GST would replace the web of indirect taxes. ClearTax.in answers a few basic questions that are being asked by small business owners, entrepreneurs and self-employed professionals.
Do you need GST registration?
Any person who sells goods and/or provides services of more than Rs 20 lakh (Rs 10 lakh for North East states) in a financial year must seek registration under GST. Those making inter-state supplies or supplies via e-commerce must mandatorily register, no threshold limit is applicable to these. Taxpayers already registered under VAT/service tax also need to migrate and register under GST.
How will GST registration help?
Registering under GST allows you to claim input tax credit. Which means, at the time of paying GST which you have collected on your sales, you can reduce the GST you have paid on inputs used for your business. If you are unregistered, businesses to which you supply will have to do compliance on your behalf. Some buyers may avoid dealing with non-registered suppliers due to higher burden of compliance.
How does one get registered?
All existing central excise and service tax registrants and VAT dealers will be migrated to GST. To migrate to GST, a provisional ID and password by the CBEC/State Commercial Tax Departments will be provided. You can use this provisional ID and password to log on to the GST Common Portal (https://www.gst.gov.in). Fill up the form and submit Form 20 along with necessary supporting documents. What happens after registration? Each entity registered under the previous indirect tax laws shall get a certificate of registration on provisional basis. This certificate would be valid for 6 months.
Will GST be very complicated?
All GST compliance will be paperless. GST returns will have to be filed online. Therefore, it will be beneficial to move to an electronic system of record keeping. Details of every B2B invoice will have to be submitted to GSTN. Invoices must also be prepared in the format prescribed under GST Rules. The process of tax payment, tax credit, and refund of GST would be carried out electronically.
Do small, part-time gigs also need to register?
Small businesses and taxpayers with turnover of less than Rs 50 lakh in a financial year can opt for the composition scheme under which they will be taxed at fixed rates; 1% for manufacturers, 2.5% for restaurants, 0.5% for other supplies which may be notified in due course.
Composition dealers will have to file quarterly returns instead of three returns every month. However, they cannot collect tax from customers. They also have to pay GST out of their own pocket and are not allowed to claim any input tax credit. This scheme is not available to those who make interstate sales or sell via e-commerce.
What’s the penalty for non-compliance of GST?
Any person who supplies goods on which tax is not paid or is short paid, must pay a penalty of 10% of the tax amount due or Rs 10,000, whichever is higher. The penalty can be 100% of the tax amount in case of deliberate evasion or fraud. There are other penalties mentioned in the law for non-filing of returns, other non-compliance etc.