Goods and Service Tax

What is GST ?

GST stands for Good and Services Tax. GST is a new form of tax that replaced all the central and state taxes such as excise duty, value added tax, entry tax, services tax, countervailing duty, luxury tax, advertisement tax etc. It is proposed to be imposed at all stages right from the production up to final consumption. GST avoided the cascading effect of taxes. It helped the Indian government to achieve its ‘One Nation One Tax’ agenda.

GST came in to effect from 1 July 2017, through the 101st amendment. GST is levied in the final market price of goods and services. It will reflect in the maximum retail price. Customers have to pay this tax for the purchase of goods and services. This is then collected by the seller and it is required to be paid to the government. Petroleum products such as high speed diesel, natural gas etc., alcoholic drinks and electricity are exempted from GST.

GST ended the multiple taxation at different levels of the supply chain. The supply of an item will not be hindered by the state boundaries and taxes. The reduced tax burden reduced the price of many items for the consumers.

Types of GST

There are four different types of GST. They are:

  • Central Goods and Services Tax (CGST)
  • State Goods and Services Tax (SGST)
  • Union Territory Goods and Services Tax (UTGST)
  • Integrated Goods and Services Tax (IGST)

The Central Goods and Services Tax (CGST)

CGST is the tax that is charged on the transactions of goods and services by the central government which is governed by the CGST Act, 2017. CGST put back the central taxes of excise duty, sales tax, service tax, additional excise duties, CVD, SAD etc. The revenue collected under CGST is for centre. However some input tax credit on CGST is given to states.

The State Goods and Services Tax (SGST)

In SGST the state has taxation capabilities. This is charged on the various transactions of goods and services by the state government. SGST replaces state sales tax, value added tax, luxury tax, entertainment tax, taxes on lottery, betting and gambling, entry tax not in lieu of octroi, state cesses and surcharges which is related to the supply of goods and services. The interest collected under SGST is for the state.

The Union Territory Goods and Services Tax (UTGST)

The Goods and Services Tax for the supply of goods and services in the union territories such as Chandigarh, Lakshadweep, Andaman and Nicobar Islands, Dadra and Nagar Haveli and Daman and Diu, come under UTGST. This came in to effect as a result of a separate act implemented for Union Territory states to impose and administer GST in India.

The Integrated Goods and Services Tax (IGST)

IGST is levied for the movement of goods and services from one state to another. The revenue collected under IGST is shared by the state government and central government as per the rates fixed by the authorities according to the law by parliament on the guidance of the Goods and Services Tax Council.

What are the forms in GST registration?

  • FORM GST REG-01: It is the initial registration form on the GSTN portal to submit PAN, mobile number and email address.
  • FORM GST REG-02: An acknowledgement is issued in this form to the applicant after the initial verification.
  • FORM GST REG-03: This form is issued when additional information is required from the applicant.
  • FORM GST REG-04: If FORM GST REG-03 is issued then the applicant need to respond in FORM GST REG-04 with the required information within 7 working days from the date of receipt.
  • FORM GST REG-05: The application is rejected using this form.
  • FORM GST REG-06: The registration certificate is issued in this form.
  • FORM GST REG-07: It is required to submit an application in this form if the applicant is required to deduct TDS or collect TCS.

What are the documents required for GST registration?

Registration documents required for Individuals and Sole Proprietors:

  • PAN card of the owner.
  • Owner’s Aadhar card.
  • Photograph of the owner in JPEG format and with a maximum size of 100 KB.
  • Bank account details. This can be a copy of cancelled cheque or an extract of the passbook or bank statement (the first and last page).The format is JPEG or PDF. The maximum size is 100 KB.
  • Address proof. If the property is self-owned then the address proof can be a copy of electricity bill, landline bill, water bill, municipal khata copy or tax receipt of the property.

Registration documents required for Partnership deed or LLP Agreement:

  • PAN card of all partners
  • Aadhar card of all partners.
  • Copy of partnership deed.
  • Photograph of all partners and authorized signatories in JPEG format and with a maximum size of 100 MB.
  • Address proof of all partners. This can be passport, driving license, voter’s identity card, Aadhar card etc.
  • Aadhar card of authorized signatory.
  • Proof of appointment of authorized signatory.
  • In case of LLP a copy of Board Resolution and registration certificate of the LLP is required.
  • Bank account details. This can be a copy of cancelled cheque or an extract of the passbook or bank statement (the first and last page).The format is JPEG or PDF. The maximum size is 100 KB.
  • Address proof of the place of business. If the property is self-owned then the address proof can be a copy of electricity bill, landline bill, water bill, municipal khata copy or tax receipt of the property.

Registration documents required for private limited or public limited or one person company (Indian or Foreign):

  • PAN card of the company.
  • Certificate of incorporation provided by ministry of corporate affairs.
  • Memorandum of Association or Articles of Association (AOA).
  • Aadhar card and PAN card of authorized signatory. The authorized signatory must be an Indian in case of foreign companies or branch registration.
  • Address proof and PAN card of all directors of the company. The address proof can be passport, driving license, voter’s identity card, Aadhar card etc.
  • Photograph of all directors and authorized signatory in JPEG format and with a maximum size of 100 KB.
  • Board resolution appointing authorized signatory or any other proof of appointment of authorized signatory in JPEG format or PDF format with a maximum size of 100 KB.
  • Bank account details. This can be a copy of cancelled cheque or an extract of the passbook or bank statement (the first and last page).The format is JPEG or PDF. The maximum size is 100 KB.
  • Address proof of the place of business. If the property is self-owned then the address proof can be a copy of electricity bill, landline bill, water bill, municipal khata copy or tax receipt of the property.

Registration documents required for HUF:

  • PAN card of HUF.
  • PAN card and Aadhar card of Karta.
  • Photograph of the owner in JPEG format with maximum size of 100 KB.
  • Bank account details. This can be a copy of cancelled cheque or an extract of the passbook or bank statement (the first and last page).The format is JPEG or PDF. The maximum size is 100 KB.
  • Address proof of the place of business. If the property is self-owned then the address proof can be a copy of electricity bill, landline bill, water bill, municipal khata copy or tax receipt of the property.

Registration Documents required for Society or Trust or Club:

  • PAN card of the society or trust or club.
  • Registration certificate of society trust or club.
  • Photograph of promoter or partners in JPEG format with a maximum size of 100 KB.
  • PAN card of promoter or partners.
  • Resolution of the Board or any other evidence of the appointing authorized signatory.
  • Bank account details. This can be a copy of cancelled cheque or an extract of the passbook or bank statement (the first and last page).The format is JPEG or PDF. The maximum size is 100 KB.
  • Address proof of the place of business. If the property is self-owned then the address proof can be a copy of electricity bill, landline bill, water bill, municipal khata copy or tax receipt of the property.

What is the procedure for GST registration?

  • Fill out part A of FORM GST REG-01 using PAN, email ID and mobile number and submit.
  • Verify PAN, phone number and email ID.
  • An Application Reference Number (ARN) is obtained through phone and mail. Store it for future use.
  • An acknowledgement is obtained in FORM GST REG-02.
  • Fill out part B of FORM GST REG-01 using ARN and attach the required documents. Submit the application.
  • Fill out FORM GST REG-03 if additional information is required.
  • After verification the GST certificate will be issued in FORM GST REG-06.

What if you violate the law?

  • A person makes a delay in filing GSTR is liable to a penalty of fine of rupees 100 per day. A fine of Rs. 100 per day for CGST and a fine of Rs. 100 per day for SGST and thus a total of Rs. 200. Maximum fine is rupees 5000.
  • A person do not file GSTR is liable to a penalty of 10% of tax due or rupees 10,000.
  • A person committing fraud is liable to a penalty of 100% of tax due or rupees 10,000.
  • A person helping another to commit fraud is liable to a penalty of fine up to 25,000.
  • A person wrongly charges GST rate is liable to a penalty of 100% of due tax or rupees 10,000.
  • A person who do not issue invoice is liable to a penalty of 100% of due tax or rupees 10,000.
  • A person do not registering GST is liable to a penalty of 100% of due tax or rupees 10,000.
  • A person who commit incorrect invoicing is liable to a penalty of fine up to rupees 25,000.

Conclusion

For certain businesses registration under GST is mandatory. It is required for the business owners to strictly follow the rules and regulations of the GST act. Failing to comply with these will lead to punishable offenses under the act.

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