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Important GST Terms

What is GST?

GST is Goods and services tax introduced by the government of India to subsume all the indirect taxes. Introduction of GST is the biggest tax reform as the name advise GST includes both Goods and services under one roof.

GST was bought in by the government with a motive of “One Nation One Tax” to simplify the indirect taxes network which was followed earlier. It was implemented in four different phases in India and was finally rolled out on 1st July 2017.

Taxes Subsumed Under GST

There are a list of taxes which has been subsumed by GST and they are

State Taxes

•   Sales Tax

•   Central Sales Tax

•   Entertainment and Amusement Tax (Except levied by the local body)

•   Taxes on Lotteries, Betting or Gambling

•   Luxury Tax

•   Advertisement Tax

•   Purchase Tax

•   State Surcharge and Cess related to goods and Services

Central Taxes

•   Central Excise Duty

•   Service Tax

•   Customs duty

•   Central Surcharge and Cess related to Goods and Services.

GST Structure

GST in India follows dual-channel structure depending upon the location of the supply.

Intra-State Supply: In case where the place of supply and the location of the supplier is in the same state. On these transactions, SGST (State Goods and Services Tax) and CGST (Central Goods and Services Tax) shall be levied.

Inter-State Supply: When the place of supply of goods and services and the location of supplier is in different states then it shall be considered as inter-State supply. On these type of transaction IGST ( Integrated Goods and Services Tax) shall be applied.

A Taxable Person Under GST

Any person who carries out business and obtained the registration or liable to register as per the GST Act. The person who shall register under GST is

•   Any person whose turnover exceeds the limit of 20 lakh INR.

•   Casual Taxable Person

•   Non Residential Taxable Person not having a fixed place of business.

•   Input Service Distributor

•   Reverse Charge Taxable Person

•   E-Commerce Operator including supplier supplying through them

•   TDS Deductor

•   Any Agent supplying goods on behalf of any Taxable person.

What is GSTIN?

GSTIN stands for Goods And Services Tax Identification Number. It is the unique identification number issued to every taxable person under GST. The taxpayer must have a PAN number for GST registration to get GSTIN. This number includes 15 digit codes to sustain the uniqueness of it.

What is a Reverse Charge?

Before the introduction of GST Reverse charge was applicable to the services under VAT. But now the Reverse charge is applicable to both goods and services under the GST regime.

Normally the supplier is obligated to receive and pay taxes to the government. However, the reverse charge is the situation where the tax is paid by the buyer or recipient of goods instead of the supplier and all the provisions of the act is applicable to them.

What is a Composite Supply?

Composite supply is a supply made by the taxpayer which includes two or more goods or services or both as the case may be that are inter-dependent on each other. These supplies are naturally bundled where one of the supply is a principal supply.

Restaurant service is a typical example of the composite supply.

What is Mixed Supply?

Mixed supply under GST is a supply made by the taxpayer which includes two or more product of goods or services or both as the case may be but they are of independent nature.

A supply of crate consisting chocolates, wheat-flour, cupcakes, juices and cold drinks is the common example of mixed supply.

What is Continuous Supply?

Continuous supply is a supply of goods or service by a taxpayer on a recurrent basis where the payment of that services is received on the regular basis.

Telephone and Internet provider is the classic examples of continuous supply.

What is the GST Compliance Rating?

Compliance rating is the performance-based rating given to different business on the basis of their compliance to the GST provisions. This helps the taxpayer to choose the supplier as per their compliance rating.

For instance, If a taxpayer pays the GST returns within the prescribed time then there are possibilities that compliance rating will be higher as compared to others who do not adhere to the due date.