10 Frequently Asked Questions About GST

Goods and Services Tax (GST) is a comprehensive tax levied on the supply of goods and services across India. Implemented in 2017, it has simplified the indirect tax structure by replacing multiple taxes with a single system. In this article, we’ll address the Top 10 Facts about GST and clarify the most common questions regarding it.

What is GST?

GST is an indirect tax applied to the supply of goods and services. It is a destination-based tax, meaning it is collected from the point of consumption rather than the point of origin. GST was introduced to simplify India’s taxation system by consolidating several indirect taxes like VAT, service tax, and excise duty into one.

What are the different types of GST?

GST in India is divided into four main types:

• CGST (Central Goods and Services Tax): Collected by the Central Government for intra-state sales.

• SGST (State Goods and Services Tax): Collected by the State Government for intra-state sales.

• IGST (Integrated Goods and Services Tax): Collected by the Central Government for inter-state sales.

• UTGST (Union Territory Goods and Services Tax): Collected for transactions in Union Territories.

Who is liable to pay GST?

Any business that has an annual turnover exceeding the threshold limit is required to register and pay GST. The current threshold is Rs. 40 lakh for goods and Rs. 20 lakh for services. However, this varies for special category states.

What is the composition scheme under GST?

The composition scheme is designed for small businesses with a turnover of up to Rs. 1.5 crore. This scheme allows them to pay tax at a fixed rate on their turnover and file quarterly returns instead of monthly. Businesses under the composition scheme cannot claim input tax credit.

What are the GST tax slabs?

GST has four tax slabs: 5%, 12%, 18%, and 28%. Different goods and services fall under these slabs depending on their nature and consumption category. For example, essential items like food grains are taxed at 0%, while luxury items like cars fall under the highest slab of 28%.

Can I claim an input tax credit under GST?

Yes, businesses registered under GST can claim an Input Tax Credit (ITC). ITC allows businesses to reduce the tax they have already paid on purchases from the tax payable on sales. However, the ITC can only be claimed if the goods or services purchased are used for business purposes.

How is GST filed?

GST returns are filed monthly or quarterly, depending on the business size and the type of scheme they have opted for. The most common forms include:

• GSTR-1: Details of outward supplies.

• GSTR-3B: Summary of inward and outward supplies.

• GSTR-9: Annual return.

What is the penalty for not paying GST?

If a business fails to pay GST on time, they will be subject to a penalty. The interest on late payments is calculated at 18% per annum. Additionally, a general penalty of 10% of the tax due (minimum Rs. 10,000) may be imposed for non-compliance.

How are exports treated under GST?

Exports are treated as zero-rated supplies under GST, which means that the export of goods or services is not taxed. Exporters can either claim a refund of the input tax credit or export goods under a bond without payment of IGST.

How has GST impacted small businesses?

GST has simplified tax filing for small businesses by consolidating multiple taxes into one. The composition scheme offers an easy way for small businesses to comply with GST with reduced paperwork and lower tax rates. However, businesses not opting for the scheme may face challenges with compliance and the initial cost of GST implementation.

What is e-invoicing under GST?

E-invoicing is a system where B2B invoices are authenticated electronically by the GST Network (GSTN) for further use on the common GST portal. This system ensures that every invoice raised is reported to the government and helps in reducing tax evasion.

In conclusion, understanding GST is essential for every business owner and taxpayer in India. These Top 10 Facts about GST address the most common questions, helping you navigate the tax system more effectively.