How to register for GST and the documents required
The previous taxation system
The Union and the States had previously calculated and levied taxes on products and commodities based on multiple stages of taxation under their respective laws and systems.
Different goods and services were subject to different taxes at every intersection of the economic environment. These taxes were determined based on where the commodity was located and the stage at which it was being produced.
Take, for example, the Value Added Tax (or VAT) was a tax that every Indian state had previously levied on goods and services. Each state's tax laws and systems influenced the calculation of its VAT.
Advantages of the Previous Taxation System
Overall, the tax system that existed before it had 2 problems.
After subtracting the prices of already taxed goods, materials or services, the price of the commodity was used to determine the tax that was charged and paid. This was not always possible, which led to confusion and double taxation.
The percentage of tax that was levied in the previous taxation system varied between states.
GST - The Current System of Taxation
The Goods and Services Tax, also known as GST, is an indirect tax that is charged on various goods and services. It is the same across all of India, and there are no variations.
The Government of India took over GST to improve the collection and charging of taxes at all points in the economy. A uniform tax rate across the country makes the GST a key component of integration.
It has replaced many indirect taxes that were previously in existence. GST is a multi-stage, destination-based tax. In effect, it is charged for every additional value.
Tax is added to every intersection under the GST system.
Intra-state: CGST, Central GST, and SGST are applicable.
Integrated GST is available for inter-state transactions.
It is important to understand the following in order to define GST as a destination-based comprehensive and multi-stage tax.
Destination-based - GST will apply at the point where the product is consumed.
Comprehensive - In every state, regardless of product category, the is implemented in equal parts.
Multi-stage- GST can be levied at multiple stages, from production to consumption. It is a multi-stage tax.
It was a long journey for GST, from the creation of the GST law by former Prime Minister Atal Bihari Vaspayee to its launch in July 2017, a difficult one.
Important Features of the GST Bill
After passing the following bills, the GST system has been implemented by the government.
Goods and Services Tax Bill
Compensation Goods and Services Tax Bill
Integrated Goods and Services Tax Bill
Union Territory Goods & Services Tax Bill
The GST Act was passed by the parliament during Prime Minister Narendra Modi's tenure as NDA Government leader. It became effective on the 1 th July 2017.
The GST was introduced to the public's attention first. It was then passed to combat the irregular VAT system and reform the entire taxation system in India. The Goods and Services Bill aims to simplify taxation for both consumers and suppliers.
The former Finance Minister of India, Mr. Arun Jaitley, stated that the current system of taxation would help to keep inflation under control.
As mentioned, the previous taxation system was inconsistent and caused a lot confusion. It lacked the consistency that GST offers. GST provides uniform and uncomplicated taxation for commodities across the country by introducing a uniform GST rate. This is regardless of whether they fall under the same category or are in the same state.
The four-tier GST block was adopted because the government felt it was wrong to tax both necessities and luxuries with the same taxes. There are four GST tax slabs that apply to various goods and services. These include luxuries: 28%, 18% and 12%. The tax is not charged for daily necessities or commodities that are intended for mass consumption, such as salt, vegetables and eggs, pulses, pulses, etc. Other products that are used daily, such as sugar, tea, spices, and the like, will be subject to a 12-18% tax.
GST's Advantages
Here are some of the benefits of GST:
It eliminates the cascading effects of taxation
It combines multiple taxes into one
It aids in reforming the Indian taxation system
It helps India to be represented as a common market in all places.
This makes Indian goods and services more competitive on the global market.
It has a higher threshold to register than its predecessor.
It is easy to apply for GST online
It also offers a composition program for small businesses and MSMEs
It establishes a clear treatment for the ecommerce industry
It aids in the regulation of the unorganized sector
It is simple and efficient, which makes it more effective in logistics.
Components of GST
The GST covers 3 sub-taxes and individual taxes.
IGST – Integrated Goods and Services Tax – This tax is collected by Union Government to fund inter-state commerce. It is a sale between two states.
STGST is the State Goods and Services tax. This is the amount that is collected by the State Government to pay for intra-state commerce.
CGST - The Union Government collects this tax for intra-state commerce. This is a sale or transaction that takes place within one state. CGST is very similar to SGST, except that it is levied only by the Central Government.