Anatomy of Tax Determination Proceedings Under GST in India

The introduction of the Goods and Services Tax (GST) has changed the way businesses in India used to handle indirect taxation. GST has replaced multiple indirect taxes levied by the central and state governments, including VAT, CST, Service Tax, Excise Duty, and more. The introduction of GST has simplified the indirect tax system in India, but it has also increased the compliance requirements for the businesses.

Under GST, the tax determination proceedings have become more structured and streamlined. This article will discuss the anatomy of tax determination proceedings under GST in detail.

What is Tax Determination?

Tax determination is the process of identifying the correct tax rates and tax liabilities for a transaction. Under GST, this process involves determining the correct tax rate applicable to a transaction, calculating the tax liability, and paying the tax.

Stages of Tax Determination Proceedings Under GST

The tax determination proceedings under GST involve the following stages:

Stage 1: Registration

The first stage of tax determination proceedings under GST is registration. Every business that is liable to pay GST has to register with the GST department. The registration process involves obtaining a unique GST registration number, which is used for all future transactions.

Stage 2: Invoice Preparation

The second stage of tax determination proceedings under GST is invoice preparation. Every business has to prepare a tax invoice, which contains the details of the goods or services supplied, along with the tax rate and tax amount.

Stage 3: Input Tax Credit

The third stage of tax determination proceedings under GST is input tax credit. Under GST, businesses can claim input tax credit for the tax paid on the purchase of goods or services used for business purposes. The input tax credit can be claimed only if the tax invoice is valid and the tax has been paid to the government.

Stage 4: Calculation of Tax Liability

The fourth stage of tax determination proceedings under GST is the calculation of tax liability. The tax liability is calculated by multiplying the tax rate with the value of the taxable supply.

Stage 5: Payment of Tax

The final stage of tax determination proceedings under GST is the payment of tax. The tax liability has to be paid to the government within the prescribed time limit.

Factors Affecting Tax Determination Proceedings Under GST

The following factors can affect tax determination proceedings under GST:

Nature of Supply

The nature of supply determines the tax rate applicable to a transaction. There are four types of supplies under GST, namely:

Goods
Services
Composite Supply
Mixed Supply

Place of Supply

The place of supply determines whether the transaction is an intra-state transaction or an inter-state transaction. The tax rate applicable to a transaction depends on whether it is an intra-state transaction or an inter-state transaction.

Type of GST

There are three types of GST under GST, namely:

CGST (Central Goods and Services Tax)
SGST (State Goods and Services Tax)
IGST (Integrated Goods and Services Tax)

The type of GST applicable to a transaction depends on the nature of supply and the place of supply.

Conclusion

The tax determination proceedings under GST are more structured and streamlined compared to the previous indirect tax system. The process involves registration, invoice preparation, input tax credit, calculation of tax liability, and payment of tax. The tax determination proceedings are affected by factors such as the nature of supply, place of supply, and type of GST.