Frequently Asked Questions on GST
What is Goods and Services act?
GST is a destination based tax on consumption of goods and services. It is proposed to be charged at every stage right from manufacturer up to final consumption with credit of taxes paid at previous stages available as set off. To sum up, just the value addition will be subject to tax and the major burden will be borne by the end consumer.
Which are the commodities proposed to be kept outside the purview of GST?
Alcohol for human consumption, Petroleum Products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel& Electricity.
What will be status of Tobacco and Tobacco products under the GST regime?
Tobacco and tobacco products would be liable to GST. Moreover, the centre would be appointed to levy central excise duty on these products, periodically.
What exactly is the concept of destination based tax on consumption?
The taxing authority which will be having the jurisdiction over the place of consumption, also known as the place of supply, will be the biggest beneficiary of this taxation reform.
What are the benefits which the Country will accrue from GST?
Introduction of GST is undoubtedly a crucial step towards organizing the clutter of the existing tax structure. GST is set to expunge countless central and state taxes into one single tax. Moreover, it would mitigate the ill effects of cascading and pave the way for a common national market.
For the consumers, the biggest gain would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25%-30%. Introduction of GST would also make our products competitive in the domestic and international markets. Studies show that this would instantly spur economic growth.
Centre and states are also bound to witness revenue gain, due to enlarged tax base, increased trade volumes and improved 10 11 tax compliance. Furthermore, thanks to its transparency, it would be easier to administer.
What are the benefits of GST For Central and State Government?
Effortless Administration – Multiple indirect taxes are being replaced by one single tax, GST. Supported with a robust IT system, this would simplify administration, in fact a lot simpler than previous centre and state levied taxes.
Better Control on leakage – Robust IT infrastructure will help in better tax compliance. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders.
High Revenue efficiency – It is anticipated that tax collection costs will be reduced considerably because of GST, thus, leading to a higher revenue efficiency.
How will the goods and services be classified under GST regime?
Harmonized system of nomenclature, or what it is generally called as, HSN code will be put in place for classifying goods under GST. Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall use 2 digit code and the taxpayers whose turnover is Rs. 5 crores and above shall use 4 digit codes. Furthermore, taxpayers with annual turnover being less than Rs.1.5 crores need not mention HSN code in their invoices.
What is the scope of composition scheme under GST?
Composition levy is applicable to taxpayers, whose turnover aggregates up to Rs. 50 lakhs, in a financial year. Under the scheme, a taxpayer shall pay tax as a percentage of his turnover during the year without the benefit of ITC. The rate of tax for SGST and CGST is anticipated to be not less than 1%.
If a tax payer opts for composition levy, in that case he is not allowed to collect tax from his consumers. Tax payers making inter- state supplies or paying tax on reverse charge basis shall not be eligible for composition scheme.
Why should you use GREEN GST?
Filing for GST may prove to be a daunting task for you; however, it is not of any major concern, thanks to GREEN GST. Mentioned below are some Benefits you are bound to receive if you file for GST through GREEN GST.
– No need to deal with multiple Non-compliant Suppliers Moglix offers indirect procurement and vendor consolidation to relieve you from dealing with multiple small vendors, while still getting to choose the best alternative.
– Need for amendment and reconciliation of invoices before filing GSTR Green chain is Moglix’s procure to pay solution which tracks all the invoices and helps you reconcile them real-time even before GSTR filing.
– Monitor and File GSTR of multiple plants and warehouses across states and countries Green GST is a product for GST compliance that is made for managing multiple plants and warehouses across states and countries.
Why is Dual GST required?
Pertaining to the fact that India is a federal country, both, the centre and the states have been awarded the powers to levy and collect taxes through appropriate legislation. Both levels have distinct responsibilities, which is to perform according to the division of powers prescribed in the constitution for which they need to generate resources. A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism.
How will Exports be treated under GST?
Exports are lucky enough to be exempted from GST. However, credit of input tax credit will be available as refund to the exporters.
Whether the composition scheme will be optional or compulsory?
It is optional.
Which authority will levy and administer GST?
Centre will retain the power of levying and administering CGST and IGST, while respective states are granted the powers to perform the same with SGST.
What are the benefits of GST for Business and Industry?
Mentioned below are some benefits of GST for Business and industry:-
Easy Compliance – All tax payer services, for instance registrations, returns, payments etc. would be available to the taxpayers online, which would undoubtedly facilitate compliance and make it more transparent.
Uniformity of tax and structures – GST would render the way businesses are implemented, thanks to neutral tax in the country that too irrespective of the choice of place of doing business.
Goodbye Cascading – Flawless tax-credits throughout the value-chain, and across boundaries of States, would make sure that there is negligible cascading of taxes. This would diminish hidden costs of implementing a business.
Enhanced competition – Substantial reduction in transaction costs of doing business would eventually lead to an upgraded competitiveness for the trade industry.
What is IGST?
An integrated GST (IGST) would be levied and collected under the scheme, by the Centre on inter-state supply of goods and services, as mentioned under the Article 269A of the Indian Constitution.
Who will decide rates for levy of GST?
CGST will be administered by the Centre, while SGST will be administered by the respective states. The rates would be notified on the recommendations of the GST Council.
What are the benefits of GST For Consumer?
Single and transparent tax proportionate to the value of goods and services –
Pertaining to numerous indirect taxes being charged by the Centre and State, with partial or no input tax credits available at progressive stages of value addition, the rate of many goods and services in the country today are burdened with many hidden taxes. Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the end consumer.
Relief in overall tax burden – It is anticipated that overall tax burden on most commodities will be reduced considerably, thanks to efficiency gain and prevention of leakages. This wil certainly benefit consumers.
Who is liable to pay GST under the proposed GST regime?
In GST, tax is only payable by the person on the supply of goods and/or services. If the taxable person crosses the threshold exemption, then the liability to pay taxes arises.
The CGST / SGST is payable on all intra-State supply of goods and/or services and IGST is payable on all interstate supply of goods and/or services. The CGST /SGST and IGST are payable at the rates specified in the Schedules to the respective Acts.
How will imports be taxed under GST?
IGST will be charged on import of goods and services into the country. The prevalence of tax will follow the destination principle and the tax revenue in case of SGST will flow to the State where the imported goods and services are consumed.
What are the major features of the proposed returns filing procedures under GST?
The proposed returns filing procedure under GST has some vital features, they are mentioned below:-
Common return would serve the purpose of both Centre and State Government.
There are eight forms provided for in the GST business processes for filing for returns. Most of the average tax payers would be using only four forms for filing their returns. These are return for supplies, return for purchases, monthly returns and annual return.
Small taxpayers: Small taxpayers who have opted composition scheme shall have to file return on quarterly basis.
Filing of returns shall be completely online. All taxes can also be paid online.