Goods and Service Tax (GST)

Goods and Service Tax (GST) can be defined as indirect tax that has integrated most of the taxes levied on goods and service under a single tax at the national level. GST is charge to the customer at the end point of consumption. It is a consolidated form of taxes with a uniform rate of tax defined for both goods and services. The collection of GST on goods and service occurs at all the stage of a supply chain i.e. Sale and purchase. Features of GST v Dual Goods and Service Tax :- GST is an indirect tax, which is dual in nature, i.e. this tax can be levied by both the central government and state governments. v Destination based tax :- GST is tax based on destination, which means that all the collected tax under SGST will be used by the state government where the consumer of the sold goods and service resides. v Payment of GST :- The payment of CGST and SGST is to be done to the central account and state account respectively. v Goods and service tax network (GSTN) :- GSTN is a non-government body that controls and manages the IT infrastructure and service on the GST portal. GSTN will act as a bridge between the central and state government and the taxpayer to decrease the communication gap. It helps the central government and state government to keep track and record all the financial transaction for taxation purpose. v GST on Imports :- IGST will be levied by the centre on the supply of interstate goods and services. Central will levy IGST on inter-state supply of goods and service. Goods that will be imported are subject to custom duty and IGST. v Maintenance of Records :- To avail utilize or refund of Input tax credit of CGST, SGST and IGST, separate details in account books will have to be maintained by the taxpayer or the exporter. v Administration of GST :- The GST council will be responsible for the administration of GST and it will also act as the prime policy-making body of the GST. v Computation of GST on the basis of invoice. 

Benefit of GST v No more multiple taxes :- GST eliminate multiple indirect taxes, such as Excise duty, VAT, Sales Tax, CENVAT, and Service Tax. All these taxes are comes under GST only. v Uniformity of tax rate and structure :- In GST all the tax rate and their structure remain common throughout the country. Implementation of one common tax system throughout the country prevents any unhealthy competitions amongst states. Thus, GST is highly beneficial to all those who do inter-state business and want to expand their business in other state. v Easy Tax Filing :- For small businessman, GST has turned out to be a blessing. The complicacy associated with taxing documentation is greatly reduced after the implementation of GST. Filing returns, payment if taxes and the process of refund have become more convenient. This also helps reduce tax evasions and corruption, and make the system more efficient and transparent. v Reduction in Cost :- Implementation of GST has reduced the cost of many goods on which double taxes are imposed. v Increase in GDP :- The production will increase with an increase in demand. It will boost the gross domestic product. v Saving more Money :- Application of GST ensures the elimination of the dual charging system. This help consumers save more money as a result of reduced prices. v Increase in Revenue :- GST operate under ‘one country, one tax’ principle. It replaces all the 17 Indirect tax with one tax only. An increase in demand for product increases the tax revenue for central and state governments. v More competitive product :- GST address the wide impact of tax and high logistic costs. Hence, the manufacturing industry becomes more competitive. Classification of GST 1) Central Goods and Service Tax (CGST) 2) State Goods and Service Tax (SGST) 3) Union Territory Goods and Service Tax (UTGST) 4) Integrated Goods and Service Tax (IGST) 

1. Central Goods and Service Tax (CGST) CGST comes under central goods and service act, 2017. CGST is levied on Intra-State Supplies of goods and services by the central government, and modification can be made it from time to time by the GST council. The total revenue collected under CGST is intended for the centre. However, the states get and input tax credit on CGST and it may be utilized against the central GST payment. CGST is levied on Sale/Purchase of Goods or Services within state. 2. State Goods and Service Tax (SGST) SGST is a constituent of State goods and service tax, 2017. SGST is levied on Intra-State Supplies of goods and services by the State government. The revenue accumulated under SGST is solely for the use of the state governments. SGST has replaced all the existing taxes, such as sales tax, VAT, Luxury Tax, Entertainment Tax, Taxes on lottery, betting and gambling, Entry Tax. SGST is levied on Sale/Purchase of Goods or Services within state. 3. Union Territory Goods and Service Tax (UTGST) UTGST is a constituent of GST. UTGST levied on the supply of Goods and services in the union territories, like Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Delhi, Lakshadweep etc. The revenue accumulated under UTGST is solely for the use of government of Union territories. 4. Integrated Goods and Service Tax (IGST) IGST is a constituent of Integrated goods and service tax, 2017 IGST is levied on the sale of goods and services from one state to another. The share of the revenue earned on IGST is divided according to the rates fixed by the governing authorities among state government and central government. IGST is levied on Sale/Purchase of Goods or Services outside state or export to another country. 

GSTN Structure Goods and service tax identification number (GSTIN) is a 15 digit unique code. It is a state and PAN based code that is assigned to each taxpayer. The structure of GSTIN is as follows : 07 ABFPA2222N 1 Z 5 The description of the structure of GSTIN is as follows : · The first two digit of GSTIN Signify the state code. This State code is numbered as per Indian census 2011. · The next 10 Digit of GSTIN Signify the PAN number of the taxpayer registered under GST. · The thirteenth digit of GSTIN signifies the entity code of registration in a state. · The fourteenth digit of GSTIN is a letter. · The last digit of GSTIN signifies the check code, which can be a letter or a number. Registration in GST Every supplier of goods and service or both is required to obtain registration in the state or union territory for which he makes the taxable supply if his aggregate turnover exceeds specified threshold limit in a FY. Goods :- Goods means every kind of movable property other than money and securities includes actionable claim, growing crops, grass and things attached or forming part of land which agreed to be served before supply or under contract of supply. Services :- Services means anything other than goods, money & securities but includes activities relating to use of money or conversion of money by cash or by any other mode, conversion of money from one currency to another or from one denomination to another denomination. Taxable supply :- Supply of Goods or services which is leviable to pay under Goods and Service Act, 2017. Supplier :- Person supplying goods and services includes agent of supplier. 

Casual Taxable Person :- A person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business Aggregate Turnover :- Aggregate turnover include value of all outward supply i.e. Taxable supply, Exempt supply, Exports and Inter-state Supply of a person having the same PAN be computed on all India basis and excludes CGST/SGST/UTGST/IGST/Cess and Value of inward supply on which tax is payable under reverse charge. Threshold Limit :- · State with threshold limit of Rs 10 Lakh for supplier of Goods/Services - Manipur, Mizoram, Nagaland and Tripura · State with threshold limit of Rs 20 Lakh for supplier of Goods/Services - Andhra Pradesh , Meghalaya , Sikkim, Uttarakhand, Puducheery and Telangana · State with threshold limit of Rs 20 Lakh for supplier of Services / Rs 40 Lakh for supplier of Goods – All other States Compulsory Registration in GST · Person making Inter state supply · Casual Taxable Person · Non-Resident Taxable Person · A person who supplies on behalf of some other taxable person · Person receiving supplies on which tax is payable by recipient on reverse charge basis · Every E-commerce operator · Person / Class of person notified by the Central / State Goverment Person not liable for Registration in GST · Person engaged exclusively in supplying Goods or Services or both not liable for Tax or wholly exempt from Tax. · Agriculturist limited to supply of produce out of cultivation of Land · Person making only reverse charge supply 

 · Person making inter-state taxable supply upto Rs 20 Lakh & Rs 10 Lakh in special category state of Mizoram, Tripura, Manipur & Nagaland. Supply in GST The term, “supply” has been inclusively defined in the Act. The meaning and scope of supply under GST can be understood in terms of following six parameters, which can be adopted to characterize a transaction as supply: 1. Supply of goods or services. Supply of anything other than goods or services does not attract GST 2. Supply should be made for a consideration 3. Supply should be made in the course or furtherance of business 4. Supply should be made by a taxable person 5. Supply should be a taxable supply 6. Supply should be made within the taxable territory Composite Supply :- Composite supply consists of two or more goods/services, which is naturally supplied with each other in the ordinary course of business and one of them is a principal supply. The items cannot be supplied separately Mixed supply : In Mixed supply two or more individual supplies combination of goods or services with each other for a single price. Each of these items can be supplied separately and is not dependent on each other. In other words, the combination of goods or services are not bundled due to natural necessities, and they can be supplied individually in the ordinary course of business. For tax liability purpose, mixed supply consisting of two or more supplies shall be treated as a supply of that item which has the highest tax rate Composition Scheme The Government of India provides for simplified and easy of doing business scheme for payment of taxes and filling of returns to certain categories of taxable person. As a result such taxable person is not required to maintain elaborate records and filing detailed returns. 

Section 10 of the CGST Act, provides for composition levy to such person. Turnover limit to opt for composition levy for goods : The Central Government notified that an eligible registered person, whose aggregate turnover in the preceding financial year did not exceed Rs 1.5 Crores, may opt to pay tax under Composition scheme. However, the said aggregate turnover shall be Rs 75 lakh in case of persons registered under following States:- Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand. Turnover limit to opt for composition levy for Services : The Central Government notified that an eligible registered person, whose aggregate turnover in the preceding financial year did not exceed Rs 50 Lakh, may opt to pay tax under Composition scheme. Rate of Taxes : · For Manufacturer of Goods : 1% (0.5% of CGST & 0.5% of SGST) · For Restaurant Services : 5% (2.5% of CGST & 2.5% of SGST) · For Other Trader of Goods : 1% (0.5% of CGST & 0.5% of SGST) · For Services : 6% (3% of CGST & 3% of SGST) Input Tax Credit Every registered person shall, subject to such conditions and restrictions as may be prescribed, entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. Conditions for taking ITC: No registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless – a) He is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying documents as may be prescribed; b) He has received the goods or services or both 

c) The tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and d) He has furnished the return under section 39: Input tax credit may be availed based on following particulars: (i) Amount of tax charged (ii) Description of goods or services (iii) Total value of supply of goods or services or both (iv) GSTIN of the supplier and recipient and (v) Place of supply in case of inter-State supply Payment of Tax Payments to be made: Under GST, the tax to be paid is mainly divided into 3 heads – IGST, CGST and SGST. Electronic ledger in GST :- 1. Electronic Cash Ledger : Every deposit made towards Tax, Interest, Penalty, Fee or any other amount by a person by internet banking or by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode and subject to such conditions and restrictions as may be prescribed, shall be credited to the electronic cash ledger of such person to be maintained in such manner as may be prescribed. The amount available in the electronic cash ledger may be used for making any payment towards Tax, Interest, Penalty, Fee or any other amount payable under the provisions of this Act or the rules made there under in such manner and subject to such conditions and within such time as may be prescribed. 2. Electronic Credit Ledger : The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, The amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may be prescribed. 3. Electronic Liability Ledger : All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic liability register in such manner as may be prescribed. Utilization of ITC in GST : Inward Supply Outward Supply Remarks CGST SGST IGST ITC of CGST Allowed Not Allowed Allowed 1stCGST and next IGST in that order ITC of SGST Not Allowed Allowed Allowed 1st SGST and next IGST in that order ITC of IGST Allowed Allowed Allowed IGST credit can be adjusted equally between CGST and SGST or any other proportion at the option of the assessee Interest on Delayed Payment of Tax in GST : Under GST, interest is liable to be paid when there is a delay in payment. The two scenarios where a tax payer will be liable to pay interest are: 1. Delayed payment of tax at 18% p.a 2. Input tax credit has been claimed in excess or where it was not eligible to be claimed/ Tax liability has been shown to be less than the actual at 24% p.a Return A return is a document containing details of income which a taxpayer is required to file with the tax administrative authorities. This is used by tax authorities to calculate tax liability. To meet the concept of digital India, the Government of India made it mandatory to file all returns electronically. Under GST, a regular taxpayer needs to furnish monthly returns and one annual return. There are separate returns for a taxpayer registered under the composition scheme, non-resident taxpayer. Under GST, a registered dealer has to file GST returns that include: • Purchases • Sales • Output GST (On sales) • Input tax credit (GST paid on purchases) Following table lists the various types of returns under GST Law :- Return Form Particular Frequency Due Date GSTR 1 Details of outward supplies of taxable goods and/ or services effected Monthly / Quarterly 10th of the Next Date GSTR 3B Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax Monthly / Quarterly 20th , 22nd & 24th of the Next Month GSTR 4 Return for composition scheme taxable person Quarterly 18th of the month succeeding quarter GSTR 9 Annual Return Annually 31st Dec of the next Financial Year GSTR 10 Final Return Once. When registration is cancelled or surrendered Within three months of the date of cancellation or date of cancellation order, whichever is later  Enabling GST in Tally Prime Steps : Click the F11 key from Keyboard Set Yes to Enable Goods and Service Tax Fill the GST details : State, Registration Type, GST No. Press the Enter key then Accept Masters pertaining for GST :

1. Sales Ledger 2. Purchase Ledger 3. Sundry Debtor 4. Sundry Creditor 5. Central Goods and Service Tax (CGST) 6. State Goods and Service Tax (SGST) 7. Integrated Goods and Service Tax (IGST) 8. Stock Item

Creating the Sales Ledger Steps : Click on create Select Ledger Enter the name Sales and Select Under Group Sales Account  In Statutory Details : Set Yes to Is GST Applicable Set No to Set Alter/ GST Details Select Goods in Type of Supply Press Ctrl + A or Enter key from Keyboard.

Creating the Purchase Ledger Steps : Click on create Select Ledger Enter the name Purchase and Select Under Group Purchase A/c In Statutory Details : Set Yes to Is GST Applicable Set No to Set Alter/ GST Details Select Goods in Type of Supply Press Ctrl + A or Enter key from Keyboard. 

Creating the Sundry Debtor Ledger Steps : Click on create Select Ledger Enter the name Yash and Select Under Group Sundry Debtor Enter the Address and Select State, Country and Enter Pin code Under Tax registration details : Enter PAN No. , GSTN No. Press Ctrl + A or Enter key from Keyboard

Creating the Sundry Creditor Ledger Steps : Click on create Select Ledger Enter the name Mohan and Select Under Group Sundry Creditor Enter the Address and Select State, Country and Enter Pin code Under Tax registration details : Enter PAN No. , GSTN No. Press Ctrl + A or Enter key from Keyboard

Creating the CGST Ledger Steps : Click on create Select Ledger Enter the name CGST and Select Under Group Duties & Taxes In Type of Duty / Tax select GST & Tax Type select Central Tax Press Ctrl + A or Enter key from Keyboard 

Creating the SGST Ledger Steps : Click on create Select Ledger Enter the name SGST and Select Under Group Duties & Taxes In Type of Duty / Tax select GST & Tax Type select State Tax Press Ctrl + A or Enter key from Keyboard