Full form of GST: – GST stands for Goods and Services Tax. GST is a tax on goods and services with added value in each stage that has a comprehensive and continuous chain of benefits from the point of the producer / service provider to the level of retailers where only the final consumer must pay the tax.
Meaning of the goods
Assets means all types of movable property that are not money and values, but includes processable claims, crops, pasture and things that are attached or that are part of the land, which are agreed to be served before the supply or under a supply contract.
DUE TO GST WHAT IS EXPENSIVE AND CHEAPER
- EXPENSIVE: mobile services, banking services, luxury items such as hotels, medical care, diamonds.
- CHEAPER – Fruits, vegetables, eggs, milk, two wheels, tea, coffee.
History of GSt
In the 1950s, the concept behind GST was invented by a French tax official. In some countries it is known as VAT or Value Added Tax. In this present context, this form of taxation is practiced in more than 160 countries, including the European Union and Asian countries such as Sri Lanka, Singapore and China. Approximately 90 percent of the world’s population lives in countries with VAT or GST.
GST IN OTHER COUNTRIES
Among the last countries to adopt GST are Seychelles, Congo, The Gambia and Malaysia. Malaysia launched GST in 2015 after an intense debate that lasted for 26 years. This led to a sharp increase in inflation despite the fact that revenues increased considerably. The inflationary trend took a year to diminish.
Similar trends were observed in Australia and New Zealand, where the price increase followed the deployment of GST. Canada is the other country than India that has a separate state GST. Here too, inflation rose after changing to a new fiscal regime.
The GST would be imposed on a common basis by both the central government and the state government simultaneously. The dual GST can be characterized into;
- Central GST (CGST) – GST will be raised by the central government.
- State GST (SGST): the GST will be collected by the states and territories of the Union with a legislature.
- Territory of the Union GST (UTGST) – GST imposed by the Territories of the Union without legislature.
- Integrated GST (IGST): GST imposed by the central government on the provision of goods and services between states to ensure that the chain of credit is not interrupted. Apart from the applicable customs duties, the importation of goods and services would be treated as interstate supplies and, therefore, would be subject to IGST.
- GSTC (GST Council) would be responsible for deciding the rates of CGST, IGST and SGST / UTGST with the mutual agreement of the states and the center.
Objectives/ Purposes of GST
One of the main objectives of the Tax on Goods and Services (GST) would be to eliminate the cascading effects of taxes on the costs of production and distribution of goods and services. The exclusion of cascading effects, that is, the tax on taxes, will significantly improve the competitiveness of original goods and services in the market, which has a beneficial impact on the country’s GDP growth. It is considered that the GST would be a superior reason to achieve the objective of rationalizing the indirect tax regime in India, which can eliminate cascading effects in the supply chain to the level of final consumers.
- One country – one tax
- Tax based on consumption instead of manufacturing.
- Uniform GST registration, payment.
- To eliminate the cascading effect of indirect taxes / duplication of taxes / taxes
- Include all indirect taxes at central and state level
- Reduce tax evasion and corruption.
- Increase productivity
- Increase in the tax on GDP and surplus income.
GST Salient FEATURES
- Double model GST
- Consumption tax based on the destination.
- Taxes to subsume.
Central tax – central special tax
- Service tax
- Surcharges and cess
- State tax – VAT
- Entertainment tax
- luxury tax
- Taxes on lottery, betting.
Octroi – entry tax
- GST in import and export
- Calculation of GST based on invoice credit method
- Payment of GST: CGST and SGST are paid through GST
BASIC SCHEME / GST COMPOSITION SCHEME
- Intimation and effective date for the composition tax.
- For people already registered under the pre-GST regime
- For people who requested a new registration under GST to apply for the scheme.
- Effective date for the composition levy.
- The option of paying taxes under the composition scheme will be effective.
- For people who requested a new registration under GST to apply for the scheme
- Conditions and restrictions for the composition levy.
- The person who opts for the plan should not be a casual passive subject or a non-resident taxpayer.
- The goods must be interstate purchases, imported goods, branches located outside the state.
- Mandatory display of invoices.
- Validity of the composition levy – compliance with conditions, application for presentation.
- Composition scheme under GST – Compliance
- Tax rate
Advantages of GST
- GST reduces the number of indirect taxes as it is a transparent tax.
- GST will not be a cost for registered retailers, therefore, there will be no hidden taxes and the cost of doing business will be lower.
- Benefit people as prices will fall, which in turn will help companies as consumption increases.
- There is no doubt that in the production and distribution of goods, services are used or consumed more and more and vice versa.
- Separate taxes for goods and services, which is the current tax system, require the division of transaction values into the value of goods and services for taxation, which leads to greater complications, the administration, including the costs of fulfillment.
- In the GST system, when all taxes are integrated, it would be possible to divide equally the fiscal burden between manufacturing and services.
- The GST will be applied only in the final destination of the consumption according to the VAT principle and not in several points (from manufacturing to the points of sale). This will help eliminate economic distortions and promote the development of a common national market.
- GST will also help build a transparent and corruption-free tax administration.
- Currently, a tax is charged when a finished product leaves a factory, paid by the manufacturer, and collected again at the point of sale when it is sold.
- GST is backed by GSTN, which is a fully integrated tax platform to address all aspects of GST.
Disadvantages of GST
- Increase in costs for software purchases.
Companies must upgrade their existing accounting or ERP software to one compatible with GST or buy GST software so they can continue with their business. But both the options lead to a higher cost of purchasing software and the training of employees for an efficient use of the new billing software.
Clear Tax is the first company in India to launch a ready-to-use GST software called Clear tax GST. The software is currently available free of charge to SMEs, which helps them make the transition to GST without problems. It has really relieved people’s pain in many ways.
- Be compatible with GST
Small and medium-sized enterprises (SMEs) that have not yet signed up for GST should quickly understand the nuances of GST’s tax regime. They will have to issue GST claim invoices, comply with the digital registration and, of course, submit the declarations in a timely manner. This means that the GST claim invoice issued must have mandatory details such as GSTIN, place of supply, HSN codes and others.
Clear Tax has made it easier for SMBs with the Clear Tax Bill Book web application. This application is available for FREE until the end of September and is an easy solution for this problem. This will help all companies issue invoices compatible with GST to their customers. These same invoices can be used for the presentation of statements through the Clear Tax GST platform.
- GST will mean an increment in operational costs.
As we have already established that GST is changing the way taxes are paid, companies will now have to hire tax professionals to file a complaint with GST. This will gradually increase costs for small businesses, since they will have to bear the additional cost of hiring experts.
In addition, companies must train their employees in compliance with GST, which will further increase their overhead.
- GST came into force in the middle of the year.
As the GST was implemented on July 1, 2017, the companies followed the old tax structure during the first 3 months (April, May and June) and the GST during the rest of the financial year.
Companies may find it difficult to adapt to the new tax regime, and some of them are executing these tax systems in parallel, which generates problems of confusion and compliance.
- GST is an online tax system.
Unlike what happened previously, companies are now changing from billing and presentation in paper and pen to submitting statements online and making payments. This could be difficult for some smaller companies to adapt.
Cloud-based GST billing software such as the Clear Tax GST billing software is definitely an answer to this problem. The process to present the statement in Clear Tax GST is very simple. Business owners should only load their invoices, and the software will complete the return forms automatically with the invoice information. Any error in the invoices will be clearly identified by the software in real time, thus increasing efficiency and punctuality.
- SMEs will have a higher tax burden.
Smaller companies, especially in the manufacturing sector, will face difficulties in the framework of GST. Previously, only companies whose turnover exceeded 1.5 million rupees had to pay special taxes. But now, any company whose turnover exceeds Rs 20 lakh will have to pay GST.
However, SMEs with a turnover of up to Rs 75 lakh can opt for the composition scheme and pay only 1% of taxes on turnover instead of GST and enjoy less compliance. However, the problem is that these companies will not be able to claim any tax credit for supplies. The decision to choose between higher taxes or the composition scheme (and, therefore, not the ITC) will be difficult for many SMEs.
PRINCIPLES SUBSUMED TO TAXES UNDER GST
(i) The taxes to be subsumed must be mainly indirect taxes, either on the supply of goods or on the supply of services.
(ii) The taxes that must be subsumed must be part of the chain of transactions that begins with the import / manufacture / production of goods or the provision of the consumption of goods and services at the one end and provision of services at another end.
(iii) The subsuming must result in a free flow of tax credit at the intra and interstate levels.
(iv) Income equity should be attempted for both the Union and individual States.
ADVANTAGES / BENEFITS OF GST IMPLEMENTATION
Advantages of GST for citizens:
(i) Simplest tax system
(ii) Reduction in the prices of goods and services due to the elimination of the waterfall.
(iii) Uniform prices throughout the country.
(iv) Transparency in the tax system.
(v) Increase in employment opportunities.
Advantages of GST to trade / industry:
(i) Reduction in the multiplicity of taxes.
(ii) Mitigation of the waterfall / double taxation.
(iii) More efficient tax neutralization especially for exports.
(iv) Development of the common national market.
(v) Simplest tax regime, less fees and exemptions.
GST or VAT
The only distinction between the two terms is the country in which they are used. In countries that include Australia, New Zealand, Singapore, India and others. VAT (Value Added Tax) is the term used in the United Kingdom, Ireland, South Africa and more.
The GST rate may vary by country, or may be affected by the particular industry or the goods or services being sold, for example, India currently has five different GST rates. The standard GST rates for the countries mentioned above are the following:
New Zealand: 15%
India: 0%, 5%, 12%, 18%, 28%
However, there are some products and services that are considered free of GST.
To register or not register for GST
In many countries, GST registration is not required unless your turnover exceeds an established amount within one year. In Australia, the amount of 2018 is $ 75,000 gross (less GST). There are also other stipulations that require the registration of GST, such as:
If you run a charitable organization that has a turnover of more than $ 150,000 per year
You own and operate a taxi or limousine service where customers pay a fee.
You want to claim return and / or fuel taxes.
If your business is not in one of these categories, in Australia, it is optional if you choose to register your business under GST.
The choice to register for GST depends on how much GST charges in your company with the GST charges and whether you want to be able to claim it when the time comes for filing tax returns.
Products and services free of GST.
There are certain goods and services in most countries that are considered exempt from GST charges; in other words, they are “free of GST”.
In Australia, the most commonly free GST items include, for example:
- The majority of food products
- Qualifying education courses
- Qualified childcare services
- Sales in duty-free stores.
- Qualified religious and charitable services.
The above is a short list of some of the products and services that may be considered free of GST. If you have any questions about whether your business is about GST-free products or services, contact your accounting professional.
How to add GST to invoices
When creating an invoice, it is important that the correct GST rate is added for each item included in the invoice. If you work with GST-free products or services, the GST should not be included for those items in your invoice lines. However, GST must be applied to other items on the same invoice, if necessary.
If you use Word or Excel invoice templates, you need to manually calculate the necessary GST amounts or set up an equation (in Excel) to help with the calculations. However, it is important to update them for any item that has a different tax rate or that does not have GST.
Today, fortunately, there are alternatives to manually handling the amounts for different tax percentages, or to spend some time investigating if you have configured the correct Excel equation in the correct spreadsheet cell. Online billing software can help you say goodbye to that tedious job.
GST and billing software
Billing and accounting software such as Debitoor gives you the tools to easily include GST in your invoices. If you deal with products or services with different tax rates, these can be saved to your account, which means that you do not need to update them for each new invoice.
In addition, the GST amounts are automatically calculated on each invoice you create as soon as you add your product or service with a click on the drop-down menu. It is easy.
Breaking down the Tax on Goods and Services (GST)
The tax on goods and services (GST) is an indirect federal sales tax that is applied to the cost of certain goods and services. The business adds the GST to the price of the product, and a customer who buys the product pays the selling price plus the GST. The GST part is collected by the company or seller and sent to the government.
Which countries collect the GST?
France was the first country to implement the GST in 1954, and since then, it is estimated that 160 countries have adopted this tax system in one form or another. Canada, Vietnam, Australia, Singapore, United Kingdom, Monaco, Spain, Italy, Nigeria, Brazil, South Korea and India are the some of the countries with a GST.
How GST systems work
Most countries with a GST have a single unified GST system, which means that a single tax rate applies throughout the country. A country with a unified GST platform merges central taxes (for example, sales tax, excise tax, and service tax) with taxes at the state level (for example, entertainment tax). , the entrance tax, the transfer tax, the sin tax and the luxury tax) and collects them as a single tax. These countries pay practically everything at a single rate.
Many countries in the world have a single unified GST system, that is, a single tax applicable throughout the country. However, in federal countries such as Brazil and Canada, a dual GST system In India, a dual GST is proposed through which a Central Tax on Goods and Services (CGST) and a State Tax on Goods and Services (SGST) will be applied. the taxable value of each transaction of supply of goods and services.
BENEFITS OF DUAL GST
- Reduction in the number of taxes at Central and State level.
- Decrease in the effective tax rate for many goods
- Elimination of the current waterfall effect of taxes.
- Reduction of transaction costs of taxpayers through simplified tax compliance.
- Increased tax collection due to a broader tax base and better compliance
- Best for business
- Good balance between center and states
- Best for business
- Less changes, more benefits.
#2 Full form of GST
GST – Gulf Standard Time
GST stands for Gulf Standard Time. Standard Gulf time is four hours ahead of the coordinated universal time standard, written as a UTC + 4:00 offset. That means that to find the standard time in the area, you must add four hours to the coordinated universal time.
Gulf Standard Time is not adjusted for daylight saving time, therefore, GST remains the same throughout the year. This means that, unlike some time zones in which the clock advances one hour each summer and back one hour during the winter to adjust the summer time, the standard Gulf time remains the same.
The territories that observe the time zone are found mainly in southwestern Asia. These Asian countries observe the Gulf Standard Time or GST throughout the year, and do not observe the summer time.
Locations in the Gulf Standard Time Zone
The following countries are included in this time zone:
United Arab Emirates
Email time zone indicator: +0400
An email sent by someone in the time zone of the Gulf Standard Time (GST) will have the time zone as “+0400” in the email headers. (However, “+0400” does not have to be in the Gulf Standard Time, since other time zones could have the same UTC offset).