written by khatabook | December 9, 2019

All You Need to Know About the GST Bill

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Table of Content


The Seventh Schedule of the Indian Constitution, which went into force on January 26, 1950, has three lists that served as the foundation for the indirect tax system in India up to June 30, 2017. These regulations were predicated on the Government of India Act, 1935, and the circumstances present in 1935. This framework was no longer functional due to changes in how society operated. The majority of nations have long since made progress toward a unified tax system. GST, is the tax of the twenty-first century in India.

In his Budget Speech on February 28, 2006, the country's then-Finance Minister laid the groundwork for the GST. Since then, the government has been working continuously to implement the GST, culminating in the submission of the Constitution (122nd Amendment) Bill in December 2014.

Did You Know? The GST bill will result in a long-term decrease in the price of goods since it will limit the cascading impact.  

What is GST Bill? 

The full form of GST is Goods and Services Tax. This bill was passed with the aim to replace a number of other indirect taxes, including the excise tax, value-added tax, services tax, etc. The Goods and Service Tax Act was approved by the Parliament on March 29, 2017, and it became effective on July 1st of that same year.

In other terms, the GST is a tax that is imposed on the provision of goods and services. India's comprehensive, multi-stage, destination-based GST law is imposed on all value additions. GST is a unified domestic indirect tax regime that applies to the entire nation.

Why is GST Bill Needed? 

The cascading taxation impact on the purchase of goods and services has mostly been eliminated by the GST. The cost of commodities has been altered by the elimination of the cascading effect.

Additionally, technology plays a major role in GST. The GST portal requires that all tasks, including registration, return filing, refund requests, and notification response, be completed online, which speeds up the procedure. Eliminating the danger of undue taxes on people is yet another goal of this GST Bill.

This measure could also address tax avoidance, making corporate operations easier. To control inflation, essential goods like grain crops and agricultural items aren’t taxed. 

Also Read: All You Need to Know About Advance Ruling under GST from AAR

Objectives of GST

Now that you’ve got an introduction to GST and why it was introduced, let’s move to the objectives of the new tax system. These objectives will help you understand how the new tax revamps the system. 

To Achieve ‘One Nation, One Tax’

The GST has replaced several indirect levies that were in force under the former tax system. The benefit of a single tax is that each state applies the same rate to a specific good or service. Since the Central Government sets the tax rates and regulations, the tax system is made simpler. Common legislation like e-way bills for the transportation of goods and e-invoicing for transactional monitoring was introduced. Taxpayers are not burdened with numerous return forms and deadlines, which improves taxpayer compliance. It is an integrated method for complying with indirect taxes overall. 

To Replace Most of the Indirect Taxes

In the past, India imposed a number of indirect taxes at various points throughout the supply chain, including Service Tax, Value Added Tax (VAT), and other Central and State taxes. The State and the Central governments each controlled different types of taxation. There wasn't a single standardised tax that applied to both goods and services. Hence, GST was consequently implemented. All of the significant indirect taxes were combined into one under the GST. It has significantly lowered the taxpayers' burdens and made it simpler for the administration to collect taxes. 

To Eliminate the Cascading Effect of Taxes

Eliminating the cascading impact of taxes was one of the main goals of the GST. In the past, taxpayers could not offset the tax incentives from one tax against another. For instance, the VAT due on the sales could not be offset by the import taxes paid on purchase. Therefore, the businesses would include the import tax in the product cost. This, in turn, leads to the tax being charged on tax leading to higher processes. Only the actual worth contributed at each level in the supply chain is taxed under the GST system. In other words, the tax paid in the purchase is deducted while paying the tax collected on the sales. Due to this, input tax credits for both products and services are now flowing smoothly, and the cascading impact of taxes has been reduced. 

Also Read: GST benefits - 7 Ways One Must Know How GST benefits the Economy

To Curb Tax Evasion 

In India, the GST regulations are stricter than any of the previous indirect tax legislation. Invoices posted by their respective vendors are the only ones on which taxpayers under GST may receive an input tax deduction. This minimises the possibility of obtaining input tax credits on fictitious invoices. E-invoicing was also introduced, which has strengthened this goal even further. Additionally, because GST is a tax with a centralised surveillance network, it is considerably quicker and more effective to crack down on tax evaders. Therefore, the GST has significantly reduced the likelihood of tax fraud and tax evasion occurring. 

To Increase the Taxpayer Base 

In India, the implementation of GST has contributed to a larger tax base. Previously, the registration requirement for every tax legislation varied depending on turnover. Since the GST is a combined tax applied on both goods and services, the number of tax-registered firms has expanded. A few unorganised industries have also been brought inside the tax net thanks to the wider legislation governing input tax credits.  

To Promote Competitive Pricing and Increase Consumption 

Revenues from indirect taxes have increased as a result of the introduction of GST. Under the previous administration, the cascading impact of taxes led to higher costs for products in India than in international markets. Even within states, there was an imbalance in expenditures in some areas due to different VAT rates. The uniformity of GST rates has helped keep prices competitive inside India and internationally. Consequently, this has boosted demand and generated larger income, achieving yet another significant goal. 

Also Read: Role of GST Software in Your Business - Explained

New Compliances Under GST

e-Way Bills

By introducing "E-way bills," the GST created a centralised structure of waybills. This system was gradually introduced on April 1st, 2017 for intra-state movement of goods and April 15th, 2017 on for inter-state movement of commodities.

Manufacturers, traders, and carriers may easily create e-way bills under the e-way bill system for items that are delivered from their origin to their destination on a shared platform. With less time spent at checkpoints and a decrease in tax evasion, this technique also benefits tax officials.

E-invoicing

Companies with an annual aggregate sales of more than 500 crore in any prior fiscal year are now required to use the e-invoicing system as of October 1, 2020. Additionally, beginning January 1, 2021, this method was made available to those having a combined yearly revenue that exceeds 100 crore.

These companies are required to register their invoices on the GSTN's invoice registration system in order to receive a special invoice reference number for each business-to-business invoice. The gateway confirms the accuracy and legitimacy of the invoice. The digital signature and a QR code are then used to authorize.

Interoperability of invoices is made possible by e-Invoicing, which also lowers data entry mistakes. The GST portal as well as the e-way bill portal will get the invoice data directly from the IRP or Invoice Registration Portal using this system. As a result, submitting GSTR-1 will no longer require manual data entry, and it also facilitates the creation of e-way invoices.

Conclusion:

India uses the Goods and Services Tax as an indirect tax on the supply of products and services, sometimes known as a consumption tax. It is a thorough, multistage, destination-based taxation. It is thorough since it has absorbed nearly all indirect taxes, with the exception of a handful of state levies. The GST is a destination-based taxation system that is collected from the point of consumption rather than the site of generation. It is a multi-staged tax that is levied at each and every stage of production. However, it is intended to be paid back to all parties involved in the various production stages other than from the end consumer. 

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FAQs

Q: Who can get GST invoice?

Ans:

A supplier or seller will provide a GST invoice to the customer or receiver of goods or services. Such a document lists the concerned parties' identities as well as the specifics of the products or services provided in connection with a specific transaction. 

Q: What is the limit of cash bills in GST?

Ans:

As of right now, there is no cap set down for financial transactions under the GST Law, meaning that any registered individual can engage in any business transaction covered by the GST Law in cash for just about any amount, which includes sales to or purchases from unregistered individuals.

Q: Why do I need a GST bill?

Ans:

A tax invoice has become a crucial record under GST. It serves as proof of the provision of goods or services and is also a requirement for the beneficiary to claim Input Tax Credit. A qualified individual cannot claim an input tax credit without a tax invoice or debit note.

Q: Is the GST bill compulsory?

Ans:

It is not required for an invoice to be issued simply by the person providing the products or services. However, any registered person who purchases products or services from an unlicensed party must submit both a tax invoice as well as a payment receipt, according to the GST law. 

Q: What are the 3 types of GST?

Ans:

India now has three different forms of GST: CGST, IGST and SGST. This straightforward separation reduces indirect taxes by identifying interstate and intrastate suppliers. 

Q: How many Acts govern GST?

Ans:

The four GST legislation that was approved is the Central Goods and Services Tax Act, often known as the CGST Act, the Integrated GST Act, the Compensation GST Act, and the State/Union Territory GST Act.

Q: Q. What are the types of GST bills?

Ans:

In accordance with the GST billing procedure, there are basically two types of GST bills or GST invoices that would be produced under the GST regime: Tax Invoice and Bill of Supply.

Q: When was the GST bill passed?

Ans:

The law was passed in the Rajya Sabha on the 3rd of August, 2016, and the Lok Sabha approved the amended version on the 8th of August, 2016. After being approved by the states, the law was signed by President Pranab Mukherjee on 8th September 2016, and it was published in The Gazette of India on that day.

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The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.