Since the Goods and Services Tax (GST) was introduced on 1st July 2017, the Indian indirect tax ecosystem has undergone a paradigm change.
Consider this article your all-you-need-to-know guide to understanding the GST meaning, its types, features, benefits, and many more.
Goods and Services Tax – An Introduction
GST refers to a value-added tax charged on the manufacture, supply, and consumption of all goods and services throughout India. GST is also referred to as a destination-based levy or tax since it is usually collected at the ultimate consumption place of the respective goods and services.
There are four types of GST – CGST (Central GST), SGST (State GST), IGST (Integrated GST), and UTGST (Union Territory GST). The Centre charges CGST, while states charge SGST on the manufacture, sale, and consumption of goods and services. IGST is levied when goods and services are transferred between states.
The Central Board of Indirect Tax & Customs (CBIC) monitors the operations of GST in India. The GST Council, consisting of 33 members, prescribes differential GST rates in India, besides determining the exemption thresholds and undertaking administrative procedures. According to the GST, Constitutional (122nd Amendment) Act’s Article 279A, the GST Council is a joint forum of the Union Government and State Governments. The Council consists of the following members:
- Chairperson – The Union Finance Minister
- Member – The Union Minister of State, in-charge of Revenue of Finance
- Members – State Government nominated Minister in charge of Finance or Taxation
Read More: Know What Are The GST’s Main Advantages or Benefits?
What Changes Did GST Bring to India’s Taxation System?
The introduction of GST was a milestone in the Indian indirect tax system. By introducing GST, the government abolished multiple taxes, such as the Central Excise, Sales Tax, State Value-Added Tax, etc. The following are some of the changes brought by GST:
- Eliminating the cascading effect of taxes on taxes
- Introducing the uniform concept of ‘Supply’ by eliminating the differentiation between services and goods
- Streamlining the overall economy through systems like E-waybill
- Introducing TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) in indirect taxes
- Setting up a single window clearance system
- Increasing the transparency
GST Meaning – Goods
As per Section 2(52) of CGST Act 2017, the term ‘Goods’ in GST refers to all movable properties, such as cars, food, pens, etc. It may also include growing grass or crops and actionable claims. Although grass or crops are not movable, they are still considered ‘Goods’ because the owner can sell these things separately or with land. It is good to note that GST doesn’t include money and securities.
GST Meaning – Services
As per Section 2(102) of CGST Act 2017, the term ‘Services’ refers to anything that is not goods, securities, and money. However, money exchanges are classified as services and come under the ambit of GST.
What is a GST Certificate?
When an individual or business entity registers on the GST portal, they receive a GST certificate. It is a legal document that proves the validity of the registration under the GST law. All businesses with annual revenue of Rs. 20 lakh or more must register for GST. The certificate can be easily downloaded from GST’s official portal.
Besides the GSTIN (GST Information Number), a GST Certificate contains the business’s legal name and trade name, business constitution, date of liability, address, registration type, validity period, approving authority’s particulars, signature, date, etc.
GST Returns: What Is It?
All GST-registered entities must file their returns periodically. The returns contain information about the business’ income, expenses, sales, and purchases. Tax authorities analyse this information to determine a business’ net tax liabilities.
There are thirteen (13) returns under Goods and Services Tax – GSTR-1, GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-7, GSTR-8, GSTR-9, GSTR-10, GSTR-11, CMP-08, and ITC-04. However, not all returns are required for taxpayers.
Who Should Register For GST?
GST registration is of two types – registration on a turnover basis and mandatory registration (with no turnover limit).
So, all businesses with an annual turnover of Rs. 20 lakh or more need to register for GST. Also, the following types of individuals or entities must register for GST irrespective of their turnover:
- Any person paying taxes under the Reverse Charge Mechanism (RCM)
- Any Casual Taxable Person (CRM)
- Any Non-Resident Taxable Person (NRTP)
- Any notified e-commerce operator
- Any Input Service Distributor (ISD)
- Any TDS Deductor
- Anyone already registered under any old indirect tax law
Read More: You need to know What Is the GST Registration Process in India?
Conclusion
GST has brought about a paradigm shift in the way the government and businesses operating in India considered indirect taxes. Ensure you stay informed about GST’s meaning, types, and features, as it is crucial for businesses and individuals alike.
