The Goods and Services Tax (GST) is a comprehensive indirect tax system implemented in many countries worldwide, including India. It is designed to streamline and simplify taxation by unifying various taxes into a single system. GST aims to create a transparent and efficient tax structure, fostering economic growth and development. Still, more people need clarification about understanding the basic concepts of GST. To clear the confusion, some of the commonly asked questions are given below:
Frequently Asked Questions – FAQs on Basic Concepts of GST:
What is the Goods and Services Tax (GST)?
GST, or Goods and Services Tax, is an indirect tax levied on selling goods and services. It replaces various taxes like VAT and Service Tax, consolidating them under a unified GST system.
Who is required to register for GST, and when should registration be done?
Entities must register for GST if their taxable supply of goods or services surpasses the threshold limit. In the North Eastern states of India, the threshold is ten lakhs, and registration must be completed within 30 days from the date the entity becomes liable for registration. For the rest of India, the threshold is Rs 20 lakhs for services and Rs 40 lakhs for products, and registration should be done within 30 days from the date of liability for registration.
What are the advantages of GST?
GST offers several advantages, including:
Elimination of double taxation: GST allows for the input tax credit, ensuring that the tax paid to the Central Government (IGST) can be claimed as input, eliminating the double taxation issue.
Fixed tax rates: The Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) are paid to the respective central and state accounts, ensuring a more streamlined and fixed tax rate structure.
Zero-rated exports: Under GST, exports are zero-rated. Unlike the previous system, refunds for certain taxes were not allowed due to the fragmented nature of indirect taxes between the central and state governments.
Transparent tax system: GST enhances transparency in the indirect tax framework, reducing confusion regarding applicable taxation and helping to bring down the inflation rate.
What is the process for GST registration?
The registration process involves the following steps:
TRN (Temporary Reference Number): After registering on gst.gov.in, you will receive a TRN, a Temporary Reference Number.
ARN (Application Reference Number): Upon successful submission of the GST Registration Application, you will receive an ARN.
GSTIN (GST Identification Number): After verifying the information with the relevant state and central authorities, the government will issue the GSTIN number.
After making the necessary payment with EZTax.you can expect to receive the TRN and ARN within approximately 48 hours.
What documents are required for GST registration?
The documents needed for GST registration include the following:
PAN Card
Aadhaar card (wherever applicable)
Digital Signature (for companies and LLP)
Valid mobile number and email ID
Photographs of the proprietor, partners, and authorized signatories
Registration Certificate received under before tax laws
Proof of position of the authorized signatory and their details
Proof of principal place of business
Opening page of the bank statement held in the name of the business or proprietor.
How will imports be taxed under GST?
Under the GST system, imports are treated as inter-state supplies, attracting Integrated Goods and Services Tax (IGST). The IGST is levied on imported goods and is collected by the Central Government. Importers are required to pay IGST at the time of customs clearance, along with applicable customs duties. The IGST spent on imports can be utilized as an input tax credit against the output tax liability of the importer. This mechanism ensures that imports are taxed under GST in a manner that maintains parity with domestic goods and promotes a level playing field for domestic and imported products.
What are the essential features of the Constitution (122nd Amendment) bill,2014?
The Constitution (122nd Amendment) Bill, 2014 introduced several essential features for implementing the Goods and Services Tax in India. These include the establishment of the GST Council as a constitutional body, the introduction of a dual GST model (CGST and SGST), the levy of Integrated GST (IGST) on inter-state supplies, provision for compensation to states, subsuming of multiple taxes, seamless input tax credit, and the creation of a common national market. These features collectively contribute to the streamlined and unified tax regime of GST in India.
What are e-way bills?
E-way bills are electronically generated documents required to move goods in India. They serve as a mechanism to track and monitor the movement of goods worth more than a specified value from one location to another. E-way bills are generated through an online portal or mobile application and contain details such as the consignor, consignee, goods description, and transportation details. These bills are required for inter-state and intra-state transportation of goods. They aim to ensure transparency, prevent tax evasion, and simplify the smooth movement of goods across the country.
What are e-Invoices?
E-invoices, or electronic invoices, are digital versions of traditional paper invoices generated, shared, and stored electronically. They are developed in a standardised format, such as JSON or XML, and contain all the relevant information related to a commercial transaction, including the buyer and seller details, item description, quantities, prices, taxes, and payment terms. E-invoices are generated using specialised accounting or invoicing software and are typically exchanged between businesses electronically through email, electronic data interchange, or other electronic methods.
What are the Tax rates under GST?
Under India’s Goods and Services Tax system, different tax rates apply to various goods and services. The GST rates are classified into several categories. A Nil rate category includes goods and services exempt from GST and attracts a 0% tax rate. These items typically include essential commodities such as fresh fruits and vegetables, unprocessed food items, books, healthcare services, and education-related services.
What is the composition scheme under the GST?
The composition scheme under the Goods and Services Tax is a simplified tax scheme aimed at reducing the submission responsibility for small businesses. Eligible taxpayers with an annual turnover below a specified threshold can opt for this scheme. It offers simplified compliance requirements, such as filing quarterly instead of monthly returns. Under the composition scheme, businesses pay tax at a fixed rate based on their business category without availing of an input tax credit. However, they are restricted from making inter-state sales. The composition scheme provides small businesses a simpler and more streamlined approach to fulfilling their tax obligations under GST.
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Finprov’s GST certification course covers a wide range of topics, including the fundamentals of GST, Input Tax Credit, Composition Scheme, GST return filing, E-way bill, Time of Supply, Place of Supply, Reverse Charge Mechanism, and more. It caters to the learning needs of graduates and professionals looking to expand their expertise in accounting and finance. By choosing Finprov for your GST certification course, you can access quality education and valuable insights that are highly relevant to these domains. The course offers a comprehensive understanding of GST concepts and equips you with the necessary skills to manage GST accounting for businesses effectively.
