Goods and Service Tax

Indirect tax is defined as the tax imposed by the government on a taxpayer for
goods & services rendered. Unlike direct taxes, indirect tax is not levied on the income,
revenue or profit of the taxpayer & can be passed on from one individual to another.
Indian Government have major source of revenue in the form of Indirect tax and to be specific
Goods and Service Tax Act



What is Goods And Service Tax

"GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.
GST is one indirect tax for the entire country."

When GST Registration is Compulsory

The registration under GST is mandatory for the business entities based on the criteria of turnover or activities. The business dealing in goods and those providing service have to mandatorily apply for GST Registration if their aggregate turnover for a financial year exceeds Rs.40 Lakhs and Rs.20 Lakhs respectively. However, for business making supplies and providing services in the North Eastern States, the same is Rs. 20 lakhs and Rs. 10 lakhs respectively. Owing to its benefits, many dealers also obtain voluntary registration under GST.

What are the components of GST?

There are 3 taxes applicable under this system: CGST, SGST & IGST.

1. CGST: Collected by the Central Government on an intra-state sale (Eg: transaction happening within the State)

2. SGST: Collected by the State Government on an intra-state sale (Eg: transaction happening within the state)

3. IGST: Collected by the Central Government for inter-state sale (Eg: Transaction within Different States)

Understanding GST returns in detail
GSTR-1

The GSTR-1 is a monthly return form filed by businesses to report the details of the outward supplies of all services and goods. Every GST-registered entity should file GSTR-1 except Input service distributor and Composition taxpayer. It must be filed even if there is no business activity. The due date for filing GSTR-1 is 10th of every month.
The GSTR 1 acts as the base on which all other form submissions can be made for the month.

GSTR-2A

GSTR-2A is the return of details of all the inward supplies of goods/services, that is, purchases made by registered suppliers. This form is filed by the 15th of every month. GSTR-2A is auto populated where the data will be fetched from the GSTR-1 filed by the supplier. It is a read-only return and cannot be edited.

GSTR-2

GSTR-2 is the return filed to furnish the details of all the inward supplies of goods/services. This form can be edited but the filing has been suspended by the government.

GSTR-3B

It is a summarized monthly return of all the details of inward and outward supplies, input tax credits and the details of all the GST liabilities. It is a self-declaration form filed by all taxpayers for every tax period. The due date for filing GSTR-3B return form is 20th normally. However, the date may be changed if there are any government notifications.

GSTR-4

GSTR-4 is filed every year by all taxpayers under the GST composition scheme. Businesses should provide a summary of the outward supplies and all the taxes paid thereon, details of import of services and supplies that may attract reverse charge. The due date for filing this form is the 30th of the month succeeding the financial year.

Benefits of GST Return Filing

Elimination of the cascading effect

The introduction of GST into the Indian tax system has done away with several other taxes like central excise duty, service tax, customs duty and state level value added tax. Thus a single GST has eliminated the cascading effect of tax on tax.

Higher threshold benefits

Before GST was introduced, VAT or value added tax was applicable for any business that had an annual turnover of 20 lakhs. Services that saw a turnover of less than 10 lakhs did not have to pay service taxes.

Startup Benefits

Earlier startups with an annual turnover of 5 lakh had to pay VAT which would be very difficult for a business during the initial stages. But as GST has replaced VAT, businesses can set off the service tax on their sales.

E-commerce for quick supply of goods

Startups are making a strong presence online offering their services and products through their websites. Under VAT, there were many types of VAT laws, and the supply of goods through online, that is, E-commerce was never a well-defined one. For instance, if you need to deliver goods to various states, then you will have to file the VAT declaration first. After that, you will need to provide registration details about the trucks which deliver the goods. In many instances, goods end up being seized by the authorities due to lack of proper documents. GST has now removed all such confusing processes.

Regulations and accountability

The pre-GST period witnessed a disorganized tax filing system. Presently, all taxes are paid online and major hassles that were a part of tax filing have been eliminated in the process of introducing GST. This has resulted in industries becoming more accountable and tax filing laws are better regulated than before.

F.A.Q

  • What is Limited Liability Partnership (LLP)?

    Limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence. A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization. Limited Liability Partnership is managed as per the LLP Agreement.

  • To incorporate a Limited Liability Partnership, a minimum of two people are required. A Limited Liability Partnership must have a minimum of two Partners and can have a maximum of any number of Partners.

  • The Designated Partners needs to be over 18 years of age and must be a natural person. There are no limitations in terms of citizenship or residency. Therefore, the LLP Act 2008 allows Foreign Nationals including Foreign Companies & LLPs to incorporate a LLP in India provided at least one designated partner is resident of India.

  • You can start a Limited Liability Partnership with any amount of capital. There is no requirement to show proof of capital invested during the incorporation process. Partner's contribution may consist of both tangible and/or intangible property and any other benefit to the LLP.

  • An address in India where the registered office of the LLP will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.

  • LLPs are required to file an annual filing with the Registrar each year. However, if the LLP has a turnover of less than Rs.40 lakhs and/or has a capital contribution of less than Rs.25 lakhs, the financial statements do not have to be audited.

 
     
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