In the past few months, GST has perhaps been the most discussed topic in the world of Indian Business. While everyone has the idea that GST update is going to make it a lot easier for the businessmen, there are many who are not sure how to go about it. Wydr gives you the clarification for some basic GST queries frequently asked by the small business owners and entrepreneurs.
If you sell goods or provide services of a value of Rs. 20 Lakh or more in a financial year, you must register under GST.
If you are from any of the North East states, you must register under GST if you sell goods or provide services worth Rs. 10 Lakh or more in a financial year.
In case you make inter-state suppvlies of goods, of sell through e-commerce, GST registration is mandatory for you, irrespective of the threshold limit.
If you are a taxpayer, already registered under VAT or Service Tax, you need to migrate and register under GST.
When you register under GST, you can claim Input Tax Credit. As a result, when you will pay GST on your sales, you can reduce the GST you have paid on inputs used for your business. In case you are not registered under GST, your buyers to whom you sell goods will have to comply with the GST conditions on your behalf. So, buyers will naturally avoid buying from you, if your business is not registered under GST.
All VAT dealers and those already registered with Central Excise and Service Tax have to migrate to GST. Here’s the step-by-step process.
The CBEC or State Commercial Tax Departments will provide you with a provisional ID and password.
Use this ID and password to log on to GST Common Portal (https://www.gst.gov.in).
Fill up the form and submit Form 20 along with necessary supporting documents.
You will get a certificate of registration on provisional basis. This certificate would be valid for 6 months.
The entire GST registration and compliance will be paperless. GST returns are to be filed online. So, it would be beneficial for you to move to an electronic system for record keeping. It is mandatory to file all the details of all your B2B invoices to GSTN. Make sure that you prepare invoices in the particular format, as prescribed under the GST rules. All functions like tax payment, tax credit and refund of GST will be carried out electronically.
If you have a small business with an annual turnover of Rs. 50 lakh, you can opt for the composition scheme under which you will be taxed at fixed rates. If you are a manufacturer, it will be 1% tax for you. The tax rate is 2.5% for restaurants and 0.5% for other supplies.
If you are a composition dealer, you will have to file returns on a quarterly basis, instead of filing three returns every month. However, you cannot charge tax on customers. In addition, you have to pay GST out of your own pocket. Furthermore, you cannot claim any input tax credit. However, you cannot avail this scheme if you make interstate sales or sell via e-commerce.
10% of the tax amount due or Rs. 10,000 – whichever is higher. That is the penalty you pay if you supply goods but do not pay GST. In case you make deliberate attempt to evade GST, the penalty may rise upto 100% of the due tax amount. There are also multiple other penalties mentioned in the law for non-filing of GST returns.