Goods and Service Tax India-GST

From 1st July 2017, the Government of India has introduced Goods and Service Tax India-GST.

In this blog post, we shall discuss

What is GST?

Why is GST introduced?

How is GST shared?

What are benefits of GST?

What is GST tax rate?

What is GST bill?

How does it work?

Who is liable to pay GST?

What is input tax credit?

How to upload invoices to GSTN Portal?

What is Goods and Service Tax?

In simple words, GST will replace all the indirect tax levied on goods & services by the central/state governments of India. GST is a tax levied at each stage of value-addition in the supply of goods and services.

Why is GST introduced?

GST seeks to eliminate the inefficiencies in the tax system that results in “tax on tax”.

How is GST shared?

It is a destination-based tax on consumption, the state’s share of taxes on inter-state trading goes to the one that is home to the final consumer, rather than to the exporting state.

What are the benefits of GST?

The main reason for introducing GST as said above and it is the major benefit is that it aims to completely eliminate cascading of taxes that result in the reduced tax burden on many items.

Secondly, it will bring transparency in the taxes levied on the supply of goods & services which were not there earlier.

The GST will tremendously help the ease of doing trading and business as the entry barriers along with state borders will be dismantled.

Currently, when a goods or services are purchased, the end consumer sees only the state taxes on them.

Many products are completely eliminated/exempted from the GST tax net as below:

Let us see what are the Goods and services tax rates for various items

GST tax rate at 0%

  • Unpacked foodgrains
  • salt
  • fresh vegetables
  • Health services
  • Education Services
  • Unbranded Atta
  • Unbranded Maida
  • Unbranded Besan
  • Gur
  • Milk
  • Eggs
  • Lassi
  • Curd
  • Kajal
  • Phool Bhari Jhadoo
  • Children’s drawing and coloring books
  • Milk
  • Unpacked paneer
  • Unbranded natural honey
  • Palmyra Jaggery

As per the Central Board of Excise and Customs & Commercial Taxes Departments o States/Union Territories, almost 81% of the items have fallen below/in 18% GST tax slab.

GST tax rate @5%
  • Sugar
  • Tea
  • Roasted Coffee Beans
  • Edible Oils
  • Skimmed Milk Powder
  • Milk food for babies
  • Packed paneer
  • Cashew Nuts
  • Raisin
  • PDS Kerosene
  • Domestic LPG
  • Footwear (up to Rs.500)
  • Apparels (up to Rs.1,000)
  • Agarbatti
  • Coir Mats
GST tax rate @ 12%
  • Butter
  • Ghee
  • Almonds
  • Fruit Juice
  • Packed Coconut Water
  • Preparations of vegetables, fruits, nuts or other parts of plants including pickle, murabba, chutney, jam and jelly
  • Umbrella
  • Mobiles
  • GST @ 18%
  • Hair oil
  • Toothpaste
  • Soap
  • Pasta
  • Corn flakes
  • Soups
  • Ice-cream
  • Toiletries
  • Computers
  • Printers

Who is liable to pay GST?

All business and traders with an annual turnover or sales of and above Rs.20 lakhs are liable to pay GST. Whereas, in the case of North-Eastern states of India and special category states the threshold for paying GST is Rs.10 lakhs.

To add this, GST is applicable on interstate trading of goods and services irrespective of this threshold.

What is input tax credit?

To make certain that the tax is levied only on the amount of transaction value addition or enhancement at each stage of the supply chain the credit for the taxes paid earlier at the previous stage is credited or granted.

To explain this, an industrial machinery manufacturer gets the credit for the taxes he has paid on the inputs purchased while calculating or computing the final indirect tax liability on this end product which is ultimately taken, charged or collected from the consumer.

How are the imports treated?

To make it simple, the imports of goods and services are treated as interstate supplies and it will be attract Integrated Goods and Services Tax.

However, the Government of India has made it clear that exports will not attract any tax. Further, the any tax or taxes paid on raw materials and other miscellaneous services used in export are refunded to the business owners or traders.

What is GSTN?

When to upload invoices to GSTN portal?

Goods and Services Tax Network – GSTN is a portal where business can upload thier sale and purchase invoices generated.

From 01 July 2017 onwards all companies and businesses can now start uploading their sale an purchase invoices generated  on the goods and services tax network – GSTN from July 24, 2017.

The GSTN chairman, Mr.Navin Kumar said on 23 July, 2017 ” We plan to lauch the invoice upload utility on the portal on July 24. We have been reaching out to trade and industry associations telling them that those who have about 10,000 invoices a day, they should upload it on GSTN portal on a daily/weekly basisto avoid last moment rush.”

Till now, over 6.9 million excise, value added tax (VAT) and service tax assessees have been migrated to the GSTN Portal. Almost, 5,00,000 new registrations have been done under GST.