On 1st July 2016, a drastic alteration in the taxation scheme of the country was made. Much precisely, one comprehensive tax replaced several distinctive levies on the value additions. The introduction of GST in India is done quite vaguely. In a pulse of the moment, the tax administration changed and there was a hassle in our lives. No doubt, every new reform brings a big deal of challenges with it. Similarly, the enforcement of GST brings a number of tests in front of us. First of all, there is a great need to understand the fundamentals of the system.
What is GST?
Goods and Services Tax is a multi-level indirect tax regiment which aims at eliminating the multiple cascading taxes and promote a unified market. The tax applied at each stage of the Supply Chain Management adds up and is levied on the end consumer as one. GST follows a rate arrangement that divides the products and services based on the tax percentage. This overarching tax is charged by the State and the Central government on the basis of the tax-slab that the article falls under.
The government of India has made this amendment in the Constitution with a view to obtain major benefits. Now, smooth and effective running of this reform is the foremost concern. Several software/tools are used and schemes are initiated in this context. There are some GST rules and techniques that the customers are supposed to follow in order to make the country GST compliant.
For the transparent execution of the plan, the government has announced a set of composition rules for the users to abide by. Let us see what a consumer is likely to do before, during and after being a part of this system.
Electronic notification about composition levy
Before initiating to pay tax under a section of this scheme, a registered person shall file an aptly signed intimation notice before the assigned date. This intimation can be direct or via a facilitation centre within the allotted time period.
The choice to pay taxes under this section is functional from the beginning of the financial year. It is considered only after the grant of the candidate’s personal registration on the appointed date.
Constraints on the levy
Following limitations are imposed when you undergo this process:
- You are neither an informal tax-payer nor a foreign taxable person
- You are not allowed to hold goods in stock that have been purchased in the schedule of inter-state trade or business imports from overseas
- Goods in possession should not have been purchased from unregistered sources otherwise, you shall pay taxes under defined sections
Validity of composition levy
- You need to follow the above rules and satisfy all the parameters declared in the concerned section to pay tax
- Within seven days of failing to satisfy any of these regulations, you have to issue a tax invoice for all taxable supplies. Moreover, you have to file a notice for withdrawal from the scheme
- If you want to withdraw from the system, prior to the date of withdrawal, you need to submit a signed application on the common portal
- Within 30 days of the withdrawal intimation, you need to furnish a statement of details about the furnished or semi-furnished goods held by you at the time of issuance
Rate of tax
The registered candidates are categorized according to the percentage of tax levied on them. For instance, Non-government manufacturers pay one percent, suppliers pay two and a half percent and other any other supplier eligible for composition levy pays a half percent of the tax.
As soon as the introduction of GST in India 2017 took place, the authorities have been on the move to make it work. The GST rules and new technologies are introduced only to facilitate the consumer accessibility. The service tax and VAT which were earlier implemented had their own return and compliances. With this new strategy, there is just one return to be filed. We have been successful in managing things the right way till date. With the help of advanced methodologies and the support of national administration, we can expect frequent positive changes towards a better global economy.