GST full form is Goods and service tax. Before going further about Goods and services tax, let’s have a look at how tax works in India.
In any of the countries, the government needs money for its proper functioning and taxes are a major source of revenue for a government. Thus, the taxes collected by the government are basically spent on the public. So, these taxes are mainly categorized into two types:
- Direct Tax: The tax which is imposed on the income of the individual is known as Direct Tax. The tax payable amount actually varies on the income earned by the individual from various sources such as salary, house rent income, etc. Hence, the more will be the income, the more tax you pay to the government which essentially means the rich pay more tax in comparison to the poor.
- Indirect Tax: It is the tax that is not imposed directly on the income of the individuals rather it is levied on the goods and services which in turn increase the cost (MRP) of goods and services. The indirect tax is basically borne by the end consumer no matter whether he is rich or poor. Out of many indirect taxes, some are levied by the central government whereas some are levied by the state government making the indirect tax system an extremely complicated system.
What is GST?
GST (Goods and service tax) is a consumable tax under which people who are basically engaged in the business of having annual turnover more than Rs. 40 lakhs is required to register as a normal taxable person. It is now applicable to each and every person who is purchasing goods and services at the same rate across India.
Only GST full form and meaning is not sufficient to understand the concept of GST. It is far above from that. Let us know the reason why GST came into existence?
Why GST has been introduced?
Actually, GST has been introduced to replace the multiple indirect taxes levied by the state and central governments in order to simplify the indirect tax system. Almost, it has replaced 17 of the existing state and central indirect taxes like central excise duty, additional customs duty, VAT, entertainment tax, service tax etc and many more to come in future.
The reason behind why it has given the name as Goods and Services Tax is that it is applicable to the supply of both Goods and Services. Read more to understand the entire GST matter: What is Goods and services tax in India
GST Meaning in various Indian Languages
|Languages||GST Meaning in Different languages|
|Arabic||ضريبة السلع والخدمات|
|Bengali||পণ্য ও পরিষেবা কর|
|English||Goods and Service Tax|
|Gujarathi||સામાન અને સેવાઓ કર|
|Hindi||वस्तु एवं सेवा कर|
|Kannada||ಸರಕು ಮತ್ತು ಸೇ ವಾ ತೆರಿಗೆ|
|Malayalam||വസ്തുക്കളും സേവന നികുതിയും|
|Marathi||वस्तू आणि सेवा कर|
|Nepali||सामान र सेवा कर|
|Punjabi||ਗੁਡਸ ਐਂਡ ਸਰਵਿਸਿਜ਼ ਟੈਕਸ|
|Sindhi||سامان ۽ خدمتون ٽيڪس|
|Tamil||பொருட்கள் மற்றும் சேவைகள் வரி|
|Telugu||వస్తువులు మరియు సేవల పన్ను|
|Urdu||سامان اور خدمات ٹیکس|
What are the Different types of GST?
There are basically three taxes applicable now in the current regime under the GST tax system:
- Central Goods and Services Tax (CGST)
CGST is imposed on the intra-state supply of products and services. The Central Government levies CGST and it is supervised by the Central Goods and Services Tax Act. CGST has completely replaced all the past Central taxes such as Central Excise Duty, Customs Duty, Service Tax, SAD, CST, etc. It is charged to taxpayers with SGST. The rate at which CGST is charged is usually the same as the SGST rate, and the revenue collected under CGST is sent to the Central Government.
- State Goods and Services Tax (SGST)
SGST the same CGST discussed above. It is charged on the sale of products or services within a state. The State Government is liable for the levy of SGST. This tax replaces all the earlier taxes such as Entry Tax, Value Added Tax, Entertainment Tax, State Sales Tax, cesses, and surcharges. The revenue collected under SGST is sent to the State Government.
- Integrated Goods and Services Tax (IGST)
IGST is imposed on inter-state transactions of products and services. It is also levied on imports. The Central Government gets IGST and distributes it among states. IGST is levied if goods or services are shifted from one state to another. The tax was executed so that states would only have to deal with the Union Government rather than dealing with all states.
- Union Territory Goods and Services Tax (UTGST)
UTGST is levied on the supply of products and services in any of the Union Territories in the country, like Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. UTGST is levied along with CGST.
Benefits of GST (Goods and Services Tax)
The following are the benefits of the GST are :
- Elimination of the cascading tax effect
With the introduction of GST i.e.Goods and Services Tax, all the taxes have been brought under a single sunshade. This means the cascading tax effect has been eliminated. The GST rate applicable to the service would be 18%.
- Higher threshold
In the VAT charging system, the business having the turnover above Rs.5 lakh are accountable to pay VAT. Even the service providers who get a turnover of Rs.10 lakh were free from service tax. Though, the beginning of the registration under GST is Rs.20 lakh.
- Manageable procedure
The whole GST process, beginning from registration and ending with filing returns, is done online. It is a manageable procedure that can be matched even by individuals with minimum technical know-how. Registering under GST is especially easy because there is no requirement to run around for multiple registrations like Service Tax, Excise Duty, VAT, etc.
- Composition scheme
Small businesses that get turnovers between Rs.20 lakh and Rs.75 lakh can benefit under the new tax regime as the Composition Scheme can help in reducing their taxes. The compliance and tax burden on small businesses has significantly decreased thanks to the implementation of GST.
- Simplified compliances
The earlier tax regime had Service Tax and Value Added Tax, and each of these taxes had their compliances and returns. For instance, Excise Duty return filing had to be made every month, while Service Tax return filing had to be made every month for companies and LLPs, and all quarter for partnerships and proprietorships. Value Added Tax was different in different states, which appeared in inconsistencies over the country. The execution of GST has ensured all businesses pay a uniform tax for the supply of goods and services.
- E-Commerce operators no longer undergo from differential processing
Before the execution of the Goods and Services Tax, there was no proper definition for the supply of goods by an e-commerce portal. There were many VAT laws. GST has completely done away with such confusing compliances and differential treatments. The e-commerce sector now has simply set provisions that make it easier to engage in the supply of products over states.
- Regulation of the unorganized sector
Before the introduction of GST and its execution, many industries like constructions and textiles were considered unorganized. The execution of GST has added provisions for online compliance and payments. Even the availing of input credit has been clearly explained to avoid confusion, thus bringing in regulation and accountability to these sectors.
What changes has GST brought in?
In the pre-GST regime, every customer including the final consumer has paid tax on tax. These taxes are called the Cascading Effect of Taxes.
GST has eliminated this cascading effect as the tax is computed only on the value-addition at every stage of the transfer of ownership. This indirect tax system under GST has increased the collection of taxes as well as supported the development of the Indian economy by eliminating the indirect tax barriers among states and combining the country by a uniform tax rate.
GST Council is the regulatory body of GST having 33 members.
- 2 members are from off-center
- 31 members out of which 29 state and 3 Union territories by legislation.
The council contains the following members :
- Union Finance Minister (as chairperson)
- Union Minister of States in charge of revenue or finance (as a member)
- The ministers of states in charge of finance or taxation or other ministers as nominated by each state’s government (as a member).
Online GST registration was passed in the Parliament on 29th March 2017 yet it became effective on 1st July 2017 in India. As per the modifications in the 32nd council meeting, the threshold limit for GST registration is 40 lakhs for the supplier of goods and 20 lakhs for the supplier of services. The North-Eastern States have a choice to decide between 20 lakhs and 40 lakhs. Once you have registered under this administration, you will get a unique GSTIN (Goods and Service Tax Identification Number). There are many benefits of GST registration. You can also get an input tax credit and get GST from recipients of goods and services.
Online GST registration can be simply done by visiting our Online GST portal. It is easy to fill the form on GST online portal yet at the same time you require the experts to fill the form with correct information and submit the documents respectively. A few of the terms while drafting for GST registration cannot be read by many of the taxpayers. Therefore at the first stage, GST registration should be made with the help of experts and here at LegalRaasta, you will be able to get done with your GST registration with a quick process.
A GST Return is a document that includes information regarding the income that a taxpayer must file with the authorities. This information is used to calculate the taxpayer’s tax liability. Under the Goods and Services Tax, registered dealers need to file their GST returns with details about their purchases, sales, input tax credit, and output GST. Businesses are required to file 2 monthly returns as well as an annual return.
In contrast to government utility and other software, LegalRaasta GST software is remarkably easy to understand and operate. Government utility has countless fields and complex Json upload method. It doesn’t even give reconciliation. One has to keep looking for instructions to understand all columns.
- Our GST software does automated reconciliation almost immediately and reports mismatches thus saving a lot of your time.
- We have cut down the complicated process of GST return into a set of tabs and windows. Our software also gives tooltips and videos making it a clear and time-saving solution for GST filing.
- It has an excel-like interface with step by step process which assists you to navigate back and forth quickly unlike the tangled and misleading government system.
- You can quickly import from excel or your ERP solution (Tally, SAP, Busy, etc). This is not possible by government utility.
- LegalRaasta GST software generates a session for a longer period to record the return of multiple clients without having to log in many times.
GST Council is an apex member committee to change, adapt or to obtain any law or regulation based on the context of goods and services tax in India. The council is managed by the union finance minister Nirmala Sitharaman assisted with the finance minister of all the states of India. The GST council is liable for any change or performance of rule or any rate changes of the goods and services in India.