Basics of GST – Useful Information on GST

Last Updated at: October 16, 2019
1661

GST is one of the major tax reforms introduced in India in recent times. It has a huge bearing on the overall economy of the country. However, many people still do not understand the concept. If you are one of them who is perplexed about this concept, then here we have come up with a simplification of the same.

The rollout of GST— one of the biggest tax reforms that the India has seen post-independence—will have a huge bearing on the economic environment. Nevertheless, many people are still perplexed as to how exactly GST will pan out for them. This article will help you understand the new tax structure better.

Get Online GST Registration

Below you’ll find the list of services that will walk you through the need for the service, the eligibility, documentation procedure and benefits. Our experienced team members are there to guide you and complete the process at ease.

 

Does GST apply to everyone?

GST is an indirect tax. It is applicable to professionals, businesses, freelancers and service providers. However, GST doesn’t apply to salaried individuals.

Does one have to register?
One MUST register if any of the following applies to you:
If the annual turnover (sales) exceeds ₹20 lakh (₹10 lakh if you are in the North-eastern states).
If you make inter-state sales i.e. you are based in one state and you sell goods to a receiver in another state. Example, if you are based in Delhi and sell in Mumbai then it is considered an interstate sale.
If you sell online. You can sell through an operator like Amazon or Flipkart or your website.
If you are an agent and sell goods on behalf of another taxable person.
If you dealing in goods/services on which reverse charge applies—where the buyer deposits the tax instead of the seller.
For points 2-5, the annual sales are irrelevant. The GST will apply to you even if the sales are less than ₹20 lakh (₹10 lakh for NE states) per year.

GST is NOT applicable to whom?
GST is not applicable to agriculturists. Example: If you are growing your own flowers and selling them, then GST is not applicable to you.
If you are dealing in exempted goods/services then GST doesn’t apply to you.

What does one need to know about GST registration?
One has to apply for registration in every state in which the business is being conducted, within 30 days from the date on which one is liable for registration (For example, the day annual sales crosses ₹20 lakhs).
The registration under GST is state-wise, hence it is necessary to obtain a separate registration for each state.
The registration number in GST (GSTIN) will is PAN-based and therefore, having PAN will be essential for obtaining registration.
One can voluntarily opt to register for GST even if the sales are less than ₹20 lakhs. This helps to avoid restrictions like no selling online or interstate sales.

Who is termed as a “casual taxable person?”
Any person who intermittently supplies goods and/or services in a territory where the GST is applicable but doesn’t have a fixed place of business in that particular state is termed as a casual taxable person. Example, a person having a place of business in Chennai gives consulting services in Hyderabad (where he does not have a place of business), then he is treated as a casual taxable person in Hyderabad.
What is special registration for casual taxable person?
Casual taxable person can acquire a temporary registration for a period of 90 days (which is extendable for additional 90 days).
If one acquires the above registration, then, the tax has to be deposited in in advance (based on your estimated tax liability).
Who can collect GST?
The GST can be collected only by a registered taxable person. One must show this amount on tax invoices.
What is a Reverse Charge?
A reverse charge means that the liability to pay the tax is by the recipient of goods/services instead of supplier.
A reverse charge is applicable for both the services and goods.
Under what conditions is the reverse charge applicable?
1. If an unregistered dealer sells to a registered dealer: In such a scenario, the registered dealer will pay GST on the supply. If one is registered under GST and then buys from an unregistered dealer then a reverse charge will apply, i.e. the buyer, will have to pay the tax.
2. Services through an e-commerce operator: If an e-commerce operator supplies services then in that case, a reverse charge will applicable on the e-commerce operator. It will be liable to pay the tax.
Example, take a company that provides services of teachers, plumbers, beauticians electricians etc. The company is liable to pay GST and the same is collected from the customers instead of the registered service providers.
Note that the Centre or State Government may notify other scenarios where reverse charge will apply.

After having understood about GST, do keep in mind that you should apply for it if you are an agriculturist, which owns your own flowers and sell them and if you are not involved in dealing with exempted services and goods. And, remember that GST can be collected from you only by a registered taxable personnel and the amount has to be shown on tax invoices.

Basics of GST – Useful Information on GST

1661

GST is one of the major tax reforms introduced in India in recent times. It has a huge bearing on the overall economy of the country. However, many people still do not understand the concept. If you are one of them who is perplexed about this concept, then here we have come up with a simplification of the same.

The rollout of GST— one of the biggest tax reforms that the India has seen post-independence—will have a huge bearing on the economic environment. Nevertheless, many people are still perplexed as to how exactly GST will pan out for them. This article will help you understand the new tax structure better.

Get Online GST Registration

Below you’ll find the list of services that will walk you through the need for the service, the eligibility, documentation procedure and benefits. Our experienced team members are there to guide you and complete the process at ease.

 

Does GST apply to everyone?

GST is an indirect tax. It is applicable to professionals, businesses, freelancers and service providers. However, GST doesn’t apply to salaried individuals.

Does one have to register?
One MUST register if any of the following applies to you:
If the annual turnover (sales) exceeds ₹20 lakh (₹10 lakh if you are in the North-eastern states).
If you make inter-state sales i.e. you are based in one state and you sell goods to a receiver in another state. Example, if you are based in Delhi and sell in Mumbai then it is considered an interstate sale.
If you sell online. You can sell through an operator like Amazon or Flipkart or your website.
If you are an agent and sell goods on behalf of another taxable person.
If you dealing in goods/services on which reverse charge applies—where the buyer deposits the tax instead of the seller.
For points 2-5, the annual sales are irrelevant. The GST will apply to you even if the sales are less than ₹20 lakh (₹10 lakh for NE states) per year.

GST is NOT applicable to whom?
GST is not applicable to agriculturists. Example: If you are growing your own flowers and selling them, then GST is not applicable to you.
If you are dealing in exempted goods/services then GST doesn’t apply to you.

What does one need to know about GST registration?
One has to apply for registration in every state in which the business is being conducted, within 30 days from the date on which one is liable for registration (For example, the day annual sales crosses ₹20 lakhs).
The registration under GST is state-wise, hence it is necessary to obtain a separate registration for each state.
The registration number in GST (GSTIN) will is PAN-based and therefore, having PAN will be essential for obtaining registration.
One can voluntarily opt to register for GST even if the sales are less than ₹20 lakhs. This helps to avoid restrictions like no selling online or interstate sales.

Who is termed as a “casual taxable person?”
Any person who intermittently supplies goods and/or services in a territory where the GST is applicable but doesn’t have a fixed place of business in that particular state is termed as a casual taxable person. Example, a person having a place of business in Chennai gives consulting services in Hyderabad (where he does not have a place of business), then he is treated as a casual taxable person in Hyderabad.
What is special registration for casual taxable person?
Casual taxable person can acquire a temporary registration for a period of 90 days (which is extendable for additional 90 days).
If one acquires the above registration, then, the tax has to be deposited in in advance (based on your estimated tax liability).
Who can collect GST?
The GST can be collected only by a registered taxable person. One must show this amount on tax invoices.
What is a Reverse Charge?
A reverse charge means that the liability to pay the tax is by the recipient of goods/services instead of supplier.
A reverse charge is applicable for both the services and goods.
Under what conditions is the reverse charge applicable?
1. If an unregistered dealer sells to a registered dealer: In such a scenario, the registered dealer will pay GST on the supply. If one is registered under GST and then buys from an unregistered dealer then a reverse charge will apply, i.e. the buyer, will have to pay the tax.
2. Services through an e-commerce operator: If an e-commerce operator supplies services then in that case, a reverse charge will applicable on the e-commerce operator. It will be liable to pay the tax.
Example, take a company that provides services of teachers, plumbers, beauticians electricians etc. The company is liable to pay GST and the same is collected from the customers instead of the registered service providers.
Note that the Centre or State Government may notify other scenarios where reverse charge will apply.

After having understood about GST, do keep in mind that you should apply for it if you are an agriculturist, which owns your own flowers and sell them and if you are not involved in dealing with exempted services and goods. And, remember that GST can be collected from you only by a registered taxable personnel and the amount has to be shown on tax invoices.

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A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.