The GST(Goods and Service Tax) implemented on 1st July 2017 might undergo major changes soon. The Government of India may implement some significant changes to curb tax evasion, reduce complexity in taxation & improvise the overall GST Structure. The news about India soon getting higher and fewer GST Rates is a very important one and we shall discuss it in this article.
What is GST?
- The GST stands for Goods and Service Tax.
- The GST Taxation is based on the consumption of Goods and Services and the final consumer has to bear the burden of the tax.
- Moreover, The GST has replaced a composite of almost all indirect taxes like VAT, CST, Service Tax, and Excise duty. Thus, it is a unified indirect tax.
- In other words, the sellers of goods and services are liable to collect tax from customers and then pay it to the government.
- The GST presently has various tax slabs such as 0%, 5%, 12% , 18% & 28%.
When to apply for GST Registration?
Following are the mandatory situations where you must apply for GST Registration.
- All taxpayers with an annual turnover of more than 40 lakhs must get a new GST registration.
- In the Special Category States, any business entity in the North Eastern States requires to get registered under GST if annual turnover is more than ten lakh rupees.
- If you offer products or services at events/exhibitions where you do not have a fixed place of business, you must register for GST online before initiating. A merchant in this category must pay GST based on an expected turnover of 90 days.
- If an NRI taxpayer does not have business premises in India and intends to start a business, he must first enroll for GST Registration in India before starting operations in India.
- All input service distributors who want to carry forward the added benefit of the input tax credit must register for GST.
- GST Registration is required for every firm that is required to pay tax via the reverse charge method.
- Every e-commerce platform whether for goods or services (such as Amazon or Flipkart) is bound to have GST Registration in India.
Who Charges GST on Sales of Goods?
GST is a destination-based tax, i.e. the goods/services will be taxed at the place where they are consumed and not at the origin.
That’s why the vendor has to create an invoice specifying the GST Tax Rate as per the tax slab and collect the tax on the behalf of the government. Then the vendor has to pay tax as per their liability while GST Return Filing.
You can start creating GST Invoices easily and quickly after creating an account on Instabill. In addition, You can use Instabill to create invoices in seconds, track costs, manage items, services, customers, debtors, GST taxes, and e-waybills. Instabill saves you time as well as money on accountant salaries.
What are the GST Tax Rates?
The GST Council determines the GST rate slabs. Also, The GST Council reviews the rate slabs for goods and services on a regular basis.
GST rates are often high for luxury items and low for necessities. The GST Tax Rates on common items that you should know are as follows.
| GST Tax Rates | Products |
| 0.25 or 0% | Cut and semi-polished stones are included under this tax slab. Milk, Curd, Lassi, Natural Honey, mangoes, citrus fruits, grapes, etc. |
| 5% | Household necessities such as edible oil, sugar, spices, tea, and coffee (except instant) are included. Coal, Mishti/Mithai (Indian Sweets), and Life-saving drugs are also covered under this GST slab. |
| 12% | Items such as computers and processed food |
| 18% | Hair oil, toothpaste and soaps, capital goods, and industrial
intermediaries come in this slab. |
| 28% | Luxury items such as small cars, consumer durables like AC and Refrigerators, premium cars, or Sin Goods such as cigarettes, drinks, fast food or tobacco, or High-end motorcycles come under the highest GST Tax Slab. |
India soon get higher and fewer GST rates in December
As per the latest sources, India may consider raising taxes on certain goods and services. It will act as the first step toward a simpler system with fewer rates.
It simply means the two lowest rates might be raised by a percentage point each to 6% and 13%, respectively. Moreover, the tax slab of five GST rates (0%, 5%, 12% , 18% & 28%) might get reduced to three.
However, the finance ministers of different states will soon submit the proposals. Afterward, a panel on goods and services tax, led by Finance Minister Nirmala Sitharaman, might meet in December. Thus, it is estimated that India soon gets higher and fewer GST rates. The panel will discuss the changes and the consequences of the same.
Important Note: If the changes in GST Tax Slabs happen, it will impact GST Return Filing too.
Therefore, if you need any guidance regarding GST Registration, please feel free to talk to our business advisors at 8881-069-069.
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