The GST Law is soon going to be implemented by the Government so all the youth out there put on your reading glasses to read this interesting article on all you need to know about the GST, more power to you on being updated about the next big raging topic after demonetization that is GOODS AND SERVICE LAW.
MEANING
GST is a multipoint destination based value added tax levied on goods and services, when the goods are supplied within the state or between the state in India.
STRUCTURE
Step 1) You have to distinguish between purchasing goods and rendering a service.
Step 2) In the GST law there is a supplier and recipient involved.
Supply- The act of giving from one person to another irrespective of a consideration.
Step 3- There are two scenarios involved whether the goods and services are:
Non- Taxable: The goods and services are non- taxable, there is a separate exemption list prepared for that.
Taxable: You will have to pay taxes either in your own country or overseas.
If you have to pay taxes, then you have to distinguish between whether you will be paying them within the state or intrastate, the place of supply rules have to be in place.
Then you have to classify the goods, the valuation price is to be prepared, the tax rate is to be decided there is a Basic Threshold Limit for the supplier to pay this tax if he exercises it he is liable to pay the tax. In case of the recipient, there is no Basic Threshold Limit but he is still liable to pay the tax.
GST APPLICATION
- All Central Taxes will be subsumed to Central Goods and Service State taxes- SGST.
- Central Goods and Service Taxes, Interstate Taxes will become- Central Goods And Service Taxes- CGST
- Interstate Goods and Service Taxes Are Abbreviated as- IGST
- Instead of 12-13 Laws, 3 Laws will be implemented: SGST, CGST, IGST.
- Infosys hired to make the software, fantastic system is being made.
SPECIFIED RATES
- CGST- 14% (Maximum Rate)
- SGST- 14% (Maximum Rate)
- IGST- 28% (Maximum Rate)
IGST comprises of a merge of CGST And SGST Laws.
Drawbacks of GST
- Custom laws still applicable causing cascading effect that is Double Taxation.
- Central and State Taxes will continue, this is not merged with GST.
BRANCHES UNDER GST
There are two types of Branch scenarios:
BRANCH 1 BRANCH 2
INVESTMENT-1, 00,000 INVESTMENT- 1,00,000
COMPANYS SHARE- 80,000 SET OFF- 50,000
PAYS TAXES- 20,000 NO PAYMENT MADE
The Benefit of the second branch here is of Input Service Distributors.
In case of disrespect of Law that is in case of the following cases:
BLACKLISTING OF DEFAULTERS
This happens when the companies don’t file their returns. They charge the tax to the customers but don’t pay it to the Government.
IMPACT: The brand name of the seller is spoilt. Also if you buy from a Blacklisted seller you will have to pay the setoff amount.
ANTI-PROFITEERING
This scenario takes place when the seller does not give the tax benefit to the customers and fleeces the customer and does not reduce the price in the market.
TAXABLE EVENT CHECKLIST
The various parameters to be given are as follows:
- Tax is charged on goods and services by interstate or intra state.
- It is paid by taxable persons- Specified Rates are the maximum rates incorporated in the law.
- Zero Rated- No taxes on the following:
Basic Agricultural Produce
Services
Basic Educational Seminars
Barred from Taxation: Newspapers, National Flag, no indirect taxes on them.
- 4)5% tax on goods and services of basic necessities.
- 5) 12% taxes on essential medicines and drugs, agricultural and industrial inputs.
- 6) 18% taxes on goods and services other than the above (residual).
CGST and IGST will be common all over India.
SGST will be decided by each state through Tax shopping whichever is cheapest.
For instance: Maharashtra charges 7% Tax and Gujarat charges 8% so it’s a better deal to go for 7% tax in Maharashtra.
GST CAREER OPPORTUNITIES
- Compliance: Financial Accounting, Returns Filing- Voluminous work, Reconciliation of Financial Statement and Returns.
- Audits: When the turnover crosses 1 crore, Statutory Audit will apply, no remedy provided in this case.
- Due Diligence: Reviews concurrent audits from GST perspective.
- Training and Orientation: Corporate Training and Orientation Workshop.
CONCLUSION
GST has its own set of pros and cons but it’s important to educate ourselves about this major topic whose in- depth knowledge will ensure a smooth function of our lives in the near future.
