GOODS & SERVICES TAX (GST) – “Uniform tax code”

Posted October 4, 2019 by caonweblive

Goods & Service tax (GST) is a destination-based indirect tax that applied to whole of India from 01/7/ 2017.This indirect taxation reform is based on“One nation one tax” & also creates an environment of uniform indirect tax code throughout India.

GST is a kind of indirect tax which is levied on manufacturing, sale & consumption of goods & services. This is a nation vide taxation law which came into force on July 01, 2017.
The idea behind bringing in the GST is to replace the decade old method of taxation on goods & services which is multi-staged.
Earlier, the centre imposes excise duty on manufacture of goods and service tax on services. The states separately charge Value Added Tax (VAT) on supply of goods and a bunch of other taxes such as Entertainment tax, entry tax, Octroi etc. This results in multiplicity of taxes with lack of credit inputs and ultimately limiting the resources of honest businessman.
GST on the other hand will be implemented simultaneously by the centre & state but on a common platform i.e. GST Council.
Tax Rates Products
5% Items of daily usage & Household necessities such as edible oil, sugar, spices, tea, and
coffee are included.
12% Computers and processed food.
18% Hair oil, toothpaste and soaps, capital goods and industrial
intermediaries are covered in this slab
28% Luxury items such as small cars, consumer durables like AC and Refrigerators, premium
cars, cigarettes and aerated drinks, High-end motorcycles are included here.

Though sugar, tea, coffee attract a 5% GST but milk does not attract any GST . The idea behind this is to ensure that basic items are available to everyone but instant usage items is kept out of this category so that everyone could avail its benefits without incurring any extra cost.
Government has introduced a 5-tier rate structure of GST i.e. 0%, 5%, 12%, 18% and 28%. Most of the daily use articles comes under 5% GST. The idea behind putting these articles under different tax brackets is multi-pronged. Encourage local production, less tax on daily used goods and high end goods are taxed at higher rate.

• Both centre & state will be charging GST simultaneously as per the council decision on supply of goods & services within a state i.e. Intra State
• Integrated GST (IGST) will be levied when there is any trade of goods & services between states i.e. Inter State
• Though IGST would be imposed & collected by the central government but the ultimately it would be shared between the centre & state (Methodology of sharing revenue would be coded in the GST Legislation.
• Instead of Origin based it is a destination based tax.
• COMPOSITION SCHEME: This comes as a relief to small businessman so they need not to be burdened with compliance provisions under the law.
• INPUT TAX CREDIT (ITC): The concept of ITC is not new it was existing in the earlier tax regime as well. Now the scope of ITC has widened. These are points which are being added to an individual’s account and can be used to pay the GST amount on the next bill.
• REVERSE CHARGE MECHANISM (RCM): Reverse charge liability cannot be set off against the Input tax credit. Generally the supplier is liable to pay GST to the government almost in 90% of the cases, remaining 10% of the cases the liability is on the buyer to pay the GST. This creates a Reverse Charge where the liability shifts from supplier to the buyer. There are two (2) types of Reverse charge scenarios:
• When an individual buys from an e-commerce trader.
• When an individual buys from an unregistered manufacturer.
• GSTN (GST Network): Government of India (24.5%), other states (24.5%) & Non-governmental financial institution such as HDFC, ICICI, NSE, LIC HFL (51%). It’s a Special Purpose Vehicle (SPV) which is established to serve the purpose.
• GST Council: The tax rates, rules & regulations of GST are subject to the council approval which is chaired by the Union Finance Minister and also the state Finance ministers are its members so that their regional issues are also considered before finalising any rule.
• E-Way Bill: It is an electronic document generated from the GST portal, which is a common and shared IT infrastructure between the Centre and States; and acts as evidence for movement of goods.
• National Anti-Profiteering Authority (NAA): It’s a vigilance unit incorporated under GST to keep a check on unfair profit making activities.

• PAN card of the owner
• Aadhar Card of the owner
• Photograph of the owner
• Electricity bill of the premises
• Letter of Authorisation for signatory
• Bank statement/ Cancelled Cheque
• Aadhar Card of owners/ directors/ partners

The process for GST registration is completely electronic. This means that there is minimal interaction between the tax payer and the tax authority. Following are the steps which are required to complete your GST Registration process:
• Form GST REG-01: Fill your PAN, email ID & Mobile number
• Verify your mobile no. & email ID with an OTP

• Application Reference No. (ARN): Store your ARN for the future reference
• Form GST REG-03: Automatically generated form in case any more information is required.
• After all the information you have put in, is verified Registration certificate will be issue within 3 working days.
• You can track your application by clicking on the link


• Individuals registered prior to GST under Excise, VAT, Service tax etc.
• Those paying tax under Reverse Charge Mechanism
• E-commerce supplier
• Agent of a supplier or a input service provider
• Business having a turnover of not less than 40 lakh (normal state) & 20 lakh (North Eastern state).
• Businesses who want to avail the benefit of composition scheme must have a turnover of not less than 1.5 Crore


• Removed bundle of indirect taxes such as VAT, Excise duty, service tax etc.
• Simplified tax policy structure
• Removal of cascading effect on tax which occurred in previous tax regime.
• Reduction of manufacturing cost due to lower burden of taxes on manufacturing sector.
• Increase demand & consumption of goods
• Increase supply of goods leading to rise in production of goods
• Control on black money circulation
• Formalisation of Indian economy
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Last Updated October 4, 2019