The GST Bill unifies the number of taxes levied on goods and services for both the consumer and the supplier. Prior to the GST implementation on July 1st, 2017, Central Excise Duty, Duties of Excise, Additional Duties of Excise, Additional Duties of Customs, Service Tax and other taxes were imposed on consumers and suppliers.
To keep taxes uniform, supplies and amenities under the Goods and Service Tax are subject to five percentage-based tax slabs. This GST tax structure in India is based on different luxurious commodities and daily consumable items.
• Products and facilities under the 0% tax slab: Daily products such as salt, eggs, butter, milk, honey, vegetable, non-frozen meat come under the 0% tax slab. Services such as hotels or inns with less than Rs. 1000 come under the 0% GST tax rate.
• Products and facilities under the 5% tax slab: Commodities such as incense sticks, domestic LPG, edible oils, hearing aids, insulin, braille typewriters, medicines, clothes under Rs. 1000, roasted coffee beans, tea and sugar fall under the 5% GST tax rate. Then the services under the 5% tax slab include economy class air travel, railway transport, advertising areas for print media, radio taxis and small restaurants.
• Products and facilities under the 12% tax slab: Items such as Ayurvedic medicines, butter, meat products that are frozen, cell phones, sewing machines, spoons come under the 12 % tax slab. Business class air-travel and hotels, and guesthouses from Rs. 1000 to Rs. 2500, are the amenities that fall under the 12% tax slab.
• Products and facilities under the 18% tax slab: Branded clothes, cameras, computers, printers, toiletries, electronic and non-electronic weighing machines are included in the 18% tax bracket. Services such as air-conditioned hotels that serve alcohol, hotels or inns in the range of Rs. 2500 – Rs. 5000, IT and Telecom services fall under the 18% tax slab.
• Products and facilities under the 28% tax slab: Under the 28% GST tax rate, the items are automobiles, motorcycles, shampoo, sunscreen, vending machines, vacuum cleaners, deodorants and water heaters. The services that fall under the 28% tax slab are cinema, entertainment, gambling, and hotels or inns that range beyond Rs. 5000.
• With the GST tax calculator, a taxpayer can calculate the overall cost of a product or a service.
• The formula for GST addition is as follows:
(Original Price x GST Rate) / 100 = GST Amount
GST Amount + Original Price = Net Amount
• For removing GST, the formula is:
Original Price – (Original Price x (100 / (100 + GST Rate))) = GST Amount
Original Price – GST Amount = Net Amount
Under the GST regime, the taxes that have to be paid for all the intra-state supplies are the Central GST (CGST)and the State GST (SGST). The CGST is collected by the Central government and the SGST is collected by the State government. Some GST registered taxpayers, mostly e-commerce operators are required to pay the TDS (tax deducted at source) and also the TCS (tax collected at source). For inter-state supplies, one has to pay the Integrated GST (IGST).
The GST payment can be made in two ways:
• Through credit ledger- Suppliers are can claim Input Tax Credit (ITC) while paying the tax. The Input Tax Credit cannot be availed for interests, penalties, or late fees.
• Through cash ledger- GST payments can be made through online and offline modes.
A regular taxpayer has to make payments on a monthly basis by the 20th of every subsequent month.
A GST refund is a standard online process that can be claimed when a taxpayer pays more than the GST liability. Some common conditions for GST refunds are:
• Refunds can be claimed when embassies make purchases.
• International tourists can claim GST refunds.
• If the Input Tax Credit on products and services has not been utilized, a taxpayer can claim refunds.
• If the tax on input is more than the tax rate on output and the Input Tax Credit is not used then one can claim for a refund.
• One can claim the GST refund within 2 years from the payment’s date.
GST invoice format
GST invoice is issued by a registered supplier, and the tax invoice format must contain the following information:
• The supplier’s name, address and GSTIN.
• If the invoice is a tax invoice, revised or supplementary invoice.
• An invoice number, that is specific to a financial year.
• Issue date.
• The recipient’s name, address and GSTIN.
• HSN (Harmonised System of Nomenclature) code and the SAC (Services Accounting Code). The HSN code is for goods and the SAC is for services.
• Goods and services description.
• The quantity of goods and/or services.
• The supply’s total value.
• Each item’s tax rate.
• CGST, SGST and IGST tax amounts must be shown in separate columns.
• Name of the state which is supplying and the place that supplies.
• Delivery address if the place of supply is different.
• There should be a statement that mentions whether reverse charges are applicable or not.
• A digital signature of the supplier or an authorized person.
GST Bill Benefits
The GST Bill has the capability to reform the Indian taxation system and it will keep inflation from rising as the tax rates would become uniform. This has also significantly reduced the cascading effect of taxes. The GST exemption limit is Rs. 10 lakhs for the Special Category states and Rs. 20 lakhs for all the states in India.