Goods and Services Tax
Goods and Services Tax popularly known as GST is an indirect tax launched by Prime minister of India after replacing multiple indirect taxes like excise duty, VAT, services tax, etc. On 29th march 2017 Goods and Services Act was passed in the parliament and finally a new law was set to define how people do business.
The Indian taxation system was now replaced by a unified tax to overcome the hurdles of a cascading, distorted tax structure affecting productivity and further leading to lesser economic growth.
GST is a multi stage and destination based tax formed on the idea of value addition.
Understanding the Basics of Goods and Services Tax
GST is a tax on goods and services sold domestically for consumption purpose. When a person buys goods GST is levied at price by the seller which is paid by the buyer to the business or seller and the seller pays the same amount to the government.
Since GST is a unified tax which merges central taxes and state level taxes, most countries have a single unified system of GST applied all over the country.
In a few countries like Brazil and Canada dual structure of GST exists.
GST rates vary depending on the goods and services. The GST council has changed the rates quite a few times since the new tax regime got implemented in July 2017. While there is no tax on some items, others come at 5%GST, 12%GST, 18%GST and 28%GST. The essential items are allocated lower tax rates followed by more tax rated on luxury items.
Earlier GST exemption limit was Rs 20 Lakh but now it has been extended to Rs 40 Lakh i.e no need for GST registration until the business has a specific annual turnover. Moreover those with a turnover of up to Rs 1.5 crore can opt for a composition scheme where they pay 1% tax.
Types of GST Returns
The type and number of GST returns to be filed depends on factors such as the type of taxpayer, e-commerce operator, composition scheme, TDS deductor, non-resident taxpayer, etc. Usually, a regular taxpayer has to file two returns monthly which are GSTR3-B and GSTR-1.
| Types | Description |
|---|---|
| GSTR-1 | It may be filed monthly or quarterly. Used for reporting all the sales transactions with any amendments made. The debit and credit notes issued are also included. |
| GSTR-2A | It contains purchases made from registered suppliers. The data is auto populated from the sale details filed in the GSTR1 of the suppliers. It is a return which is read-only. |
| GSTR-2 | The details are auto-populated from GSTR2-A but GSTR-2 can be edited. For now the filing of GSTR-2 has been suspended since start of goods and services tax. |
| GSTR-3 | It shows auto populated data of sale, purchase, ITC claimed, tax liabilities and tax paid from the returns GSTR-1 and GSTR-2. |
| GSTR3-B | The return is filed monthly or quarterly on self declaration basis for furnishing the total taxable sale and purchase made in the particular period of time along with the amount of tax. |
| GSTR-4/CMP-08 | The return is to be filed on a quarterly basis by composition tax payers. The composition scheme can be opted if annual turnover is less than Rs 1.5 crores. |
| GSTR-5 | To be filed by Non-resident foreign taxpayers on a monthly basis who carries business transactions in India. GSTR-5 includes details of inward supplies, outward supplies, debit/credit notes, tax liabilities and tax paid. |
| GSTR-6 | A monthly return to be filed by Input Service Distributor (ISD). It contains details of ITC received and distributed with proper documentation. |
| GSTR-7 | GSTR-7 is a monthly return to be filed by concerns that deduct TDS (Tax deducted at source) under GST. |
| GSTR-8 | E-commerce operators registered under GST have to file the return monthly declaring TCS (Tax collected at source) and the amount of outward supplies made. |
| GSTR-9 | The return is filed annually. The return contains comprehensive data of sale and purchase under various heads like CGST, SGST or IGST. Composition taxpayers don’t need to file GSTR-9. |
| GSTR-9A | The business concerns who have opted for composition scheme have to file GSTR-9A. |
| GSTR-9C | GSTR-9C is a reconciliation statement filed annually by businesses that have a annual turnover of more than Rs 2 crore after getting the books audited by a CA. |
| GSTR-10 | This return is filed in case when GST number is cancelled or surrendered within 3 months of cancellation. |
| GSTR-11 | A unique identification number (UIN) is issued by the government to allow refund against purchase of goods and services. Such UIN holders are required to file GSTR-11. |
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