WHAT IS GST?
Goods and service tax is an indirect tax that has replaced many taxes in India such as service tax, VAT, excise duty, etc. This act was passed in Parliament on 29th March 2017 and came into effect on 1st July 2017. GST is a single domestic indirect tax law for the entire country which is levied on the supply of goods and services. The GST is added to the invoice generated by the company on the price of the product, and a customer who buys the product pays the sales price plus the GST. The tax that is collected in the form of GST is collected by the business or seller and forwarded to the government.
Under Goods & Service tax, there are three taxes applicable under this system: CGST, SGST, and IGST
CGST: Central Goods & Service Tax or CGST is the tax collected by the central government on an intra-state sale.
SGST: State Goods & Service Tax or SGST is the tax collected by the state government on an intra-state sale.
IGST: Integrated Goods & Service Tax or IGST is the tax collected by the central government for an inter-state sale happening between two states.
HOW GST REGISTRATION MADE TAX PAYMENT EASY
Before the implementation of GST registration, sales that happened within the state included taxes such as VAT, central excise, or service tax but GST reduced it to CGST+SGST where the revenue will be equally shared between the center and the state government.
Sales that happen to another state had to pay taxes like central sales tax+ service or excise tax but after GST paying IGST covers up everything, where the revenue will be shared by the central government based on the destination of the goods.
Let’s look at the various Tax Slab rates under Goods & Service Tax or GST.
GST TAX SLAB RATES APPLICABLE ON GOODS AND SERVICES
– 0% TAX ON
There will be no tax imposed on items such as jute, fresh fruits, and vegetables, meat, chicken, fish, milk, buttermilk, curd natural honey, flour, bread, stamps, judicial papers, printed books, newspapers, bangles, handlooms, hoof meal, horn meal, cereal grains, and their powders, jaggery, all types of salt, kajal, children’s picture book, drawing and coloring book, khadi purchased from village industries stores, clay idols, broom, cotton seeds, oil cakes, etc. No GST tax will be imposed on hotels and lodges with a tariff of fewer than 1000 rupees. Only 0.25% of the tax will be imposed on semi-precious stones.
– 5% TAX ON
Apparel below 1000 rupees and footwear below 500 rupees, packed food items, fish fillet, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, kerosene, coal, medicine, lifeboats, cashew nuts, raisin, bio-gas, insulin, kites, postage or revenue stamps, stamp-post marks, first-day covers, branded food, walnut, dried tamarin, roasted grams, duty credit scripts, cotton quilts( quilts not exceeding rupees 1000 per piece), rosaries, prayer beads, fiber products, including mats, pouches, wallets. Transport such as railways and air transport.
– 12% TAX ON
Apparel above rupees 1000, butter, ghee, cheese, dry fruits in packed form, frozen meat, animal fat, sausages, fruit juices, ayurvedic medicines, tooth powder, umbrella, sewing machine, cell phones, ketchup and sauces, all diagnostic kits and reagents, exercise books and note pads, spoons, fork, skimmers, ladles, cake servers, fish knives, tongs, spectacles, correctors, carrom board, playing cards and all types of board games, rubber band, wood, stones, metals and marble idols, table and kitchenware, textiles, sprinklers, cotton quilts( exceeding rupees 1000 per piece), statues, pedestals, ceramic items, porcelain items, ornamental articles, bells, gongs, non-electric base metal, state-run lotteries, non AC hotels, business class air ticket, fertilizers and work contract.
– 18% TAX ON
Footwear costing more than 500, trademarks, goodwill, software, all types of biscuits, flavored refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables and fruits, jams, sauces, soups, and ice creams, instant food mixes, mineral water, tissues, envelops, tampons, steel products, printed circuits, cameras, speakers, kajal pencil sticks, headgear, aluminum foils, weighing machines, printers, electrical transformers, CCTV, optical fiber, bamboo furniture, swimming pools, curry paste, mayonnaise, salad dressings, mixed condiments, mixed seasonings, tractor parts, raincoats, medical-grade disposable hand gloves, computer monitor, custard powder, Hotel services such as AC hotels serving liquor, Room tariff between Rs 2500 and Rs 7500, IT services, branded garments, financial services,
– 28% TAX ON
Chewing gums, molasses, chocolates not containing cocoa, waffles, wafer coated with chocolate, pan masala, aerated water, paint, deodorants, shaving creams, aftershave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwashers, washing machines, ATM, vending machine, vacuum cleaner, shavers, hair clippers, automobiles, motorcycle, aircraft for personal use, state authorized private run lotteries, hotel rooms with tariff above Rs 7500, race club betting and cinema.
WHO IS LIABLE OF HAVING GST REGISTRATION NUMBER
As per sec 22 of the CGST/SGST Act 2017, every supplier who makes a taxable supply i.e supply of goods and/ or services which are leviable to tax under GST law, and his aggregate turnover in a financial year exceeds the threshold limit of twenty lakh rupees shall be liable to register himself in the state or the union territory of Delhi or Puducherry from where he makes the taxable supply. Sec 24 of the CGST act mentions certain categories of suppliers, who shall be liable to take GST registration even if their aggregate turnover is below the said threshold limit of 20 lakh rupees.
ADVANTAGES OF GST REGISTRATION NUMBER
- You will be recognized as a legal supplier of goods and services.
- Proper accounting of taxes paid on the input goods or services that can be utilized for payment of GST due to the supply of goods or services or both by the business.
- Eligible to avail of various other benefits and privileges under the GST laws.
- Legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on the goods or services supplied to purchasers or recipients.
- Uniformity in taxation.
- Helping government revenue finds buoyancy.
- Cascading on taxes.
- Simpler and lesser number of compliances
- Simplified tax structure with fewer exemptions.
- Lowered tax burden on industry and trade.
- Regulation of unorganized industries.
- The poor will receive their due.
- Products and services will be allowed to move freely across the country.
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