GST Advisory

What is GST?

Goods and Services Tax (GST) is an indirect tax (or consumption tax) levied on the supply of goods and services. It is a comprehensive, multistage, destination-based tax:

  • Comprehensive because it has subsumed almost all the indirect taxes except a few state taxes.
  • Multi-staged as it is, the GST is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer and
  • Destination-based tax, as it is collected from point of consumption.

On what supply is GST levied?

GST is levied on supply of goods, or services or both, except for taxes on the supply of the alcoholic liquor for human consumption.

What are the components of GST?

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

  • CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a transaction happening within Maharashtra)
  • SGST: It is the tax collected by the state government on an intra-state sale (e.g., a transaction happening within Maharashtra)
  • IGST: It is a tax collected by the Central Government for an inter-state sale/Import (e.g., Maharashtra to Tamil Nadu)

In most cases, the tax structure under the new regime will be as follows: 

Transaction New Regime
Sale within the State CGST + SGST
Sale to another State/Import IGST

Who is liable to pay GST?

Any person who is supplying goods or services is liable to pay GST (i.e. Supplier). However, in few exceptional cases the recipient would be liable to pay GST to the Government on reverse charge basis.

How to pay GST?

For payment of GST, a taxpayer must register himself on the GST portal and obtain GSTIN (Goods and Services Tax Identification Number).

Companies, who have been incorporated through integrated form of incorporation (SPICE+), get their registration number at the time of incorporation itself. Other persons can get their GST registration number by filing an online form at the government portal.

In which state will a person be registered?

A person liable to be registered has to apply for registration in each state from where he makes or intends to make outward supplies under GST.

Is there any exemption limit available for registration in GST?

The government has set up the basic exemption limit for small suppliers of goods and services.

For sale of Goods, threshold limit is Rs. 40 Lakh for Normal Category States and Rs. 20 Lakh for Special Category States like Northeastern States etc.

Person providing services need to register if their aggregate turnover exceeds Rs 20 Lakh in any of the States.

Is there any scheme for payment of GST for small traders and manufacturers?

Yes. The composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs. 1.5 Crore (Rs. 75 lakhs in case of few States). The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. A composition dealer can also supply services to an extent of 10% of turnover, or `5 Lakhs, whichever is higher.  A composition dealer cannot take credit on his input supplies.

How can a Non Resident Indian (NRI) obtain a GST registration in India?

A Non Resident Indian seeking to invest and do business in India shall be required to obtain GST Registration in India within 30 days of commencement of business. Depending upon the kind of supply of goods or services or both and the presence of the entity in India, GST registration shall be obtained on behalf of the entity by its Authorised Signatory or Authorised Representative, as the case may be. For more details about GST registration for Non- Resident Supplying Online Services, click here.

Is GST registration mandatory for importers of goods or services or both even after having an IEC (Import-Export code) issued by DGFT?

Yes, GSTIN is mandatory for filing Bill of Entry in case of import of goods or import of services, in other cases, by importers as IGST is to be paid on imports and input tax credit can be availed for IGST paid. In addition to GSTIN, the requirement for PAN of the importer and IE Code for the importer would also continue.

Is GST registration mandatory for a supplier outside India providing Online Information, Data Base Access or Retrieval Services (OIDAR Services) through internet?

Yes, a non-resident supplier located in non-taxable territory shall be required to obtain GST Registration for providing OIDAR services in India. In case the online recipient is a registered business entity, IGST shall be payable by the resident recipient under reverse charge. In other case if the recipient is an individual consumer, IGST shall be payable by the supplier outside India. For more details about GST Registration and related aspect for providing OIDAR services, click here.

Is GST registration mandatory for Charitable trust & Religious Institutions?

Notification No.12/2017– dated 28th June 2017, issued by CBIC, exempts services provided by entity registered under Section 12AA of the Income-tax Act, 1961 by way of charitable activities from whole of GST. However, in case the entity is engaged in supplying both taxable and exempt supplies, it shall require registration under GST depending on the prescribed turnover of supply. Supply in such case shall be on reverse charge basis as per the Notification No. 13/2017 of CBIC.

How can I surrender / Cancel my GST registration?

A taxable person may opt to cancel the GST registration in case the business is discontinued, transferred, amalgamated or due to any other change in the constitution of the business. For more details about cancellation of GST registration in form GST REG 16, you may refer to the CBIC circular issued on the same. The amount in cash ledger will get refunded but no amount shall get refunded for credit lying with the taxpayer on the GST portal during the course of liquidation whether voluntary or otherwise.

Whether a registered person will have to approach two authorities- Centre as well as State for various permissions, audit, etc under the Act?

No. A registered person will have to approach only one tax authority for all practical purposes. One person can discharge all the functions under CGST, SGST and IGST act.

What is input tax credit?

Input Tax Credit is the credit of taxes paid by a supplier on inward supplies, i.e, purchases made in the course of furtherance of business which can be set off against the taxes paid in the outward supplies, i.e, sales in the business.

Can a registered person who purchases goods from a composition supplier take input credt?

No. A taxable person opting to pay tax under the composition scheme is out of the credit chain. He cannot take credit on his input supplies.

What are GST Returns?

A GST return is a document containing details of all income/sales and/or expense/purchase which a taxpayer is required to file with the tax administrative authorities. All registered businesses have to file monthly or quarterly and an annual GST return based on the type of business. All these GSTR filings are done online on the GST portal.

Is GST required to be levied on remuneration received by a Director of a company registered under the Companies Act 2013?

Only the part of a Director’s remuneration which is declared separately as ‘other than salaries’ in the Company’s accounts and is subjected to TDS under Section 194J of the IT Act as Fees for professional or Technical Servicesand also is outside the scope of exempt supplies under Schedule III of the CGST Act, shall be taxable under GST. For more clarification on taxability under GST on director’s remuneration, click here.

What are the Services offered by GST Professionals with respect to compliances under GST?

 Few of the services provided by a GST professional includes-

  • Providing services relating to accounting, book-keeping on the basis of documents and information in compliance with GST Laws;
  • Registration in Goods & Service Tax (state-wise) and Calculation and monthly payment of GST;
  • Filing of monthly & quarterly GST returns (GSTR 3B, GSTR 1) and annual return (GSTR 9);
  • Analyzing contracts, transactions and invoicing for applicability;
  • Advisory on other compliance with respect to day-to-day business operations with respect to GST;
  • To surrender GST Registrations when no longer required for the business

What advisory and consultancy services are provided by GST Professionals?

A GST professional will always keep you informed of any new legislation or regulations enacted by the government that you may need to take care of in the various operational aspects of your business via invoicing, analysis and advisory on taxation aspects of transactions, input tax credit, goods movement, etc. Besides filing periodical returns, GST Professionals update the clients on amendments under GST laws so that they comply with the requirements of the amended laws on time to avoid any penal or other consequences of non-compliance.

How can I claim refund under GST?

To claim refund, a taxpayer is required to fill an online Refund Pre-Application giving details about nature of business, Aadhaar Number, Income Tax details, expenditure and investment etc. For more details on this behalf, please click here. You may also raise your query on any related aspect under GST at the Central Board of Indirect Taxes and Customs (CBIC) Grievance Redressal portal.

How can pending dues under GST be treated for a corporate debtor (taxable person) undergoing CIRP under Insolvency and Bankruptcy Code, (IBC) 2016?

In accordance with the provisions of the IBC and various legal pronouncements on the issue, no coercive action can be taken against the corporate debtor with respect to the dues for period prior to insolvency commencement date. Also, no legal requirement under GST is required to be complied with by the IRP/RP for dues during the pre-CIRP period. For more clarification about other GST compliances of companies under IBC, 2016, you may refer to the Circular by the CBIC issued for the same.