Frequently Asked Questions About GST

GST stands for Goods and Services Tax. It is a comprehensive indirect tax levied on the manufacture, sale, and consumption of goods and services in India. GST replaced multiple indirect taxes like VAT, Service Tax, Excise Duty, and others when it was implemented on July 1, 2017.

GST was officially implemented in India on July 1, 2017, at a historic midnight session of Parliament. It replaced the complex web of central and state taxes with a unified tax structure.

There are three main types of GST in India:

• CGST (Central GST): Collected by the Central Government on intra-state supplies
• SGST (State GST): Collected by State Governments on intra-state supplies
• IGST (Integrated GST): Collected by the Central Government on inter-state supplies

For Union Territories without legislature, UTGST (Union Territory GST) applies instead of SGST.

GSTIN stands for Goods and Services Tax Identification Number. It is a 15-digit unique identification number assigned to every GST-registered taxpayer in India. The format is: 2-digit state code + 10-digit PAN + 1-digit entity code + 1-digit checksum + 1 default alphabet.

The GST Council is the governing body that makes decisions on GST rates, rules, and regulations. It is chaired by the Union Finance Minister and includes Finance Ministers from all states and union territories. The Council meets regularly to review and modify GST policies.

GST registration is mandatory for:

• Businesses with turnover exceeding ₹40 lakhs for goods (₹20 lakhs for special category states)
• Service providers with turnover exceeding ₹20 lakhs (₹10 lakhs for special category states)
• Inter-state suppliers regardless of turnover
• E-commerce operators and sellers on e-commerce platforms
• Casual taxable persons and non-resident taxable persons
• Persons liable to pay tax under reverse charge mechanism
• Input Service Distributors

GST registration is done online through the GST portal (www.gst.gov.in). The process involves:

1. Visit the GST portal and click on "New Registration"
2. Fill Part A with PAN, email, and mobile number
3. Verify contact details using OTP
4. Receive Temporary Reference Number (TRN)
5. Complete Part B with business details, documents, and bank information
6. Submit application using DSC, e-Sign, or EVC
7. Receive Application Reference Number (ARN) for tracking

Common documents required include:

• PAN card of the business/applicant
• Aadhaar card of the applicant
• Proof of business registration (incorporation certificate, partnership deed, etc.)
• Photograph of the applicant
• Address proof of place of business
• Bank account details (cancelled cheque or statement)
• Digital Signature Certificate (for companies and LLPs)

If all documents are in order and there are no discrepancies, GST registration is typically processed within 3-7 working days. However, if the GST officer raises any query or requires clarification, the process may take longer until the query is resolved.

No, the government does not charge any fee for GST registration. The process is completely free. However, if you engage a GST practitioner, chartered accountant, or consultant to assist with the registration process, they may charge professional fees for their services.

Yes, you can have multiple GST registrations:

• Separate registration for each state where you operate
• Multiple registrations for different business verticals within the same state (optional)
• Each registration will have a unique GSTIN with a different entity code

The composition scheme is an optional scheme for small taxpayers to reduce compliance burden. Key features:

• Eligible for businesses with turnover up to ₹1.5 crore (₹75 lakhs for special states)
• Pay tax at fixed rates (1% for traders, 2% for manufacturers, 5% for restaurants, 6% for services)
• File quarterly returns instead of monthly
• Cannot claim input tax credit
• Cannot make inter-state sales of goods
• Cannot issue tax invoices

GST can be calculated using these formulas:

For adding GST:

GST Amount = (Original Cost × GST Rate) / 100

Total Amount = Original Cost + GST Amount

For removing GST (reverse calculation):

GST Amount = (Total Cost × GST Rate) / (100 + GST Rate)

Base Amount = Total Cost - GST Amount

GST in India has the following rate slabs:

• 0% (Nil): Essential items like fresh food, milk, unbranded atta
• 0.25%: Rough diamonds
• 3%: Gold, silver, and precious metals
• 5%: Basic necessities like edible oil, tea, coffee, coal
• 12%: Processed foods, mobile phones, Ayurvedic medicines
• 18%: Most goods and services (standard rate)
• 28%: Luxury goods, automobiles, tobacco, aerated drinks

For intra-state transactions (within the same state), the total GST is split equally between CGST and SGST:

• If GST rate is 18%, then CGST = 9% and SGST = 9%
• If GST rate is 5%, then CGST = 2.5% and SGST = 2.5%

For example, on a ₹10,000 transaction with 18% GST:

CGST = ₹900 (9%)

SGST = ₹900 (9%)

Total GST = ₹1,800

IGST (Integrated GST) applies to inter-state transactions (between different states). The full GST rate is charged as IGST, which is then shared between the Centre and the destination state.

CGST + SGST applies to intra-state transactions (within the same state). The GST is split equally between Central GST (CGST) and State GST (SGST).

For example, for 18% GST:

• Inter-state: IGST = 18%
• Intra-state: CGST = 9% + SGST = 9%

To extract GST from a total amount (GST inclusive):

Formula: GST Amount = (Total Amount × GST Rate) / (100 + GST Rate)

Example: Total amount is ₹1,180 with 18% GST

GST = (1,180 × 18) / 118 = ₹180

Base Amount = 1,180 - 180 = ₹1,000

GST is calculated on the transaction value (actual selling price), not on the MRP. If you offer discounts, GST is calculated on the discounted price.

Example:

MRP = ₹1,000

Discount = 10% (₹100)

Selling Price = ₹900

GST @ 18% = ₹162 (calculated on ₹900, not ₹1,000)

Main GST returns include:

• GSTR-1: Details of outward supplies (monthly/quarterly)
• GSTR-3B: Summary return with tax payment (monthly/quarterly)
• GSTR-4: Return for composition dealers (quarterly)
• GSTR-5: Return for non-resident taxable persons
• GSTR-6: Return for Input Service Distributors
• GSTR-7: Return for TDS deductors
• GSTR-8: Return for e-commerce operators
• GSTR-9: Annual return
• GSTR-9C: Reconciliation statement (for turnover above ₹5 crore)

Due dates for regular taxpayers:

• GSTR-1: 11th of the following month (monthly) or 13th of the month following the quarter (quarterly)
• GSTR-3B: 20th of the following month (monthly) or 22nd/24th of the month following the quarter (quarterly)
• GSTR-9 (Annual): 31st December of the following financial year

Note: Due dates may be extended by the government through notifications.

Late filing penalties:

• Normal returns (GSTR-1, GSTR-3B): ₹50 per day of delay (₹25 CGST + ₹25 SGST), maximum ₹10,000
• Nil returns: ₹20 per day of delay (₹10 CGST + ₹10 SGST), maximum ₹10,000
• Annual return (GSTR-9): ₹200 per day (₹100 CGST + ₹100 SGST), up to 0.25% of turnover

Additionally, interest at 18% per annum is charged on the tax amount due.

No, GST returns cannot be revised once filed. However, you can make corrections in the subsequent return:

• Omitted invoices can be added in the next month's GSTR-1
• Excess tax paid can be adjusted in subsequent returns
• Short tax paid must be paid with interest

Input Tax Credit is the credit that businesses can claim for the GST paid on purchases (inputs, input services, and capital goods) against the GST payable on sales. ITC helps eliminate the cascading effect of taxes and reduces the overall tax burden.

To claim ITC, the following conditions must be met:

• Possession of a valid tax invoice or debit note
• Goods or services have been received
• Supplier has paid the tax to the government
• Supplier has filed the return
• ITC is claimed within the prescribed time limit
• Payment to supplier within 180 days (for goods/services other than reverse charge)

No, ITC cannot be claimed on certain purchases:

• Motor vehicles (except for specified uses like transportation of goods, passenger transport, or driving school)
• Food, beverages, outdoor catering (except where obligatory)
• Beauty treatment, health services, cosmetic surgery
• Membership of clubs, health and fitness centers
• Travel benefits to employees on vacation
• Insurance, repair and maintenance of motor vehicles
• Goods/services used for construction of immovable property (other than plant and machinery)
• Goods/services used for exempt supplies or personal use

ITC must be claimed:

• By the due date of filing the return for September of the following financial year, OR
• By the date of filing the annual return (GSTR-9), whichever is earlier

Any ITC not claimed within this period will lapse and cannot be claimed.

Under reverse charge mechanism, the recipient of goods or services is liable to pay GST directly to the government instead of the supplier. The recipient can then claim ITC if eligible. RCM applies to specific categories of goods and services as notified by the government.

Services under reverse charge include:

• Legal services by advocates/firms to business entities
• Goods Transport Agency (GTA) services (to specified recipients)
• Services provided by a director to the company
• Services by insurance agents to insurance companies
• Services by recovery agents to banks/NBFCs
• Services by authors to publishers
• Import of services

To pay GST under reverse charge:

1. The supplier issues an invoice without GST
2. The recipient calculates GST on the invoice amount
3. The recipient pays GST directly to the government through the GST portal
4. The recipient reports the transaction in GSTR-3B under reverse charge
5. The recipient can claim ITC of the GST paid under RCM (if eligible)

An e-way bill is an electronic document required for the movement of goods worth more than ₹50,000. It contains details of the goods, consignor, consignee, and transporter. E-way bills are generated on the GST portal or through SMS.

E-way bill is required for:

• Inter-state movement of goods worth more than ₹50,000
• Intra-state movement (threshold varies by state, generally ₹50,000 or ₹1,00,000)
• Supply, return, or job work purposes

E-way bill is not required for certain exempted goods and specific categories of movements.

E-way bill should be generated by:

• Registered person: When causing movement of goods (as consignor or consignee)
• Transporter: If the registered person has not generated the e-way bill
• Unregistered person: If supplying to a registered person (registered recipient generates)

Exports are treated as zero-rated supplies under GST. This means:

• GST is charged at 0% on exports
• Exporters can claim refund of input tax credit
• Or export under bond/LUT without payment of IGST

This makes Indian exports competitive in the international market.

Imports are treated as inter-state supplies and attract IGST. Additionally:

• Basic Customs Duty (BCD) is also applicable
• Compensation Cess may apply to certain goods
• IGST is calculated on the value including BCD
• IGST paid on imports is available as input tax credit immediately

A GST tax invoice must contain:

• Name, address, and GSTIN of the supplier
• Invoice number (unique and consecutive)
• Date of issue
• Name, address, and GSTIN of the recipient (if registered)
• HSN code for goods or SAC code for services
• Description of goods/services
• Quantity and unit (for goods)
• Taxable value
• Rate of tax (CGST, SGST, IGST, UTGST, cess)
• Amount of tax
• Signature or digital signature of supplier

For Goods:

• Before or at the time of removal of goods (if movement involved)
• Before or at the time of delivery (if no movement)
• On receipt of advance payment (if advance received)

For Services:

• Within 30 days of supply of service
• Within 45 days for banking and financial services
• On receipt of advance payment (if advance received)

Penalties for various non-compliances:

• Non-registration: 10% of tax due or ₹10,000, whichever is higher
• Non-filing of returns: ₹50 per day of delay (max ₹10,000)
• Short payment of tax: 10% of tax short-paid or ₹10,000
• Fraudulent activities: 100% of tax evaded
• Incorrect invoicing: Up to ₹25,000

Yes, GST registration can be cancelled in the following cases:

• Discontinuation of business
• Transfer of business (merger, amalgamation)
• Change in constitution of business
• Turnover falls below threshold
• Death of sole proprietor
• Non-compliance with GST rules (by tax authority)

Application for cancellation is filed using Form GST REG-16.