Goods and Services Tax (GST) in India

Goods and Services Tax (GST) is a country-wide indirect tax that will replace various indirect taxes like central excise duty, service tax, state sales, octroi and value added taxes levied by different states. All these taxes will get subsumed in GST to create a unified market across India.

The key advantages of this uniform tax structure will be as follows:
  • One nation one tax
  • Single registration – GSTIN
  • Subsumes 60+ indirect taxes
  • Better compliance

Guides on GST

All you need to know about GST

GST is a revolutionary step in the history of indirect taxes in India but what is GST and why do you need it? Is it good or bad and how will it affect you? Read More


What is GST Composition Scheme?

GST Composition Scheme gives small businesses a reason to smile. Find out how it will impact your business. Read More


What is GST Identification Number?

Instead of having different ID nos. under state VAT laws and service tax laws, all the taxpayers will be identified by GSTIN. Know all about your GSTIN. Read More


Read more GST Guides and Blogs
Frequently Asked Questions

Find answers to the most frequently asked questions on the Goods and Services Tax in India.

Goods and Services Tax (GST) is a country-wide indirect tax that will replace various indirect taxes like Central Excise Duty, Service Tax, State Sales Tax, Octroi and Value Added Taxes levied by different states. All these taxes will get subsumed in GST to create a unified market across India.

It will be applicable across the supply chain – from manufacturing to consumption. It will allow constituents of the supply chain to claim credit of input taxes paid at each stage in the subsequent stage of value addition, which means that a tax will be imposed only on value addition at each stage. For the end consumer, this will be the only tax levied by the dealer she has obtained goods or services from.

The GST structure has two components – central GST and state GST – that will be levied simultaneously on all transactions, except the exempted ones. As the nomenclature suggests, the central government will collect the former, while the states will be in control of the latter for transactions within the states.

A long-awaited reform, GST became a reality after the Rajya Sabha in August this year passed the GST constitutional amendment bill, which was subsequently ratified by the required number of states and secured the Presidential assent in September 2016. The central government is aiming for a GST rollout by April 2017, though final negotiations with the states on several aspects are still on.

There is unanimity on the utility value of uniform tax rate and structure of GST. Although differentiated rates charged by states won’t come to an end altogether there will be a huge change in the form of compliance under GST scheme. GST will replace 17 indirect levies and will reduce compliance costs. A full Input Tax Credit under this scheme will reduce the cost of capital goods by up to 12-14% and hence should result in overall reduction in prices. Hence on many fronts it seems to be a boon for India. However clarity is still required on many fronts that could emerge out of the deliberations of the GST council.
The objective behind implementing GST is to boost ease of doing business by providing uniform indirect tax rates and structure throughout the country. It will also rein in the cascading tax effect, a situation where a tax is levied on every successive value addition without excluding the taxes imposed at the preceding stage. The system of Input Tax Credit is likely to eliminate this anomaly of ‘tax on tax’, which has been the cause of heartburn for businesses. The overall cost of doing business and cumbersome compliance paperwork are expected to shrink under the GST regime, hugely benefitting small and medium scale businesses and start-ups.
If your annual turnover exceeds Rs. 20 lakhs, you will fall under the purview of GST. If your business is located in North Eastern or hill states, the applicable exemption threshold will be Rs. 10 lakhs. If your business’ annual turnover is less than Rs. 1.5 crores, state authorities will exercise their jurisdiction; else, the central government officials will take over.
New Business: If you are a new dealer, that is, if you decide to set up your business after GST is implemented, you will have to file an application online for registration under GST. There is a provision for deemed approval within three days of submitting the application. A PAN-based registration number, valid under both centre and state jurisdictions, will be allotted to every dealer along with a unique ID GSTIN.

Existing dealers Those who already pay VAT, Central Excise Tax or Service Tax shall be issued a certificate of registration on a provisional basis which shall be valid for a period of six months from the date of its issue. The taxpayer so registered shall within the period specified, furnish such information as may be prescribed. On furnishing of such information, the final certificate of registration will be issued by the central/state government.
Liquor, tobacco, fuel as well as other oil and gas products.
GST Council has proposed 4 tier-rate structure; fixing rates at 5%, 12%, 18% and 28% with zero tax rate for several items constituting 50% of CPI basket
Introduced with the aim of protecting the interests of small traders and small scale industries, the composition/compounding scheme, allows them to pay tax at a prescribed rate instead of going through the elaborate tax compliance process. Under GST, small enterprises will have the option of registering for this scheme if their gross annual turnover is under Rs. 50 lakhs. The floor tax rate is fixed at 0.5% across states. The scheme also provides the option of GST registration for dealers with turnover below the Rs. 50 lakhs mark.

The Input Tax Credit of Central GST can be set off against Central GST liability on the output at each stage. Likewise, the credit of SGST shelled out on inputs can be used to offset payment of SGST on output. However, the mechanism does not facilitate cross utilisation of credit; that is, credit for SGST cannot be set off against CGST and vice-versa.

In case of inter-state transactions, the central government would be responsible for collecting the Integrated Goods and Services Tax (IGST), which will be the sum of CGST and SGST. The purpose of this system is to facilitate smooth flow of Input Tax Credit between states. Input taxes paid in the form of IGST can be set-off against output tax liability of IGST/CGST/SGST.

GST Tax invoice issued by the supplier should contain the following details:-

  1. name, address and GSTIN of the supplier;
  2. a consecutive serial number containing only alphabets and/or numerals, unique for a Financial Year;
  3. date of issue for invoice;
  4. name, address and GSTIN/unique ID number, if registered, of the recipient;
  5. name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is unregistered and where the taxable value of supply is fifty thousand rupees or more;
  6. HSN code of goods or Accounting Code of services (Government may by notification exempt certain class of taxable person from this requirement for specified period);
  7. description of goods or services;
  8. quantity in case of goods and unit or Unique Quantity Code thereof;
  9. total value of goods or services;
  10. taxable value of goods or services taking into account discount or abatement, if any;
  11. rate of tax (CGST, SGST or IGST);
  12. amount of tax charged in respect of taxable goods or services (CGST, SGST or IGST);
  13. place of supply along with the name of state, in case of a supply in the course of inter-state trade or commerce;
  14. place of delivery where the same is different from the place of supply;
  15. whether the tax is payable on reverse charge;
  16. the word “Revised Invoice” or “Supplementary Invoice”, as the case may be, indicated prominently, where applicable along with the date and invoice number of the original invoice; and
  17. signature or digital signature of the supplier or his authorised representative.

Further in case of exports, the invoice shall carry an endorsement “supply meant for export on payment of IGST” or “supply meant for export under bond without payment of IGST”, as the case may be, and shall, in lieu of the details specified in clause (e), contain the following details:

  • name and address of the recipient;
  • address of delivery;
  • name of the country of destination; and
  • number and date of application for removal of goods for export [ARE-1].
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