One of the most searched for words, GST is a taxation revolution that redefined the business taxation format in India. Before GST, both Central and State Governments used to levy their own taxes at different rates on goods & services across India. This led to double taxation, differential rates of the goods and services across India and even tax evasion, by manufacturers and wholesalers.
The need of the hour was therefore a uniform taxation system that would benefit the consumers while making it simple for manufacturers and wholesalers to calculate and pay their taxes. The government also wanted to improve the rate of tax collection in the country, which in turn would help boost the economy of the country.
The GST taxation system was formed after many detailed discussions and briefings with leading financial experts, taxation authorities and representatives from the state and central governments. A proper roadmap on its implementation was prepared and briefed to all the stake holders to ensure its smooth implementation across the country. To help the states, manage their GST implementation and also cover their losses from local tax collection, the central government committed to bear all their, losses and offer compensation for up to 5 years.
Launched in July 2017, GST clubbed together all different products and services in just 5 tax brackets, based on their value, and whether the product or service was a necessity or luxury. It envisioned many benefits to all the stake holders i.e. consumers through lower prices and no double taxation while trade & industry will benefit through a uniform single tax across the country. It would also benefit the state and central governments through reduced tax collection costs and sharing of the taxes collected as per pre-defined ratios. GST also facilitated the free movement of goods across the country, without the need to spend long waiting times for tax payment at state border check posts and reduced paper work and administrative time.
GST has just 5 tax brackets i.e. 0%, 5%, 12%, 18% and 28%. Most of the daily necessities such as food grains, salt, bread etc. have been covered under 0%, while the other tax brackets cover normal products and services such as soaps, tea, cosmetics, restaurants etc. The highest tax bracket i.e. 28% has been pegged for luxurious goods and services. The goods and services in the different tax brackets are periodically reviewed and revised as per market conditions. This is to ensure that all the taxes being charged are relevant and in tune with the business scenario of the country.
Who needs to register for GST
All businesses that supply goods and services, with a turnover exceeding pre-specified limits are required to register for GST, as per the guidelines. This will enable them to avail various benefits including seamless input tax credit.
Existing VAT / Central Excise / Service Tax payers were not required to re-register under GST, while new entrants would need to file a single application online on the GST portal. A unified application would then be made on their behalf to both the central and state tax authorities. Post registration each new or existing company / individual will be given a unique id, known as GSTIN.
What are the documents required for GST registration?
- Pan Card of the company
- Proof of constitution such as the partnership deed, Memorandum of Association/Articles of Association or Certificate of Incorporation.
- Details and proof of place of business (Rent agreement or electricity bill)
- Cancelled cheque of your bank account
- Details of authorised signatories
How does one file returns under GST?
There is no need to file separate tax returns with different authorities. There will be common returns for CGST, SGST and IGST.
Filing of returns has to be done online.
All the payment challans have to be prepared on the GST portal. Once the challan is prepared, the tax payer has the option of paying the taxes either online or over the counter at designated banks.
GST is one of the biggest tax reforms that India has seen, with the sole aim of making taxation more transparent and ensuring maximum compliance of the same by businesses. Its benefits are long term and it will help boost the economy gradually, by increasing the base of tax payers in the country.