GST – Gear up for 1st July 2017.

Goods and Services Tax (GST), a significant step in the field of indirect taxation is slated to be rolled out from July 1st ,2017, all over India. It will envelope a number of central and state taxes into a single tax and is supposed to mitigate the problem of double taxation and pave the way for a unified common national market.

What is GST?

We have two types of taxes – direct tax and indirect tax. The present indirect tax structure is a bit complicated as it is multilayered, comprising multiple taxes, due to which it is difficult to monitor and administer.

Moreover, current VAT system at central (CENVAT) level extends tax set- offs (tax refund) only against central excise duty and service tax paid up to the production level. It does not extend to value addition by the distributive trade below the stage of manufacturing. No manufacturer can claim set-off against other central taxes like additional excise duty and surcharge.

Similarly, state VAT system cover only sales. Sellers can claim credit only against VAT paid on previous purchases. Thus, there is a cascading burden of “tax on tax”, as there are no set-offs for taxes paid on inputs or on previous purchases.

Proposed GST is also a Value-Added Tax (VAT) that will levy comprehensive indirect tax on manufacture, sale and consumption of goods and services at the national level. It will subsume all indirect taxes levied on goods and services by the Indian Central and State governments into an integrated tax with two buckets – Central GST levied by the Central government and State GST levied by the State government.

It is a consumption-based tax, based on the principle of destination based consumption taxation as against the present principle of origin based taxation.

GST Slabs

The proposed rate stands at 17-18 per cent with certain items exempted from GST, while a concessional rate will be charged for some other essentials.

However, five slabs have been approved by the GST council, the governing body. zero, 5%, 12%, 18% and 28%.

Central taxes that GST will replace State taxes that GST will subsume
  • Central Excise Duty
  • Duties of Excise (medical and Toilet preparations)
  • Additional Duties of Excise (goods of special importance)
  • Additional Duties of Excise (textiles and textile products)
  • Duties of Customs (commonly known as CVD)
  • Special Additional Duty of Customs (SAD)
  • Service Tax
  • Cesses and surcharges in so far as they relate to supply of goods or services
  • State VAT
  • Central Sales tax
  • Purchase Tax
  • Luxury Tax
  • Entry Tax (all forms)
  • Entertainment Tax (not levied by local bodies)
  • Taxes on advertisements
  • Taxes on lotteries, betting and gambling
  • State cesses and surcharges

What effect will GST have and how will it affect you?

It will boost ‘Make in India

  • Uniform tax rate and common national market will boost foreign investment and promote campaigns like Startup India, Make in India.
  • It will boost Indian exports and manufacturing activities. This will make Indian products more competitive in the international market.
  • It will generate more employment and thus increase GDP with gainful employment, leading to substantive economic growth.
  • It will prevent cascading of taxes as Input Tax Credit will be available across goods and services at every stage of supply.
  • It will help in making India a ‘manufacturing hub’. It will reduce average tax burden on companies – resulting in low prices, leading to more consumption, more production and hence, growth of industries.

It will ease doing business

  • By reducing compliance costs and simplifying and automating various process registrations, returns, refunds and tax payments.
  • By reducing multiplicity of taxes, Cascading and Double Taxation.
  • By promoting interaction through common GST portal and online procedures for filing returns, input credit verification.
  • By setting common procedures for registration of taxpayers, tax refunds, uniform format of tax return, common tax base, common system of classification of goods and services.
  • By facilitating more transparency and accountability.

It will benefit the customers

  • With price reduction, due to seamless flow of input tax credit between the manufacturer, retailer and service supplier.
  • With relief in overall tax burden.
  • With decrease in black transactions.

How and from where do I get my GST Id?

gstTo obtain registration, you should interact with tax authorities via a GST common Portal, set up by Goods and Services Tax Network (GSTN). Method of registration for Goods and Services Tax Identification Number (GSTIN) differs for:

  • New Applicants.
  • Existing registrants migrating from centre/state.

As a new applicant, you can apply for registration without prior enrollment.

Once you submit your online application with complete details, you as an authorized signatory, will receive confirmation email or SMS, that you need to verify.

On the receipt of required confirmation, the Acknowledgement Number is generated and intimated to you.

Once the application gets approved, GSTIN is generated and sent to the authorized signatory i.e. you along with the provisional Login ID and password details which you can use to access GST Portal.

As a taxpayer, you need to keep this information updated.

If you are our customer, here is what you need to do before July 1st.

As explained above, the introduction of the most awaited tax regime – GST is expected to bring substantial benefits to the Indian businesses and consequently to the Indian economy.

To implement it, we need to make some necessary changes in our accounting, business processes and compliance’s, and for this we seek your cooperation and support.  Now, we need few details from you, so please mail us the details below:

  • Proprietor Name
  • Your Business Name
  • Business Address with Contact Details
  • PAN Card Detail
  • GST ID

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