What Is GST? Learn More about It in Detail
On 1st July 2017, the Government of India put into effect an indirect tax law known as Goods and Services Tax (GST). This law was introduced keeping in mind the benefit of manufacturers, consumers, and the Government. Keep reading to know what GST is, its types, mode of registration, calculation rates and advantages.
What Is GST?
What is GST? GST was introduced as a single replacement of numerous indirect taxes prevalent earlier, including excise duty, value-added tax, service tax, octroi, luxury tax, and entry tax. This implies that you will have to pay only a single tax on the purchase or sale of goods instead of multiple taxes. However, the GST rates on different goods vary significantly. Also, you will have to pay GST on goods that you are importing and exporting in addition to the customs duty.
What Are the Types of GST Charged in India?
The types of GST charged in India are as follows:
- Central Goods and Services Tax (CGST)
The Central Government levies these charges on the intra-state selling of goods and services.
- State Goods and Services Tax (SGST)
The State Government levies these charges on selling products and services within the border of a state.
- Integrated Goods and Services Tax (IGST)
You will have to pay these charges for selling goods and services across the state’s border.
- Union Territory Goods and Services Tax (UTGST)
You will have to pay these charges for selling goods and services in the Union Territories of India.
You can follow some hassle-free steps to complete online GST registration from a place of your choice.
How to Apply for Online GST Registration?
You can follow the steps below to apply for online GST registration:
Step 1: Visit the official website of GST.
Step 2: Click on the ‘Taxpayers’ tab.
Step 3: Select ‘Register Now’ from the dropdown list. Click on ‘New Registration’ button. Then fill in the essential details.
Step 4: Input the CAPTCHA and then click on ‘Proceed’. Enter the OTP to verify your contact number and email ID.
Step 5: Navigate back to the ‘Register’ button under the ‘Taxpayers’ menu.
Step 6: Click on ‘Temporary Reference Number (TRN)’. Enter the TRN and CAPTCHA and click on ‘Proceed’.
Step 7: Enter the OTP in your registered mobile number and click on ‘Proceed’.
Step 8: Click on the edit icon and enter the necessary data. Upload the required documents.
Step 9: Visit the ‘Verification’ page and check the declaration.
Step 10: Submit the application form either by Electronic Verification Code (EVC) or by signing it digitally.
Once done, you will receive an Application Reference Number (ARN) on the GST portal to check its status. Furthermore, you can easily calculate the GST you need to pay using a simple formula.
How Is GST Calculated?
You can calculate the GST and net price of an item using the following formula:
GST = (Original cost x GST%) / 100
Net price = original cost + GST amount
However, you can also use an online GST calculator for instant and accurate results. You can quickly get the GST rate from the table below for GST calculation.
What Are GST Slab Rates?
The GST slab rates are as follows:
| GST Rates | Type of Product |
| 0.25% | Cut and semi-polished stone |
| 3% | Gold jewellery and coins |
| 5% | Indian sweets, coal, life-saving drugs, household essentials |
| 12% | Computers, processed foods |
| 18% | Industrial intermediaries, capital goods |
| 28% | Sin goods, luxury items |
Additionally, there are some new compliances under GST that can benefit taxpayers to a great extent.
What Are the New Compliances under GST?
The new compliances under GST are:
- e-Way Bill
A supplier issues these bills when they have to transport goods across state borders. However, it is only essential if the total price of the products is above Rs. 50,000. You can generate this bill quickly from the online portal of ewaybillgst.gov.in.
- e-Invoicing
Large ventures with an annual turnover of Rs. 100 Crores and above can obtain a unique invoice reference number. With this, they can upload all the B2B invoices on the GSTN’s portal. After verification, these invoices are authorised with a digital signature and QR code.
Moreover, there are several advantages of GST that can benefit manufacturers, consumers and the Government immensely.
What Are the Advantages of GST?
The advantages of GST are as follows:
- Establishes a uniform tax rate across goods and services.
- Compliance becomes easier for traders.
- Consumers need to pay only a single tax on goods.
- Government can generate revenue effectively.
- The burden on taxpayers reduces considerably.
- Traders do not have to pay multiple taxes.
- Government can easily monitor and implement this law.
- Aids in the development of a common national market.
- Revenue collection by the Government becomes comparatively more straightforward.
Now that you are aware of what GST is and the benefits that it offers, you can make more informed choices. However, you must keep in mind to enter accurate data to avoid any discrepancies while filing for GST.