GST Frequently Asked Questions

Under the ‘One Nation, One Tax’ initiative, the new indirect tax regime, Goods and Services Tax (GST), is implemented. With effect from 1st July 2017, the GST law came into force which made India the ‘One Nation Tax Market’. GST is considered a path-breaking tax regime and a strong foundation for future India. 

After many efforts and proposals, GST was introduced into the indirect tax world, which subsumed many other traditional and repetitive indirect taxes. Still today, there are various GST queries for many people across the country. Here is a simple way to solve your GST-related questions and GST FAQs. Read on to clear your doubts about GST with the help of these 16 most common GST frequently asked questions and the latest FAQ on GST. 

Did you know? France is the first country to implement GST, and 160 countries across the world have already implemented GST.  

Also read: All About GST Accounting - Meaning, GST Journal Entry and Purchase

GST Frequently Asked Questions with Answers

1. What is GST in Simple Words?

Goods and Services Tax (GST) is the new indirect tax which came into effect on 1st July 2017. GST is released with the motto of ‘One Nation, One Tax’ to simplify and strengthen the existing structure of indirect taxes in India. GST is a destination-based tax where the final consumer is liable to pay tax under the ‘Dual GST Model’. 

The dual GST model refers to India's GST structure, considering its unique federal nature. Under this model, there will be a collection of indirect taxes simultaneously by both central and state governments. 

GST is levied on goods, services or both. With the introduction of GST, various central and indirect state taxes are subsumed, making GST the single indirect tax for the country. Here are the various indirect taxes that are subsumed into the GST: 

Central Taxes

• Service Tax 
• Additional levies of customs tax – Countervailing Duty (CVD) and Special Additional Duty (SAD) 
• Central Excise Duty 
• Additional Duties of Excise 
• Other Surcharges and Cesses Like ED Under Medicinal and Toiletries Preparation Act. 

State Taxes 

• Sales Tax/Value Addition Tax (VAT) 
• Entry Tax 
• Luxury Tax 
• Entertainment Tax 
• Taxes on Lottery, Betting and Gambling. 

2. What Are the Various Components of GST?

Since the dual GST model is followed in India, both the centre and the state have the power to levy taxes on goods and services. The four tax components of GST are as follows:

• Central Goods and Services Tax (CGST) 
• State Goods and Services Tax (SGST)
• Union Territory Goods and Services Tax (UTGST) 
• Integrated Goods and Services (IGST) 

3. What Is the Meaning of CGST, SGST, UTGST, and IGST?

CGST is charged by the centre while SGST is charged by states. SGST and UTGST come under the same component of tax except for the difference that UTGST is levied by union territories while SGST is charged by states. IGST is distributed between the central government and state governments based on the nature of transactions and the consumption of goods. 

• CGST and SGST/UTGST are levied in the case of Intra-State supply of goods and services or both
• IGST is charged in the case of Inter-State supply of goods and services. Also, IGST applies to imports into India. 

4. What Are Inter-state and Intra-state Supplies? 

When the supply of goods or services or both happens within one state, then it is considered an intra-state supply. Inter-state supply refers to the transaction between two states – state 1 and state 2. 

Here, supply is defined as sale, transfer, barter, lease, rental, license, exchange and disposal of goods and services. There are two types of supplies such as taxable supply and non-taxable supply. As the name suggests, taxable supplies are taxed under GST, while there will be no tax on non-taxable supplies. To be considered as a taxable supply, the transaction should satisfy the conditions mentioned under the Section 7(1). These taxable supplies are taxed at different GST rates such as 5%, 12%, 18%, etc. 

The non-taxable supplies don't attract GST yet. Meaning, the GST council may decide to charge GST for these non-taxable supplies in the future. The GST rates are amended from time to time and are released through circulars, notifications and amendments. Examples of non-taxable supplies are petroleum crude, alcoholic liquor for human consumption, petrol, etc. 

Also read: GST on Flight Tickets - Know the Impact of GST on Air Fares

5. Is GST Applicable to All Goods and Services?

No. GST does not apply to certain types of goods and services due to their nature. These goods and services will be taxed the same as before (under previous indirect tax regime) and are outside the purview of GST for now. Later, the GST council can make further recommendations regarding the scope of GST on these non-taxable supplies such as: 

• Petroleum Crude 
• High-Speed Diesel
• Motor Spirit or Petrol 
• Natural Gas 
• Aviation Turbine Fuel (ATF) 
• Alcohol for Human Consumption 

There are also exempt supplies, zero-rated and nil-rated supplies under GST. The items that are not covered under the scope of GST are included under the ‘Negative List’. This negative list contains the items that are notified under Schedule-III of the CGST Act. 

6. What Are the Different GST Rates? 

GST rates vary based on the nature and form of goods and services. Various GST slab rates fall into 4 categories such as – 5%, 12%, 18% and 28%. These GST rates are decided by the GST council and are amended each year. 

While the 5% tax slab is charged on necessities like medicines and essential food items, the highest GST rate, 28%, is levied on luxury goods like cars, washing machines, etc. 

7. What Are the Main Features of GST?

GST is a simple and transparent indirect tax mechanism which solved years of confusion regarding the indirect tax structure in India. Here are some of the main features of GST that make it interesting and adapted by many businesses: 

• Input Tax Credit (ITC) can be claimed in GST by various businesses, which is a relief to manufacturers and as well as consumers
• It avoids the cascading effect of taxes and double taxation, unlike in the previous indirect tax structure where there were repetitive taxes on the same transaction 
• Taxpayers can utilise IGST input tax credit against output tax in the following order: IGST, CGST and SGST/UTGST 
• Comprehensive transitional provisions are available to the existing taxpayers for a seamless transition to the GST scheme.
• GST Portal is available to millions of taxpayers across the country and offers various services like registration, payments, refunds, and more. It is an open-source official GST website where taxpayers can get access to GST information and track their application status 
• Composition Scheme is available in GST, which benefits small taxpayers and allows the filing of quarterly GST returns considering the financial position of small businesses 

8. Who Can Claim Input Tax Credit (ITC) Under GST? 

Every taxpayer except a person registered under the composition scheme can claim ITC only when the below conditions are satisfied. 

• The previous returns due are filed, and tax liability is paid to the government 
• The tax invoice must be possessed by the supplier, and the goods/services must be received 
• In the case of instalments, ITC can only be claimed when the last lot of goods are received 
• One cannot claim ITC in the case where depreciation is claimed on the tax component of capital goods 

9. How Can I Register Under the GST Scheme?

Businesses can register under GST as normal/composition taxpayers, a casual taxable person (CTP), non-resident taxable person (NRTP), input service distributor and SEZ developer. Businesses whose turnover exceeds the threshold limit of ₹ 40/20/10 lakh, as the case may be, should mandatorily obtain the ‘GST Registration". The GST Registration is mandatory for these category of taxpayers such as :

• If the turnover in a financial year exceeds ₹40 lakhs in case of Normal Category States (₹20 lakhs for Special Category States)* for any business involved in ‘supply of goods’ 
• If the turnover in a financial year exceeds ₹20 lakhs in case of Normal Category States (₹10 lakhs for Special Category States)* for any business involved in ‘supply of services’ 
• Casual Taxable Person (CTP) 
• Non-Resident Taxable Person (NRTP) 
• Agents of a supplier 
• Any person making inter-state supplies 
• A person who is paying GST under RCM 
• E-commerce operator 
• Input service distributor 

*The Special Category States under GST are Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand. 

10. What Is the QRMP Scheme Under the GST Regime?

Quarterly Returns Monthly Payment (QRMP) is the scheme under GST, which is implemented with effect from 1st January 2021. It allows taxpayers to file GST returns quarterly and pay taxes monthly. QRMP scheme applies to the registered taxpayers whose aggregate turnover is up to ₹ 5 crores in the previous FY.

Also read: What Is Job Work Under GST? Procedure, GST Rates & Job Work Return Under GST

11. What Is SRN in GST?

Service Request Number (SRN) is the unique number generated after the submission of the registration application by taxpayers on the MCA portal. With the help of the SRN number, you can track your live application status. 

12. What Are the Various GST Returns? 

Under the GST law, various GST returns are to be filed by taxpayers according to their registration type. Check out the below table to know your specific GST return with the due date. 

13. What Are the Benefits of the Composition Scheme in GST?

The composition scheme is a huge benefit to small businesses as it limits the number of GST returns to be filed to four quarterly returns and one annual return. Under this scheme, only companies whose turnover threshold limit is up to 50 lakhs in the Previous Financial Year (PFY) can opt for the composition scheme by filing CMP - 02 form. 

14. What is RCM in GST?

Usually, the supplier of the goods or services pays GST by collecting it from the recipient. This is considered a Forward Charge Mechanism (FCM). Under the Reverse Charge Mechanism (RCM), the recipient is liable to pay GST. In simple words, the supplier pays GST in FCM while the recipient pays GST in RCM. 

15. What Role do Time, Value and Place of Supply Play in GST?

• Time of supply helps the taxpayer to figure out the due date for tax payments without unnecessary penalties and complications 
• The value of supply determines the right amount of GST to be charged and paid to the government. GST is inherently not correct when the value itself is wrong in the first place
• Place of supply determines the type of GST to be charged – CGST/SGST in case of intra-state and IGST in case of inter-state supplies. 

16. What are Some Reliable GST Software?

For a simple and user-friendly interface, check out popular GST software like ProfitBooks, Tally ERP 9, Khatabook App, GEN GST, and Clear Tax. Now make your business easy and hassle-free with Khatabook, a powerful GST-compliant accounting software. Packed with various useful features like easy integration, excellent user interface and many more, it will make you GST compliant within no time. Grow and manage your multiple businesses like never before with Khatabook which is 100% safe and secure.  

Also read: Learn About the Structure of GST in India - 4-tier GST Tax Structure Explained

Conclusion 

Hope we solved some of your most common questions on GST. GST is the most evolving indirect tax regime and is expected to undergo several amendments and proposals in the future. For more of your queries on GST, you can visit the official GST Council FAQ page and find helpful answers to your GST-related questions. You can also check out the official GST Knowledge Portal where you can learn about GST with various helpful educational options like quick videos, GST FAQs, training kits, user manuals, and more which makes your GST journey a piece of cake. Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.