Top 5 Things Every Entrepreneur Should Know About GSTby Ananya Nair Accounting and Legal Services
GST Registration is compulsory once the business turnover in an FY surpasses RS. 40 lakhs for the supply of goods and 20 lakhs for the supply of services.
Once a company registers for GST, the entity will be allotted a 15-digit alpha-numeric PAN-based unique identification number which is called GSTIN. GSTIN has switched the Tax Identification Number (TIN) which was selected to all service and Goods providers registered under VAT. In GSTIN, the first 2 digits range from 01-35 specify the state codes for the registration as per the Indian Census of 2011. The next 10 digits are PAN Number of the entity. The 13th digit of the GST Number is the number of GST registered individuals with the same PAN. The 14th digit designates the default letter Z as stated by the Government. A 15th digit is an arbitrary number used for checking code.
A business entity can decide to go for voluntary registration of GST. Though once opted the GST must be compulsorily charged except relieved.
Rate of tax for goods or service (SAC code or HSN code)
Once GST registration is done for the individual, the subsequent process is to identify the rate of tax that is required to be charged on goods and services which are to be supplied. The process can be done after visiting the GST website of the Government.
The tax rate on goods is mentioned along with its HSN (Harmonized System of Nomenclature) Code, where HSN is a 6-digit uniform code that classifies 5000+ products and is accepted worldwide.
Equally for the services the tax charge is quoted together with its SCN code. For the right charge of GST rates, precise HSN or SAC Code (Service Accounting Code) is required at the time of return filing.
Charging GST on every invoice – CGST, SGST or IGST
After registering for GST, it should be charged on the invoice allotted with the GST Number. The GST number has to be compulsorily applied to all taxable people offering the payable services.
The supplier needs to charge CGST and SGST/UTGST once the process of supply is done within the state (Intra-state supply) and in case of supplies out of the states (Inter-Sate Supplies) at the respective invoice.
Providing GST number for every purchase to claim ITC
For appealing the input tax credit for the purchase done or for the services paid, the item is required to compulsorily deliver its GST number to the vendor.
Payment of GST and filing returns
The latter step is to pay the tax and file returns using the GST portal. All the taxpayers can file GST returns monthly and pay the tax month to month. Although for small taxpayers (turnover of up to Rs. 5 crores) could file the returns quarterly though the tax payment should be done month to month.
Created on Dec 19th 2019 04:32. Viewed 904 times.
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