SERVICES – FAQ
- GST is a single uniform indirect tax which was introduced to replace Central and State indirect taxes such as VAT, CENVAT, and others. GST applies on all types of businesses, small or large. This makes it one of the greatest tax reforms in the country. The entire nation will follow a unified tax structure. As the name suggests, GST will be applicable on both goods and services and India will follow a dual system of GST to keep both the Centre and State independent of each other. The GST council will be headed by the Union Finance Minister and it will consist of various State Finance Ministers. GST will be devised as a four-tiered tax structure with tax slabs of 5%, 12%, 18%, and 28% for various different categories of products and services. 0% rate is kept for most essential goods such as rice, wheat.
1. What is Goods and Services Tax (GST)?
- A GST return is a document containing
details of all income/sales and/or expense/purchase which a taxpayer (every GSTIN)
is required to file with the tax administrative authorities. This is used by tax
authorities to calculate net tax liability.
Under GST, a registerd dealer has to file GST returns that broadly include: - • Purchases
- • Sales
- • Output GST (On sales)
- • Input tax credit (GST paid on purchases)
2. What is GST Return?
- Input credit means at the time of paying
tax on output, you can reduce the tax you have already paid on inputs and pay the
balance amount.
Here's how-
When you buy a product/service from a registered dealer you pay taxes on the purchase. On selling, you collect the tax. You adjust the taxes paid at the time of purchase with the amount of output tax (tax on sales) and balance liability of tax (tax on sales minus tax on purchase) has to be paid to the government. This mechanism is called utilization of input tax credit.
For example- you are a manufacturer: a. Tax payable on output (FINAL PRODUCT) is Rs 450 b. Tax paid on input (PURCHASES) is Rs 300 c. You can claim INPUT CREDIT of Rs 300 and you only need to deposit Rs 150 in taxes.
3. What is input tax credit?
- TEWay Bill is an Electronic Way bill for
movement of goods to be generated on the eWay Bill Portal. A GST registered person
cannot transport goods in a vehicle whose value exceeds Rs. 50,000 (Single
Invoice/bill/delivery challan) without an e-way bill that is generated on
ewaybillgst.gov.in.
Alternatively, Eway bill can also be generated or cancelled through SMS, Android App and by site-to-site integration through API. When an eway bill is generated, a unique Eway Bill Number (EBN) is allocated and is available to the supplier, recipient, and the transporter.
4. What is an eWay Bill?
- As mentioned earlier, GST will unify the taxation system in the entire nation. This will help in removal of the cascading tax effect. Cascading effect refers to tax to be paid on a tax. Under GST, this will no longer happen as the unified tax will bring the entire indirect tax system under one umbrella. Another important benefit is that under GST, the input tax credit can be availed on both goods and services, which eliminates the cascading effect. GST will also unify the returns and compliances as there will no separate VAT and service tax
5. Benefits of GST
- GSTIN refers to the unique GST identification number that every business will be allotted. Every taxpayer will be allotted a state-wise, PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN). Also, note that having PAN is mandatory for registration under GST.
6. What is a GSTIN?
- In the GST Regime, businesses whose
turnover exceeds Rs. 40 lakhs* (Rs 10 lakhs for NE and hill states) are required to
register as a normal taxable person. This process of registration is called GST
registration.
For certain businesses, registration under GST is mandatory. If the organization carries on business without registering under GST, it will be an offence under GST and heavy penalties will apply.
GST registration usually takes between 2-6 working days
7. What is GST Registration
- An offender not paying tax or making short
payments (genuine errors) has to pay a penalty of 10% of the tax amount due subject
to a minimum of Rs.10,000.
The penalty will at 100% of the tax amount due when the offender has deliberately evaded paying taxes
8. Penalty for not registering under GST
- A tax invoice is generally issued to
charge the tax and pass on the input tax credit. A GST Invoice must have the
following mandatory fields-
1. Invoice number and date
2. Customer name
3. Shipping and billing address
4. Customer and taxpayer's GSTIN (if registered)**
5. Place of supply
6. HSN/ SAC code
7. Item details i.e. description, quantity (number), unit (meter, kg etc.), total value
8. Taxable value and discounts
9. Rate and amount of taxes i.e. CGST/ SGST/ IGST
10. Whether GST is payable on reverse charge basis
11. Signature of the supplier
9. What are the mandatory fields a GST Invoice should have?
- HSN code stands for "Harmonized System of Nomenclature". This system has been introduced for the systematic classification of goods all over the world. HSN code is a 6-digit uniform code that classifies 5000+ products and is accepted worldwide. It was developed by the World Customs Organization (WCO) and it came into effect from 1988.
10. What is HSN Code?
- Usually when the GST paid is more than the GST liability a situation of claiming GST refund arises. Under GST the process of claiming a refund is standardized to avoid confusion. The process is online and time limits have also been set for the same.
11. What is GST refund?
- The time limit for claiming a refund is 2
years from the relevant date. The relevant date is different in every case. Here are
the relevant dates for some cases –
Reason for claiming GST Refund Relevant Date Excess payment of GST Date of payment Export or deemed export of goods or services Date of despatch/loading/passing the frontier ITC accumulates as output is tax exempt or nil-rated Last date of financial year to which the credit belongs Finalisation of provisional assessment Date on which tax is adjusted
Also if refund is paid with delay an interest of 24% p.a. is payable by the government.
12. What is the time limit for claiming the refund?