What is GST? Who collects and administers it?
GST is a tax on economic activity like manufacturing, services or trading. It would be levied on nearly all supplies except those listed as exempted supplies and imports. GST exempt supplies include alcohol for human consumption and five petroleum products (crude, petrol, diesel, ATF & natural gas).
GST replaces eight central and nine State taxes such as Central Excise Duty, Service Tax, CST, State VAT and Entry Tax. The uniform GST rates across States reduce the tax burden and compliance cost.
GST would be collected at each stage of production or distribution. GST would be levied by both the Centre and States simultaneously on a common tax base. Centre will levy and administer CGST & IGST. Respective States will levy and administer State GST.
My annual turnover is ₹5 lakh. Do I need to register for GST?
No GST registration is required for firms with an annual turnover of less than ₹10 lakh for north-eastern States, Himachal Pradesh and Uttarakhand, and ₹20 lakh for the rest of India. But firms selling online need to register irrespective of the turnover.
GST also offers lower tax option for small dealers with turnover below ₹50 lakh. They may choose to pay tax at a flat rate on turnover without credits under the Composition Scheme.
But this option is not available to inter-State suppliers, service providers (except restaurant service) and specified category of manufacturers.
My unit in Himachal Pradesh is exempt from payment of all taxes? How my situation changes post-GST?
To promote manufacturing and employment generation, many States exempted manufacturing firms from payment of VAT and other taxes payable to the State. However, under GST, since the State of manufacture would not collect any tax and hence cannot exempt these. For continuance, exemptions would require reimbursement through the budgetary route.
I have a small unit with a five-people operation. I heard all GST compliances would be online. How do I go about it?
GST mandates electronic filing of returns in strict time-bound fashion and punishes any late filing. To ensure that you meet the requirements, you must join a GST compliance training programme and contact a GST Suvidha provider for help. Start today.
Which domestic taxes will still be levied post GST?
Taxes collected by the Centre: Taxes on income, wealth or gifts, Central Stamp Duties, Clean Environment Cess, Duty of Excise on tobacco and tobacco products; Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freights, Oil Industries Development Act Cess.
Taxes collected by States: Electricity duty, Mandi fee, property tax, State stamp duties
India has GST rates ranging from zero to 28 per cent. What are the average GST rates in other countries?
Japan: 5 per cent, New Zealand: 15, Austria: 20, Australia: 10, Malaysia: 6, Canada: 5, and Singapore: 7 per cent.
(The writer is from the Indian Trade Service. The views are personal. Adapted from his book, ‘The GST Nation: A Guide for Business Transformation’. The article first appeared in The Hindu BusinessLine.)