GST in India

The Goods and Services Tax (GST) was implemented on July 1, 2017, in India. It is a single indirect tax that subsumes all existing State and Central taxes like octroi, excise, service tax, value added tax (VAT), and others.

Several rules are associated with the latest indirect tax modification, which is one of the largest in the history of independent India. Here are six of the rules:

  1. Composition rules

All persons who have received registration under rule 24 and choose to pay tax under section 10 must file intimation in Form GST CMP-01. The tax payable is effective from the commencement of the financial year. The persons exercising this option must comply with additional GST rules, such as he must not be a nonresident taxpayer or a casual taxpayer, inventory must not be purchased from interstate trades or unregistered vendors, and he must mention “composition taxable person” on each notice and signboard.

  1. Registration rules

Every person, except who is exempt, must register under section 25. Furthermore, he must provide his Permanent Account Number (PAN), email address, contact number, and state in Part A of the Form GST REG-01. If an individual has units in Special Economic Zone (SEZ) or is an SEZ developer, he must make a separate registration application for units outside the SEZ.

  1. Determination of value supply rules

If the value of the goods or services is not in money, it is considered as open market value. In case this value is unavailable, the supplied value is deemed as the sum of the money and an equivalent amount for the component not valued in money. If the value is still not determinable, it is based on the value of similar kind and quality of goods or services.

  1. Input tax credit (ITC) rules

As per GST India regulations, ITC is available only to registered users. The credit is available if all the applicable details as per Chapter VI provisions are included in the documents. Furthermore, relevant details must be furnished in Form GSTR-2. No ITC is available for tax paid in pursuance of an order where demand is based on the willful misstatement, fraud, or suppression of facts.

  1. Returns rules

Every registered person must furnish all information on the outward supply of goods or services under section 37 in Form GSTR-1. These details may be provided electronically through the portal or through a commissioner-certified facilitation center. The information must include all of the following:

  • Invoice-wise details on interstate and intrastate supplies to registered users
  • Interstate supply to unregistered persons where invoice value is more than INR 2.5 lakh
  • Consolidated information about intrastate supplies to unregistered users
  • State-wise interstate sales where value is up to INR 2.5 lakh to unregistered persons
  • Debit and credit notes for invoices previously issued
  1. Tax payment rules

Every person liable to pay tax, late fee, penalty, or other amounts on the portal must maintain an electronic liability register in Form GST PMT-01. This register is debited by tax amount, late fee, interest, or other amounts as per the returns. Furthermore, it is debited by an amount determined by an officer as per the provisions of the Act. If there is any mismatch under sections 42, 43, or 50, the register is debited by the tax and interest amount. The register is also debited by an amount equivalent to accrued interest.

GST may modify the indirect tax regime and structure in the country. It brings the entire country under a single tax making it easier for people to comply with the rules and regulations. Further information on other rules is available on the common portal.