Commonly Asked Questions on GST

Q.1  What is GST?

1. GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
   

   In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.
   GST is one indirect tax for the entire country.
   

Q.2 What is GSTIN?

1. Goods and Services Tax Identification Number (GSTIN) is a 15 digit number that is given in a certificate of registration to an applicant. This number is given once his application for the grant of GST registration is approved. Furthermore, this number is made available to the applicant on the common portal once GST registration gets completed.
   

Q.3 What is the format of GSTIN?

The GSTIN comprises of 15 digits. Furthermore, this number is PAN based and is specific to each state. Thus, following points denote the structure of goods and services tax identification number which is unique to every legal person (individual or sole proprietor, partnership, LLP, AOP/BOI (Association of persons/Body of Individuals, company etc).

1.  First Two Digits Represent State Code

The first two digits of the GSTIN indicate the code number of a specific state as per the Indian Census 2011. Thus, every state has a distinct two digit code of its own.

Take for instance K. P. Pvt. Ltd.  Which has GSTIN 07BBBBB1111B1ZE.

Now, the first two digits stand for 06.  Thus, 06 in K. P. Pvt. Ltd. GSTIN shows the state code of Delhi since the first two digits represent a state code.

2. Next Ten Digits Indicate PAN or TAN

The next 10 digits of the GSTIN represent Permanent Account Number (PAN) of the taxpayer. Thus, this means every person registering under GST needs to have a PAN compulsorily. However, only a non – resident taxable person seeking registration under GST can apply for registration without a PAN.

This is because non – resident taxable persons are granted registration on the basis of a unique number or a Tax Identification Number (TAN). Thus, this number helps the government of foreign land, where such an entity is based, to identify the entity.

3. Thirteenth Digit Represents Number of Registrations Under a Single PAN

Next, the 13th digit of the GSTIN represents the number of registrations the entity or person has within the state of a given PAN. Now, this number is an alphanumeric number that starts with 1 continues to 9 and then further continues from A to Z. Therefore, this number is assigned on the basis of number of registrations an entity has within a single state having the same PAN.

Say for instance, K. P. Pvt. Ltd. has a GSTIN – 07CCCCC0000C9Z5. Now, the thirteenth digit in the aforementioned GSTIN is 9. This means that K. P. Pvt. Ltd. has 9 branches in the state of Delhi under the same PAN – CCCCC0000C.

Furthermore, say Sharma Pvt Ltd has a GSTIN – 07DDDDD1111DBZE. Here, the thirteenth digit indicates the alphabet ‘B’. As mentioned above, after the number 9, the sequence A – Z starts as the number of registrations of an entity increase beyond 9. Thus, the alphabet ‘B’ represents ‘11’ branches of Sharma Pvt. Ltd in the given state of Delhi.

4. Fourteenth Digit Indicates the Nature of Business

Now, the 14th digit in GSTIN is ‘Z’ by default. This is kept blank for future use.

5. Fifteenth Digit is a Check Code

The 15th digit is an alphanumeric character known as check code. Now, check code is nothing but a digit or an alphabet added to a series or string of characters in order to detect errors. This digit or alphabet is computed from the digits or characters present in the string of characters mentioned. Usually, identification numbers such as bank account numbers or other ids used for application use this kind of check code.

Q.4 Types of GST.

There are 4 types of GST:

1. IGST = Integrated Goods and Services Tax.
   
2. SGST = State Goods and Services Tax.
   
3. CGST = Central Goods and Services Tax.
   
4. UTGST = Union Territory Goods and Services Tax.
   

Q.5 Rates of GST.

The GST council has fitted over 1300 goods and 500 services under four tax slabs of 5%, 12%, 18% and 28% under GST. This is aside the tax on gold that is kept at 3%.

Q.6 What changes has GST bought in?

In the pre-GST regime, every purchaser including the final consumer paid tax on tax. This tax on tax is called Cascading Effect of Taxes.

GST has removed this cascading effect as the tax is calculated only on the value-addition at each stage of the transfer of ownership.

Q.7 Components of GST.

There are 3 taxes applicable under this system: CGST, SGST & IGST:

1. CGST - Collected by the Central Government on an intra-state sale (Eg: Transaction happening within same state Delhi to Delhi)
   
2. SGST - Collected by the State Government on an intra-state sale (Eg: Transaction happening within same state Delhi to Delhi)
   
3. IGST - Collected by the Central Government for inter-state sale (Eg: Delhi to Maharashtra).
   

In most cases, the tax structure under the new regime will be as follows:

1. CGST+SGST :- Sale within the State (Revenue will be shared equally between the Centre and the State)
   
2. IGST :- Sale to another State (There will only be one type of tax (central) in case of inter-state sales. The Centre will then share the IGST revenue based on the destination of goods).
   

Q.8 How to pay GST online?

Step 1: Login to the GST Portal. Enter your username, password, and captcha code

Step 2: Once you log in go to Services > Payments > Create Challan.

Step 3: Enter the amounts and select the method of payment i.e. e-payment, over the counter or NEFT/RTGS.

Step 4: A summary page will appear containing all the details of the challan.

Make an online payment of GST through Net-Banking or take a printout of the challan and make payment in Bank.

Q.9 Advantages of GST.

GST has mainly removed the Cascading effect on the sale of goods and services. Removal of cascading effect has impacted the cost of goods. Since the GST regime eliminates the tax on tax, the cost of goods decreases.

GST is also mainly technologically driven. All activities like registration, return filing, application for refund and response to notice needs to be done online on the GST Portal; this accelerates the processes.

For more information on this visit www.taxaj.com 

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