages of production with credit of taxes paid at the previous stage. Hence the end consumer will pay only the value-added tax. GST was implemented on 1st June 2017 and has thus been successful as on date* with more and more taxpayers paying their taxes on time and finding the process less cumbersome.
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2. What taxes have been eliminated after the introduction of GST?
Prior to GST, there were taxes levied on businesses at various stages, by various governmental organization structures. The table below shows the elimination of taxes by the central and state government.
|Sr. No||Central Level Taxes||State Level Taxes|
|1||Central Excise Duty||Subsuming of State Value Added Tax/Sales Tax|
|2||Additional Excise Duty||Entertainment Tax|
|3||Service Tax||Central Sales Tax|
|4||Additional Customs Duty is commonly known as Countervailing Duty||Octroi and Entry tax|
|5||Special Additional Duty of Customs||Purchase Tax|
|7||Taxes on lottery, betting and gambling|
3. Who are the governing bodies for GST?
There will be two major bodies governing and overlooking the functions of GST – a central level body and a state level body depending on the state your business entity is registered in. Respectively, the taxes under the central head will be collected by the central government only and the taxes under the state head will be collected by the state government only. IGST – Integrated Goods and Services Tax will be monitored and collected by the Central government. This tax is the tax levied upon interstate transaction of goods and services.
4. What are the slab rates under GST?
There are multiple slabs under GST depending upon the goods/services provided and how essential their purposes are. The goods are divided into essential goods, fast moving consumer goods and luxury goods along with goods that have additional cess. The table below mentions the slab rate against the types of goods/services.
|Sr. No||Type of Goods/Services||GST Rate||Example|
|1||Essential Goods||0%||Eggs, Milk, Meat, Newspaper|
|2||Basic Goods||5%||Fish, Tea, Coffee, Railway – Air Transport|
|3||Fast Moving Consumer Goods||12%||Cell phones, Board Games, Table and Kitchenware|
|4||18%||Sugar, Cakes, CCTV, Tractor Parts|
|5||Luxury Goods and Goods with additional cess||28%||Paan Masala, Tobacco, Vacuum Cleaner, Sunscreen|
5. What is Dual GST and is it required?
As we have the center and the state collecting their appropriate taxes from the taxpayers, two parties are involved and hence known as dual GST. Both parties have their distinct identification and power/responsibility to levy and collect taxes. Thus, in a country like India, dual GST is required.
6. How will imports be taxed under the new GST regime?
Imports of goods and services under GST will be taxed under the head of IGST – Interstate Goods and Service Tax. The basic customs duty and other charges will still be levied on the goods during import. The tax paid on the goods/services will be available for an input tax credit to the importer which can be set off against the GST outgo on supplies.
Exports under GST will be treated as 0% tax; however, the input tax credit on imports will be available for refund to the exporters.
7. What are the major features one needs to keep in mind while filing for returns under GST?
There are 4 major features that have caught our eye that a taxpayer or business entity needs to keep in mind while filing for returns. We’ve listed them down below for you:
- Common Return – The tax that you pay to the center will be the same as the tax you pay to the state and vice versa. In short, the amount paid will always be identical to both the parties.
- Ease of Forms – Every taxpayer/business entity will fill a total of 8 forms while filing for his return, however, this is the extensive version. On an average, a taxpayer will fill mainly 4 forms which include – the return of supplies
– return of purchases
– monthly returns
– annual return
- Ease to small taxpayers – Business entities who have opted for the composition scheme have to only file for quarterly returns. You can read more about composition scheme on our blog here.
d. Online and Offline – With the era of digitalization, the filing for returns can be done completely online, reducing the paperwork and making it less cumbersome. However, if you are someone more comfortable with the old school method, you can file your returns offline too. There are certain authorized banks that accept the forms for GST filing of returns. It’s a win-win to both parties.
8. What is reverse charge and is it applicable only to services?
Reverse charge mechanism is the system wherein the recipient of the goods/services has to borne/liable to pay the tax as against the common method wherein the service provider bears with the tax. The charge gets reversed from the supplier to the recipient. These charges are usually on e-commerce portals for example.
Addressing the second part of the question, the simple answer is no, reverse charge is applicable to both goods and services.
9. What happens if one engages in business with an unregistered GST dealer?
If a registered person engages with an unregistered dealer of goods/supplies, then the registered taxpayer is liable to pay GST on a reverse charge basis. Every act that the registered supplier will do will act as if he was the person liable for paying the tax in the first place. However, purchases under Rs. 5000 per month from an unregistered dealer will not attract any tax. If the amount exceeds Rs. 5000 then the registered dealer is subject to reverse tax.
10. Under what requisition does one have to register himself under the GST portal?
A taxpayer/business entity that has a turnover of Rs. 20 lakh annually needs to register himself under the GST norm. Or, if the taxpayer/business entity engages in the interstate supply of goods/services is required to register themselves.
11. How can one register on the GST portal?
The registration process on the GST portal is completely easy, paperless and hassle-free. The process takes about a few hours to complete, and once everything has been approved a GSTIN number will be provided within 15 working days of registration. The process for registration on the portal is as follows:
Step A: Go to the GST Portal
- Access the GST Portal ->https://www.gst.gov.in/
- Click on Services -> Registration > New Registration option
Step B: Generate a TRN by Completing OTP Validation
- In the drop-down list, select the Taxpayer type from the options provided.
- In the State/UT and District drop-down the list, select the state for which GST registration is required and district.
- In the Legal Name of the Business (As mentioned in PAN) field, enter the legal name of your business/ entity as mentioned in the PAN database. There will be an automated check with the PAN database. Hence, ensure the name is the same as in PAN. In case a wrong name is mentioned in PAN, apply for correction of PAN first.
- In the Permanent Account Number (PAN) field, enter PAN of your business or PAN of the Proprietor. GST registration is linked to PAN. Hence, in the case of a company or LLP, enter the PAN of the company or LLP.
- In the Email Address field, enter the email address of the Primary Authorized Signatory. (Will be verified in next step)
- In the Mobile Number field, enter the valid Indian mobile number of the Primary Authorized Signatory. (Will be verified in next step)
- Click the PROCEED button
Step C: OTP Verification & TRN Generation
On submission of the above information, the OTP Verification page is displayed. OTP will be valid only for 10 minutes. Hence, enter the two separate OTP sent to validate email and mobile number.
- In the Mobile OTP field, enter the OTP you received on your mobile number.
- In the Email OTP field, enter the OTP you received on your email address.
Step D: TRN Generated
On successfully completing OTP verification, a TRN will be generated. TRN will now be used to complete and submit the GST registration application.
This is just the temporary form and once this is done, it takes you onto the next step. To know more about the following steps and the completion of the GST registration, you can read the link here.
12. What are the documents required for the registration of GST?
There is a set list of documents required by a taxpayer/business entity for the registration. The table below mentions all the documents required.
|Proof of Constitution of Business (Any One)||Certificate of Incorporation|
|Photo of Stakeholder (Promoter / Partner)||Photo of the Promoter/ Partner|
|Photo of the Authorised Signatory||Photo|
|Proof of Appointment of Authorised Signatory (Any One)||Letter of Authorisation|
|Copy of Resolution passed by BoD/ Managing Committee and Acceptance letter|
|Proof of Principal Place of business (Any One)||Electricity Bill|
|Legal ownership document|
|Municipal Khata Copy|
|Property Tax Receipt|
|Proof of Details of Bank Accounts (Any One)||The first page of Pass Book|
13. How do you check for GST verification?
GST verification process it the process to check whether the form submitted by you has been accepted and if the registration process is now complete. To check for your GST verification follow these steps.
- Click on the GST portal – https://www.gst.gov.in/
- Click on Search Taxpayer > Search by GSTIN/UN
- Enter the GST number
Once you have entered the number you will see a few options regarding the verification process. To know in depth about the GST verification read our blog on it.
14. If an Inter-State transaction of goods and services is being provided, is registration required in different states?
The simple answer is – No. Registration is only required in the state from where the service is being provided or from where the business has been registered. For Eg. A type supplier, a supplies tyre all over India but from the state of Punjab, registration is required in the state of Punjab.
15. How long does a registration last for on the GST portal?
In terms of a normal taxpayer/business entity, once the registration is complete and certificate of registration has been issued, there is no expiry to the registration and registration number. The only time the registration is ended is when the registration has been cancelled by the taxpayer/business entity.
In terms of a non-resident foreign entity, the registration has an expiry date which is mentioned on the certificate of registration and needs to be renewed once the expiry has elapsed.
16. Does a taxpayer/business entity have to register under GST if they deal in 0% GST goods even if their turnover is more than 20 lakhs?
A taxpayer/business entity is not required to register under GST if they are dealing in 100% exempted goods/services, no matter what their turnover is.
17. A taxpayer has a business turnover of less than Rs. 20 lakh. How are they charged?
Any individual/taxpayer who has a turnover of less than Rs. 20 lakh is required to pay tax under the normal taxable person slab rate.
18. What is the format for GST invoice?
This is a question that concerns most people while they are starting the process for their GST filing. It is mandatory that all the invoices uploaded on the website are in the format prescribed by the government. The invoice is generally issued to charge tax and input tax credit. There are basic details that need to be mentioned on the GST invoice, they are:
- Invoice Number
- Customer Name
- Shipping and Billing Address
- Taxpayers GSTIN
- Place of supply
- Description of goods/services
- Amount, CGST/SGST/IGST
There are quite a few software and websites providing already formatted invoices to ease your work.
19. How to calculate GST returns?
Calculating your GST returns can be quite tricky as you do not want to miss out on anything or calculate something incorrectly and end up paying a fine. Before you begin to calculate your return you need to figure out which tax slab you fall under and what is the type of taxpayer category you are under. Once that has been established, you can calculate your returns.
- Once you have established your tax slab, you need to find the HSN Code and if the transaction is a service you need to find the SAC Code. Here is the process on how to find the HSN and SAC code.
- Next step is to find out whether you pay IGST or SGST and CGST. For this, you need to know the place of your supply.
- Post that the supplier of goods can collect tax from the recipient and remit the amount to the government.
- A normal business taxpayer has to fill 3 forms every month while filing for returns. However, if you fall under the composition scheme you need to file for your returns only every quarter, easing the process for small business entities.
- The last step is to find out the type of transaction – B2B, B2C more than 2.5l and B2C less than 2.5l.
There are many GST calculators available online that help you determine the exact amount that needs to be paid by you.
20. How do I file my returns under GST?
Filing returns is the most important aspect of GST. While filing returns can be a process, if you know what category you fall under and the types of forms you need to fill along with the details required, the entire process can be a piece of cake.
The forms are divided depending on the type of taxpayer category you fall under such as:
- Normal Taxpayer
- Composition Scheme
- Foreign Non-Resident Taxpayer
- Input Service Distributors
- Tax Deductors
- E-Commerce Portals
Once that has been decided, you need to download the forms that fall into your category and fill them up. To download the forms, you need to perform the following steps:
Step 1: Visit the official website of GST gst.gov.in
Step 2: Click “Downloads”
Step 3: Click “Offline Tools” and then click “Returns Office Tools”
Step 4: Click GSTR __ Form no. download
For a detailed explanation on how to file for your returns and the process post it, click on our blog here.
These are a few GST related doubts that we wanted to cater to you and make your GST filing process easier and convenient. If you have any more doubts or queries, comment in the section below and we will make sure we answer them and help you out in any way possible. Till then, happy filing for your GST bills!