GST has been rolled out in India with effect from 01st July, 2017
Why is GST Important?
Prior to GST, there was Excise Duty or VAT being levied on products and Service tax on services. There were significant number of litigations on what to be considered as merchandise and what to be considered as service and which tax is to be collected − VAT, Excise Duty or Service Tax. However, now this process has been simplified and only a single tax is to be collected called GST.
What is Goods and Service Tax (GST) in India – GST Meaning?
GST means Goods and Services Tax (GST) in india which is one Indirect Tax for the entire nation. There are a total of 17 taxes being subsumed in one tax i.e. Goods and Service Tax. The taxes being subsumed are VAT, Excise Duty, Service Tax, Entry Tax and so forth.
Advantages and Disadvantages of GST
There are many advantages and disadvantages of GST.
- It reduced a number of indirect taxes which simplified the tax system
- Reduced litigations on the differentiation between goods and services
- Ease of doing business. Now, one needs to take only one registration for GST as compared to an earlier regime where registrations under VAT, Service Tax, and Excise were separately required
- There is more transparency
- There is a free flow of Input Tax Credit mechanism, which reduces the price of goods or services and benefits the end consumer
- There is no concept of Centralised Registration (One registration). Earlier, if any company was operating from many states, one could take one registration called centralised However, now there is no concept of centralised registration, a person operating from many states, has to take registration in every state
- There is much compliance, which has increased the cost for the small businessmen. Now, a taxpayer has to file three returns monthly, which has increased the compliance burden on a taxpayer
- The tax rates have been increased for many commodities which have tightened the pocket of the common man
- The threshold limit for a manufacturer now is quite less. Earlier, the manufacturer needed to take registration, if the turnover crossed Rs. 1.50 crore which has been reduced to Rs. 20 lakh in GST
- It has also increased the implementation cost for all, especially small businessmen
GST Structure – How does GST work?
The Government has adopted a dual system of taxation. Both Central and State shall levy a tax on supply of goods and services. The following are the three types of GSTs:
Types of GST -What is IGST, SGST and CGST ?
- IGST – Integrated Goods and Service Tax
- SGST – State Goods and Service Tax
- CGST – Central Goods and Service Tax
As explained in the pictorial diagram, there are three taxes being levied on the supply of goods or services namely CGST, SGST, and IGST. If any goods or services are being provided within the state, then CGST and SGST are to be levied. However, if goods or services are being provided from one state to another, then IGST is to be levied.
GST Tax Rates on Different Items
Everyone wanted to have a single tax rate as GST for its simplification. However, in India, it is not feasible to keep one tax rate for different items. Necessary items like (vegetables, fruits) and luxury items like (cars, AC) cannot be charged at the same rate of tax as it is not justifiable. In this way, it was important to set different rates for different products/services.
The GST Rates in India are 0%, 0.25%, 3%, 5%, 12%, 18% and 28%:
|GST Tax Rate||Items covered|
|0%||Milk, fruits, vegetables etc.|
|0.25%||Diamonds, precious or semi-precious stones|
|5%||Flour, wheat, clothing sale value not exceeding Rs. 1,000 per piece|
|12%||Pens, pencils, apparel exceeding Rs. 1,000 per piece|
|18%||Hair oil, handbags etc.|
|28%||Cars, pan masala etc.|
There is one more tax called the Compensation Cess which is being introduced in GST. This tax is over and above the GST rates as discussed above and it is levied on some selected items, e.g.: Pan Masala, Tobacco, Motor Vehicles etc. There is no fixed percentage for compensation cess. Therefore, the different rates of cess are charged on different items.
GST Tax Calculator – How to calculate GST with Example ?
One needs to adopt the following steps for calculation of GST:
- The rate applicable on the item for calculating the tax.
- Which tax is to be levied, is it intra-tax or inter-tax, CGST and SGST or IGST?
Here is an example for calculation of GST where goods are supplied within the state (CGST and SGST):
|Manufacturer to Wholesaler|
|Cost of Production||10,000|
|Add: Profit Margin||1,000|
|Total Manufacture Price||11,000|
|Suppose, GST rate is 5%||–|
|Add: CGST @ 2.5%||275|
|Add: SGST @ 2.5%||275|
|Wholesaler to Retailer|
|Add: Profit Margin @10%||1,100|
|Add: CGST @2.5%||302.5|
|Add: SGST @2.5%||302.5|
|Retailer to Consumer|
|Add: Profit Margin @10%||1,210|
|Add: CGST @2.5%||332.75|
|Add: SGST @2.5%||332.75|
|Total Price to the Final Consumer||13,975.5|
Therefore, the burden of tax will not be added to the price being charged by the wholesaler to a retailer or by the retailer to consumer. One would claim Input Tax Credit at every stage.
What is Input Tax Credit under GST with Example?
Input Tax Credit under GST – Meaning
When we sell any goods or provide any services, we need to charge GST from the customer; it is called the Output Tax. This GST is to be paid to the Government. When we purchase any goods or avail any services, we pay GST to the person from whom we are purchasing the goods; it is called Input Tax Credit. This Input Tax Credit is deducted from the Output Tax and the balance liability is to be paid to the Government.
Let’s understand this concept with the help of an example:
Suppose, I am a Chartered Accountant providing consultancy services to my clients on which I charge GST @18% on Invoice. On the contrary, I have my office on rent; I pay my telephone bill etc. and pay GST@18% for availing these services. What amount will I pay to the Government?
|Nature||Amount (Rs.)||GST @18%|
Less: Office Rent
|Less: Telephone Bill||Input Services||1,000||180|
|Pay to the Government||
Here in the above example, I am utilising Input Tax Credit, therefore, I don’t need to pay Rs. 1,800 to the government. I will pay only Rs. 720 as GST to the Government after utilising Input Tax Credit.
Due dates for GST Returns
Since GST is a new concept in India, people are not fully aware of its compliances. Moreover, GST portal is also not fully capable to handle the returns of a number of taxpayers. Therefore, the Government extends the due dates for filing of GST returns from time to time.
Herein are the extended due dates for filing of the returns.
GSTR-3B is basically for the collection of taxes till the time the government rolls out a smooth filing of monthly returns.
Due date for filing GSTR-3B for Jan to March is given below:
|Month||Last Date for filing GSTR-3B|
|Jan-18||20th February, 2018|
|Feb-18||20th March, 2018|
|Mar-18||20th April, 2018|
GSTR-1 is regular return for reporting of outward supplies (Sales).
Due date for filing GSTR-1:
Quarterly Returns (Taxpayers with an annual turnover up to Rs. 1.5 crore who opt for quarterly return filing)
|July-Sept||Quarterly||10th January, 2018|
|Oct-Dec||Quarterly||15th February, 2018|
|Jan-Mar||Quarterly||30th April, 2018|
For Taxpayers with an annual turnover of more than Rs. 1.5 crore
and for Taxpayers with the annual turnover of up to Rs. 1.5 crore (who opt for monthly return filing instead of quarterly return filing)
|July to Nov||Monthly||10th Jan., 2018|
|Dec||Monthly||10th Feb., 2018|
|Jan||Monthly||10th Mar., 2018|
|Feb||Monthly||10th Apr., 2018|
|March||Monthly||10th May, 2018|
The due date for filing GSTR-4 for Composition dealers:
|July to Sept||Quarterly||24th Dec., 2017|
|From next Quarter||Quarterly||18th of the month succeeding quarter|
Online Filing of GST Return – How to file GST Returns Online?
First of all, to file returns online, you need to go to the website www.gst.gov.in. Click on the Login button and enter your User id & Password which you have created. After login, you just click on the return dashboard icon, after that financial year will be automatically selected i.e. 2017-18, then select the return filing period for the month you want to file the return and click on the search icon. Then you have to select which returns you want to file… GSTR-1 for Sales, GSTR-2 for Purchase, GSTR-3B for Sales Purchase Summary Return. As of today, we can file only two GST returns i.e. GSTR-1 and GSTR-3B.
Here we are discussing in detail the return filing of GSTR-3B:
For filing GSTR-3B, click on GSTR-3B icon, fill the required details of Taxable Supply of Goods or Services in “Column 3.1” and fill eligible ITC in “Column 4”. Then you have to save your data by clicking save button at the bottom of the page, then click the submit button to submit your return. After submitting your return, click on “Column 6.1 Payment of Taxes”, if Input Tax Credit is available, set off your taxes through Input Tax Credit. If after taking Input Tax Credit your tax is still payable, then you have to pay your taxes through challan. For creating challan, go to services-payment-create challan.
Also you can make the payment of taxes through net banking or through RTGS. There is one more option for payment of tax, and that is “over the counter”, you may create challan and go to the bank and make the payment of tax; however, this facility is only available if your tax liability is Rs. 10,000 or less. After successful payment, you again click on Column 6.1 for the offset of liabilities. So,after offsetting the liabilities, you have to save your return. After successfully submission of return, you can file your return through Electronic Verification Code (EVC) that will be sent to your registered mobile and email address (same code will be sent to your mobile and e-mail address) or through Digital Signature; if the taxpayer is a Company, then the return is to be filed mandatorily by Digital Signature.
So, what is your view on GST? Please share.
The article has been written by CA Monika Bansal.