8 GST Key Points in India: GST Benefits & Importance

What is a GST Key Points:

Goods and Services Tax (GST) is an indirect tax system implemented in India to streamline and simplify the country’s taxation structure. Here are some GST key points regarding GST:

Single Tax System:

GST replaced multiple indirect taxes such as excise duty, service tax, VAT, and others. It introduced a unified tax system, making it easier to administer and comply with tax regulations.

Dual GST Structure:

GST key points in India follows a dual model, consisting of Central GST (CGST) and State GST (SGST). Both the central and state governments levy and administer GST on intra-state supplies of goods and services.

Integrated GST (IGST):

IGST is applicable to the interstate supply of goods and services and imports. It is collected by the Central Government but shared between the center and the destination state.

Input Tax Credit (ITC):

Businesses can claim input tax credit on the GST paid on their purchases and use it to offset the GST liability on their sales. This helps in eliminating the cascading effect of taxes and encourages the seamless flow of credits across the supply chain.

Threshold Exemption:

Small businesses with an annual turnover below a specified threshold limit (currently ₹40 lakhs for most states) are exempt from GST registration. However, this threshold may vary for specific categories of businesses or states.

Tax Slabs:

GST introduced different tax slabs to categorize goods and services based on their nature, essentiality, and tax rates. The primary tax slabs are 5%, 12%, 18%, and 28%, with some essential items attracting a lower rate of 0% or 5%.

Composition Scheme:

Small businesses with an annual turnover up to ₹1.5 crores (₹75 lakhs for certain states) can opt for the composition scheme. Under this scheme, they pay a fixed percentage of their turnover as GST and enjoy simplified compliance requirements.

GST Key Points – E-way Bill:

The GST regime introduced the concept of an e-way bill for the movement of goods above a specified value. It is an electronic document generated online and required for the transportation of goods to ensure proper tax compliance and monitoring.

GST Council:

The GST Council is a constitutional body comprising representatives from the central and state governments. It is responsible for making recommendations on GST-related policies, rates, and other operational aspects.

GSTN:

Goods and Services Tax Network (GSTN) is the IT backbone for GST implementation. It handles the technological infrastructure and provides a common IT platform for taxpayers, facilitating GST registration, return filing, and other compliance-related activities.

GST Key Points to Be Taken Care During GST Checking Drive Starting from 16/05/2023 till 15/07/2023

Some Important GST Key Points

1. Sign Board containing Name, GSTIN, Address of Firm should be clearly visible outside your registered premises.

2. For more than one registration in single premise, demarcation should be clearly visible.

3. All address including Godown Additional place of business should be updated on portal.

4. First page of GST registration certificate should be framed and hanged on wall.

5. KYC documents like copy of PAN, Aadhaar etc. should be readily available.

6. Address Proof of place of business like rent agreement, electricity bill, registry copy, mobile bill etc. should be available.

7. Purchase and Sale Bill books if manually maintained. However if maintained on computer than they should be updated.

8. In case of computer books ensure multiple companies are not created in your software.

It’s important to note that the GST key points and its provisions are subject to changes and updates by the government and the GST Council. Therefore, it is advisable to refer to the official GST website and consult with tax professionals for the most accurate and up-to-date information.

GST Key Points– Streamlined and Simplified Tax Structure:

GST replaces multiple indirect taxes, such as excise duty, service tax, VAT, and others, with a unified tax system. This simplifies the tax structure, making it easier for businesses to understand and comply with tax regulations.

Elimination of Cascading Effect:

GST eliminates the cascading effect of taxes, also known as “tax on tax.” With the input tax credit mechanism, businesses can claim credits for the GST paid on their purchases. This ensures that taxes are levied only on the value added at each stage of the supply chain, reducing the tax burden and promoting efficiency.

Increased Efficiency and Ease of Doing Business:

The implementation of GST has resulted in the removal of multiple checkpoints and entry taxes at state borders. This has led to the smooth movement of goods across states, reducing logistics costs and improving overall business efficiency. It has also simplified compliance procedures by introducing online platforms for GST registration, return filing, and payments.

Reduction in Tax Evasion and Black Economy:

GST’s robust IT infrastructure and invoice matching system help in curbing tax evasion and promoting transparency. The system provides a trail of transactions, making it difficult to evade taxes. This strengthens tax compliance and contributes to the formalization of the economy.

Boost to Make in India and Export Competitiveness:

GST provides a level playing field for domestic manufacturers by removing the cascading effect of taxes. This promotes the “Make in India” initiative and enhances the competitiveness of Indian goods in the global market. Additionally, GST has facilitated easier export procedures through initiatives like the Integrated GST (IGST) refund mechanism.

Increase in Government Revenue:

GST has widened the tax base by bringing more businesses into the tax net. This has resulted in increased tax revenues for the government, enabling the provision of essential public services, infrastructure development, and welfare programs.

Positive Impact on Consumers:

GST aims to bring down the overall tax burden on consumers by eliminating hidden taxes and reducing the prices of goods and services. The rationalization of tax rates and input tax credit benefits translate into potential cost savings for consumers.

Promotes Digitization and Formalization:

GST encourages digital transactions and promotes the use of electronic invoices and records. This helps in reducing the dependence on cash transactions, increasing transparency, and fostering the formalization of the economy.

Unified National Market:

GST has created a unified national market by removing inter-state trade barriers. Businesses can now operate seamlessly across states without encountering varied tax regimes, making it easier to expand operations and enhance market access.

The implementation of GST key points in India represents a significant reform aimed at creating a more efficient, transparent, and integrated taxation system. It brings numerous benefits for businesses, the government, and consumers alike, fostering economic growth and development.