GST, or Goods and Services Tax, is the new levy set to replace existing indirect taxes like excise duty on manufacturing, service tax on services, and customs duty. The GST will be levied at different rates on different products. It's not as complicated as it sounds! We've made this ultimate guide to help you understand how the GST works. Read on to find out more about what GSTR means for your business, how it will affect your taxes, and what needs to be done by the time the GST rollout date arrives.
What is GST?
A lot of people are not familiar with GST, but it is essentially a new tax structure for the country. A large number of countries around the world have implemented GST to streamline taxation and make it simple and more efficient. In this article, we explain what GST is, how it will work, and what will happen when it is implemented. GST was first introduced in India on 1st July 2017, and subsequently, it was implemented in all states on 1st October 2017. Here's a detailed timeline of the GST rollout. The GST is administered by the Goods and Services Tax Council, which is a body of both Union and State government officials. How will it affect my business?
How does GST work?
The GST, or Goods and Services Tax, is a value-added tax that was introduced in India in July 2017, How do you explain GST to your friends so, where it is set to replace the existing indirect taxes like the Central Excise Duty on manufacturing, Service Tax on Services and Custom Duty. The GST is essentially a single tax on the supply of goods or services by a supplier to a customer and is levied at every stage of the supply chain. The GST is set to be rolled out on 1 July 2017 and will replace the existing indirect taxes which include excise duty on manufacturing, service tax on services, and Customs Duty on the import of goods. If the goods and services you're selling have a GST rate of zero, your goods or services will be exempt.
What will happen on the date of the rollout?
The implementation of the GST will begin in a phased manner from 1st July. For instance, if you are a manufacturer and want to sell your goods, you will have to register for GST, and only after that, you will be allowed to do business. The registration procedure will take place for six months (till 31st March 2018). Each manufacturer will be allotted a unique code, which he or she will have to pay the GST levy for every product and the total amount can be billed to the client. What will happen to the existing tax collection procedure? GST Council has done away with the present-day system of tax assessment and collection. The current system is known as Integrated GST (IGST) and has been subsumed in the GST. The IGST was an important part of the overall tax liability of the manufacturer.
What does GSTR mean for your business?
Businesses will need to collect GST on the supply of goods or services to their customers. Once you declare the GST you are liable to pay, you will also be able to recover the tax amount from your customers on the basis of the invoices generated for the sale. However, GSTR stands for 'Gross Receipts Compliance'. The revenue department will use the GSTR-1 as a means of tax filing, while the GSTR-2 and GSTR-3 will be used for the filing of claims and refunds with the government. How to use GSTR? To start using GSTR, a supplier of goods and services needs to register with the GSTN (the network that records all tax payments under GST).
How does GST affect your taxes?
A common misconception is that GST is a consumption tax, but it's not. The Goods and Services Tax Council has set up a four-tier tax structure. The rates are 5%, 12%, 18%, and 28% (or items), which means that the total tax burden on the product is likely to be around 18%. The rate depends on the item and the state where the product is purchased. What is GST? GST is a standard tax that will be levied in all states across India. GSTR, or Goods and Services Tax Return, is the basic tax return form that businesses need to file every month. You'll be able to see your GST return online once you're registered under GST. You can submit your GST return every month until the end of the financial year. You can use any of the different categories of GSTR forms to provide details of your business.
What needs to be done before the date of the rollout?
First things first! If you are a GST resident, you need to check your GSTIN. You can use this online or offline form, which was launched on April 1, 2017, to calculate your GSTIN. If you are a GST non-resident, you will need to register your business in the GSTN so that you can file your tax returns and be eligible for a credit of GST paid. You need to buy the Goods and Services Tax Return and the GST Forms from GST Network (GSTN) before the GST rollout date. The date of the rollout is June 30, 2017. You can choose your GST return on your Paytm store. Steps to Register for GST: Visit the GST website Once you've logged in, click on 'Login' and start uploading the necessary documents. Get GST Form The GST form is one of the crucial documents you need to upload and fill.
Conclusion
The GST is set to bring a lot of changes to the taxation system in India. With the new system in place, the annual tax outgo of a medium and small business could reduce to around 12%, compared to the previous tax incidence. Of course, as an entrepreneur, there's more you can do to reduce your taxes! In this post, we've covered all the basics of the GST.
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