What is Goods and Services Tax (GST)? Tax rates, HSN Code, E-way bill & GST Council

Goods and Services Tax (GST)

Goods and Services Tax (GST) is the indirect tax charged on the supply of goods and services. It is a far reaching, wisely planned and multi purpose tax that includes practically all the indirect taxes apart from a couple of state taxes.

The GST isn't collected at each phase in the production process. GST was considered to replace all the taxes collected in the different phases of production other than the last consumer and as an objective based tax, it is collected on utilization of goods/services and not on source/production like past taxes.

GST is divided into five particular tax slabs - 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic beverages, and power are not taxed under GST and are taxed separately by the state governments on their own, according to the past tax system.

There is an extraordinary rate of 0.25% on valuable and semi-valuable stones and 3% on gold. A cess of 22% or different rates up to 28% GST applies on things like aerated beverages, extravagance vehicles and tobacco products. Before GST, the statutory tax rate for most of the goods was about 26.5%, while after GST, most goods are taxed in the 18% tax range.

(Also Read: GST Cess)

The tax became effective from 1st July, 2017 through the usage of the 101st Amendment of the Constitution of India by the Indian government. The GST replaced different taxes which were charged by the central and state governments.

The tax rates, rules and guidelines are administered by the GST Council which is made of the finance minister of the central government as well as all the states governments. The GST is intended to replace a huge number of indirect taxes with a combined tax and is expected to reshape the country's 2.4 trillion dollar economy, however its usage has gotten criticism. Positive results of the GST contains the travel/transport time in interstate journeys, which dropped by 20%, due to end of interstate check posts.

Indirect Taxes Covered under GST

The single GST covered various indirect taxes and duties, which including central excise duty, services tax, extra customs duty, overcharges, state-level value added tax and Octroi. Other tolls which were applicable on inter-state transportation of goods were also been discarded in GST regime. GST is imposed on all exchanges like sale, transfer, buy, barter, rent, or import of goods and additionally services.

India accepted a double GST model, indicating that taxation is regulated by both the Union and state governments. Exchanges made inside a single state are charged with Central GST (CGST) by the Central Government and State GST (SGST) by the State governments. For inter-state exchanges and imported goods or services, an Integrated GST (IGST) is designed by the Central Government.

GST is a consumption based tax, in this manner, taxes are paid to the state in which the goods or services are consumed, not the state in which they were produced. IGST mixes up tax classification for State Governments by breaking them from collecting the tax owed to them legitimately from the Central Government. Under the past system, a state would just need to manage a solitary government so as to gather tax revenue.

HSN code

India joined World Customs Organization (WCO) in 1971. It was initially utilizing 6-digit HSN codes to arrange wares for Customs and Central Excise. Later Customs and Central Excise added two additional digits to make the codes more exact, making an 8 digit code. The motivation behind HSN codes is to make GST systematic and around the world acknowledged.

(Also Read: GST identification number)

HSN codes eliminate the need to transfer the itemized image of the goods. This will reduce time and make recording simpler since GST returns are computerized.

If an organization has turnover up to INR 15 million in the previous budgetary year then they don't need reference to the HSN code while supplying goods on invoices. But, an organization having turnover more than INR 15 million and up to INR 50 million, at that point they will have to make reference to the initial two digits of HSN code at the time of supplying goods on invoices. If the turnover crosses INR 50 million, at that point they will specify the initial 4 digits of HSN code on invoices.

Tax Rates

The GST is charged at various rates on factor things. The rate of GST is 18% for soaps and 28% on washing powder/detergents. GST on film tickets depends on slabs, with 18% GST for tickets that cost not as much as Rs. 100 and 28% GST on tickets costing more than Rs.100 and 28% on commercial vehicles and private and 5% on readymade clothes. The rate on under-development property booking is 12%.

(Also Read: GST refund process)

Some services and products were exempted by the government and stay tax-free under GST. The examples are dairy products, products of processing enterprises, new vegetables and organic products, meat products, and different goods and necessities.

Checkposts were canceled assuring free and quick transporting of goods. Such productive transportation of goods was additionally guaranteed by covering octroi in the system of GST.

The Central Government promised to protect the incomes of the States from the effect of GST, with the desire that at the appropriate time, GST will be imposed on petroleum and petroleum products. The central government also guaranteed states to pay for any income misfortune brought about by them from the date of GST for a period of five years. However, no solid laws have been made to help such action (as of October 2020). GST council embraced idea paper demoralizing playing with rates.

E-Way Bill

An e-Way Bill is an electronic license for delivery goods like a waybill. It was made compulsory for inter-state transport of goods from 1st June 2018. It is needed to be generated for each inter-state transportation of goods more than 10 kilometers (6.2 miles) and the amount exceeding of ₹50,000 (US$700).

It is a paperless, arranged and useful in avoiding tax evasion activities and in tracking the exchange that presently happens on a money premise. The pilot began on 1st February 2018 yet was removed after glitches in the GST Network. The states are separated into four zones for turning out in stages by end of April 2018.

A novel e-Way Bill Number (EBN) is generated either by the supplier, recipient or the transporter. The EBN can be a printout, SMS or written on receipt is legit. The GST/Tax Officers tally the e-Way Bill recorded goods with goods conveyed with it. The system is pointed toward stopping escape clauses like over-burdening, downplaying and so forth Every e-way bill must be coordinated with a GST receipt.

Carrier ID and PIN Code now necessary from 1st October, 2018.

It is a basic consistence related GSTN venture under the GST, with an ability to process 75 lakh e-way bills every day.

Intra-State e-Way Bill

The five states steering this task are Andhra Pradesh, Gujarat, Kerala, Telangana and Uttar Pradesh, which represent 61.8% of the between state e-way bills, begun obligatory intrastate e-way bill from 15th April 2018 to additionally decrease tax evasion. It was successfully presented in Karnataka from 1st April 2018.

The intrastate e-way bill will make ready for a consistent, cross country single e-way bill system. Six additional states Bihar, Jharkhand, Tripura, Madhya Pradesh, Haryana and Uttarakhand will turn it out from 20th April, 2018. All states are ordered to present it by 30th May 2018.

Reverse Charge Mechanism

Reverse Charge Mechanism (RCM) is a system in GST where the collector pays the tax for the benefit of unregistered, more modest material and administration providers. The collector of the goods is qualified for Input Tax Credit, while the unregistered vendor isn't.

The central Government delivered Rs 35,298 crore to the state under GST remuneration. For the usage, this sum was given to the state to remunerate the income. Central government needs to confront numerous reactions for delay in pay.

Goods kept external the GST

Liquor for human utilization (i.e., not for business use).

Petroleum and petroleum products (GST will apply sometime in the future), i.e., petroleum crude, rapid speed diesel, motor spirit (petroleum), natural gas, aviation turbine fuel.

GST Council

GST Council is the overseeing assortment of GST having 33 members, out of which 2 members are of focus and 31 members are from 28 state and 3 Union territories with enactment. The council contains the accompanying members (a) Union Finance Minister (as executive) (b) Union Minister of States responsible for income or finance (as member) (c) the ministers of states accountable for finance or taxation or different ministers as named by each states government (as member).

GST Council is a zenith member board of trustees to alter, accommodate or to acquire any law or guideline dependent on the setting of goods and services tax in India. The council is going by the union finance minister Smt. Nirmala Sitharaman helped with the finance clergyman of the apparent multitude of states of India. The GST council is answerable for any modification or order of rule or any rate changes of the goods and services in India.