GST Overview

GST would apply to all goods other than :

• Alcoholic liquor for human consumption
• Electricity
• Petroleum products, viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel.

Petroleum products are currently outside the ambit of GST, to protect the State Governments' revenues. They are proposed to be brought under the GST framework at a later date, once there is acceptance by all (under the GST council). Besides the above three, there are may goods (e.g. Salt, Sugar, Edible vegetables and cereals etc.) which are zero rated i.e. GST = 0%

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HEALTHCARE and EDUCATION Services have been exempted from GST.
Other Services also exempt from GST are :

• Services by the Government (Exclusions : Services like speed post, services related to aircrafts etc. are subject to GST)
• Services by RBI
• Services by diplomatic foreign missions
• Service by way of access to a road or a bridge on payment of toll charges
• etc. etc.

For a full list of Exempted Services, please click here ==> Misc GST Info

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The objective of implementing GST is to replace a plethora of Central and State level taxes (currently levied i.e. prior to 01 Jul 2017) with a single unified pan India tax (GST), so that the ease of doing business and statutorily compliance is greatly improved

Central taxes that would be subsumed under GST are :

• Central Excise Duty .
• Duties of Excise (Medicinal and Toilet Preparations)
• Additional Duties of Excise (Goods of Special Importance)
• Additional Duties of Excise (Textiles and Textile Products)
• Additional Duties of Customs (commonly known as CVD)
• Special Additional Duty of Customs (SAD)
• Service Tax
• Central Surcharges and Cesses so far as they relate to supply of goods and services.

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State taxes that would be subsumed under GST are :

• State VAT
• Central Sales Tax
• Luxury Tax
• Entry Tax (all forms)
• Entertainment and Amusement Tax (except when levied by the local bodies)
• Taxes on advertisements
• Purchase Tax
• Taxes on lotteries, betting and gambling
• State Surcharges and Cesses so far as they relate to supply of goods and services

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India being a federal structure , taxes are collected by both the Centre and the States (as also other statutory bodies like the municipal authorities). Hence GST levied will be either (i) IGST -- Integrated GST or (ii) CGST + SGST -- Central, State GST. India also has 7 Union territories (Two of these viz. Delhi and Puducherry also have legislatures) where UTGST will be applicable. UTGST is akin to SGST.

For sin products like tobaco, aerated drinks, gambling etc. Cess is additionally applicable.

All goods and services will be divided into certain categories. The rates will be fixed by category, and a State, cannot shift a commodity from a lower to a higher rate, or put it in the exempt category. GST will mark erosion in the states' freedom to decide on taxes and tax rates.

According to the Constitution, the States have complete autonomy over levy of sales taxes, which, on average, accounted for 80 per cent of their revenue. But with the GST, which mandates a uniform rate, this limited autonomy would be gone. The task of designing GST is assigned to the GST Council, a collective forum of State and Central governments. Any change to tax rates will have to be within a narrow band prescribed by the GST Council. Any changes to the tax rate will need to be agreed to with three-fourth majority at the GST Council. While states together have weightage of two-third in any decision and Centre will retain the balance one-third. The council will be deciding on all important aspects of the tax, including the base, rates, allocation of tax base among the states, administrative architecture and compliance procedures. This effectively means that states together will not be able to act on their own or take any decision, consent of the Centre will be necessary.

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For Intra State Transactions : Seller collects both CGST & SGST from the buyer and CGST needs to be deposited with the Central Govt. and SGST with the State Govt.

For Inter State Transactions : Integrated Goods and Service Tax (IGST) shall be levied on Inter State transactions of goods and services which are based on the destination principle. Tax gets transferred to the Importing State (Destination).

Exports and Supplies to SEZ units will be zero rated.

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There are 5 main tax rates. 0%, 5%, 12%, 18% and 28%. Rough diamonds are taxable at 0.25 % and Gold at 3 %. Cess is additionally applicable to some sin products Of the ~1200 # items for which rates were fixed by the GST council, the original rates were :

• 07 % of items are zero rated ( 0% tax)
• 14 % of items are taxed at 5 %
• 17 % of items are taxed at 12 %
• 43 % of items are taxed at 18 %
• 19 % of items are taxed at 28 %

Almost all common and everyday use items have been pegged at 0 to 5% tax rate. Majority of the items (60%) have been taxed at 12% or 18%. Majority of the Services are taxable at 18%.

Rates are being evaluated by the GST council every month. For the latest rates, please refer to the CBEC website.
The GST council has been progressively reducing rates.
28% rate is now (amendment in Nov 2017) applicable to only ~ 50 # items (originally applicable to more than 225 items). This rate is essentially applicable for luxury items and demerit / sin goods.

The stated objective is to move to a TWO TAX rate and in the future also include alcohol and petroleum products under GST.

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Businesses with the following aggregate turnover are liable to register and pay for GST.

Region	Liable to register for GST	Liable to pay GST
North-Eastern States	Rs. 9 Lakh	Rs. 10 Lakh
Rest of India	Rs. 19 Lakh	Rs. 20 Lakh

The Threshold limit is based on the yearly aggregate turnover of a business. Aggregate turnover is the sum of all taxable, non-taxable, and exempt supplies. It also includes export of goods and services (if any).

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GST registration process will be online through a portal maintained by Central Government of India. Govt. will also appoint GSPs (GST Suvidha Providers) to help businesses with the registration process. Based on the information provided by GSTN, registration process is:

• The applicant, will need to submit his PAN, mobile number and email address in Part A of Form GST REG–01 on the GSTN portal or through Facilitation center (notified by board or commissioner).
• The PAN is verified on the GST Portal. Mobile number and E-mail address are verified with a one-time password (OTP). Once the verification is complete, applicant will receive an application reference number on the registered mobile number and via E-mail. An acknowledgement should be issued to the applicant in FORM GST REG-02 electronically.
• Applicant needs to fill Part- B of Form GST REG-01 and specify the application reference number. Then the form can be submitted after attaching required documents.
• If additional information is required, Form GST REG-03 will be issued. Applicant needs to respond in Form GST REG-04 with required information within 7 working days from the date of receipt of Form GST REG-03.
• If you have provided all required information via Form GST REG-01 or Form GST REG-04, the registration certificate in Form GST REG –06 for the principal place of business as well as for every additional place of business will be issued to the applicant.

If the person has multiple business verticals within a state he can file a separate application for the registration in Form GST REG-01 for each business vertical.

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• PAN card of the Company
• Proof of constitution like partnership deed, Memorandum of Association (MOA) /Articles of Association (AOA), Certificate of Incorporation.
• Details and proof of place of business like rent agreement or electricity bill
• Cancelled cheque of your bank account showing name of account holder, MICR code, IFSC code and bank branch details
• Authorized signatory like List of partners with their identity and address proof in case of partnership firm or List of directors with their identity and address proof in case of company.