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Published on:
February 25, 2023
By
Harshini

GST - Goods  Services Tax (India): What is GST? New Compliances Under GST

The Goods and Services Tax (GST) is a comprehensive tax system that was introduced in India in 2017. This tax system has replaced all the existing indirect taxes such as excise duty, service tax, and value-added tax (VAT). GST is a destination-based tax which means that the tax is levied on the final consumption of goods or services. It is a multi-stage tax system that is levied on each stage of value addition.

Impact of GST on Businesses

The implementation of GST has had a significant impact on businesses in India. It has simplified the process of taxation by replacing multiple indirect taxes with a single tax. This has reduced the compliance burden on businesses and has made it easier for them to do business in India. Under GST, businesses are required to register themselves and obtain a GSTIN (Goods and Services Tax Identification Number). They are also required to file their GST returns on a regular basis.

GST has also made it easier for businesses to conduct inter-state transactions by removing the need for multiple taxes and state-specific rules. This has led to a reduction in logistics costs and has made it easier for businesses to expand their operations across the country. GST has also brought transparency and accountability to the tax system by making it easier to track transactions and detect tax evasion.

What are the New Compliances Under GST?

Businesses that are registered under GST are required to comply with various rules and regulations. The following are some of the new compliances that businesses need to adhere to under GST:

1. GST Registration:

Businesses that have an annual turnover of more than Rs. 20 lakhs are required to register themselves under GST. In the case of businesses located in the North Eastern states, the threshold limit for registration is Rs. 10 lakhs. Businesses that are involved in inter-state transactions are also required to register themselves under GST.

2. GSTIN:

Once a business is registered under GST, it is allotted a GSTIN or Goods and Services Tax Identification Number. This number is a unique 15-digit number that is used to identify the business for all GST-related transactions.

3. GST Returns:

Businesses that are registered under GST are required to file their GST returns on a regular basis. The frequency of filing the returns depends on the turnover of the business. Businesses that have an annual turnover of up to Rs. 1.5 crores are required to file their returns on a quarterly basis. Businesses that have an annual turnover of more than Rs. 1.5 crores are required to file their returns on a monthly basis.

4. Input Tax Credit:

Under GST, businesses are allowed to claim input tax credit for the taxes paid on the inputs used in the production of goods or services. However, businesses are required to maintain proper records of the input tax credit claimed and need to ensure that they do not claim excess input tax credit.

5. E-Way Bill:

The E-Way Bill is a document that needs to be generated for the movement of goods that are worth more than Rs. 50,000. The E-Way Bill needs to be generated for both inter-state and intra-state transactions. The E-Way Bill contains details such as the name of the consignor, consignee, and the details of the goods being transported.

6. TDS and TCS:

Under GST, certain businesses are required to deduct tax at source (TDS) while making payments to suppliers. Similarly, certain e-commerce operators are required to collect tax at source (TCS) while making payments to suppliers. The TDS and TCS rates are specified under the GST law.

7. Audit and Assessment:

Businesses that are registered under GST are required to undergo a GST audit on an annual basis. The audit is conducted to ensure that the business has complied with all the provisions of the GST law. Additionally, the GST department is also empowered to conduct GST assessments to ensure that businesses have complied with the law.

8. Reverse Charge:

Under the reverse charge mechanism, the recipient of goods or services is required to pay the tax instead of the supplier. The reverse charge mechanism is applicable in certain cases such as the purchase of goods or services from an unregistered dealer.

Conclusion

GST has simplified the process of taxation in India by replacing multiple indirect taxes with a single tax. It has reduced the compliance burden on businesses and has made it easier for them to do business in India. However, businesses need to ensure that they comply with all the rules and regulations under GST to avoid penalties and other legal implications.

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Updated on:
March 16, 2024