The Goods and Services Tax for the average Joe

Chances are you here because you are a complete beginner to the Goods and Services Tax (GST). If you are looking for an essay on GST and how it works, you’ve come to the right place.

The GST Act was put in place to subsume several indirect taxes such as Excise, Entertainment tax, and so forth that were imposed on taxable goods and services under the old tax structure. If you own a business, you will need to make a GST payment online, assuming your business turnover exceeds Rs. 40 Lakh in a financial year. In special category states, the annual business turnover threshold for a fiscal year is Rs. 20 Lakh.

What makes GST great?

Here are a few benefits GST you ought to know:

  • The taxpayer can sign and file taxes, and file GST returns via the GST portal online without having to report to the authorities. The GST portal has an incredibly extensive database that is up-to-date with all the vital information once you provide it. Additionally, a system like this prevents tax evasion and fraud.

  • GST is a unified tax system that subsumes numerous taxes like Utility Tax, Central Excise, Income Tax, Separate Extra Customs Duty, Luxury Tax, and others. It does not allow the imposition of different tax strata on taxable products and services.

  • VAT and other indirect taxes are difficult to calculate and manage, mainly because these taxes vary with every state. However, the Goods and Services Tax system contains a consolidated GST network with easy data access. The government finds it much easier to handle tax payments and other tax-related aspects.

What are the primary GST types?

The three types of GST are – IGST, CGST, and SGST.

Integrated Goods and Service Tax (IGST)

This tax is imposed by the central government on supplies that occur between states. The IGST full form is Integrated Goods and Service Tax.

Central Goods and Services Tax (CGST)

This tax is imposed by the central government when you make transactions within a state. The CGST full form is Central Goods and Service Tax (CGST).

State Goods and Service Tax (SGST)

This tax is imposed by the state government when an intrastate transaction takes place.

The Basics of the Goods and Services Tax Identification Number

A Goods and Services Tax Identification Number (GSTIN) or GST number refers to a 15-digit unique identification number that is exclusive to you after you complete GST online registration. There are a bunch of reasons you need to have a GST number for your business. Firstly, you need to be in good books with the government and the market and ensure they see you as a legitimate supplier of goods and services. A GSTIN can help you do this. Secondly, a GSTIN or GST number is required for GST filing and to prevent tax evasions. Finally, it ensures the safety and security of your tax payments and transactions and keeps you safe from fraudulent companies.

Registering for a GST Number

Carrying out the GST registration process for a GSTIN is fairly simple. Here’s how the process works:

  • Then, click on services and hit the new registration tab. Enter and submit your details, like your email ID, phone number, and Personal Account Number (PAN) and go to the next step.

  • Now, you will get an OTP. Enter this OTP and obtain your Temporary Reference Number (TRN).

  • You will have to visit the services tab, select registration, and then click on new registration. Enter the TRN and the displayed captcha code.

  • You will get another OTP, after which you will get redirected to the saved applications page.

  • Enter and submit all the necessary business-related details such as your business location, bank account details, and so forth. Be sure to send the required documents along with the specifics.

At this point, you will have to submit your application upon completing the verification process through methods like E-signature, Electronic Verification Code (EVC), or Digital Signature Certificate. Check your phone and email address inbox to confirm if you’ve received your 15-digit Application Reference Number (ARN). You can use your ARN if you want to track your GST status.