GST(Goods and Services Tax) by name is well known by everyone, but there are few things regarding GST which is hardly known by anyone. GST came into existence on 1st July 2017.
GST registration is necessary for the organizations whose turnover surpasses Rs. 20 lakhs (Rs 10 lakhs Northeastern States) is required to enlist its business as a tax liable person or business. This enlistment procedure is called GST registration.
For specific organizations, GST registration is compulsory. In the event that the association carries on business without enrolling under GST, it will be an offense under GST act and strict punishments will be applied.
GST Registration is an online procedure where the GST Law suggests that any business substance ought to get a unique number by the authority.
This unique number is known as GSTIN which is a PAN-based 15-digit registration number and it is also possible to apply for a different GST Registration number for each state.
GST has been segregated in 4 different types, IGST, UTGST, SGST, CGST.
Types of GST
SGST is State Goods and Services Tax which has helped to replace the taxes such as VAT, Luxury tax, State sales tax, Entertainment tax etc. The revenue which is collected from State Goods and Services Tax is for State government.
IGST is Integrated Goods and Services Tax, IGST is levied when the goods are transported from one state to another. The revenue from IGST is given to Central and State government.
CGST is Central Goods and Service Tax, it is one of the types of GST. It has replaced the taxes such as Central excise duty, Central Sales Tax, Service Tax etc. The CGST is levied when the movement of goods is done from standard commodities.
UTGST is Union Territory Goods and Services Tax. This tax is levied when the supply of goods and services are done to the Union territory such as Daman and Diu, Nagar Haveli, Delhi, Andaman and Nicobar Island.
The most important benefit of GST is that the tax structure will be more lenient and easy for the taxpayer. It helps to export and import goods from one place to another with efficient costing. As well a brings transparency and much better compliances.
Let us understand the benefits of GST and why it’s importance.
- GST helps to reduce the cascading effects of the tax, which helps to reduce production and raw material cost.
- There is an increase in the threshold amount, earlier the taxpayer has to register when the annual turnover would exceed 5 lakh under VAT(Value Added Tax) and Service Tax.
- GST helps to reduce the double charge of taxes which were paid earlier and it acts like a most beneficial thing.
- Small businesses are excluded from registration.
- Several business entities will come under this system which will increase the tax base
This will surely lead to better and more tax revenue collections. Companies which are under the unorganized sector will also come under the tax regime.