Important FAQs About GST That Will Make Your Billing Simpler

Important FAQs About GST That Will Make Your Billing Simpler

As a business, you need to register for GST and understand all about it. This will help in making smooth taxations that are levied on the business. You must know essential things like what is GST, how to register for gst, and what are the different types of GST.

This article answers some important FAQs about GST. These questions will help you manage your business and do better billing.

What is GST?

Goods and Service Tax, abbreviated as GST, is a destination-based tax on the consumption of goods and services. This tax is levied right from the manufacturing stage right up to the final use.

The credit of taxes paid previously is available as setoff. In GST, the value addition will be taxed, and the consumer bears the burden of the tax.

What are the GST Slab rates?

It is levied at multiple rates. There is a four-tier GST structure of 5%, 12%, 18%, and 28%. The lower rates are for essential items, and the highest rates are for luxury and de-merits goods which would attract an additional cess.

The lowest rate of 5% is mostly for everyday use items. 12% and 18% fall on the bulk of goods and services, which also includes fast-moving consumer goods. The highest tax slab is for items that are currently taxed at 30% – 31%.

What types of existing taxes are subsumed under GST?

The GST has replaced the following taxes:

  • Taxes that are currently levied and collected by the Centre, which include:
  1. Central Excise Duty
  2. Duties of Excise
  3. Additional Duties of Excise
  4. Additional Duties of Excise
  5. Additional Duties of Customs
  6. Special Additional Duty of Customs (SAD)
  7. Service Tax
  8. Central Surcharges so far as they relate to supply of goods and services
  • State taxes that are under the GST include:
  1. State VAT
  2. Central Sales Tax
  3. Taxes on advertisements
  4. Entertainment and Amusement Tax
  5. Entry Tax (all forms)
  6. Luxury Tax
  7. Purchase Tax
  8. Taxes on lotteries, betting, and gambling

What types of GST has been implemented?

Dual GST has been implemented with the Centre and States simultaneously levying GST on a common tax base. The GST that the Centre will levy on the intra-state supply of goods is called Central GST or CGST.

SGST or State GST is the tax levied by the States on the goods. Finally, Integrated GST (IGST) will be levied and administered by the Centre on the inter-state supply of goods and services.

Is Dual GST required?

Yes, dual GST is required to keep with the constitutional fiscal federalism. Both the Centre and the States have the power to levy and collect taxes through appropriate legislation. Both the Centre and State have distinct responsibilities to perform according to the division of the powers mentioned in the Constitution.

Who needs to pay GST under the proposed GST regime?

Under the GST regime, GST is payable by the taxable businesses on the supply of goods and services. The liability to pay taxes arises when the taxable business crosses the threshold exemption.

The CGST or SGST is payable on all intra-state supply of goods and services, while IGST is payable on all inter-state supply of goods and services.

How can you file GST returns?

All businesses must file for returns with the Government of India. All these returns must be filed mandatorily as non-compliance may lead to disallowance of the input tax credit. It may also attract penalties and interests. You need to file the information and pass the same in return properly.

GST returns have been designed in a way that all the transactions are in sync with each other. No transaction is left unattended by the buyer and the seller.

This data is stored in the gstn portal, and it can be accessed by the taxpayers at any time. You can file GST returns using the GST Return Filing Software or the GSTN portal.

What is GSTN, and what is its role in the GST regime?

Goods and Service Tax Network (GSTN) has been set up to cater to the needs of GST. The idea of setting up GSTN is to provide a shared IT infrastructure and services to both the Central and State Governments, taxpayers, and all the stakeholders.

GSTN has the following functions:

  • Facilitate registration
  • Provide analysis of taxpayers’ profile
  • Compute and settle IGST
  • Forward the returns to Central and State authorities
  • Match the tax payment details with the banking network
  • Run the matching engine for matching, reclaim, and reversal of input tax credit

How will imports and exports be taxed under GST?

Imports of goods and services will be treated as inter-state supplies. On the other hand, IGST will be levied on the import of goods and services into the country.

The incidence of tax will follow the destination principle. The tax revenue will accrue to the State in case of SGST, where the imported goods and services are consumed.

On the other hand, all the exports will be treated as zero-rated supplies. You don’t have to pay any tax on exports of goods and services. But, the credit of input tax credit will be available as refund to all the exporters.

What are some of the do’s and don’ts of GST invoicing?

Here are some of the do’s for invoicing:

  • Maintain records of all the documents that you create and receive and make sure you have correct information on them.
  • Issue tax invoices on the sale of taxable services and goods.
  • Charge the GST correctly like CGST and SGST for the same state while IGST for different state sales.
  • Submit GST reports on time.
  • All the documents must have your and your client’s GSTIN.

Don’ts of GST invoicing include:

  • Never buy from an unregistered dealer if you want to get an input tax credit on GST.
  • Don’t forget to add a different serial number for every invoice.
  • Don’t charge tax as GST. Instead, split it correctly between CGST, SGST or IGST
  • Never ship products without the original invoice

Conclusion

Keeping these FAQs in mind will help you navigate your business and billing well. Your billing and invoicing sections are critical and should b taken care of accordingly. Moreover, if you run a business, you should take all the possible steps to keep your finances up to date.

Category Finance

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