Basics of GST
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Goods and Services Tax (GST) is a comprehensive indirect tax on the supply of goods and services throughout India that replaced multiple taxes levied by the central and state governments. GST is composed of Central GST and State GST and is levied on all stages of supply of goods and services. Registered businesses can claim input tax credit, reducing the overall tax burden. GST was implemented on July 1, 2017 and aims to create a single, unified Indian market.
Basics of GST
- 1. WHAT IS GST?
- 2. Goods and Service Tax (GST) is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level under which no distinction is made between goods and services for levying of tax. It has been implemented from 1st July 2017.
- 3. Removal of Multiple taxes GST VAT/CST Other Indirect taxes Excise Duty Service Tax Octroi/Entry Tax Some of the indirect taxes on supply of goods/services, that have been replaced by GST are mentioned here. This means there is 1 single tax.
- 4. Dual GST Model Intra-State supply The GST has two components – One levied by the Centre i.e. Central GST (CGST) and the other levied by the State/ Union Territory i.e. State GST (SGST)/ UTGST. Both Centre and States will simultaneously levy GST Inter-State supply In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) which is roughly equal to CGST plus SGST
- 5. Input Tax Credit While calculating tax payable, sellers can take credit of input tax paid as per below: Input tax credit can only be taken by dealers: 1. Who are registered under GST 2. Who have paid such taxes on their purchases. *SGST credit can only be utilized if output SGST is of same state • First use IGST credit • Secondly use CGST credit • Thirdly use SGST credit To Pay IGST • First use CGST credit • Secondly use IGST credit • SGST credit not allowed To Pay CGST • First use SGST credit* • Secondly use IGST credit • CGST credit not allowed To Pay SGST
- 6. Who needs to register? Any dealer selling goods/services through an e- commerce portal would mandatorily be required to get registered under GST irrespective of threshold specified by the Government.
- 7. Registration Procedure Already registered taxpayers under Centre/State/UT legislations: For such taxpayers, 30th April was the last date to migrate to GST. By now, they should be having a provisional certificate downloaded from the GST website: https://www.gst.gov.in/ New Taxpayers: The rules and process of registration for new taxpayers can be found in : https://www.aces.gov.in/Documents/draft-formats- under-registration-rules.pdf
- 8. GST Returns to be filed Forms Description Due Date Due date of 1st Return under GST GSTR-1 Details of outward supplies of taxable goods and/or services effected 10th of the next month 10th August ‘17 GSTR-2 Details of inward supplies of taxable goods and/or services effected claiming input tax credit. 15th of the next month 15th August ’17 GSTR-3 Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax 20th of the next month 20th August ’17 GSTR-6 Return for Input Service Distributor 13th of the next month 13th August ’17 GSTR-9 Annual Return 31st December of next financial year 31st December ‘18
- 9. How merchants benefit with GST - I Merchant receives Rs.943 from Shopclues after deducting commission. Customer pays Rs.1120 to Shopclues Merchant Customer Pay GST of Rs.93 to Government on income received from Customer after deducting GST Credit. Use GST credit of Rs.27 which is included in commission deducted by Shopclues. Value of Good sold to customer : Rs.1000 GST @ 12% charged on Bill : Rs.120 SF & FF Fees paid to Shopclues: Rs.150 GST @ 18% charged on Bill : Rs.27 Customer Invoice Value of goods Rs.1000 Add: GST Rs. 120 Total Rs.1120 Merchant Invoice Commission Rs.150 Add: GST Rs.27 Total Rs.177 Tax Calculation GST on Income Rs.120 Less: GST Credit Rs.27 Net tax payable Rs.93
- 10. How merchants benefit with GST - II Particulars Current System GST System Value of Goods sold to Customer 1,000 1,000 Add : VAT 120 - GST 120 Total Receivable from Customer 1,120 1,120 Less: Commission paid to Shopclues -150 -150 Less : Service Tax/GST -23 -27 What Merchant receives from Shopclues 947 943 Less : Tax to be paid -120 -93 Net Income 827 850 Net Benefit 23 Net Tax Calculation GST Payable Rs.120 (-) Input GST Rs.27 Net GST Payable Rs.93 Only a registered merchant can take benefit of the GST credit paid on it’s purchases.
- 11. TCS and the credit for TCS It has been proposed that under the GST Law, an E- commerce operator is required to deduct 1% as tax collected at source (TCS) from the amount payable to any Merchant. Merchants will be able to claim credit for such amount and utilize it for paying off their output GST. It is important to note that the credit will only be available to Merchants who are registered under GST. Please note official GSTIN of ShopClues Name: Clues Network Pvt. Ltd. GSTIN: 06AAECC3074B1Z6
- 12. What do you need to do? You will be required to take separate registration for each State from where you are supplying goods. Hence, multiple registrations with unique GSTIN will be needed for every State, where you have a pick up location. Be ready with all the documents required for GST registration. Some of the documents required are as below: 1. PAN Card 2. Proof of Place of Business 3. Photograph 4. Bank Account proof
- 13. Thank You!
- 14. Annexure: Central Government notified (28th June, 2017) rate of Integrated Goods and Services Tax (IGST) S No. IGST Rate Schedule 1 5% In respect of goods specified in Schedule I 2 12% In respect of goods specified in Schedule II 3 18% In respect of goods specified in Schedule III 4 28% In respect of goods specified in Schedule IV 5 3% In respect of goods specified in Schedule V 6 0.25% In respect of goods specified in Schedule VI Link to access the Schedules http://www.cbec.gov.in/resources/htdocscbec/gst/Notification%20for%20IGST%20rate%20Schedule-1.pdf