What are SGST, CGST and IGST?

Goods and Services Tax (GST)

When Goods and Services Tax (GST) rolled out in July 2017, many of the earlier taxes such as Central Excise, Service Tax and State VAT etc. got subsumed in one tax, thus making India 'one nation with one tax. '

GST being a destination based tax got divided into three categories - State Goods and Services Tax (SGST), Central Goods and Services Tax (CGST) and Integrated Goods and Services Tax (IGST).

State Goods and Services Tax (SGST)

The State Goods and Services Tax (SGST) is a tax charged on intra-state supplies of both goods and services by the state government and is governed by the SGST Act. An important point to note is that any tax liability obtained under SGST can be set off against SGST or IGST input tax credit only.

Central Goods and Services Tax (CGST)

Central Goods and Services Tax (CGST) is levied on intrastate supplies of both goods and services by the Central Government and is governed by the CGST Act. SGST, governed by the State Government, will also be levied on the same intrastate supply.

Integrated Goods and Services Tax (IGST)

The Integrated Goods and Services Tax (IGST) is applicable on all inter-state supplies of goods and/or services and will be governed by the IGST Act. The tax is levied on any supply of goods and/or services in both cases of import into India and export from India. Under IGST, exports would be zero-rated and the tax will be shared between the Central and State Government.

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Know all about GST Composition Scheme

Big businesses in India are happy with the introduction of GST but small and medium enterprises (SMEs) and start-ups that don't have required resources and expertise to facilitate GST compliance procedures are having hard times.

Therefore, to lower the burden of compliance for small businesses, a GST composition scheme has been introduced by the GST Council where the individuals have to pay tax at a minimum rate based on their turnover.

Registering under the GST composition Scheme is optional and voluntary. Businesses having a turnover of less than Rs 50 lakh can opt for this scheme but on any given day, if turnover crosses the above-mentioned limit, then he becomes ineligible and has to take registration under the regular scheme. Here are some of the terms and conditions to be able to register under composition scheme:

  • Only suppliers of goods can opt for this scheme. The scheme is not applicable for service providers; however, restaurant service providers can apply.
  • Businesses having the only intra-state supply of goods are eligible under this scheme.
  • e-Commerce operators are barred from registering under composition scheme.
  • The scheme is levied for all business verticals with the same PAN. You can't opt for composition scheme for one, and pay taxes for other.
  • Dealers are not allowed to collect composition tax from the recipient of supplies, and neither are they allowed to take Input Tax Credit.
  • If an individual found to be misusing composition scheme, the tax liability on him/her shall be TAX + Interest and penalty which shall be equal to the amount of tax.
  • Dealers who collect Tax at source under Section 56 are also barred from registering in composition scheme.

What is Goods and Services Tax Network (GSTN)?

Goods and Services Tax Network (GSTN) is a non-profit non-government company that serves as the interface between the government and the taxpayers. The government owns 49 per cent of the share in GSTN and rest of the 51 per cent stake is owned by private players such as - LIC Housing Finance, HDFC Bank, ICICI Bank and NSE Strategic Investment Co.

An IT infrastructure and service, GSTN takes care of the front-end services of GST registration, returns and payments to all taxpayers.

A unique and complex IT initiative, GSTN is the first service that seeks to establish a uniform interface for the taxpayer and a common and shared IT infrastructure between the Centre and States. GSTN has to support more than 3 billion invoices per month and the subsequent return filing for 65 to 70 lakh taxpayers. It will also take care of - invoices, various returns, registrations, and payments & refunds.

GST is a destination based tax, and hence, the inter-state trade of goods and services (IGST) would need a robust settlement mechanism amongst the States and the Centre. GSTN serves as a strong IT Infrastructure and Services backbone to enable capture, processing and exchange of information amongst the stakeholders (including taxpayers, States and Central Government, Bank and RBI).

To be able to pay taxes through GSTN, the taxpayers need to register themselves on GST portal and get a Goods and Services Tax Identification Number (GSIN). The 15 digits GSTIN will serve as the one identification number for taxpayers.

What is GSTR 3B? Who should file it?

Filing GSTR 3B form is mandatory for all those who have registered for the Goods and Services Tax (GST). The GSTR 3B is a simple tax return form introduced by the Central Board of Excise and Customs (CBEC) for the month of July and August. The forms - GSTR-1, GSTR-2 and GSTR-3 - for the months of July and August are to be filed in the month of September. In the interim, all GST registrants have to file GSTR-3B form.

It is must that you have a separate GSTR 3B file for each Goods and Services Tax Identification Number (GSTIN) you have. You can mention only total values for each field in this form; invoice level information is not required for this form.

An important point to note is that some portions of Part B of GSTR-3 will be automatically populated from GSTR 3B file. So, in case there is any discrepancy between the two forms you can correct GSTR-3 later and deposit the taxes payable.

The due date for GSTR 3B for August 2017 expired on September 20. However, GSTR 3B will not be applicable starting the month of September. For the month of September, you need to file regular returns in GSTR-1, GSTR-2 and GSTR-3 file format.

Who should file GSTR 3B?

GSTR 3B must be filed by everyone who has registered for GST. However, individuals such as - Input Service Distributors, Composition Dealers, Suppliers of online information and database access or retrieval services (who have to pay tax themselves as per Section 14 of the IGST Act, and Non-resident taxable person - do not have to file GSTR 3B.

How to find HSN code for GST

With GST, most of the goods and services were classified uniformly using Harmonised Commodity Description and Coding System or HSN.

The HNS is a multipurpose international product nomenclature developed by the World Customs Organization (WCO). In 2017, an amendment was made in Section 141 and 146 of the Finance Act 2016 regarding the changes from the WCO HSN 2012 version to the 2017 version. It included 233 sets of amendments, divided as - agricultural sector 85; chemical sector 45; wood sector 13; textile sector 15; base metal sector 6; machinery sector 25; transport sector 18; other sectors 26.

Under GST, the majority of dealers will have to adopt two, four, or eight-digit HSN codes for their commodities, depending on their turnover the year prior.

The HSN is divided into 21 sections, 99 chapter, 1,244 headings, and 5,224 subheadings. Each HSN Section is a collection of various chapters and represents a broader class of goods. Chapters represent a particular class of goods which are further divided into various headings depending upon different types of goods belonging to the same class. The headings contain products, which are ultimately assigned an HSN code. HSN code uses dots to separate sections, chapters and sub-headings.

To find an HSN code for a product, first, select the Chapter, then select Section and filter the subheading to finally get the product code. For example, HSN code for Chana Roasted is 19.04.10.90 where 19 is the Chapter, 04 is the Section, 10 is the subheading and 90 is the product.

What's format for GST invoice

It is mandatory that all GST registered business need to provide GST-complaint invoices to clients or customers for sale of services and/or goods.

The GST invoice is generally issued to charge the tax and pass on the input tax credit. A GST based invoice should mention mandatory details such as - invoice number, date, customer name, shipping and billing address, customer and taxpayer's GSTIN (if registered), place of supply, HSN code/ SAC code, item details (description, quantity/number, unit in meter/liter/kg), total value of the item, taxable value and discounts, rate and amount of taxes i.e. CGST/ SGST/ IGST, whether GST is payable on reverse charge basis and signature of the supplier.

In case the customer or taxpayer is not GSTIN registered and value of service or good is more than Rs 50,000, then the invoice should carry - name and address of the recipient, the address of delivery, state name and state code.

Author: Vaibhav Mahadev Gawand
M.com, M.M.S (finance) B.Ed


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