The goods and services tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. It is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture upto final consumption with credit of taxes paid at previous stages available as set off. In a nutshell, only value addition will be taxed and the burden of tax is to be borne by the final consumer.
The tax came into effect from July 1, 2017 through the implementation of One Hundred and First Amendment of the Constitution of India by the Indian Government. The tax replaced existing multiple Central and State Government taxes.
GST (Goods and Services Tax) is essentially an Indirect tax which has been implemented to replace numerous taxes in India. It became effective on 1st July 2017 in India. As per the changes in the 32nd council meeting, the threshold limit for GST registration is 40 lakhs for the supplier of goods and 20 lakhs for the supplier of services. Along with that, the North-Eastern States have an option to choose between 20 lakhs and 40 lakhs. Once you have registered under this regime, you will receive a unique GST number(Goods and Service Tax Identification Number). You can also avail input tax credit and collect GST from recipients of goods and services.
Benefit of GST
- GST eliminate the cascading effect. This means a person who is registered under the GST law can take input tax credit of goods and services purchased from suppliers. So, the tax on tax is eliminated by taking GST registration.
- Benefit of input tax credit (ITC) of inward supply of goods and services.
- Loan from banks and financial institutions are easily available
- Less compliance as compared to previous VAT law.
- Easy and simple online GST returns filing procedure
Person liable for compulsory GST registration
In the following case limit of 10/20/40 lakhs does not apply and the person has to take GST registration mandatory.
- A supplier making inter supplies of goods
- Casual taxable person making taxable supply
- Person required to make payment tax under reverse charge mechanism (RCM).
- Non-resident making taxable supply.
- Person liable to deduct TDS under section 51.
- E-commerce operator require to collect tax at source (TCS) under section 52
- A person supplies goods or services or both on behalf of other taxable person, whether as an agent or otherwise.
- Input service distributor.
- A person supplies goods or services or both, other than the supplies given u/s 9(5), through e-commerce operator who is required to collect tax at source u/s 52.
- A person supplies Online Information Database Access and Retrieval services (OIDAR) from a place outside India to a person in India, other than registered taxable person.
Person liable to obtain GST registration
Section 22(1) of CGST act specifies that every person whose aggregate turnover in a financial year exceeds Rs. 20 lakhs is liable to get registered under the GST act. In special categories state turnover limit is Rs.10 lakhs. The limit of Rs.20 lakhs has been increased to Rs.40 lakhs where a person exclusively deals in goods. So, if you are dealing in service then limit of Rs.40 lakhs will not be available to you.
Person Not liable for GST Registration
A Person not liable to tax or is wholly exempt from the tax does not require to get GST registration.
Service recipient is liable to pay tax under reverse charge mechanism (RCM), then the service provider is not required to take GST registration.
Job worker with turnover up to 20 lakhs/10 lakhs is exempt even if supply to a registered person is inter-state.
Supply of services including inter-state supply up to Rs.20 lakhs/10 lakhs.
Documents Required for GST Registration
| Sole proprietor / Individual | PAN card of the owner Aadhar card of the owner Photograph of the owner (in JPEG format, maximum size – 100 KB) Bank account details* Address proof** |