Do you remember the days when you had to pay a multitude of taxes that ranges in a different set of names? .They went like service taxes, state-level value-added taxes, customs duty charges, and the never-ending central exercise duty. They had all their implications of why a business or consumer had to pay it.
But it got to a point where it all became downright confusing. it just didn’t become confusing but also quite manipulative and advantageous to customers and businesses. Many sought easy ways to exempt themselves from some of these taxes and some were also successful in finding certain ways.
So with more than 10 total taxes levied by the state, central and union territories in combination, the government seemed to have enough and subsumed all the taxes under a single note as GST.
GST ( Goods and Services Tax): A look into the what, why and how’s
What Are the all famous Goods and Services Tax?
GST taxies were brought along into effect by the government by July 2017. It was aimed to subsume all the wax models of the central and state governments under the common schemes of CGST (Central Goods And Services Tax), SGST (State Goods And Services Tax), IGST (Integrated Goods and Service Tax ), UTGST ( Union Territory Goods and Service Tax ).
It had its own servicing scheme and made sure all the businesses were divided into five subcategories of taxing limits.
- 0% GST- fresh meat,fish,salt,newspapers,bangles.
- 5% GST- paneer, frozen vegetables, Coffee, Tea, Kerosene, Coal, Medicines.
- 12% GST- Butter, Cheese, Ghee, dry fruits in packaged form, Ayurvedic medicines, tooth powder, Agarbatti, Umbrella, sewing machine, and cell phones.
- 18% GST-instant food mixes, mineral water, Tissues, Envelopes, Tampons, notebooks, Camera, speakers, and monitors.
- 28% GST- aerated water, Paint, Deodorants, shaving creams, aftershave, hair shampoo, Dye, vacuum cleaner, Shaver’s, hair clippers, Automobiles, Motorcycles, aircraft for personal use.
All of this has been listed as per the release of GST on July 1, 2017.
Why did the GST come into existence and why is it important?
Tax evasion is one of the biggest reasons a country can lose its performance, economically.
With the enormous amount of tax laws, it became very hard for the government to perform standardization on all of them. it has also become increasingly common for some business people to find ways to exempt themselves from some of these taxes on purpose.
Some people have found certain loopholes to exempt themselves from paying the valuable tax money, that could have otherwise helped the government of India.
Here are some important reasons for the government to implement GST in all states.
- Online payment of taxes
- Subsume all the 17 different taxes levied by the central, state and union territories under one common tax
- To improve the competitiveness of India on a global level
- To reduce the cost of compliance of small businesses
- To improve the ease of doing business by dividing them into five subcategories
One Good Example
A classic example of small businesses evading taxes is the kachori shop in Aligarh. This created sensation of how a roadside kachori shop earned more than 60 lakhs per year and exempted themselves from paying their taxes. It was brought to light by when someone complained about the tax evasion by this business to the state GST department.
They put together a team of 12 individuals to conduct a raid and it was brought to light that their daily total earnings were somewhere between 17,000-20,000 rupees a day. With the amount of money they had been earning, it was highly unfair to not pay taxes to the government. But this is what happens when the tax system is very complicated and confusing.
The main reason to bring in GST
One of the main reasons the government of India decided to bring in GST was to prevent fraud and opportunistic tax evasions in the country. This was a move to improve the GDP of the country and increase its global competency.
How to file for GST?
But before you register for GST, make sure you and your organization are GST compliant to ensure that you don’t register unnecessarily.
Terms of GST Compliance
- Individuals under the previous tax laws( value-added tax, service tax).
- Businesses with turnover above 40 lakhs. ( the threshold has been increased from 20 lakhs to 40 lakhs from 1 st April 2019).
- Agents of a business supplier.
- Service distributor to a business or organization.
- E-commerce aggregators and persons supplying via e-commerce.
Documents required to file for GST
- Valid PAN card of the applicant and his business
- Address proof of the place of business
- Aadhar card
- Bank account statement ( can go to a maximum of 10 banks )
- Proof of valid business registration under the registrar of MCA
- Digital signature
- Identity and address proof along with the working directors.- this may include the utility bills of the business place along with the proof of ownership( such as rent or lease agreement ).
Now that you’ve equipped yourself with all the necessary documents, it is time to put them all to good use.
Signing for GST registration has become pretty easy, thanks to a transparent online process that gets your request delivered within a maximum of 10 days.
But different states have different advantages for registering through GST.
Advantages of GST Registration in Different states
Let’s look at the pros of GST inclusion from a simple example. Consider two states Maharashtra and Uttar Pradesh and a business transaction between them. Before GST was introduced in INDIA, if Maharashtra sold to UP, Maharashtra got the tax income and profit at the same time.
With GST, both states benefit from this transaction, owing to the fact GST is a destination or consumption-based tax. By this scenario, Uttar Pradesh will get the tax income while Maharashtra reaps the profits of the transaction.
Penalty for not Registering under GST?
The penalty of paying GST a little late is 10% of the tax amount. But if you’re found guilty of fraudulent ways of avoiding a penalty, then it is 100% of the tax amount.
How to file for GST Registration?
Once you have the necessary documents you can apply for GST through various online websites that offer their services for rates exceeding no more than 3000 rupees. They will handle all your processing work and deliver yourself with a unique GST identification number.
You can use this number as reference to pay your GST taxes in the future. So we conclude by hoping you found this article absolutely helpful by all means.
If you have any more doubts or queries feel free to leave them in the comments per se.
Pay your GST and be a responsible citizen, for we are INDIA and one.1 110