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How GST will affect Indian tax system?

CA Vipin Garg 
on 24 June 2017

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Introduction of GST to the Indian Tax System

GST is considered to be the biggest change in Indian economy ever since the 1991 economic reforms which ushered in the globalization, bringing in a whole lot of changes in all the business sectors of India. Although the GST is concerned with indirect taxation only, its impact on the economy is considered to be very important considering the volume of monetary transaction carried out in a country like India.  As it has been mentioned before, that the GST will be rolled out from July 1, all the existing companies in India are presently engaged in transforming their whole structure to the GST regime. Truly, the rules and regulations of the GST are certainly very different from the existing VAT regime.  We shall now discuss various aspects which will be crucial for this major transformation in the indirect tax arena.

Eligibility for GST

No doubt, this has been the topic of discussion all over. First and foremost one must remember that any person who has taxable supply turnover of over Rs 25 lakhs is eligible to register for GST in India. The term 'person' includes proprietorship, partnership firms, Hindu Undivided Family, Company, LLP, Society and any other legal entity. Individuals or entities with existing service tax or VAT registration will also need to migrate in the GST procedure.

Taxpayers under GST - By existing taxpayer GST underlines all entities which are registered under state of central laws 

  1. Central Excise
  2. Service Tax
  3. State Sales Tax or VAT (except exclusive liquor dealers if registered under VAT)
  4. Entry Tax
  5. Luxury Tax
  6. Entertainment Tax (except levied by the local bodies)

What is the fee enrolling under GST ?
There is zero expense for enrolling of a taxpayer under GST.

Understanding GST registration number

GST registration number is a 15 digit unique identification which is allotted to each taxpayer.  No doubt, this is based on PAN number of the individual and state where the individual resides in.  GST number is applicable in all the states in India.  Every VAT dealer has to obtain VAT registration number in each of the states in India, which will require additional cost and formalities to complete the process.

Applying  GST online

To enroll for GST, one has to visit the site (https://www.gst.gov.in/).  Online application has to be submitted using the form GST-1 with all necessary details.  An applicant will need to keep a copy of the GST application and courier all the details to the GST department. While applying in the GST portal, mobile number, PAN card details and email address will be verified with a onetime password (OTP).  Once the verification process is over, the applicant will receive an application reference number on the mobile as well as by email. Subsequently, the user will be directed to fill up GST REG 2 form electronically. For additional information or necessary details, an applicant can fill in Part B of GST REG 1.

Do's & Don’ts after applying for GST online

Once enrolled, there will be a provisional ID given. Individuals or Organizations need to update profile information and documents. Further Instructions will be notified from time to time and this will evidently differ from state to state. Once the application is verified, GST certificate will be issued to the individual or organization.

Documents needed for GST?

Individuals or organizations need to submit PAN card, proof of Constitutions like partnership deed along with Memorandum of Association (MOA), Articles of Association (AOA) and a certificate of incorporation. Apart from that rent agreement and electricity bill are also to be provide Subsequently, cancelled cheque of bank account is required reflecting the account holder's name, IFSC Code, MICR code and other relevant bank details. If there is a partnership business, the list of partners along with the identity and address proof of the partners are to be provided.

Converting from VAT to GST

Migrating from the VAT era to GST era is the primary task for most organizations.  At present, states which have passed GST bill in the legislative assembly, will communicate provisional ID to all registered taxpayers. Those who are yet to receive provisional ID should definitely contact the local VAT department.  Using that provisional username and password, taxpayers need to create new username and password in GST portal, authorized by Government of India. After that, registration has to be done with Digital Signature certificate along with filling up Enrolment Application.  Users are required to attach essential documents along with submission of the enrolment application. Subsequently, ARN will be given along with the migration status and after that, provisional ID will be Active on a specific date.

Understanding  state and central GST

There is no demarcation as such between state and central GST as far as enrolling of the taxpayers is concerned. All taxpayers need to enrol through the GST portal. Common registration, common return, common challan will be generated for each taxpayer for all states.

FAQs  GST

Taxpayers can definitely contact us @vgnc.in, shooting mail at vgnc@vgnc.in. One can also refer to the FAQ section on the GST common portal.

No doubt, the whole process of transformation from the VAT regime to the GST era will take time.  Anyhow, the whole process being digital, it won't be difficult for taxpayers as such. Side by side, as more announcements are coming up with more clarity and understanding, the GST transaction will indeed be more transparent than the existing VAT regime.


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