This guide is for businessmen and students who wants to have a basic working knowledge of GST. The guide is arranged in a logical manner and written in easy to understand language. We recommend to read chapters one by one but feel free to jump the part which is not applicable to you. Leave a comment in case you have any query, we will try our best to reply. So just bookmark this page and start reading.
Goods and Service Tax (GST) is applicable in India from 1st July 2017. GST system in India contains three types of GST – Central GST (CGST), State GST (SGST), Integrated GST (IGST). CGST & SGST is applicable on intra-state sales (i.e sales within same state) and IGST is applicable on inter-state sales (i.e sales outside state). Total rate of GST will be same in both the cases.
Persons whose turnover exceeds the specified limit are compulsory required to get registered. Persons who are selling goods/services through E-commerce operators like Amazon, Flipkart are also required to get registered even if turnover is less. A person may also register voluntarily and all provisions also applicable on him. No fees is charged by government for registering under GST. The registration can be done at www.gst.gov.in
A person engaged in trading of goods, manufacturing, restaurant and whose turnover is less than Rs. 1 crore can register under Composition Scheme. The person registered in composition scheme needs to pay tax at concessional rate of 1% (for trading and manufacturing) or 5% (for restaurant) rather than paying GST at normal rates. Such person can not take input tax credit on purchase of goods and services. There are also certain other restrictions on such person.
There is no specific format of invoices to be issued under GST. There are certain details to be compulsorily included in a invoice such as Name, Address, GSTIN, date, invoice number in a serial, rate of GST, place of supply, taxable value, HSN/SAC etc. There is also time limit for issue of invoices in case of sale of goods and sale of services. Person registered in Composition Scheme is required to issue Bill of Supply in place of invoice.
Input Tax Credit (ITC) refers to the tax already paid by a person at time of purhase of goods or services or capital goods and which is available as deduction from tax payable. Person registered under Composition Scheme is not allowed to take any ITC. There are certain goods and services for which taking ITC is not allowed or allowed only in certain cases. ITC is allowed only when you claim it before the specified time limit.
Normally, GST is to be collected by the person who is selling good and services. But in some cases GST is to be collected by the purchaser of goods/service and not by seller. This is called Reverse Charge Mechanism, RCM in short. Reverse charge is applicable in case of Supply of specific goods or services notified by government. GST under RCM has to be paid through cash only. The rate of tax to be used is the rate which is applicable on such goods/service.
GST is to be paid before filing of 20th of the next month. GSTR-3B cannot be filed before making payment. Interest @ 18% is to be paid if the payment is not made before due date. You can pay amount of only up to Rs. 10,000 per challan per month in a bank branch. Payment above this amount should be done through net banking only. You can not make payment through Debit Card/Credit Card.
An e-way bill is required to be generated if goods are required to be moved from one place to another and value of goods is more than Rs. 50,000. E-way bill is not required if goods are moving through non motorized vehicle. If e-way bill number is mentioned in invoice then it is sufficient. Printout of e-way bill is not mandatory. You can generate e-way bill from https://ewaybill.nic.in/. You need to do a separate registration on this portal.
IGST is payable on inter-state sales and CGST + SGST is payable on intra-state sales. Separate ledger should be maintain for each type of GST. The person who is registered in Union Territory has to pay UTGST and thus maintain UTGST account in lieu of SGST account. GST is not an expense nor income for the business so its entries should not be passed through profit and loss account.