Online GST Registration.

Goods and Services Tax, more commonly abbreviated to GST, is levied on goods and services sold in India. There are five different levels of GST:

• 0%
• 5%
• 12%
• 18%
• 28%

The lowest rate of tax at 0% means that no tax is charged on the sale of these goods at all. Most of the items which are zero-rated for GST are everyday food staples and essentials such as eggs, butter, milk, fresh fruit and vegetables, fresh meat and grains. No GST is charged on books, newspapers or postage stamps.

The next 5% rate covers a wide range of other types of food such as coffee, spices, cashew nuts or packaged food items. Some cheaper clothing attracts GST at 5%, as do many fuels like kerosene or coal. When it comes to services, air travel and train tickets have GST added at 5% too.

12% tax is applied to another level of food products, including frozen meat, sausages, fruit juices or ketchup. Mobile phones are in this category, as are any items of clothing which are being sold for 1000 rupees or more.

18% GST is applied to food stuffs which are the most processed, so things like pasta, biscuits, salad dressing or ice cream. Most IT equipment like printers and cameras fall into this category of GST too, as do hotels and financial services products.

28% is the top level of GST and is levied on goods which are classed as luxury. Although perhaps not seen as luxury foodstuffs, chewing gum and carbonated water is classed in the 28% group in India, as do larger appliances like dishwashers and vacuum cleaners.

Full lists of goods and services which fall into each of the categories has been produced by the Indian government. Unless you are in the food industry, it should be relatively easy to work out which category your products fall into.

Goods and Services Tax – GST – was only introduced in India in 2017, and like any radical overhaul of the taxation system, it’s taking a while to bed in. The introduction of GST aimed to make trade between different Indian states simpler, and have one clear system of taxation across the country. The introduction of GST saw the abolition of many other sales taxes, both national and at state level, but since the system started in July 2017, there have been a number of changes.

GST is split into five separate taxation bands, ranging from 0% to 28%. Federal and state finance ministers have the flexibility to adjust the levels of taxation very quickly, either raising or decreasing levels in response to current conditions. This type of “tweaking” is very common in all countries which have these types of sales taxes and can be a valuable political tool.

As a business owner, these repeated revisions to the rates of GST and the types of goods in each taxation band can be confusing. It’s your responsibility to make sure that you are charging the right levels of GST on the goods which you are selling, and the easiest way of doing this is by having dedicated accounting software which automatically updates with new rates every time the rates are adjusted by the government. There are many other advantages to using professional GST software too; it makes your life a lot easier and less complex by allowing you to have the figures easily to hand when it’s time to submit your GST return to the government, and by printing the required information automatically on all of your invoices.

The small investment required to get GST compliant systems into your business will reap huge dividends as you will be spending less time collating figures and manually creating your submission every month or quarter.

When GST was introduced in India in 2017, the aim was to simplify the country’s tax system and make the pricing of goods more transparent and allow the different regions of India to trade more effectively. GST has replaced a whole host of local and national sales taxes, including:

• Service tax
• VAT
• Central sales tax
• Surcharge and cess
• Luxury tax
• Entertainment tax
• Entry tax

GST is an attempt to level the playing field between the different tax rates charged in the different Indian states. The mix of national taxes and state taxes before GST was introduced meant that buying goods from one part of India to sell in another could be complicated, and often resulted in the end consumer not being clear about the end price due to the different taxes with varying rates.

Although rolling up several sales taxes into one GST seems like a great idea, it’s not quite as simple as that. There are five different levels of GST ranging from 0% and 28%, with basic goods like staple foods and books in the 0% category, and goods which are classed as luxury items, having 28% GST added onto the sales price. There is lots of guidance online about the GST tax bands, and unless you are dealing in food, it should be relatively easy to work out which of the bands your products or services fall into.

Companies manage the collection and payment of GST to the government, and submit their returns and payments electronically. There is software and expert advice available to help you through the process, which can be complicated until you get the hang of it. It is hoped that eventually, taxpayers personal tax accounts will be linked into the GST computer system, allowing people to view all of their records in the same place.

One of the main criticisms of the Goods and Services Tax (GST) from both an individual and business perspective is that the administration of it is overly complex and takes too long for companies to make their monthly returns. The GST system in India is fairly new, having only been introduced in summer 2017, and the Indian government is actively looking for ways to make life easier for taxpayers submitting their GST returns.

Single-Page Monthly Return

When the system was established in 2017, taxpayers liable for GST were faced with making three returns each month, to outline their sales, purchases and an overall summary of GST liability. The Indian government is set to approve changes to this system in order to make things a lot more simple, with proposals stating that taxpayers should just have to submit one page every month rather than three separate documents.

Quarterly or Monthly returns?

Whether your business submits quarterly or monthly returns for GST depends at present on your turnover. Currently, businesses with an annual turnover of up to 1.5 Crore rupees (15 million rupees) file their GST returns every quarter, and companies with a larger turnover have to submit monthly returns. Changing to a monthly system for everyone to submit returns might mean more paperwork for the small business, but smaller organisations will be given longer to log on and submit their figures after the end of the previous month.

GST Return Forms

There are 11 different forms for GST submissions, and the forms which you are required to submit will depend on your business turnover and individual circumstances. When logging into the system, you should automatically be shown the forms which you are required to complete. If there is any doubt, speak to an accountant or specialist in GST tax for advice.

When GST was introduced in India in 2017, the aim was to simplify the country’s tax system and make the pricing of goods more transparent and allow the different regions of India to trade more effectively. GST has replaced a whole host of local and national sales taxes, including:

• Service tax
• VAT
• Central sales tax
• Surcharge and cess
• Luxury tax
• Entertainment tax
• Entry tax

GST is an attempt to level the playing field between the different tax rates charged in the different Indian states. The mix of national taxes and state taxes before GST was introduced meant that buying goods from one part of India to sell in another could be complicated, and often resulted in the end consumer not being clear about the end price due to the different taxes with varying rates.

Although rolling up several sales taxes into one GST seems like a great idea, it’s not quite as simple as that. There are five different levels of GST ranging from 0% and 28%, with basic goods like staple foods and books in the 0% category, and goods which are classed as luxury items, having 28% GST added onto the sales price. There is lots of guidance online about the GST tax bands, and unless you are dealing in food, it should be relatively easy to work out which of the bands your products or services fall into.

Companies manage the collection and payment of GST to the government, and submit their returns and payments electronically. There is software and expert advice available to help you through the process, which can be complicated until you get the hang of it. It is hoped that eventually, taxpayers personal tax accounts will be linked into the GST computer system, allowing people to view all of their records in the same place.

There are a lot of abbreviations in any tax and accounting system, but for anyone doing business in India, two of the most important are GST and HSN. These stand for:

• GST – Goods and Services Tax
• HSN – Harmonised System Nomenclature

GST is relatively self-explanatory, and many other countries have some sort of sales tax with different bands of tax for items which are classed as essentials or luxury items. There are five different bands in the Indian system ranging from 0% for staple, basic food items through to 28% for luxury goods. Deciding which band of GST should be applied to your company’s goods and services is the tricky part however, and this is where the second abbreviation comes into play.

HSN is an eight digit code which is used not only by the Indian government but around the world to classify over 5,000 goods and products. Using the right HSN code on invoices for both sales and purchases means that the correct tax is paid and you aren’t hit with a big tax bill at the end of the year or the quarter. It is estimated that 98% of all goods worldwide have an HSN code.

Finding your HSN Code

The HSN code manual is split into 21 sections, and over 5,000 subheadings. Each chapter is dedicated to a different type of product, and using the detailed descriptions in the subheadings should allow you to work out which HSN code you should be using for your products, and as a consequence, what the rate of GST should be. The amount of details in terms of HSN code which has to be provided on an invoice or tax return will depend on the income of the organisation, as different rules apply to businesses which have a very small annual turnover.

The introduction of GST and the overhaul of the Indian tax system was one of the country’s biggest ever tax changes. GST abolished many state and national sales taxes, and replaced them with one single Goods and Services Tax or GST. Although there are still different bands of tax within GST, the effect of having just one tax has been to streamline the movement of goods and services within the country, and to make it easier for organisations to make sure they’re paying what they owe. The changes apply to all organisations, whether big or small, and if you’re unsure where to go to get help managing the new tax, you have a few different options.

• CBEC – the Central Board of Excise and Customs is the Indian government department responsible for the administration of the tax. They have online training videos, and lots of detailed information about specific elements of the tax available on their website.
• Accountant – if your organisation is big enough to have an accountancy firm, they will be able to give advice on how GST applies to your company and what you need to be doing in terms of record keeping and submitting returns.
• Software – many existing software packages have been updated to take account of the new requirements of GST, allowing you to pull together the information you require to submit your electronic return and make the payments.
• Special GST software – often it’s better to use a software package or firm of accountants who are experts in GST. This is a complex tax with different bands, and it’s essential to make sure your products are classified correctly or you could end up paying too much or too little. The small fee you will pay for expert software or advice could save you substantial amounts in the long run.

The introduction of GST in India in middle of 2017 was the biggest shake-up in Indian sales tax in years. Goods and Services Tax was introduced in order to make life easier for both businesses and consumers by scrapping many different state and national sales taxes and implementing one tax across India instead. The downside for many to GST is submitting returns online, and although the process is designed to be simple once you get the hang of it, getting started can be difficult. Luckily, there’s help available.

Every business which turns over 20 lakh rupees (2 million rupees) or more every year has to register for GST and file returns. This applies to manufacturers, wholesalers, retailers and service providers. Most businesses have to submit their GST return every quarter, but companies with higher turnovers may have to complete a monthly return.

Many different software packages have been developed which help Indian companies keep on top of their liability for GST and make completing the GST return much easier. Accounting packages will make sure that GST is added at the correct rate to all invoices which your company produces, allow you to log GST paid out when buying goods and services for your company, then pull the figures through from the books into the GST submission forms at the end of the quarter or the end of the month. This minimises that amount of work which has to be done by the accountant or finance team, and ensures no errors in producing the returns.  Most software packages will also update automatically when the rules about GST tax bands or rates change, and will make sure that your company is never hit with unexpected tax bills because you submit your information late, or are using out of date information.