Table of Contents
Quality Service Guarantee Or Painting Free
Get a rental agreement with doorstep delivery
Find the BEST deals and get unbelievable DISCOUNTS directly from builders!
5-Star rated painters, premium paints and services at the BEST PRICES!
Loved what you read? Share it with others!
Submit the Form to Unlock the Best Deals Today
Help us assist you better
Check Your Eligibility Instantly
Experience The NoBrokerHood Difference!
Set up a demo for the entire community
GST Laws - All You Need to Know
Table of Contents
By integrating a technological layer into the taxation system, GST makes it easier for taxpayers to use taxpayer services. Knowing the right facts about GST will make it easy for you to perform GST registration, returns and payments. Here’s all that you need to know-
What is GST? An Overview of the GST Tax Policy Reform
GST or Goods and Services Tax is a Tax Policy Reform that came into effect in India on July 1, 2017. The NDA Government headed by Narendra Modi Introduced GST as part of their vision of ‘One Nation- One Tax’.
So what is GST and how is it different from the preceding tax regime?
Quality Service Guarantee Or Painting Free
Get a rental agreement with doorstep delivery
Find the BEST deals and get unbelievable DISCOUNTS directly from builders!
5-Star rated painters, premium paints and services at the BEST PRICES!
Pre-GST Tax Regime in India: A Quick Retrospective Glance
The Indirect taxation system in India before GST was a confusing, cascading mess.
Here are some of the Indirect Taxes from the Pre-GST era –
- Central Excise Duty and Duties of Excise
- State VAT and Central Sales Tax
- Purchase Tax
- Luxury Tax, Entertainment Tax and Entry Tax
- Taxes on advertisements, lotteries, betting, and gambling
These taxes were charged on products and services purchased and consumed in India. They were collected by both the Central and State Governments. States mostly collected VATs (Value Added Taxes). The laws for these taxes were different for each state. Taxes like entertainment tax and local taxes were levied by both the State and Central Governments. On top of all this, an Inter-State tax would be levied by the Central Government for the Interstate sale of Goods. The GST system has replaced all of these taxes with either CGST, SGST or IGST, depending on whether the transaction is intra-state or interstate.
What are CGST, SGST and IGST: Explained
Why is GST Split into 3 Components?
Transaction of Goods and Services in India is broadly categorised into
- INTRA State Transactions – transactions that happen within a single state, and
- INTER-State Transactions – transactions that happen between two or more states
CGST, SGST and IGST stand for Central GST, State GST and Integrated GST respectively. These three taxes replace all the indirect taxes that are collected in India. Here’s how they work together to streamline the tax regime –
GST for Intra-State Transactions: Transactions Within a Single State
For any transaction that takes place within the state, both the Central and State GSTs are collected (CGST + SGST). Since the GST is a destination-based tax, the tax is collected by the State in which the goods are consumed, and not the one in which it is manufactured.
When the Goods and Services are consumed in one of the Union Territories of India, a UTGST (Union Territory GST) is collected by the destination Union Territory.
GST for Inter-State Transactions: Transaction Between States or Union Territories
For the transactions that happen between states, only the Integrated GST (IGST) is collected. Since the GST is a destination-based tax, the tax is collected by the State in which the goods are consumed, and not the one in which it is manufactured.
The GSTIN: GST Number Explained
The Goods and Services Tax Identification Number also known as the GST number, can be considered the backbone of the GST tax regime. It is a unique 15-digit identification number that will be assigned to you if you are a dealer, supplier or any other business entity.
Every business entity in India registered under GST will be given a unique identification number known as the GSTIN. The GSTIN replaces the TIN which used to be issued by the Tax authorities of the state. You can obtain the GSTIN and register yourself for GST for free.
Input Tax Credit Adjustments
If you are running a small business, the GST regime offers you a lot of advantages. The input tax credit is one of the most significant advantages of the GST.
What is Input Tax Credit?
The GST is a destination-based tax. This means that the tax is collected from the buyer of the transaction. If you are a business person, the GST is way more advantageous than the previous tax regime. GST differs in that businesses can reduce their tax liability by claiming credit for GST paid on purchases.
Conditions for Availing of Input Tax Credit
To avail of the Input Tax Credit,
- You must produce Tax Paying Documents like Tax invoices, Debit Notes etc.
- Goods and Services should have been received by the person who is taxable
- A tax that is charged on the invoice should have been paid to the Government.
- You as the taxpayer should furnish the tax returns.
- In the case of ITC for invoices received in instalments, you can only credit against the last instalment.
- Your entitlement for ITC against a particular invoice will lapse, one year from the date of issue of the credit.
How Input Tax Credit Works
Imagine you purchased some goods for your business from a seller. In this case, the invoices show that the seller can claim the input tax credit on the purchases. By doing so, you can offset your GST liability.
You can use the input tax credit of one GST type to recover the tax liability of another type.
But you have to follow a certain order of priority
Input Tax Credit | Utilise for Liability Payment |
IGST | IGSTCGSTCGST |
CGST | CGSTIGST |
SGST | SGSTIGST |
For this, the seller will have to upload details of all the tax invoices in the GSTR 1 Return Form.
The GSTR-1 return is a summary of all sales a taxpayer makes. If you are a GST taxpayer, you have to file GSTR-1 monthly or quarterly. The GSTR-1 will contain details of all sales classified systematically. Meanwhile, GSTR-9 is a mandatory annual return form that all GST taxpayers have to file.
Adjustment of Input Tax Credits under GST
Before adjusting your Input tax credits, you need to ensure that All three GST filings have been completed, namely
- GSTR-1
- GSTR-3B
- GSTR-9
GSTR-9 is the annual return form. You must fill out GSTR-1 and GSTR-3B before filing GSTR-9. If you identify that there is some correction needed in the data of GSTR-1 and GSTR-3B, you cannot correct it in GSTR-9, as GSTR-9 is intended as a data aggregation.
How Can NoBroker Help
For a lot of people, GST can come across as confusing. Filing GST and paying taxes doesn't have to be a stressful affair. This is where the NoBroker Legal Services Team can help you. Our experts can guide you through the GST process and help streamline the payment process for your business.
FAQs
Four different GST rates are applicable in India. The rates are 5%, 12%, 18%, and 28%. The rates of products and services may be revised by the GST Council from time to time.
The 3 different types of GST are Central GST (CGST), State GST (SGST), and Integrated GST (IGST). State GST is applicable for the transaction of goods and services within a single state, while Integrated GST is applicable when goods and services are transacted between two or more states.
To verify a GST number, go to search on the GST Services Portal and enter the GSTIN. Alternatively, many private websites provide GST search tools as well.
If your business is a goods provider and has an aggregate turnover of more than ₹40 lakhs, then you must register for GST. If your company provides services, the GST registration limit is ₹20 lakhs.
The IGST is proportionally divided between the Center and the States. If the IGST for a certain service is 5%, 2.5% of it goes to the Central Government, while the rest goes to the State Government which is at the receiving end of the service.
Recommended Reading
How to Register a Company in India: A Step-by-Step Guide
December 19, 2024
13922+ views
GST on Flats Below 45 Lakhs: Everything You Need to Know
October 11, 2024
1796+ views
Getting Started with GST – How to Register for GST and File your GST Returns.
December 2, 2022
4405+ views
Offences and Penalties Under GST
December 2, 2022
3176+ views
Loved what you read? Share it with others!
Most Viewed Articles
Franking Charges Explained: Meaning and Benefits
December 31, 2024
1046248+ views
What is the BBMP E-Khata Registration process for property owners in Bangalore, Karnataka in 2025?
January 16, 2025
77390+ views
Supreme Court Verdict on Society Maintenance Charges
December 17, 2024
69995+ views
All You Need to Know about Revenue Stamps
December 17, 2024
58861+ views
Stamp Duty and Registration Charges in Bangalore in 2025
January 23, 2025
51404+ views
We’d love to hear your thoughts
Join the conversation!
Recent blogs in
Stamp Duty and Property Registration Charges in Mumbai 2025
January 23, 2025 by Kruthi
What are the current Stamp Duty and Property Registration Charges in Karnataka for 2025?
January 23, 2025 by Prakhar Sushant
Stamp Duty and Registration Charges in Bangalore in 2025
January 23, 2025 by Vivek Mishra
Beauty Fashion
Thank you for your articles. I find them very helpful.
March 16, 2023, 7:17 am