Thursday, March 23, 2017

GST: Are You Ready for One Nation One Tax!!!

Goods and Services Tax (GST) would be a consequential step in the reform of indirect taxation in India. GST is an indirect tax reform constitutional amendment cleared by the Rajya Sabha which affects all of us. GST will try to remove tax barriers between states and makes into a single market. GST is put forward to be a comprehensive indirect tax levy on the manufacture, sale, and expenditure of goods and services at the national level. It will replace all indirect taxes levied on goods and services by the Nation’s Central and State governments.  

India’s tax structure; Today:-

Direct Tax:-

The constitution splits taxation potential between center and states. Both levels of government have some absolute areas where they can levy the tax. Income tax, which comprises tax on company profits, is the complete domain of central government. These taxes are mentioned to as direct taxes.

Indirect Tax:-

Indirect taxes are taxes imposed on the manufacture of goods, distribution of services and expenditure and are under the exclusive domain of central government. Taxes on expenditure are the exclusive domain of state governments.

How this arrangement works?

A product is manufactured before its consumption. At the time of manufacturing, the central government levies its indirect tax called central excise at the factory gate. Later the product reaches the retail outlet and purchased by the consumer. On this stage, the state government levies a tax on consumption dubbed Value Added Tax (VAT).  So we have tax at both factory gate which adds cost of the product and then taxes at the retail outlet which also adds cost to the product. 

States have their exclusive domain on consumption tax within their borders. So they treat goods coming from other states as imports. If a product manufacturer in a particular state buys the raw material from another state, the manufacturer would have paid central excise and the state from where he purchased raw material taxes on the product. On this cost, the state government would levy its tax if the product is sold in the state. If the product is sent across the state border and sold in another state, an “export” tax called central sales tax is collected by the state from the product sent.  India is politically a single country but economically it is fragmented. It implies various tax within the country.

GST replaces the following Taxes:-

   • Central Excise Duty
   • Additional Excise Duty
  • Service Tax
  • Surcharge, Cess
  • VAT/ Sales Tax
  • Entertainment Tax
  • Luxury tax
  • Additional customs duty
  • Special Additional duty of customs
  • Taxes on lottery and betting
  • Entry tax
  • State ceases and surcharge

How GST helps Business and Consumer?

GST helps business by reducing the tax rate and makes assent easier. GST helps the consumer by lowering the price for merchandise and services. All taxes poised at the point of expenditure. 

GST will be ready to engage from July 2017. The existing taxpayers will have to enroll themselves under the GST database and all those who have registered themselves for service tax and central excise or any other state tax laws such as VAT. They need to get their GST registrations carried out.  The migration process of the present tax system has begun so it is very important to know about the primary features of GST.

Process of registering at GST:-

1. Getting Provisional ID for GST

        Provisional ID and password is directly given by VAT department. All will be provided with distinctive ID and password. This is mandatory. And can use this for login to GST portal created for this purpose.

2. Documents required:-

  The following documents required for this propose:-

• Personal email id to receive confirmation and acknowledgment.
• Bank account number and IFSC code.
• Softcopy of proof of business, such as a partnership deed (PDF or JPEG file of the same), registration certificate, and LLP Agreement, whichever applies are required to upload.
• Photograph of partners, owner or Karta (in case of HUF) in a JPEG file with a size not exceeding 100KB.
• Proof of appointment of authorized signatory. It should be either in PDF or JPEG file, and size should not exceed1MB.
• Soft copy of Bank account details such as an image of bank account number, branch address as well as the address of the account holder (front page of the passbook, or bank statement). Size should not exceed more than 1MB.

3. Registration Process:-

         Open GST Website and create user ID and password. For creating user ID and password provisional ID and password is required.

Step 1:- First enter into GST website and click on “New User Login”. Click I Agree for the declaration provided and continue to register.

Step 2:- After agreeing on declaration hit on continue and will direct to login page. Use provisional ID given from tax department to log in. 

Step3:- After login provisional ID verification page will be displayed and then need to fill the following details:-

    1. Valid email ID
    2. Valid mobile number.

Make sure that the provided email id and number are correct since the OTP and important information are sent to these IDs.  After that, click on continue. OTP will be sentyou’re your email id or phone number both which are required for the verification. And this email id and password will be permanent. Any change in both can be made only after April 1, 2017.

Step 4:- Next you will get a new page with OTP verified. There is option to enter personal details and new login details to secure login. Once set the new login credentials you should answer some security questions and submit it. There are five questions and it is mandatory to fill all these questions.

Step 5:- After login you will be directed to welcome page of your account. In your dashboard there is an option like “Provisional ID Enrollment”. Hit on that for application enrollment.

The common portal for Goods & Service Tax is now live. GST is now a reality and all taxpayers should be prepared for that. The penalties regarding it could be priced from few lakh even for a small mistake.

If you are looking to migrate or register new GST, do contact LICIT – Go Legal on +91 9741 33 33 77 or e-mail us at

If you require more assistance on GST, connect with Licit. For Consulting Lawyers online for any of your legal queries visit the biggest online legal solution or download the app

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