The Goods and Services Tax (GST) became a subject of constant debate after it was introduced in 2017. While most people seem to have a mixed bag of reactions to the implementation of GST, it would behoove you, regardless of your stance on the subject, to understand how it is calculated. This is especially critical if you are running a business of any kind.
Under GST regulations, goods and services are divided into five distinct tax rates – 0%, 5%, 12%, 18%, and 28% and also there are easy to use GST calculator to help you with your GST payments online.
Advantages of GST
GST Removes the Cascading Effect of Tax
GST is a fundamentally a comprehensive indirect tax meant to bring indirect taxation under one umbrella. Moreover, it is designed to nullify the cascading impact of tax from the tax system that was put in place earlier.
The Provision of Composition Scheme for Small Businesses
Small businesses that yield a turnover between Rs. 20 Lakh to Rs. 75 Lakh can significantly benefit from the GST as they now have the option to lower their taxes through the Composition scheme.
Increased Threshold for Registration
Under the previous tax structure, businesses with a turnover of over Rs 5 lakh were susceptible to VAT. Keep in mind that this threshold would vary with each state. However, under the new GST system, this threshold has been increased to Rs 20 lakh, which benefits small traders and service providers.
Simple and Straightforward Online Procedure
The GST process from start to finish is done online, and it is easy to carry out.
This is particularly beneficial for small and medium-sized businesses, as the processing time to finish different registrations such as VAT, excise, and service tax can be quite long.
Defined Rules for E-Commerce Operators
The tax regulations around the supply of goods in the e-commerce sector were not well-defined under the previous tax structure.
Online merchants such as Flipkart and Amazon would have to file a VAT declaration and mention the registration number of the delivery truck. Tax authorities had the power to seize goods if these online merchants did not produce the required documents.
In some states like Kerala and Rajasthan, these merchants would be treated as facilitators or mediators and did not need to register for VAT. The difference in tax rules in different states under different circumstances would cause a massive amount of confusion.
Fortunately, the rules and provisions for the e-commerce sector have been clearly laid out under the new GST system, thereby drastically reducing the confusion.
Improvement in the Efficiency of Logistics
The logistics industry in India initially had to maintain multiple warehouses across states to evade Central Sales Tax (CST) and state entry taxes on the movement of goods between states.
However, the GST regulations have brought clarity on the movement of goods between states.
How to Register for GST online?
If you haven’t registered your business for GST online, follow these steps to carry out the online GST registration.
Start by heading over to the GST portal and clicking on ‘Register Now’ under the ‘Taxpayers (Normal)’ tab.
In this step of the online GST registration process, choose ‘New Registration’ and hit ‘Taxpayer’ in the drop-down menu that pops up under ‘I am a.’ After this, select your state and district.
Type in the name of your business and its Permanent Account Number (PAN) and submit your mobile number and email address. You can expect to receive OTPs on them. Click on the ‘Proceed’ button.
Once you receive your OTP, enter the OTP and follow it up by clicking on ‘Continue.’
At this point, you will receive a Temporary Reference Number (TRN), which will also be sent to the phone number and email address that you have used to register. Make sure you note your TRN.
Head back to the GST portal and click the ‘Register now’ button.
Click on the TRN option, enter your TRN and the captcha code that pops up, and then click on the ‘Proceed’ button. Enter the OTP you receive on your mobile and then click on ‘Proceed.’
You can expect the status of your application to be displayed as a draft. Make sure you click on the Edit Icon.
This step marks the second part of the GST registration process. Be sure to fill in the required details and submit your photographs, the proof of the location of your business, your authorization form, and, finally, your bank account details.
Head over to the verification page, tick and confirm the declaration, and send in your application. You can do this through Electronic Signature (E-sign), Electronic Verification Code (EVC), or Digital Signature Certificate (DSC).
You can expect a message that says the online GST verification was successful, thereby marking the end of the registration process.
You can view your Application Reference Number (ARN) using your registered email ID and phone number.
Given how the concept of GST and everything it entails is a tad confusing, using a GST calculator before you decide to pay your GST online can prove to be helpful. Take a look at the following GST calculators:
Bajaj Finserv boasts an easy to use GST calculator that will help you with your GST payments online.
- To use the calculator, Enter the net price of a service or product and its associated GST slab. It could be 5%, 12%, 18% and 28%.
- Then hit the ‘Calculate’ button to find out the gross price of the product or service in question.
To use ClearTax’s GST calculator to calculate and make your online GST payment, enter these details:
- The net value of the service or goods
- The relevant GST rate for the service or goods. The GST rates are 5%, 12%, 18%, and 28%.
Once you hit the calculate button, the ClearTax GST calculator will display the tax amount for CGST, SGST, and IGST in addition to the gross price of the goods or service.
There you have it. These are two among many accessible, easy to use GST calculator to help you with your GST payments online. These GST calculators also include the formulae they use to calculate your GST.