Goods & Service Tax: 5 Vital Things You Need to Know

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Goods & Service Tax (GST) has played an important role in unifying several indirect taxes for businesses in India. Since 2017, GST has impacted businesses in India in several ways. GST was the exact implementation of the ‘One Country, One Tax Scheme’ theory. A single tax regime was implemented by GST for the supply of goods/services from the manufacturer to the consumer. Every business owner should know several aspects of GST to comply with the norms. Failing GST norms can land an Indian business in legal trouble.

Read on to know things that you should know about GST and GST services.

Working of GST in India

GST is implemented in the state where goods and services are bought by the customer. It is not applied based on the state where goods and services were manufactured. It is why many tax experts call GST a destination-based tax. At every point of sale, GST is included in the cost of any product/service which the customer has to pay.

There aren’t any state-specific indirect taxes applied after the introduction of GST in India. All indirect taxes of central and state governments are compiled under GST for a better tax regime. However, some products and services are not counted under GST as they are counted under VAT (Value Added Tax). At every stage of the supply chain, VAT is applied for some products and services in India. GST is a globally-recognized tax scheme and brings India at par with the world market.

Structure of GST in India

GST consists of four classes that are 5%, 12%, 18%, and 28%. Each class of GST consists of several products and services. Business owners should know the GST class under which their product/service falls. You can partner with a firm that offers GST services for complying with the GST norms. Still, one should know the basic rules of GST and how it is implemented across India. At frequent intervals, GST council meetings are conducted in India. During the council meetings, the GST class of some products/services can be changed. It is better to keep an eye on the decisions made in the GST council meetings.

Special scenarios for GST in India

Business owners should know about GST exceptions and exemptions. If a business is supplying products or services in any ‘Special Economic Zone’, it will be exempted from GST. For doing so, you can claim a refund on the paid GST or can supply products/services under a government bond. While all products and services are divided under different GST classes, some of them attract extra GST charges. For example, the supply of precious stones in India attracts additional GST.

The dual structure of GST in India

Different indirect taxes imposed by state and central authorities are compiled into one via GST. It does not mean that only one of them has the authority to implement GST. GST has a dual structure and can be implemented by the central government or state/union territory government. CGST is monitored and levied by the central government of India. On the other hand, SGST/UGST is applied by state/union territory governments. The central government of India can also apply IGST (Integrated GST) for the supply of goods between different states. The state governments do not have the authority to apply IGST in India.

Classification of products and services in India under GST

HSN (Harmonized System of Nomenclature) is used by the government of India to classify traded products under GST. The HSN coding system is globally accepted and used in many countries to decide tax rates. For deciding the GST rates for services in India, SAC (Services Accounting Code) is followed.

If you are still confused about GST rates, you can contact a CA firm that offers GST services. A reputed CA firm has many tax experts that are fully aware of the GST landscape. Tax experts can help in making use of GST tax credits and schemes offered by the government of India.

Conclusion

One may think of hiring in-house GST experts for their organization. However, it may result in high recruitment and training costs for business organizations in India. It is better to outsource the GST compliance process to a reputed third party. Contact a CA firm for better GST compliance!