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When is GST Registration Required?

  • Year-end financial reporting
  • Bank funding or loan requirements
  • Internal control and management review
  • Periodic verification for large inventory-based businesses
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WHAT IS GOODS AND SERVICES TAX (GST)?

Goods and Services Tax (GST) is a comprehensive indirect tax system implemented in India on 1 July 2017 with the objective of creating a unified and transparent taxation framework. GST is levied on the supply of goods and services and has replaced multiple indirect taxes previously imposed by the Central and State Governments, such as Value Added Tax (VAT), Service Tax, Central Excise Duty, Entertainment Tax, and several others. By subsuming these taxes, GST has simplified the indirect tax structure and reduced the overall tax burden on businesses and consumers.

GST is a destination-based tax, which means that tax revenue is collected by the state where goods or services are consumed rather than where they are produced. This principle ensures fair distribution of tax revenue among states and removes barriers to inter-state trade. Under GST, tax is charged at every stage of the supply chain; however, the system allows businesses to claim Input Tax Credit (ITC) for the GST paid on purchases. This mechanism eliminates the cascading effect of tax-on-tax and ensures that tax is ultimately borne only by the final consumer.

One of the most significant features of GST is its dual structure, which allows both the Central and State Governments to levy tax simultaneously. In case of intra-state supplies, GST is divided into Central GST (CGST) and State GST (SGST). For inter-state supplies and imports, Integrated GST (IGST) is levied by the Central Government and later apportioned between the Centre and the States. In Union Territories without a legislature, Union Territory GST (UTGST) is applicable. This structure ensures seamless tax collection and credit flow across the country.

GST has introduced a technology-driven compliance system.Registration, return filing, payment of tax, and refund processes are carried out online through the GST portal. This digital approach has increased transparency, reduced manual intervention, and improved compliance. Businesses are required to maintain proper records, issue GST-compliant invoices, and file periodic returns, thereby bringing more accountability into the tax system.

Overall, GST represents a major reform in India’s taxation system. It has streamlined indirect taxes, promoted ease of doing business, encouraged formalization of the economy, and created a common national market. While the transition to GST initially posed challenges for businesses, continuous improvements and policy refinements have strengthened the system. Today, GST stands as a cornerstone of India’s economic and fiscal framework, contributing to long-term growth and transparency.

KEY BENEFITS OF GST

GST offers several benefits to businesses, consumers, and the economy:
• Eliminates the cascading effect of taxes by allowing Input Tax Credit (ITC)
• Simplifies compliance by replacing multiple taxes with a single system
• Brings transparency through an online registration and return filing process
• Facilitates smooth inter-state trade and commerce
• Reduces overall tax burden and improves pricing efficiency

OBJECTIVES OF GST

The main objectives of introducing GST are:
• To create “One Nation, One Tax”
• To simplify indirect tax laws and procedures
• To widen the tax base and improve compliance
• To remove barriers to inter-state trade
• To increase revenue through better tax administration

IMPORTANCE OF GST

GST plays a significant role in strengthening the Indian economy. It:
• Integrates India into a single national market
• Encourages formalization of businesses
• Improves transparency and accountability in taxation
• Helps reduce tax evasion
• Benefits consumers through competitive pricing and reduced hidden taxes

SCOPE OF WORK UNDER GST

The scope of GST covers all major compliance and advisory activities, including:
• GST registration, amendment, and cancellation
• Determination of taxability and applicable GST rates
• Issuance of tax invoices and record maintenance
• Filing of monthly, quarterly, and annual GST returns
• Input Tax Credit (ITC) reconciliation and claims
• GST audit, assessment, and advisory services

TYPES OF GST

GST in India is divided into the following types to ensure fair distribution of tax revenue:

SGST (State GST) is an indirect tax levied by the state government on intrastate (within the same state) supplies of goods and services. It is levied by the state government where the product is sold or consumed. SGST ensures that the state government gets its tax revenue share from intrastate transactions. SGST has replaced earlier state-level taxes like purchase tax, luxury tax, VAT, and more.

CGST (Central GST) is imposed by the central government on intrastate (within the same state) supplies of goods and services. An equal value of CGST and SGST is levied on the same intrastate supply. If GST of 18% is levied for an interstate transaction, 9% will be the CGST rate, and 9% will be the SGST rate.

IGST (Integrated GST) stands for Integrated Goods and Services Tax. IGST is a tax imposed on all interstate supplies of goods and services between two or more states/Union Territories. It is governed by the IGST Act 2017.

Under intrastate transactions, CGST and SGST are both applied. At the same time, IGST combines these into a single tax for goods and services moving between states or union territories. The tax is then shared between the central and state governments.
UTGST (Union Territory GST) is a tax imposed on the supply of goods and services within Union territories whose governments don’t have their own legislature. It is governed as per the UTGST Act 2017. It applies to the following Union territories:

  • Ladakh
  • Andaman and Nicobar Islands
  • Chandigarh
  • Dadra & Nagar Haveli
  • Daman & Diu
  • Lakshadweep

Union territories of Delhi, Jammu & Kashmir, and Puducherry have their own legislation. Hence, SGST taxation law is applicable here and not UTGST.

GST RETURN FILING

A GST return is a statement furnished by a registered person under the GST law containing details of:
• Outward supplies (sales)
• Inward supplies (purchases)
• Input Tax Credit (ITC)
• Tax payable, paid and refund claimed
Returns are filed electronically on the GST Common Portal as per Sections 37 to 48 of the CGST Act, 2017.

REGULAR VS COMPOSITION SCHEME

S. No. Return Purpose Filed By Frequency Contains Use
1 GSTR-1 Outward supplies (sales) details Regular taxpayers Monthly / Quarterly Invoice-wise sales, Debit/Credit notes —
2 GSTR-2A Purchase details (auto-generated) Not filed by taxpayer Auto Supplier GSTR-1 data ITC reconciliation
3 GSTR-2B Static ITC statement Not filed by taxpayer Monthly Eligible & ineligible ITC For GSTR-3B
4 GSTR-3B Summary return & tax payment Regular taxpayers Monthly / Quarterly Sales, ITC claimed, Tax paid —
5 GSTR-4 Composition scheme return Composition taxpayers Annually Turnover & tax at fixed rate —
6 GSTR-5 Non-resident taxable return Non-resident taxpayers Monthly Taxable supplies —
7 GSTR-6 ISD return ISD registered entities Monthly ITC distribution details —
8 GSTR-7 TDS under GST TDS deductors Monthly TDS deducted & paid —
9 GSTR-8 TCS by e-commerce operator E-commerce operators Monthly TCS collected —
10 GSTR-9 Annual return Regular taxpayers Annually Annual sales, purchases & tax —
11 GSTR-9A Composition annual return Composition taxpayers Annually Annual summary —
12 GSTR-9C GST audit reconciliation Specified turnover taxpayers As applicable GST vs audited accounts —
13 GSTR-10 Final return Cancelled GST holders One-time Closing GST details —
14 GSTR-11 UIN holder return Embassies / UN bodies As applicable GST refund claims —

GST RETURN DUE DATES

For Regular Taxpayers

Return Purpose Frequency Due Date
GSTR-1 Sales details Monthly 11th of next month
GSTR-1 Sales details Quarterly (QRMP) 13th of month after quarter
GSTR-3B Summary & tax payment Monthly 20th of next month
GSTR-3B Summary & tax payment Quarterly (QRMP) 22nd / 24th (state-wise)
GSTR-9 Annual return Annually 31st December of next FY
GSTR-9C Audit reconciliation Annually 31st December (if applicable)

For Composition Taxpayers

Return Purpose Frequency Due Date
CMP-08 Tax payment statement Quarterly 18th of month after quarter
GSTR-4 Annual return Annually 30th April of next FY

REGULAR VS COMPOSITION SCHEME

BasisRegular SchemeComposition Scheme
Tax RatesNormal GST rates (0%, 5%, 18%, 40%)Fixed low rate (1% / 5% / 6%)
ITC ClaimAllowedNot allowed
GST on InvoiceShown separatelyNot shown
Interstate SalesAllowedNot allowed
Return FilingMonthly / QuarterlyMostly Annual
ComplianceHighLow
Suitable forMedium & Large BusinessesSmall Businesses
Annual Turnover LimitNo limitUp to ₹1.5 crore (₹75 lakh for special states)

FREQUENTLY ASKED QUESTIONS (FAQs)

GST (Goods and Services Tax) is a unified indirect tax in India levied on the supply of goods and services. Introduced on 1 July 2017, it replaced multiple indirect taxes and created a single, transparent tax system across the country.
GST simplifies the tax structure, removes the cascading effect of taxes, allows input tax credit, promotes ease of doing business, ensures uniform tax rates across states, and increases transparency through an online compliance system.
The main objectives of GST are to create one nation one tax, simplify indirect taxation, eliminate tax-on-tax, widen the tax base, increase compliance, and promote economic growth by creating a common national market.
GST is important because it unifies India into a single market, reduces the cost of goods and services, improves tax compliance, encourages digital transactions, reduces tax evasion, and benefits consumers, businesses, and the government.
Any person or business supplying taxable goods or services whose turnover exceeds the prescribed limit must register under GST. Certain categories of taxpayers must register mandatorily, irrespective of turnover.

The GST registration threshold is ₹20 lakh for service providers and ₹40 lakh for goods suppliers. For special category states, the limit is ₹10 lakh.

There are four types of GST in India: 1. CGST for central tax on intra-state supplies 2. SGST for state tax on intra-state supplies 3. IGST for inter-state supplies and imports 4. UTGST for Union Territories
Input Tax Credit (ITC) is the credit of GST paid on purchases that can be used to reduce the GST liability on sales, provided all conditions under GST law are fulfilled.
No, GST is not applicable to all goods and services. Some supplies are exempt, nil-rated, or kept outside the scope of GST as notified by the government.
GST applicability to NGOs depends on the nature of activities and income. Certain charitable activities are exempt, while services provided for consideration may be taxable under GST.
Pure donations received without any benefit to the donor are not taxable under GST. Donations linked to sponsorship, branding, or promotional benefits are treated as taxable supplies.
Failure to file GST returns on time may result in late fees, interest, penalties, blocking of input tax credit, and cancellation of GST registration.
Yes, GST is applicable on inter-state supplies. Such transactions attract Integrated GST (IGST), which is collected by the Central Government.
Exports are treated as zero-rated supplies under GST. No GST is charged on exports, and exporters can claim a refund of input tax credit.
Yes, GST registration can be cancelled voluntarily by the taxpayer or by the department in case of non-compliance, business closure, or incorrect registration.
GST compliance is important to avoid penalties, ensure uninterrupted business operations, claim input tax credit, and maintain credibility with customers and tax authorities.

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