GST journey began in 2000 when one committee of members was formed to form and develop legislation. This took seventeen years for the Law to arise after that. GST bill was approved in both houses Lok and the Rajya Sabha in the year 2017. The GST came into operation on 1st July 2017.
The government has been implementing the GST regime for over five years. Many SME owners struggled to adjust to new norms. Every other day, the government attempts to impose new restrictions. If you want to prevent receiving any type of notice, you must maintain yourself up to date. In this article, We will cover various topics that you should be aware of and the advantages of GST.
GST Charging and Collection
Once you are registered for GST, you must charge GST at the applicable rate on your supplies, except for applicable goods subject to customer accounting. Output tax is the term used to describe the GST that is levied and collected.
The GST you pay on company purchases and expenses and imports is referred to as input tax. If your company meets the requirements for claiming input tax, you can deduct the tax on your company’s purchases and expenses.
This methodology for input tax credits assures that only the value contributed is taxed at each stage of a supply chain.
Paying Output Tax and Claiming Input Tax Credits As a GST-registered firm, you must do the following:
One month following the end of each statutory accounting period, you must submit your GST return. This is normally done once a quarter.
In your GST return, you must report both your output tax and your input tax.
The net GST payable is the difference between output tax and input tax.
Under this system, three taxes are levied: CGST, SGST, and IGST.
CGST – This is the tax levied by the Central Government on intra-state transactions ( Ex transaction happening within Maharashtra)
The State Government Sales Tax is a tax levied by the state government on intra-state sales (Ex. an event happening within Maharashtra)
IGST: It is a tax levied by the Central Government on interstate transactions (Ex., Maharashtra to Delhi )
Who is required to pay GST?
Businesses and traders with annual sales of more than Rs20 lakh must pay GST. In the case of northeastern and special category states, the GST barrier is Rs10 lakh. Regardless of this threshold, GST is levied on interstate transactions.
How are imports handled?
Imports are considered interstate supplies and will be subject to IGST. There is no tax on exports. Taxes paid on raw materials and services utilised to export goods and services are reimbursed to the company.
Therefore The biggest advantage of GST is The cascading of taxes on the sale of goods and services has 99% been eliminated. The removal of the cascading of taxes effect has affected the cost of items. Because the GST regime eliminates the tax on tax, the price of goods falls.