5 Basic Things about GST Everyone Should Know

GST Reform in India

If you are a registered business entity in India; It is necessary for you to comply with the norms of income tax department in order to sustain legal status of your business. Businesses in India are required to pay various taxes as per the Indian Company law. GST (Goods and Services tax) is also one of the latest tax reforms by Indian Government with purpose of improving the tax collection and economic growth of India. GST is a transaction based tax levied by the suppliers on goods and services.

Due to GST reform, indirect tax collection has changed completely. It is one tax which as replaced a number of indirect taxes such as excise duty, VAT, service tax.

Type of GST in India

Goods and services tax has been classified into three categories:

Central GST

It is the GST collected by central government on the goods and services transaction.

State GST

SGST is the type of GST collected by the state authority where the goods or service has been supplied.

Interstate GST

If your business delivers goods and services between the states; then the IGST will also be imposed on the transaction of goods and services in India.

Who should register of GST?

If you are a business in India, you must register for GST to get tax benefits as per the government rules.

If your business turnover doesn’t exceeds 20 Lakh turnover, it is not mandatory for the business to go for online GST registration.

Note: This limit is 10 Lakh for North Eastern states

If your business turnover crosses the above prescribed limit then you must register for GST. Although this condition doesn’t applies if you are a business which is involved in frequent inter state transactions but your turnover has not exceeded the limit.

Here are some questions to ask yourself in order to judge if you require GST.

  1. Does your business annual turnover crosses 20 lakh?
  2. Do you make interstate sales frequently?
  3. Are you an online seller or vendor?
  4. Do you sell products of a taxable entity?

If answer is “yes” to one or all questions; then you definitely require GST registration online.

What is reverse charge in GST tax structure?

Reverse Tax is an important term coined at time of GST reform. It is defined as the liability of the recipient of goods and services to pay tax instead of supplier of goods and services.

 

 

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