GST

Introduction

The Goods and Services Tax (GST) is an indirect tax in India applied to the supply of goods and services. It
is a comprehensive, multi-stage, destination-based tax imposed at each stage of value addition. It was
implemented on July 1, 2017, and replaced the majority of indirect taxes previously in place in the country.

How to Calculate GST?

Under GST, there are four different tax slabs (5%, 12%, 18%, 28%) applicable depending on the type of
goods and services in which the company is dealing. For eg., processed food items come under the 5% slab while electronics items come under the 18% slab. The rationale for this multi-tier system is that basic goods and services should not be taxed at the same rate as luxury items and services.

The GST Bill consists of two parts: the Central GST (CGST), imposed by the central government, and the
State GST (SGST), imposed by the individual states. To calculate GST, the company needs to follow these four steps:

Step I: Check the GST rate applicable for the goods or services you are selling or purchasing.

Step II: Determine the transaction value of the goods or services on which GST is to be calculated.

Step III: Calculate the GST amount by multiplying the transaction value with the applicable GST rate.

Step IV: Determine the gross amount payable by adding the GST amount to the transaction value.

How to check the GST number?

A Goods and Services Tax Identification Number (GSTIN) is a distinct 15-character alphanumeric code
given to each taxpayer registered under India’s GST system. This GSTIN enables the government to
monitor tax transactions and ensure taxpayer compliance.
To check and verify GSTIN, following are the steps:

• Visit the official GST portal at [www.gst.gov.in]
• On the homepage, click on the search taxpayer tab and select search by GSTIN/UIN from the drop-down menu.
• Enter your GSTIN number in the search box and click on search.
• If your GSTIN number is valid, you will see the details of the taxpayer, such as legal name, trade
• name, address, date of registration, status, and tax type.

How to apply for a GST number?

The registration process for a GST number is divided into two parts:
Part A

• Step 1 – Go to the GST portal. Click on Services. Then, click on the ‘Registration’ tab and select
• ‘New Registration’.
• Step 2 – Enter the following details in Part A –
  • ➔ Select New Registration radio button
  • ➔ In the drop-down under ‘I am a’ – select Taxpayer
  • ➔ Select State and District from the drop down
  • ➔ Enter the Name of Business and PAN of the business
  • ➔ Key in the Email Address and Mobile Number. Please note that you don’t have to enter your email id and mobile number if your contact details are linked with PAN.
  • ➔ You will receive OTPs on the registered email id and mobile number or PAN-linked contact details.
  • ➔ Click on Proceed.
• Step 3 – Enter the two OTPs received on the email and mobile or the PAN-linked contact details. Click on Continue.
• Step 4 – You will receive the 15-digit Temporary Reference Number (TRN).
• Step 5 – Once again go to the GST portal. Select the ‘New Registration’ tab.
• Step 6 – Select Temporary Reference Number (TRN). Enter the TRN and the captcha code and click on Proceed.
• Step 7 – You will receive an OTP on the registered mobile and email or PAN-linked contact details. Enter the OTP and click on Proceed
• Step 8 –You will see that the status of the application is shown as drafts. Click on Edit Icon.

Part B:

• Step 9 – Here is the list of documents you need while applying for GST registration-
  • ➔ Photographs
  • ➔ Constitution of the taxpayer
  • ➔ Proof of the place of business
  • ➔ Bank account details
  • ➔ Verification and aadhaar authentication, if chosen
• Step 10 – Under the Business Details section, enter the trade name, business constitution and district.
• Step 11 – Under the Promoters/Partners tab, you may enter the details of up to 10 Promoters or Partners
• Step 12 – Enter details of the Authorised signatory similar to the details entered for promoters/partners, in step 11.
• Step 13 – Enter Principal Place of Business details.
  • The taxpayer’s principal place of business is the primary location within the state where he or she conducts business. The principal place of business is usually the address where the company’s books of accounts and documents are stored, as well as where the company’s president or top management is based.
• Step 14 – Submit details of goods and services in the next tab along with the HSN codes or SAC for up to a maximum of 5 goods and 5 services on the top of your list.
• Step 15 – Next, enter the Bank details of the taxpayer for up to 10 bank accounts. Submission of bank account details has been made optional from 27th December 2018.
• Step 16 – Under the State Specific Information tab, enter the professional tax employee code number, PT registration certificate number, and State Excise License number with the name holding the license.
• Step 17 – Next, choose whether or not you are willing to do Aadhaar authentication.
• Step 18 – Once all the details are filled in go to the Verification page. Tick on the declaration and submit the application.
• Step 19 – A message will be displayed on the successful application and the Application Reference Number(ARN) will be sent to the registered email and mobile.

Written By – Adv. Pradhuymn Singh Shekhawat

FAQs

What is the GST meaning?

GST stands for Goods and Services Tax. It’s a comprehensive, multi-stage, destination-based tax levied on every value addition in the supply chain of goods and services. Many countries have implemented GST to simplify their tax systems and promote economic growth. GST typically replaces multiple indirect taxes, creating a unified tax structure. It aims to eliminate cascading effects of taxes, reduce compliance burdens, and increase tax transparency. GST rates vary by country and product category. While implementation can be complex, proponents argue that GST ultimately benefits businesses and consumers by streamlining taxation and potentially lowering prices.

What is the GST rate in India?

In India, GST has multiple rates:

• 0% for essential goods
• 5% for basic necessities
• 12% and 18% for most goods and services
• 28% for luxury items

Some products have special rates. For example, gold is taxed at 3%. Certain goods like petroleum and alcohol are currently outside the GST system.

What is India as per GST?

Under GST, India is considered a single unified market. The country is treated as one tax jurisdiction, eliminating state borders for taxation purposes. This concept is known as “One Nation, One Tax, One Market.”

GST has integrated various states and union territories into a cohesive economic unit. It has replaced the complex system of multiple taxes imposed by central and state governments. This unified approach aims to streamline inter-state commerce, reduce cascading taxes, and promote ease of doing business across India.

Who pays GST?

GST is ultimately paid by the end consumer of goods or services. However, it’s collected at multiple stages of the supply chain:

1. Some essential items are exempt to benefit lower-income consumers.
2. Manufacturers, service providers, and sellers with an annual turnover above a specified threshold must register for GST.
3. These registered entities collect GST from their customers and pay it to the government, after deducting input tax credits.
4. Businesses pass the tax burden down the supply chain until it reaches the final consumer.
5. Unregistered small businesses and individuals don’t collect GST, but still pay it when purchasing goods or services.

What are the types of GST?

There are four main types of GST in India:

1. Central GST (CGST): Collected by the central government on intra-state supplies.
2. State GST (SGST): Collected by state governments on intra-state supplies.
3. Integrated GST (IGST): Levied on inter-state supplies and imports, collected by the central government.
4. Union Territory GST (UTGST): Collected by union territory governments on intra-UT supplies.

Additionally, there’s a Compensation Cess on certain luxury and sin goods to compensate states for revenue losses during the initial GST implementation years.