Goods And Services Tax GST

Introduction

GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act came into effect on 1st July 2017.

In other words, Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. After subsuming majority indirect taxes, GST is a single domestic indirect tax law for the entire country.

Type of GST:

1. CGST: For intra-state sales (within the same state), collected by the central government.
2. SGST: For intra-state sales (within the same state), collected by the state government.
3. IGST: For inter-state sales (between different states), collected by the central government and shared

Tax rate under GST:

GST in India is levied under a multi-tier tax rate structure depending on the type of goods or services. As of now, there are four main GST tax slabs:

Standard GST Tax Rates:

GST Rate	Applies to
0% (Nil rate)	Essential items like fresh fruits, vegetables, milk, and education services
5%	Common necessities: packaged food, rail tickets, life-saving drugs, footwear below ₹1,000
12%	Processed foods, business class air tickets, cell phones (now 18%), fertilizers
18%	Most services, electronics, financial services, soaps, hair oil, toothpaste
28%	Luxury items: automobiles, ACs, washing machines, tobacco products (plus cess)

Special Cess:

Some products like tobacco, aerated drinks, and luxury cars attract a compensation cess in addition to the 28% GST.

 Examples:

1. Restaurant food (non-AC): 5%
2. Hotel room (₹1,000–7,500/night): 12%
3. Hotel room (above ₹7,500/night): 18%
4. Gold & jewelry: 3%
5. Petroleum, alcohol: Not under GST (taxed separately by states)

Structure of GSTIN (15-Digit Format)

A GSTIN is a 15-character alphanumeric code:

Digit(s)	Description
1–2	State Code (as per Indian Census 2011)
3–12	PAN of the business or entity
13	Entity code (e.g., 1 for first registration under the same PAN in a state)
14	Blank by default (currently kept as 'Z')
15	Checksum digit (for error detection, auto-generated by system)

Process of GST registration:

Step 1: Visit the GST Portal

1. Go to: https://www.gst.gov.in

 Step 2: Click on “Register Now”

1. Under the “Taxpayers” tab on the homepage.

 Step 3: Fill in Part A of the Registration Form (Form GST REG-01)

You’ll need to provide:

1. Legal name of the business (as per PAN)
2. PAN number
3. Email ID and mobile number (for OTP verification)
4. State/UT

 After OTP verification, you’ll receive a Temporary Reference Number (TRN).

 Step 4: Fill in Part B Using TRN

Login using the TRN and fill Part B:

1. Business details
2. Promoter/partner details
3. Authorized signatory
4. Principal place of business
5. Additional places of business
6. Goods/services supplied
7. Bank account details
8. Upload required documents

Supported file types: PDF, JPEG (usually under 1MB)

 Step 5: Submit the Application

1. Use Digital Signature Certificate (DSC), e-Sign, or EVC (OTP on Aadhaar-linked mobile) to verify and submit.

Step 6: ARN Generation

1. Once submitted, you’ll get an Application Reference Number (ARN) via SMS and email.

Step 7: GST Officer Review

1. The application is processed within 7 working days.
2. You may receive queries for clarification or additional documents.

Step 8: GSTIN Allotment

1. If approved, you will receive:
   1. GSTIN (Goods and Services Tax Identification Number)
   2. GST Registration Certificate (downloadable from the portal)

Duration:

1. Usually 7–10 working days, if all documents are correct and no clarifications are needed.

Major Advantages of GST:

1. Elimination of Cascading Taxes (Tax on Tax)

1. GST replaces multiple indirect taxes (like VAT, excise, service tax).
2. Input Tax Credit (ITC) allows businesses to claim tax paid on purchases, eliminating double taxation.

2. Simplified Tax Structure

1. One unified tax across India for goods and services.
2. Makes compliance easier with online registration, filing, and payments.

3. Improved Ease of Doing Business

1. Uniformity across states creates a common national market.
2. Removes complexities from interstate transactions.

4. Increased Tax Compliance and Transparency

1. Technology-driven system with invoice matching, e-way bills, and audit trails.
2. Reduces tax evasion and black money circulation.

5. Boost to GDP and Export Competitiveness

1. Lower logistic and compliance costs benefit manufacturers and exporters.
2. Makes Indian products/services more globally competitive.

6. Benefits to Consumers

1. Lower prices due to reduced tax burden on goods.
2. Greater price transparency as GST is included in MRP.

7. Encouragement for Formalization

1. Small businesses are encouraged to register to avail input tax credit and become part of the formal economy.

8. Supports “Digital India” and Automation

1. Fully online processes for registration, returns, refund, and payments.
2. Reduces physical interface with tax authorities.

Who needs GST registration:

Under the Goods and Services Tax (GST) regime in India, registration is mandatory for certain businesses and individuals based on turnover, business activity, and location:

1. Turnover-Based Registration

1. Mandatory if aggregate turnover exceeds:

   1. ₹40 lakhs for goods (normal category states)
   2. ₹20 lakhs for services
   3. ₹10 lakhs for special category states (like the North-East, J&K, etc.)

2. Inter-state suppliers:

Anyone supplying goods or services from one state to another (inter-state) must register under GST, regardless of turnover.

3. E-Commerce Sellers and Operators

1. Businesses selling goods or services through e-commerce platforms (like Amazon, Flipkart, etc.)
2. E-commerce operators (platform owners) themselves

4. Casual Taxable Persons

1. Individuals who occasionally supply goods or services in a territory where they have no fixed place of business.

5. Non-Resident Taxable Persons

1. Non-residents doing business in India temporarily.

6. Input Service Distributors (ISD)

1. Offices that distribute tax credit of input services to branches with the same PAN.

7. Reverse Charge Mechanism (RCM) Obligated Businesses

1. If a business is liable to pay tax under RCM (i.e., recipient pays GST), registration is required.

8. TDS/TCS Deductor

1. Government departments or agencies, and e-commerce platforms deducting TDS/TCS under GST rules.

9. Voluntary Registration

1. Even if not required, businesses can register voluntarily to claim input tax credit and appear more credible.

Documents required for registration:

1. Documents for Individuals & Sole Proprietors

PAN Card: Your Permanent Account Number (PAN) is mandatory.

Aadhaar Card: Aadhaar is required for identity verification.

Photograph: A recent passport-size photo.

1. Business Address Proof: Any of the following:
2. Electricity bill
3. Rent agreement (if rented)
4. Property tax receipt (if owned)

Bank Account Details: A copy of your bank statement or a canceled cheque.

2. Documents for Partnership Firms

1. PAN Card of the Firm: The partnership firm must have a PAN card.
2. Partnership Deed: A legal document showing the agreement between partners.
3. Aadhaar and PAN of Partners: Each partner must provide their PAN and Aadhaar.
4. Photographs of Partners: A recent passport-size photo of each partner.
5. Business Address Proof: Rent agreement, electricity bill, or property tax receipt.
6. Bank Account Details: A bank statement or a canceled cheque.

3. Documents for Private Limited Companies

1. PAN Card of Company: The company must have a PAN card.
2. Certificate of Incorporation: A government-issued document proving your company’s existence.
3. Memorandum & Articles of Association (MOA & AOA): These are legal documents that define the company’s rules.
4. PAN and Aadhaar of Directors: Each director must submit their PAN and Aadhaar.
5. Photographs of Directors: Passport-size photos of all directors.
6. Business Address Proof: Rent agreement, electricity bill, or property tax receipt.
7. Bank Account Details: A bank statement or a canceled cheque.

4. Documents for Limited Liability Partnership (LLP)

1. PAN Card of LLP: The LLP must have a PAN card.
2. LLP Agreement: A legal document defining the LLP’s rules and roles of partners.
3. Certificate of Incorporation: Issued by the Ministry of Corporate Affairs.
4. PAN and Aadhaar of Partners: Each partner must provide their PAN and Aadhaar.
5. Photographs of Partners: A passport-size photo of each partner.
6. Business Address Proof: Rent agreement, electricity bill, or property tax receipt.
7. Bank Account Details: A bank statement or a canceled cheque.

5. Documents for Trusts and Societies

1. PAN Card of Trust/Society: A PAN card in the name of the trust or society.
2. Trust Deed or Registration Certificate: Legal documents proving the trust or society’s formation.
3. PAN and Aadhaar of Trustees: Each trustee must provide their PAN and Aadhaar.
4. Photographs of Trustees: Passport-size photos of all trustees.
5. Business Address Proof: Rent agreement, electricity bill, or property tax receipt.
6. Bank Account Details: A bank statement or a canceled cheque.

Sometimes, the GST department may ask for extra documents, such as:

Authorization Letter: If someone else is applying for GST on your behalf.

Board Resolution: For companies authorizing a director to apply.

NOC (No Objection Certificate): If the business address is owned by someone else.

Conclusion

The Goods and Services Tax (GST) Act marks a transformative reform in India’s indirect tax system. By replacing a multitude of complex and overlapping central and state taxes, GST has established a unified, transparent, and efficient tax structure. It simplifies compliance, reduces the cascading effect of taxes, promotes ease of doing business, and fosters the creation of a common national market.

Implemented through a combination of the CGST, SGST/UTGST, IGST, and Compensation to States Acts, GST ensures cooperative federalism by empowering both the Centre and the States. With its digital-first approach, seamless input tax credit mechanism, and destination-based taxation model, the GST Act is a cornerstone of India’s modern tax administration and a key driver of economic formalization and growth.