GST basics: 7 misconceptions cleared

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GST only subsumes central and state taxes; the levies charged by local bodies are still outside its ambit.

The rumour mills have gone on an overdrive mode since the launch of GST.

Here’s a reality check for both GST supporters and its detractors.

 

  1. Now it’s one nation one tax

Myth : Since GST will replace all other taxes on all goods and services, we are in a single tax regime.

Reality : Though this was the original idea, certain exempted items such as petroleum products, are still outside GST’s ambit and, therefore, their tax rates vary significantly across states.

For example, petrol is still sold in Mumbai at Rs 74.30 per litre (as on 5 July) compared to Rs 63.12 in New Delhi. Similarly, some other items, such as liquor, have also been kept out of GST for now.

2.  Small businesses will suffer

Myth : The life of small businessmen will become difficult under GST because of computerised billing, need for Internet connectivity.

Reality : Shops can do manual billing under GST and Net connectivity is needed only at the time of filing monthly return and can be managed from a cyber cafe.

  1. Prices will shoot up

Myth : Personal expenses will go up on account of GST making it inflationary because tax rates have been fixed at higher levels—18%, 28%.

Reality : Though the GST rates seem high, it is only because the entire tax is now visible to the consumer. Earlier most taxes – central and state excise, additional excise, purchase tax, etc. – did not reflect on your bill. If one adds up all the taxes, it would have been more for most items (ie effective tax rates under GST will be lower for most products).

For example, the price of chicken dish in Kerala should fall because there was a 14.5% tax on live chicken earlier, which has come down to zero now under GST.

4.   Corporates may try to profiteer but govt won’t

Myth : Business will try to rob you of the GST benefits, but the government won’t make money at your expense.

Reality : Some state governments are also acting greedy and not passing on the GST benefits to consumers. For example, the Maharashtra government has increased the vehicle registration tax by 2% after auto firms passed on the GST benefit by cutting prices by 2-3%.

5.    No tax other than GST is now a reality

Myth : For every good or service that has been brought under GST, there won’t be any additional tax.

Reality : GST only subsumes central and state taxes and the levies charged by local bodies are still outside its ambit. Using this loophole, the Tamil Nadu government has allowed its local bodies to charge 30% tax on movie tickets over and above GST. GST is 18% for movie tickets up to Rs 100 and 28% for tickets that cost more than Rs 100.

But because of local body levies, tax in Tamil Nadu will be 48% for tickets up to Rs 100 and 58% for tickets that cost more. Not surprisingly, the cinema hall owners in the state went on strike. “Action of the Tamil Nadu government is against the spirit of the GST and the GST council should take action against it,” says Amit Sarkar, Partner and Head, Indirect Taxes, BDO India.

 6.   Economic growth will rise

Myth : GST will push up the economic growth.

Reality : Real economic growth comes from both organised and unorganised sectors. Tax evasion becomes difficult in GST, so cost advantage of unorganised sector goes and this will result in some businesses shifting to the organised sector. So, what happens will not be an in increase in ‘real’ economic growth but an increase in ‘recorded’ economic growth. However, there will be a small uptick in ‘real’ economic growth due to the improvement in the ease of doing business.

 7.  Pay GST twice for card payments

Myth : GST will be charged twice, if you make payments via credit card.

Reality : There is no additional GST for credit card payments and the confusion arose only because there is GST on additional fees—convenience charges—levied by companies. For example, you make Rs 10,000 payment and a company charges Rs 50 as convenience fee for helping you make the payment via the credit card, you have to pay 18% GST on that fee too—earlier you paid a 15% tax on it. So the 3% increase is very small—just Rs 1.5 on Rs 50.

 

Source:  http://economictimes.indiatimes.com/articleshow/59501148.cms

What GSTIN means, how to register for GSTIN, what is ARN number, code in GST India 2017

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0
GST will have an immediate effect on a few things, especially regarding businesses. One of such things is the tax identification number, which is now known as GSTIN. Find out what exactly is GSTIN and how to register.

GST or Goods and Services Tax is currently the poster boy for the Indian Economy. While experts, as well as regular citizens, are divided on how GST is going to transform India, the real effects can only be seen after some time. Meanwhile, there are a few things which will have an immediate effect, especially to the businesses. One of these things is the tax identification number, which is now known as GSTIN (Goods and Services Tax Identification Number). GST is basically a 15-digit number which has replaced the Tax Identification Number (TIN) that business entities were allotted while registering under a state’s Value Added Tax law. Such businesses also had to get several other identification numbers from various places. But now, after the GST implementation, all such numbers will be replaced by GSTIN. Also, while registering on the GST portal you get an ARN (Application Reference Number), which is required for further queries regarding your application, including GSTIN number validation.

In order to get the number, there is a two-step process which is needed to be completed by each business. On its part, the government has kept the process of online registration for GST quite simple. The registration for taxpayers and GST practitioners is now open on the GST portal gst.gov.in and one really does not need to do much provided you have the necessary documents ready for the process. GST registration is critical because it will enable you to avail various benefits that are available under the GST regime. According to government data, of the 83.50 lakh excise, service tax and VAT assesses; 65.6 lakh have already registered on the GSTN portal. Of this 65.6 lakh, nearly 13 lakh business entities are yet to complete the second stage of the registration process. Know all about the whole process below.

What is GSTIN? Under the GST regime, all these different identification numbers required for indirect tax purposes will be replaced by a single umbrella number, the GSTIN. All the taxpayers have been consolidated into a single platform for compliance and administration purposes and have been assigned registration under a single authority. The government has set up GSTN – a special purpose vehicle to provide the IT infrastructure necessary to support GST digitally. All of these businesses will be assigned a unique Goods and Services Tax Identification Number (GSTIN). This 15-digit number is similar to the Tax Identification Number (TIN) that is allotted to business entities registered under a state’s Value Added Tax law. Currently, businesses providing services are also required to obtain a Service Tax Registration Number assigned by the Central Board of Excise and Customs (CBEC).

How does GSTIN get allotted? There is a two-stage verification process:
Stage 1: Upon registration on the GST Network portal, a business is given a provisional GSTIN.
Stage 2: In the second stage, the business entity has to log on to the GSTN portal and provide details of its business, such as the main place of business, additional place of business, directors and bank account details.

Notably, the government has allowed traders and businesses to continue their businesses even after July 1 with provisional IDs, until the time they get their final identification numbers.

What does GSTIN contain? A complete break-up of the proposed GST Identification Number. Each taxpayer is allotted a state-wise PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN).

1. Firt 2 digits of the number represents the state code as per Indian Census 2011.
2. Next 10 digits is the PAN number of the taxpayer.
3. 13th digit gets assigned based on the number of registrations within a state.
4. 14th digit is Z by default.
5. Last digit is the ‘sum’ check code.

ARN: Application Reference Number is the full form of ARN. Basically, ARN Status in GST means, a user can check the status of their GST Registration Application. The ARN will be sent to the Registered User’s Mobile number and Email Address provided. There are five types of possible ‘status’ of your application: ‘Provisional’, ‘Pending for Verification’, ‘Validation against Error’, ‘Migrated’, and ‘Cancelled’.

 

 

Source: http://www.financialexpress.com/economy/gstin-under-gst-india-2017-what-gstin-means-how-to-register-for-gstin-what-is-arn-number-code-in-gst-india-2017/746661/

Historic GST launched at midnight, from today India is finally one nation, one tax

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India embraced the goods and services tax (GST) on the intervening night of Friday-Saturday, in a move that marked the culmination of the country’s long and chequered journey toward a uniform, all-encompassing, pan-India indirect tax system.

India embraced the goods and services tax (GST) on the intervening night of Friday-Saturday, in a move that marked the culmination of the country’s long and chequered journey toward a uniform, all-encompassing, pan-India indirect tax system. The GST would militate against and cut out the cascade of multiple taxes which jack up product prices. The official launch of the tax preceded a grand ceremony in the central hall of Parliament attended by the president and prime minister, along with members of both Houses and the GST Council. Some Opposition parties including the Congress, Trinamool Congress and Left did not attend the ceremony, citing protests against GST by small and medium-scale entrepreneurs, traders, weavers and informal-sector workers.

Although the design of the new destination-based tax on consumption with its multiple rates, sub-optimal coverage and complicated rules is unmistakably inferior to an “ideal GST”, even independent tax experts welcomed the launch, calling it a transformational move. However, trenchant critics would say the imperfect GST has merely enabled cross-utilisation of credit between the central and state VAT chains and is, therefore, akin to the 2004 Cenvat rules that allowed such cross-credit facility between central excise and service tax.

But these critics might have taken too dim a view; GST is a momentous event for thee reasons: One, it puts in place a federal, rules-bound indirect tax system that would curtail the scope of rate differentials for the same products among states (one-product-one-tax) ; two, it could potentially slash India’s high logistics costs by speeding up movement of goods across state borders and even within states and thereby make the country’s goods and services more competitive; and three, thanks to the availability of seamless input tax credits, GST would discourage tax evasion and expand the revenue base for the government without hurting the businesses or the consumers. The GST will subsume excise duty and state VAT (along with the corresponding taxes on imports), service tax, octroi, entry tax, purchase tax, central sales tax, and entertainment tax, but not the basic Customs duty which is the tariff on imports.

Earlier, the GST Council, which met for an hour, decided to reduce the tax rate on fertilisers from 12% proposed earlier to 5%, a move that would nullify the chances of prices of these key farm inputs rising under GST. The gap between the current tax incidence on fertilisers and the 12% rate had created a practical difficulty in recovering the differential from fertiliser stocks lying with manufacturers and dealers as MRPs are printed on them. Also, the ministry of finance tweeted, the rate for “exclusive parts of tractors” have been reduced to 18% from 28%.

NITI Aayog member Bibek Debroy on Friday rebutted the claim that GST would produce 1.5% increase in GDP. “For an imperfect GST, I have no idea what is the figure. This particular figure (1.5%) was for ideal GST,” he said. Chief economic adviser Arvind Subramanian had told FE earlier that even though “we have not got as much base expansion and as much reduction in complexities as we would have liked”, there was still a huge reduction in complexities. “I expect a 10% expansion in the (tax) base due to just invoice-matching,” he had said.

While the government has iterated that the GST would not stoke inflation — GST will be zero on 50% of consumer price index basket and 5% on another 10% — former finance minister P Chidambaram said that the new tax could be inflationary in the short run. However, Subramanian said that with with actual tax incidence to be substantially lower under GST due to input tax credit, a downward bias on prices was to be expected. Firms disposing of stocks could also have a dampening effect on prices in the short run, he added.

Even as the industry is keeping its fingers crossed, the government has assured them that the anti-profiteering provision built into the relevant GST laws to prevent companies from not passing on the tax benefit under GST to consumers would be sparingly used. “I sincerely hope that we don’t have to really use the anti-profiteering mechanism,” Jaitley had said on Thursday. Chidambaram, however, sharply criticised the mechanism, saying it was wrong to assume that “the element of taxes decide at what price I sell my goods”. Since tax is only one of the things that make up costs, he said, if tax falls, it does not mean there should be a corresponding reduction in prices.

Even though 68 lakh businesses have already been issued provisional IDs by GSTN, the IT backbone for the new system, and the deadline for first filing of returns have been postponed to August 20 — invoice-wise returns can be filed as late as the first week of September — concern over the transition pains remained. Arun Kumar, chairman and CEO at KPMG in India, said: “The focus should now be on making the transition seamless and effective. Making compliance cost-effective, particularly for smaller businesses, is extremely important. The potential benefits of this landmark-reform will become real when the benefits of rationalised taxation accrue to consumers and business benefits from cost-efficiencies in logistics and streamlined processes.”

According to Shyamal Mukherjee, chairman, PwC India, “We are confident (that GST) will boost investors’ confidence in India, incentivise manufacturing and fuel the growth of the economy.” When asked about the quantum of extra growth due to GST by a TV channel earlier in the day, the chief economic adviser, however, merely said GST’s effect on the economy would be “positive”. “The medium-term impact of GST on macroeconomic indicators is expected to be extremely positive. Inflation will be reduced as cascading of taxes will be eliminated,” CII director general Chandrajit Banerjee said, adding that exports would emerge as more competitive in global markets, while FDI was likely to be encouraged.

Source: http://www.financialexpress.com/economy/historic-gst-launched-at-midnight-from-today-india-is-finally-one-nation-one-tax/744112/

GST Network reopens for registration

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Opened for first time for new assessees, tax practitioners

With barely five days left for the roll-out of the goods and services tax (GST), the GST Network (GSTN), a company that provides information technology systems for the GST, reopened registration for assessees on Sunday.

 

That was for new assessees not enrolled in the existing tax system — central excise duty, service tax and state-level value added tax — and for tax practitioners such as chartered accountants. Existing assessees which did not apply earlier can also enrol. The system also opened for those to be registered as tax deducted at source (TDS) or tax collected at source (TCS).

 

So far as smoothness of registration is concerned, Archit Gupta, chief executive officer (CEO) of Cleartax, that helps assessees register on GSTN, said, “We have an online service for fresh registrations and have received applications form small & medium businesses. So far, we haven’t faced any issues in the registration process for our customers.”

 

As many as 6.56 million registrations have already been made on the GSTN, which is 81 per cent of the existing 8.01 million registrations.

 

The new assessees, as well as existing ones, will be given a month’s time to register on the GSTN from Sunday.

 

Earlier, GSTN was opened in phases since November 16 for existing tax assessees. The GSTN had stopped registrations in between, as it was to transfer data to its own data centre from an earlier hired data centre. The GST portal has already opened two windows for enrolments — first between November 8 and April 30 and then from June 1 to June 15. This is the third window to allow all taxpayers enough time to migrate to the new regime.

 

Navin Kumar, chairman of GSTN, said, “We started the migration of existing taxpayers in November and wanted to close the process by March. The government however asked us not to close it, as many were still to register. At that time, the number of people coming to the portal fell to a few thousands compared to 200,000 a day (now). But we halted the process briefly, hoping it would trigger more people to come and register when we reopen the window.” Interestingly, there was no law that required them to register as GSTs then; the Bills were passed later.

 

“In fact, I am surprised why they came. We asked the tax department to persuade them to come and migrate, so the entire credit goes to CBEC. About six million came in the first instance and then 600,000 more came in the 15 days after that,” he said.

 

There were 8.01 million registrations in the existing system. Kumar said he wondered why the 1.4 million didn’t come. He believed one factor could be the exemption threshold under VAT for most states is Rs 5 lakh, and is Rs 20 lakh under the GST. Those with a turnover below the threshold have to register if they want to claim input tax credit.

 

It is expected not all assessees would migrate to the GSTN portal as, businesses with turnover of up to Rs 5 lakh are currently exempt from VAT. But, if they are supplying to other businesses or if want to pass on credit, then they need to register their business.

 

The existing assessees were given provisional IDs if they registered with their email ID and mobile numbers. But, for the second stage and final registration, the businesses have to give details of its business, such as the shareholding pattern of business, main place of business, additional place of business, directors and bank account details etc.

 

Revenue Secretary Hasmukh Adhia had cautioned those with provisional IDs not to rush for registration on GSTN, as they had got one month more for registration.

 

The GST Council has given relaxation for filing of returns. The assessees can file detailed, invoice-based returns by September 5 for the month of July. Had this relaxation not been given, they would have to file these returns by August 10.

 

Similarly for August, these returns could be filed by September 20, a relaxation of 10 days.

 

Meanwhile, the GSTN released three sets of videos to reach out to assessees and help them register.

 

“To help the people register themselves to the new GST portal smoothly, we have released three videos just after the opening of the portal today (Sunday). The videos are an official guide for registration which will ensure a smooth roll out of the regime. The videos have been crafted to help all taxpayers including those who are not well versed with technology to complete their enrolments,” Kumar said.

 

Source: http://www.business-standard.com/article/economy-policy/gst-network-reopens-for-registration-117062600049_1.html