GST (Goods and Services Tax) is a comprehensive, multistage, destinationbased tax that is levied on every value addition in the supply chain of goods and services. It replaces a multitude of indirect taxes that were previously levied by central and state governments.
2. Who needs to pay GST?
Any person or business that makes taxable supplies of goods or services and whose turnover exceeds the prescribed limit must register for GST and charge tax on its sales.
3. What are the main components of GST?
CGST Central Goods and Services Tax, collected by the Union government.
SGST/UTGST State/Union Territory Goods and Services Tax, collected by the respective state or UT.
IGST Integrated Goods and Services Tax, applicable on interstate supplies and collected by the Centre.
4. What is the GST rate structure?
India currently has four primary rate slabs: 0%, 5%, 12%, and 18%, with a special 28% rate for luxury and sin items. Certain items such as essential food grains are exempt.
Registration
5. Who is required to register for GST?
Any person, business or entity making taxable supplies whose aggregate turnover exceeds the threshold (40lakhs for most states, 20lakhs for special category states) must register. Voluntary registration is also allowed for businesses below the threshold.
6. How do I apply for GST registration?
Visit the GST portal (www.gst.gov.in).
Complete the online application (Form ITR01) and upload the required documents (PAN, Aadhaar, proof of address, bank details, etc.).
Submit the application and obtain an Application Reference Number (ARN).
After verification, the GSTIN (GST Identification Number) is issued.
7. What documents are needed for registration?
Common documents include:
PAN card of the business
Aadhaar card of the proprietor/partner/director
Proof of business address (rent agreement, electricity bill, etc.)
Bank account details and cancelled cheque
Certificate of incorporation / partnership deed (for companies, LLPs, partnerships)
8. Can a foreign entity obtain a GSTIN?
Yes, a foreign company can register under GST if it supplies goods or services in India. It must appoint a local authorized signatory and provide a valid Indian address.
Returns & Payments
9. How often must GST returns be filed?
GSTR1, GSTR3B and other periodical returns are filed monthly. Certain small taxpayers may be eligible for quarterly filing.
10. What is the difference between GSTR1 and GSTR3B?
GSTR1 Details of outward supplies (sales) to be uploaded by the 11th of the following month.
GSTR3B Summary return for both outward and inward supplies along with tax payment; due by the 20th of the following month.
11. How is GST payment made?
Payments can be made online through the GST portal using net banking, credit/debit cards, or NEFT/RTGS. The amount payable is the net tax liability after adjusting input tax credit.
12. What is Input Tax Credit (ITC)?
ITC allows a taxpayer to claim credit for GST paid on purchases (inputs) against the tax collected on sales (outputs). Credit can be claimed only if the supplier has filed their return and the invoice complies with GST regulations.
13. What happens if I miss a filing deadline?
Late filing attracts a penalty of 100 per day (or 1% of tax payable, whichever is higher). Continuous defaults may lead to interest, cancellation of registration, or prosecution.
The tax authority may issue a notice to examine books, returns, and supporting documents. The taxpayer must provide access within the stipulated period. Findings may lead to demand notices, interest, or penalties.
16. What is a Composition Scheme?
A simplified tax scheme for small taxpayers with turnover up to 1.5crore (75lakhs for specific states). Tax is paid at a fixed percentage on turnover, and detailed returns are not required. However, composition taxpayers cannot claim ITC.
17. How are GST refunds processed?
Refunds may arise from excess payment, export of goods/services, or inverted duty structures. Refund claims are filed through the portal (Form RFD01). The authority verifies the claim and, if approved, issues the refund within 60 days.
Other Common Queries
18. Is GST applicable on online services?
Yes. All supplies of services including digital services, SaaS, streaming, and ecommerce are taxable. For nonresident service providers, the reverse charge mechanism may apply.
19. What is the difference between taxable and exempt supplies?
Taxable supplies attract GST at the applicable rate, while exempt supplies are not subject to GST at all and no ITC can be claimed on inputs used for such supplies.
20. How does GST affect imports?
Imports are treated as intrastate supplies. IGST is levied at the time of customs clearance, and the importer can claim ITC subject to compliance.
21. Can I transition from regular GST to the composition scheme midyear?
Yes, but the change can be made only at the beginning of a financial year and must be communicated to the tax authority using Form GST CMP04.
22. What is the Reverse Charge Mechanism (RCM)?
Under RCM, the liability to pay GST shifts from the supplier to the recipient. It applies to specific categories of goods/services (e.g., legal services from a lawyer, certain minerals, and imports).
23. How are GST rates determined for new products?
The GST Council reviews and classifies goods/services into appropriate rate slabs based on factors such as essentiality, luxury status, and fiscal impact.
24. What is HSN Code and why is it important?
HSN (Harmonized System of Nomenclature) codes classify goods for taxation. From a turnover of 5crore onwards, businesses must mention the HSN code on invoices and returns.
25. Is GST applicable on charitable activities?
Charitable activities that involve the supply of goods or services for consideration are taxable. However, donations received without consideration are not subject to GST.
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