1. GST questions and FAQs: All key questions on GST impact and effect, answered in detail

GST questions and FAQs: All key questions on GST impact and effect, answered in detail

At the stroke of midnight tonight, Prime Minister Narendra Modi will launch GST -- India's biggest tax reform ever since Independence, fittingly at a grand ceremony in Parliament's central hall.

By: | Published: June 30, 2017 6:58 PM
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When India wakes up tomorrow, it would have changed forever. At the stroke of midnight tonight, Prime Minister Narendra Modi will launch GST — India’s biggest tax reform ever since Independence, fittingly at a grand ceremony in Parliament’s central hall, where Jawahar Lal Nehru gave his famous ‘Tryst with destiny’ speech in 1947 to mark the country’s independence from the British rule. Here are some key questions and their answers on the revolutionary tax system.

What is GST?

GST is India’s biggest ever tax reform ever since Independence and had been in making 17 years. It impacts everyone from the biggest industries and the richest businessmen to a small shopkeeper and a commoner in your neighbourhood — even those who do not pay income tax! GST subsumes over 15 different taxes and levies, and unifies the entire country into one common market with a single tax structure, making the movement of goods easier and seamless across state and territorial borders. With GST, all goods and services sold across various states of India will be taxed at a uniform rate, with all the income accruing to the Central government, which thereafter will compensate states for revenue lost due to tax forgone. Since the states will not be responsible for any of the indirect tax collection, trucks carrying the goods across states will not be stopped at check posts. The GST Council has made four primary tax rate slabs for various items — low rate of 5%, standard rates of 12% and 18%, and high rate of 28%. Other than this, gold and jewelry will be taxed at a concessional GST rate of 3%, while rough diamonds will attract a 0.25% levy. The government has also chosen to keep certain essential items of daily use free from any tax levy under GST.

Will it make things cheaper or costlier?

At this moment, it’s difficult to say, regardless of the several speculations and calculations being put forth by various sections. Finance Minister Arun Jaitley has repeatedly said that the government has kept in mind that the tax burden under GST does not exceed the tax incidence on various items at present, when it fixed the tax rate on 1,211 goods and about 600 services. Nevertheless, if one were to compare just the sticker tax rate under GST with the current tax rate, then some of the items which could become costlier include shampoos and deodorants, eating at fine dining restaurants, business class air travel, TVs, refrigerators, air conditioners, washing machines, five star hotel stays, mobile and broadband services, banking and financial services, and more. Although, the provision of input tax credit may offset some of the increment. On the other hand, items on which GST rate is lower than the current tax rate include salt, unbranded flour, unpackaged foodgrains, fresh fruits and vegetables, soaps, hair oil, toothpaste, pressure cookers and pans, non luxury hotel stays, education, healthcare and more.

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How will it benefit, and whom?

GST seeks to benefit everyone, but the biggest impact will be felt by businesses, especially those engaged in buying or selling of goods from or into other states. With the onset of GST, any trader would be able to buy goods from anywhere in India, with logistics remaining the only factor and not the state taxation. It will help producers sell more goods, who sometimes find it difficult to sell stuff to distributors or wholesalers in other states because of a difference in tax rates and cumbersome movement of goods. Also, notably, since there will be no stopping at the state borders, it will significantly cut the time spent and cost incurred on movement of goods. Further, GST seeks to build a complete chain of tax payments at each stage of sale, due to its value-added taxation nature. This will lead to a huge reduction in tax evasion as the entire ecosystem increasingly gets into the tax net, which will eventually boost the government revenue, leaving it with more money to spend on development. Further, the increased business activity and the erstwhile unorganised activity becoming formalised will boost India’s economy as a whole.

What happens going forward?

After a ceremonious rollout of GST at midnight tonight in Parliament’s central hall by Prime Minister Narendra Modi, all businesses across India will move to the new system tomorrow onwards itself. As is expected from any revolutionary change, there is a lot of opposition to GST too, with some business lobbies asking to delay the rollout for more time to prepare for it, and some others asking for scrapping it altogether due to fears of increased compliance burden and increasing use of technology. However, the finance ministry has indicated that the government would not take penal action for compliance lapses in the first few months of the rollout. GST in its current form in India, with multiple tax slabs and few items out of its ambit, is not an ideal tax solution which was sought earlier – a single tax rate across everything. But the government’s goal is to eventually move in that direction gradually and converge various tax slabs at later stages.

 

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    All India Metal Forging Association(Regd) Ghazoiab
    Aug 12, 2017 at 2:58 pm
    Please let us know if we are purchasing inputs from state we gets credited 9 SGST 9 CGST(If GST 18 )on interstate we can get the adjustment 9 on CGST by chrging IGST. We have to deposit 9 additionalSGST from our account for MSME unit the product are being of 30 days to 180 days credit therefore aqn additional burden of 9 on the unit. We request for allow to adjust 9 of SGST on the to avoid additional burden of 9 to MSME unit.
    Reply
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      All India Metal Forging Association(Regd) Ghazoiab
      Aug 12, 2017 at 2:47 pm
      Please let us know about the credited of VAT Excise Duty available in the books of accounts as on 30.06.2017
      Reply
      1. S
        Soumit
        Aug 6, 2017 at 7:03 pm
        Dear sir,. I have a business of potato and paddy. And fertiliser. Potato ,paddy are exempted from gst list. And my fertiliser turnover is below Rs. 2000000 in a year. So my question is that am I need to get gstn number
        Reply
        1. S
          SHRAVAN KUMAR
          Aug 5, 2017 at 3:21 pm
          DEAR SIRS KINDLY GIVE US INFORMATION , WHAT IS SAC CODE FOR MANPOWER SUPPLY TO AN INDUSTRIAL WORKS. AND WHAT IS THE RATE OF GST THANKS REGARDS SHRAVAN KUMAR
          Reply
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            varun
            Aug 4, 2017 at 9:46 pm
            i am providing banking services to the customers,(working as agent) in which I am only getting commission after deduction of TDS. Please guide me , For this i need to get GST no. or not ?
            Reply
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              VIJAY KUMAR
              Aug 3, 2017 at 6:19 pm
              Dear Sir, Our company registered in Bhiwadi-Rajasthan successfully migrated to GST on dated 20-12-2016 , Also received GSTIN from the department. In the month of Jan-17 we had opened new Unit in Jaipur-Rajasthan. But we are unable to add ( Jaipur Unit) in existing GSTIN due to amendment-service still not available at site. Our both Units ( Bhiwadi Jaipur ) will be single GST Registration in future.. "Our Query"- we have to raise GST invoice to Customer from "Jaipur Div" , So we are eligible to raised GST Invoice to Customer from "Jaipur Div" ( which addition is still pending due to GST end) With warm regards, Vijay Satija 8588804151 9717288111
              Reply
              1. Annu webphantoms
                Jul 31, 2017 at 11:52 am
                Thanks for sharing the GST FAQ'S it's important for us to know about these impacts and eefects.
                Reply
                1. P
                  Pramod.B
                  Jul 30, 2017 at 7:48 pm
                  My Business Turnover is under 20 Lakh.So i have no gst regestration .Can i perches goods from other states.
                  Reply
                  1. S
                    Suresh Kumar
                    Jul 24, 2017 at 3:46 pm
                    We are an EPC Company so we have registered in more then 15 states for GST. But before GST we have operating/maintained accounts for all states from Delhi Head Office with accounting software Tally because we have available credit limit for funds with Delhi Head Office. Know we have purchased webtel software for GST but we have maintained accounts with Tally presently and in future also. So it is mandatory/compulsory Separate Books maintained for each state else in same books we have maintained accounts with cost center for each state.
                    Reply
                    1. Gadiraju Sailakshmi
                      Jul 17, 2017 at 2:55 pm
                      Dear Sir, Iam into services business at Hyderabad and taken GST registration for Telangana state. iam also do services at Karnataka Andhrapradesh . Do i need to take GST registration for Karnataka state AP state separately because i already have GST registration at Telangana state.
                      Reply
                      1. Gadiraju Sailakshmi
                        Jul 17, 2017 at 2:54 pm
                        K. Sai Lakshmi Dear Sir, Iam into services business at Hyderabad and taken GST registration for Telangana state. iam also do services at Karnataka Andhrapradesh . Do i need to take GST registration for Karnataka state AP state separately because i already have GST registration at Telangana state.
                        Reply
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                          i n murty
                          Jun 30, 2017 at 7:33 pm
                          why petrol was not considered which should be included
                          Reply
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