GST is a very complex tax system, and it is but natural to get confused when you try to understand it fully. The sheer number of different aspects, rules, tax slabs, and other categories that are there in GST could create problems in handling taxes or filing returns. There could be issues with simple tasks like understanding the abbreviations or entering correct details while trying to pay taxes. You might come across people looking up igst full form or searching for a GST billing software. Though it is confusing, gaining some basic knowledge will make it easier for you to solve problems that may arise in handling your taxes. Let’s dive into a few useful details.
About GST: Goods and Services Tax is a multi-level, destination-based indirect tax system that has subsumed various taxes. It’s also called “one nation – one tax” because it has created India into a unified common market of $2 trillion economy with 1.3 billion consumers into one market. On 1st July 2017, GST came into effect. Previously, there were various taxes levied at different levels of production of goods. Taxes collected were on the total value of the product at each level. With GST, it is levied only on the value addition of the product at each level. The system of Input Tax Credit provides suppliers with the option to claim a refund for the taxes paid at an earlier stage.
Categories of GST and types of GST returns.
Categories of GST: GST falls under three categories. CGST, which stands for Central Goods and Services Tax, SGST stands for State Goods and Service Tax, and IGST is Integrated Goods and Services Tax. A quick look at what each category does.
- CGST: The Central Goods and Services Tax is levied by the central government on every transaction of goods and services, and the tax collected goes to the center.
- SGST: The State Goods and Services Tax is levied by the state government and is collected by the state government.
- IGST: Integrated Goods and Services Tax levies taxes on the inter-state supply of services and goods and also on the imports and exports. Taxes imposed under this category are collected by the central government and shared between the central and state government.
GST returns: GST returns are basically tax return forms that are required to be filed by individuals and businesses with the income tax department. It is a document reflecting all the details about sales, purchases, input tax credit, output GST in a particular tax period to determine GST tax liability. GST returns can be filed monthly, quarterly, or annually depending on various factors and the different types of GST Returns. Different types of GST Returns are GSTR1, GSTR 1A, GSTR 2, GSTR 2A, GSTR 3, GSTR 3B, GSTR 4, GSTR 4A, GSTR 5, GSTR 5A, GSTR 6, GSTR 7, GSTR 8, GSTR 9, GSTR 9C, GSTR 11. The most important and common among businesses of all types are GSTR 1 and GSTR 9.
- GSTR 1: GSTR 1 is required to be filed before the 11th of every following month of business. It basically contains a record of monthly sales.
- GSTR 9: GSTR 9 is an annual return that is required to be filed once every year by registered taxpayers who come under the regular scheme. Similarly, GSTR 9C is a reconciliation statement between the audited records of accounts and GSTR 9.
GST Slabs / Rates: Prior to the 38th GST Council meeting there were 4 tax slabs 5%, 12%, 18% ,and 28%. The 5th slab of 0.25 was introduced after the discussion by council members. In the meeting, a decision was reached upon that any product that falls under the category of necessity will have a 0% tax slab.
- 5% tax slab: Goods such as milk powder, kerosene, pizza bread, fish fillet, insulin, handmade carpets, etc. fall under this slab. About 14% of goods out of 1300 identified goods fall under this category. Services that fall under this category are transport services such as airlines and railways. Hotels with room tariff less than Rs. 7500. Non AC restaurants etc.
- 12% tax slab: Butter, frozen meat products, tooth powder, umbrella, cell phones, sewing machines, mirrors, etc. are the goods that come under 12% category. Services that come under 12% category are movie tickets that are under Rs.100 and business class air tickets.
- 18% tax slab: Goods like sheets, pumps, compressors, fans, light fittings, suitcases, Refrigerators, Water heaters, and eatery such as cakes, ice cream, soups, sauces fall under this category. Services that fall under 18% are movie tickets priced above Rs.100, Telecom, and financial services, etc.
- 28% tax slab: Goods like Sunscreen, dishwasher, Vaccum cleaner, cement, paint, weighing machine fall under this category. There are about 200 goods under this category. Services that come under this category are casinos and races, five-star hotels, any hotel stay with bill amount exceeding Rs. 7500 and above etc.
GSTIN and GSTN
The GSTIN: It is mandatory for every taxpayer to get registered under GST. GSTIN is 16 digits unique identification you get when you register under GST as a taxpayer.
About GSTN: Often, there is confusion between GSTIN and GSTN. GSTN is the Goods and Services Tax Network. It is a non-government organization that handles the tax network. Recently an announcement was made that the government is going to undertake GSTN fully.
Registering under GST: Registration process is very simple and user-friendly. You will need to enter a few details about your business or yourself ( if you are registering as an individual taxpayer) and submit a few scanned documents. After the evaluation of the authenticity of your details and documents, you will be registered under GST.
How to file returns and pay taxes: Anyone with some knowledge of the GST returns or filing taxes can easily file returns by login into the GST portal. But it is not everyone’s cup of tea. Hiring an accountant could be wise if you are totally oblivious about filing returns or paying taxes.
GST portal and the GSTN is a pathbreaking aspect of how taxes are handled in India. Though filing returns and paying taxes is not a cakewalk for a layman, but it surely is easy once you get to know a few terms and aspects of GST. If you feel you are at a level where you are not familiar with small details like igst full form, then it could be difficult for you. But, even then, there is some great GST billing software that is very helpful in creating invoices, keeping records, and filing taxes.