What is the GST percentage rate being proposed by GST bill?

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To know about the GST percentage rate that is being propose by the GST bill lets us se what are related to the GST percentage.

What is GST?

It is a good and service taxation which filters all the indirect tax and bring uniformity in the tax. GST reduces the complicated structure of taxation and other rules that makes the taxation complicated. There are several taxes and indirect taxes that makes the tax rate higher but GST filters all the indirect tax and reduces it to only what you require to pay. It also gives a clear view of what you are paying for and how much you are paying.

GST will replace all the indirect taxes except for the customs, stamp duty, property taxes, which will reduce the cost of tax to minimum by eliminating tax on tax and many indirect taxes that are put on the line up of the tax chain. The state and the central tax rate becomes uniform making the things simpler for trade import and export. This will turn the country into one market and that is going to turn things into much easier.

How to register for GST? (The calculation of GST percentage will be done based on your business’ turnover)

If your business is having a turnover of above 20 lakhs. The suppliers that need to register mandatorily for GST are:

  • Interstate suppliers
  • Casual and non-resident taxable person
  • Business liable to pay taxes under reverse charge
  • Agents supplying on behalf of taxable person
  • Input service distributor
  • Ecommerce sellers
  • Online information database access
  • Retrieval services from outside India to an unregistered person
  • Agitator supplying services under his brand name
  • Person responsible to deduct TDS

 

GST return filing India (The returns are based on the GST percentage)

  • GST implementation is will be going live this year (2017) by completely filtering India’s indirect tax system. GST registration will become must for all the companies that are involved in buying and selling or delivery of services. The business that exceed 10 lakhs per year will have to register in GST in northeaster and hill regions while it will be 20 lakhs for rest of the country. The entities having GST registration would be required to file GST returns, GST returns filing would be mandatory for all GST registered entities irrespective of any activity or sale during the return filing period.
  • The registration holder will have to file GSTR-1(details of outward supplies) on the 10th of each month, GSTR-2 (details of inward supplies) on the 15th of each month and GSTR-3 (monthly return). The tax payers would be required to file GSTR-4 every quarter on 18th of the month next to the quarter. And, annual GST must be filed by all GST registered entities on or before 31st of December.

 

What is the Periodicity of filing return?

This depends on the type of registration and transactions different periods have been specified. Monthly return needs to be filed by regular, foreign non-residents, ISD and casual tax payers whereas compounding tax payers have to file quarterly returns.

What is GSTR1?

This return form would capture the following information:

  • Basic details like business name along with GSTIN, period for which the return is being filed etc.
  • Details of invoices issued in the previous month and the corresponding taxes paid.
  • Details of advances received against a supply which has to be made in future
  • Details of revision in relation to outward sales invoices pertaining to previous tax periods

What is GSTR2?

GSTR2 return includes details of purchases by the tax payer. GSTR2 is prefilled for a tax payer based on the GSTR1 filed by his supplier. All you need to do is validate this prefilled information and make modifications if required. For example, if you are buying good from company B, then company would have filed its GSTR1 and included your name as the buyer. Now the same information will be reflected in GSTR2 as purchases which you need to validate. GSTR2 will include the following details:

  • The details of purcahses auto-populated by the department
  • Invoices on which partial credit has been availed earlier has to be submitted in a separate table.

What is GSTR3 return?

GSTR3 is a combination of 1 and 2. In case of GSTR2, GSTR3 is also filed for a tax payer based on GSTR1 and GSTR3. You have to validate this prefilled information and make modifications if required. GSTR3 return will include the following details:

  • Information about ITC ledger, cash ledger and liability ledger
  • Details of payment of tax under various tax heads of CGST, SGST, IGST
  • Taxpayer will have the option of claiming refund of excess payment

What is GST quarterly return (GSTR4)?

Small taxpayer has this option for the composition scheme. In such a case he would be required to pay taxes at fixed rate. Although no input tax credit facility would be available. A taxpayer opting for the composition scheme would be required to file simplified quarterly return that is GSTR4. He is required to provide only the following details:

  • The total value of supply made during the period of return
  • Details of payment of tax in the return
  • Declare invoice-level purchase information

What is GST annual return(GSTR8)?

All the normal taxpayers would be required to submit annual return under this return intended to provide complete visionary.

  • It will be a detailed return and will capture details of all the income and expenditure of the taxpayer and will regroup them in accordance with the monthly returns.
  • A major advantage of this return will be that it will provide the opportunity to correct for any short reporting of activities undertaken supply wise.

Can the taxes be paid after filing the return?

No the taxes has to be paid before filing the return for that particular period or else the return will be invalid.

Can it be revised?

Yes it can be revised

Differences:

At the moment, we have VAT and service tax which are taken separately as VAT is for goods and service is clearly for what it is mentioned while GST is common for both making it a simpler taxation system.

The current taxation gives rise to a high tax rate as it has several indirect tax and that increases the tax rate along with every state having their own tax rate which increases the amount of tax rate as the goods are being transported from state to state which will no longer be a problem when GST is implemented. It will have no separate tax based on good or services and state borders which will make it easier and less expensive for importers and exporters.

VAT was calculated on the value of sales of good or services which but with the tax rate that is already levied on the goods. But it changed to only paying tax on value addition and separately for the service. With GST coming into the picture the tax will be collected together without separate tax for goods and services.

The benefits that one can get from GST implementation (The GST percentage is much lesser than the tax percentage that we have been paying)

Business to industry:

  1. All work of taxation will available online. Like registration, returns, payments, etc. This will make everything simpler for tax payers and increase the transparency of all the activities.
  2. GST will remove all the differences in the structure of taxation in between the states and the indirect tax this will lead to neutral tax and common market.
  3. There are several hidden costs of doing business that piles up in the business chain which will be filtered while paying tax with the help of GST.
  4. The reduction in the taxation and improvement of tax policies will lead to better competition in trade business.

Central and state governments

  1. All the central, state and indirect taxes are replaced by GST making it all simpler to manage and pay.
  2. GST will make better tax compilation with the seamless transfer of input tax credit from one stage to another in the chain of value addition.
  3. GST will be reducing the tax collection of the government which will lead to higher revenues.

Consumer

  1. Due to the high tax rate and tax on every item and value being added by the time it reaches the consumer the amount increases but with GST the consumer will be paying clearly only for one and have a clear view of what is her or she paying for.
  2. Overall tax burden will reduce and the consumer’s burden will decrease preventing leakages.

 

The taxes that are being charged by central and state are:

Central

  1. Central excise duty
  2. Service tax
  3. Additional excise duty
  4. Additional custom duty
  5. Special additional duty of customs

State

  1. Taxes levied by local bodies known as entertainment tax
  2. Central sales tax
  3. State value added tax or sales tax
  4. Entry tax and Octroi tax
  5. Purchase tax
  6. Luxury tax
  7. Taxes on lottery and betting and gambling

GST percentage

The Rajya Sabha and the members of the parliament has mainly agreed on the GST percentage rate to be inclined to 18 percent provided the center assured them that their present level of tax collection will be protected. The campaign has been made on the bill that it must not exceed 18 percent. The GST percentage must be kept low as it is the main source of tax rate. There have also been recommendations on how much it should be as a standard rate and that is not more than 17-18 percent.

The goods currently attract an effective tax rate 24-25including both the central and state taxes and services have extra charge of 15 percent.

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I’m a tax expert with over 10 years of professional experience. I’ve gained practical insights on GST and other Taxes during my tenture as a Tax expert and GST Trainer in Reach Accountant.
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