What is GST?
GST is a multi-stage, systematic tax system that is charged on the supply of goods and services. This taxation system’s primary objective is to prevent the cascading effect of many other indirect taxes. GST Full Form is the Goods and Services Tax.
What Is GST? GST is an indirect tax that was implemented in India to replace various indirect taxes, including value-added tax (VAT), service tax, and excise duty.
GST Full-Form and Meaning:
Every country’s government requires funds to operate, and taxes are an essential source of revenue for governments. Thus, the government spends the taxes it collects for the benefit of the public.
These taxes are classified into two main categories: direct taxation and indirect taxation.
There are numerous types of indirect taxes. The indirect tax system is highly complicated because some of these are charged by the Central government while others are levied.
Goods and Services Tax (GST) is the Full Form of GST. It was introduced to replace the numerous indirect taxes levied by the Indian State and Central Governments. This has resulted in a simplification of the indirect taxation system.
Different Terms Used Under GST:
The following are the most significant ones:
GSTIN, or Goods and Services Tax Identification Number, is a legal and unique identifier assigned by the government of India to businesses operating under the GST regime. GSTIN is a 15-character alphanumeric, PAN-based unique number that is assigned state-by-state.
2. CGST, SGST, and IGST:-
The GST is separated into three different taxes: the Central GST, the State GST, and the Integrated GST.
Taxpayers would be able to take the credit under the various taxes, allowing the taxation process to be more accessible and more transparent.
- The Central GST [CGST] is the GST that the Centre will levy on intra-state businesses.
- State GST [SGST] is the state-imposed tax on inter-state businesses.
- The Integrated GST [IGST] is the GST that the Centre will levy on interstate commerce and imports.
3. Reverse Charge:-
Reverse charge under GST means that the recipient of goods or services carries the tax liability, not the supplier, but only on specific supply categories.
4. Mixed Supply:-
A mixed supply is when a GST payer makes a single price for a pairing of two or more distinct supplies of goods or services or any other adjustment of goods or services.
5. Composite Supply:-
Composite supplies are the organic combination of two or more independent supplies of goods and services or any natural arrangements of a GST payer’s goods or services at the same price.
Additionally, a composite supply is divided into two components: Primary Supply, Dependent Supply.
6. Continuous Supply:-
A continuous supply is one in which goods and services are supplied regularly [fortnightly/monthly], and payouts are also routinely made.
7. Input tax credit [ITC]:-
Input tax credit [ITC] is a credit given to manufacturers for paying input taxes on inputs used in manufacturing goods.
8. The GSTR:-
The GSTR, or Goods and Services Tax Return, is a document that contains information about a taxpayer’s income and is required to be filed with the authorities to calculate the taxpayer’s tax liability. A total of 11 types of GST returns are available to different taxpayers from GSTR-1 to GSTR-11.
9. GST Compliance Rating:-
GST Compliance Rating is mainly a value and a scoring system between [0 -10] that the government assigns to all taxpayers to indicate their level of GST compliance.
10. SAC & HSN Codes:
Since the inception of GST, SAC and HSN are used for denoting the services existing in the country. SAC refers to Service Accounting Code and is used to classify the services that fall under GST. HSN refers to Harmonized System of Nomenclature and is used to classify goods that fall under GST.
Issued by the Central Board of Indirect Taxes and Customs (CBIC), the SAC and HSN codes are mandatory to make GST bills, file returns, etc.
When GST Was Introduced In India:
GST full form is Goods and Services Tax, an indirect tax implemented in India on 1 July 2017 and is applicable throughout the country. It replaced several cascading taxes imposed by the state and central governments. Following the passage of the Constitution 122nd Amendment Act Bill, it was introduced as The Constitution Act 2017. The GST in India is controlled by a GST Council headed by the Indian Finance Minister. The GST has replaced a slew of indirect taxes with a unified tax, reshaping the country’s $2 trillion economies dramatically.
GST has emerged as the most significant tax reform in the economy since independence, merging many State and central taxes into a single tax.
GST means Goods and Services Tax, a comprehensive tax structure that applies to both goods and services.
Advantages of GST:
- GST has multiple centralized taxes such as Service Tax, Central Excise, Luxury Tax, and Sales Tax under one roof.
- The introduction of the GST increased the transparency of the taxation process.
- GST does not apply to service providers with a turnover of less than Rs.20 lakh. This is a substantial benefit for small businesses.
- GST will also provide unorganized sectors like the textile industry with much-needed accountability and regulatory oversight.
- It is a fully integrated platform that will streamline and ensure the proper operation of GST-related activities.
- GST will be charged only at consumption, avoiding double taxation at various points along the supply chain from manufacturer to retailer branches.
Disadvantages of GST:
- GST is a law that is entirely based on technology. All states in India lack the infrastructure necessary to implement this system entirely.
- Businesses that operate in multiple states must register in each of those states. This introduces a new level of complexity that didn’t even exist initially.
- Following the GST implementation, it is feasible that certain items that millions of us use daily will cost more.
- GST full form got the nickname “Disability Tax,” due to its inclusion of wheelchairs, hearing aids, and Braille papers in the tax net.
- The GST net has so far excluded petroleum products. These industries, and those associated with them, would be ineligible to claim the Input Tax Credit.
How to Generate GST Number
Each business that supplies goods and services with a turnover of more than Rs 20 lakh must be registered as an average taxpayer under the GST regime.
1. Visit the GST’s online portal at www.gst.gov.in.
2. Click ‘Register Now’ and enter your name, e-mail address, and mobile number in Part A of the GST Application.
3. The portal will confirm your information by sending you an OTP via SMS and email.
4. Upon completing the verification process, you will receive an Application Reference Number (ARN) via text message in mobile or email.
5. At this point, you can complete Part B of the GST Application by entering the ARN. The following documents are required for this step:
- The taxpayer’s constitution
- Proof of business location(s).
- Details of the bank account
- Authorization form
6. Complete all required fields and upload all required documents before submitting the GST Application via DSC or Aadhaar OTP.
Within three business days, the GST officer would then verify your application. You are either authorized by your officer to receive your registration certificate (form GST REG06), or the officer asks for additional information using Form GST-REG-03.
Additional information must be provided within seven business days. Once the officer receives the details, he or she may reject the application and offer justifications in Form GST-REG-05. The process will be completed, and then you will obtain a Certificate of Registration when the GST officer is satisfied with the information provided.
myBillBook GST billing software features
- It is now easy to use myBillBook and access GST portal login to enable searching files
- Also, you can update GST portal from mobile using myBillBook app
- Calculate GST using the app inbuilt calculator
- Generate all GST reports including GSTR1, GSTR 2, GSTR 3B etc
FAQs about GST:
Q: Is GST applicable to all businesses?
Ans: Businesses operating within a state with a turnover of more than INR 20 lakhs must pay GST. Businesses that conduct business across multiple states must pay the Goods and Services Tax regardless of their annual revenue. Irrespective of their income, service providers must pay tax.
Q: Who will be in charge of collecting the GST?
Ans: CGST and IGST will be levied and collected by the central government. The SGST will be imposed and managed by the states and union territories.
Q: Is GST software commercially available?
Ans: Numerous GST software packages are available that assist in calculating purchases and sales and the easy filing of GST forms.
Q: What are some of the drawbacks of the composition scheme?
Ans: Those who choose it must pay a flat tax of between 0.5 and 2.5 percent on their gross turnover. An Input Tax Credit is not available. Additionally, they are prohibited from selling goods outside of their state.