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GST is an indirect tax structure which is designed for aiding and availing the growth of the economy of our country. It is an all-inclusive tax which is levied on the consumption, sale and manufacturing of goods and services at a national level. In Parliament, The Goods and Services Tax Act which is also identified as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, was passed on March 29th, 2017. It came into effect on July 1st, 2017. The tax under GST is levied on every stage of sale. In the case of intra-state sales, Integrated GST is charged.And for inter-state sale, Central GST and State GST are charged. Under the GST regime, the Central and State taxes would be amalgamated as a single tax payment. GST reduced the overall tax burden on the consumers and also enhanced the position of India at both domestic as well as international market.
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The concept of GST in India was introduced in the year 2000 by the then Prime Minister Atal Bihari Vajpayee; and a committee was set up for designing the model of GST for the country. After that, a task force on Fiscal Responsibility and Budget Management was formed in the year 2003. This task force recommended, in 2004, the GST for replacing the existing tax regime. It introduced a comprehensive tax structure on all goods and services which was supposed to replace the Central level VAT and State level VATs. The task force also gave the recommendation to replace all indirect taxes leaving the customs duty with value added tax on all goods and services with complete set-off in all levels of the value chain.
Mr. Jaswant Singh, the then Finance Minister of India articulated the initiative towards GST in his Budget speech of 2006-07. At that time, it was proposed that from April 1st 2010, the GST would be introduced; and the Empowered Committee of Finance Minister (designed the State SAT also) was bestowed with the task of coming up with the structure and the road map for GST. A Joint Working Group was formed consisting of officials having representatives of the Centre as well as the State. The group had the important task of examining the various aspects of GST and to formulate a report particularly on exemptions and thresholds, taxation of inter-state supplies and taxation of services. The Empowered Committee released its First Discussion Paper (FDP) on the GST in November, 2009. It was based on the discussion within and between the Committee and the Central Government. This paper showcased the characteristics of the proposed GST and also formed the basis for the discussion between the State and the Centre so far.
India has a number of industries in different sectors having different locations, target customers, supply chain, etc.; which is why the economy of India is highly diverse. For understanding the detailed impact of GST on Indian economy, we have to first understand the three types of GST.
According to the Central Goods & Services Tax Act 2016, Central Goods & Services Tax is a centralized part of GST that includes the existing central taxation and levies the following:
The revenue which is collected through CGST belongs to the Central Government. And this tax is applicable on the supply of goods and services which could be amended from time to time by an expertise body governed by the Central Government. The input tax is transferred to the State Government so that they can use it for making the payment of CGST.
SGST is a vital part of the GST and stands for State Goods & Services Tax, as according to the 2016 GST bill. Several taxation and levies which comes under the head of the State authority are included in the SGST as one uniform taxation. It is the amalgamation of the following taxes:
The revenue collected through SGST belongs to the State Government although the framework of the State governing body is supervised and directed by the Central Government. Every state has its own State authority for collection of SGST.
IGST is an organ of GST which lies under the ambit of one nation, one tax. It is charged on the goods and services which are supplied from one state to another state. For example, if the supply of goods and services happens between Delhi and Gujarat, IGST will be applicable.
According to Article 269A of the Indian Constitution, the trade and commerce activities involving the movement of goods and services from one state to another shall be levied with IGST under the GST regime. Under IGST, the Government of India collects the revenue and further changes can be made by the GST Council of India.
VAT (Value Added System) was followed in India before the implementation of GST. There are a number of differences between the GST and the old taxation system of India:
There are many more differences between the GST and the old taxation system of India. All in all the changes are beneficial for the common taxpayer and lightens the burden of the tax on each and every one of them.
Any seller who wants to sell something in India needs to have GST registration. This rule is applied as of July 1, 2017. A seller does not need to enrol for GST, if he is selling something which is under exempt categories. The GST registration is a paperless procedure. There is no hard copy or physical print-outs required for the enrolment.
The registration of GST includes the following procedure:
Firstly, you have to go to the official GST portal. Then on the registration page, you have to enter all the requested details like PAN number, email, phone number, etc. After entering the details, you will receive two different OTPs -- one on your email and another on your mobile, verifying the mobile number and the email ID.
At the end of the process, your temporary reference number will be generated. In the TRN (Temporary Reference Number) field, you have to enter the TRN generated.
After this you will be again asked to verify OTP and after verifying it, you will reach to your “My Saved Application” page. After that you have to fill in the form details and submit it within 15 days. Now you have to click the edit button and move to part II.
This form contains 10 sections or tabs. For this process, you need scanned copies of your valid bank account number and IFSC, Proof of incorporation of business. If it is a partnership firm, the Deed of Partnership is required; otherwise registration certificate of the business entity is required. Along with the certificate of registration, the following documents are needed:
Digital sign is needed to verify the GST application. For companies and LLP, Digital Signature Certificate is compulsory. You can only use and register the digital signature of the Authorized Signatory specified in the registration form.
You have the option of submitting the application by selecting any one of the following verification methods:
Every coin has two sides And GST is no different. On one hand it is beneficial for a class of taxpayers; on the other, it is also negatively affecting the general public. Let’s take a look at the advantages and disadvantages of GST.
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Written by: Aman Kumar Saini