Introduction to GST in India
GST, or Goods and Services Tax, is a comprehensive indirect tax on the supply of goods and services in India. It was introduced on July 1, 2017, and replaced several indirect taxes that the central and state governments previously levied. GST aims to create a single, unified market by eliminating the cascading effect of multiple taxes.
History of GST in India
The concept of GST in India was first proposed in the late 1990s, but it was in 2017 that it was finally implemented. The Indian Parliament passed the GST Act in 2016, and the GST Council, consisting of the Union Finance Minister and state finance ministers, was formed to oversee the implementation and administration of GST.
Overview of GST compliances in India
GST compliances in India refer to the obligations businesses must fulfil under the GST Act. These include registering for GST, filing GST returns, and paying GST. Businesses must also maintain accurate and up-to-date records and use GST-compliant invoicing software. Failure to comply with GST requirements can result in penalties and fines.
Eligibility for GST registration
Any business that supplies goods or services in India has a turnover of more than INR 40 lakhs for All the states except certain special category states. Some exceptions exist, such as businesses that only supply exempt goods or services.
Process for GST registration
The process for GST registration is as follows:
- Visit the GST portal (https://www.gst.gov.in/)
- Click on the "Register Now" button.
- Select "New Registration"
- Enter your PAN (Permanent Account Number) and mobile number
- An OTP (One-Time Password) will be sent to your mobile number.
- Enter the OTP and proceed with the registration process
- Provide the required information and documents
- Submit the application
Documents required for GST registration
The following documents are required for GST registration:
- PAN card
- Aadhaar card
- Bank account details
- Proof of business address
- Photograph of the business owner or authorised signatory
- Details of the directors or partners (for companies and partnerships)
Filing GST Returns
Types of GST returns
There are several types of GST returns that businesses must file, depending on their GST registration type and the nature of their business. The most common types of GST returns are:
- GSTR-1: This return is filed by businesses registered as regular taxpayers. It includes details of all taxable supplies made by the business during the month.
- GSTR-2: This return is filed by businesses registered as regular taxpayers. It includes details of all taxable purchases made by the business during the month.
- GSTR-2A: This return is generated by the GST portal and is based on the GSTR-1 returns filed by the supplier. It summarises the supplies made to a business by its suppliers.
- GSTR-3B: This return is a summary of the GSTR-1 and GSTR-2 returns filed by businesses registered as regular taxpayers.
- GSTR-4: This return has been replaced by CMP-08 as the quarterly composition return.
- CMP-08: This return is filed by businesses registered as composition taxpayers. It replaces GSTR-4 as the quarterly composition return and includes details of the supplies made by the business during the quarter.
- GSTR-9: This annual return must be filed by all GST-registered businesses with an annual turnover exceeding two crores in the previous financial year. It includes details of the supplies made and received by the business during the financial year and the taxes paid.
- GSTR-9C: This reconciliation statement must be filed along with the GSTR-9 return by businesses with a turnover of more than INR 2 crore. It includes comparing the details of the supplies and taxes declared in the GSTR-9 return with the business's audited financial statements.
Frequency of GST return filing
The frequency of GST return filing depends on the GST registration type of the business. Regular taxpayers must file monthly, or quarterly GST returns, while composition taxpayers must file quarterly GST returns. All regular GST-registered businesses must file annual returns (GSTR-9) by December 31 of the following financial year.
Due dates for GST return filing
The due dates for GST return filing are as follows:
- GSTR-1: 11th of the following month
- GSTR-2: 15th of the following month
- GSTR-3B: 20th of the following month
- CMP-08: 18th of the month following the quarter
- GSTR-9: December 31 of the following financial year
- GSTR-9C: December 31 of the following financial year (along with GSTR-9)
Payment of GST
GST payment options
There are several options for paying GST in India, including online payment through the GST portal or a bank's internet banking facility. GST can also be paid offline methods such as demand drafts or cheques.
GST Due dates
The GST payment due dates depend on the GST registration type of the business. Regular taxpayers must pay GST on a monthly basis, while composition taxpayers must pay GST on a quarterly basis. The due dates for GST payment are as follows:
- Regular taxpayers: 20th of the following month/ quarter
- Composition taxpayers: 18th of the month following the quarter
Late payment penalties
If a business fails to pay GST by the due date, it may be subject to late payment penalties. The penalty amount will depend on the amount of GST due and the length of the delay.
GST Compliance Best Practices
- Maintaining accurate and up-to-date records: Businesses need to maintain accurate and up-to-date records of their supplies, purchases, and GST payments. It will help ensure that the correct amount of GST is paid and will make it easier to file GST returns.
- Regularly filing GST returns: Businesses should file GST returns on time to avoid penalties and fines.
- Timely payment of GST: GST should be paid on time to avoid late payment penalties.
- Using GST-compliant invoicing software: GST-compliant invoicing software can help businesses generate accurate invoices and make it easier to file GST returns.
- Seeking professional assistance for GST compliance: If a business is unsure about how to comply with GST requirements, it may be helpful to seek the assistance of a professional, such as a chartered accountant or a GST practitioner.
GST compliances are important in India to ensure that businesses are paying the correct amount of GST and following the rules of the GST Act. Following best practices for GST compliance, such as maintaining accurate records, regularly filing GST returns, paying GST on time, and using GST-compliant invoicing software, can help businesses avoid penalties and fines and ensure that they comply with GST requirements. Seeking professional assistance for GST compliance can also be helpful for businesses that need guidance on how to comply with GST rules. By following best practices for GST compliance, businesses can benefit from creating a single, unified market and contribute to the overall economic growth of India.