In today’s article we want to talk about some basic points about GST.
You know, there was a joke, which was floated on WhatsApp and Alia what was asked once that what is the full form of GST? And she said it is goodnight sweet dream and take care.
So, these days I guess actresses are competing with each other that was want to give the most hilarious answer for any question as you have understood about whom I’m talking about. Right?
So anyways, so that we don’t end up giving such messy answers. We are going to start up a separate series which will clear all your basics about GST.
And the intention is not to make you a GST expert, but the intention is to make you as a consumer and even if you are an entrepreneur to make you aware about certain basic concepts of GST.
so in today’s article
we are going to talk about what is the meaning of GST?
We are going to talk about the components of GST.
We are going to talk about the registration requirements of GST and
we are also going to talk about what are the different forms which appear in GST at a very basic level at a layman’s level.
So please read completely this article.
So GST is basically Goods and Services Tax. Some both are included in plural Goods and Services Tax Okay.
Before the introduction of GST we had so many taxes in India. We had excise we had service tax we had customs we had VAT we had CST and so many we had Octroi was a complete mess complete Khichdi of all the taxes.
So to simplify things, this government BJP in 2014 to 2019 regime their first annual they came up with GST and when our Prime Minister Narendra Modi said that we are introducing you with one nation one tax and that was GST.
He called it as a good and a simple tax. Is it really good? Is it simple, so many different perceptions about I mean by various people.
So let’s understand a little bit more in detail so that you can make your own perception about realistic good and real. Is it simple or not?
I remember that when I was at a restaurant the day after GST was introduced and the waiter got a bill right next to my table and the customer was sitting right next to me he saw the bill and he said it says CGST is at 9% and SGST is at 9% and he said I have listened to Modi speech and he said it’s one tax one nation.
So either charge me CGST or charge me as GST? I’m not going to pay both. We think I’m a fool. No. So there’s a confusion.
Why is it said one tax one nation when there are multiple components of GST and what are the components of GST?
There are three major components, one is CGST, one is SGST and one is a IGST. CGST stands for central GST SGST is state GST and it is IGST is an integrated GST okay.
Now which tax is levied events when in simple words again assume that I am selling my articles to a person who is in Rajasthan and I’m from Rajasthan also.
I’m selling articles to person in Rajasthan then I have to levy two types of taxes one is CGST one is IGST, so basically when I sell articles to you and when i Wherever I collect taxes from you, then I will pay a part of that to the state government. So I pay SGST OR state GST to Rajasthan government, then CGST that portion goes to central Okay, so I don’t pay taxes separately.
That the division part the bifurcation part is done by the tax authorities but that component whatever I’m paying,
So as a simple example, if I’m paying 18 rupees to the government, then it gets split up as nine plus nine, nine rupees goes to government of Rajasthan which is the SGST and nine rupees goes to the central government that is CGST okay.
What now it does happen that there are many people who place an order for my articles even outside Rajasthan. So let us say there’s a person from Delhi was placed an order for my articles, there is a person from Chennai who has placed order for my articles.
Now what happens do I charge CGST and SGST to them? No, I charge I GST. So I hope you have understood any sale which takes place within the state is a CGST SGST.
So basically such sale will attract to taxes CGST SGST, and a sale outside the state will attract a IGST which is an integrated GST or what would be the tax rate for GST in such a case where CGST and SGST is 9%+9% and for IGST, it will be 18% next time.
So is it necessary that every person who is selling some goods or who is rendering a service is every person required to pay is required to collect and pay GST to the government?
So a simple example taken on lighter note, let’s say my building watchman. I was going to my office the other day and my watchman said Salaam and I said hello. Hi, good morning.
And he said we were going so I’m going to my office said that I provided your service. I was awake on the night and I was protecting the people of your society so that everyone should sleep very calmly and quietly without any tension.
So I provided your service. So first pay GST and then would we office is that what is going to happen? No. But then he’s also providing a service that’s true.
Then who is required to collect GST? And who is not required to collect GST for that you should know the registration requirements, okay.
So just as an example, if I am collecting GST from you, then it means that I crossed the threshold, the minimum requirement and then it will be mandatory for me to register under GST.
So, what are the mandatory requirements for any business one basically I’m talking about business one okay. If the turnover of a business turnover is nothing but sales if turnover crosses 40 lakhs, then he or she that business basically is required to get itself registered under GST.
If some person wants to sumoto, supermoto on his or her own which will then they can register under GST.
okay, so if you’re a small shopkeeper and you say I want to get registered under GST, I want to tell everyone that I’ve registered under GST. This just just out of curiosity, can you register on the GST? Yes, you can.
That’s a voluntary registration, but when is it mandatory registration mandatory registration is that if you cross the threshold of 40 lakh rupees turnover, Okay, one more.
Some important point for you. If you want to sell your products online, so let us see you’re making one some fancy items, some fancy bottles these days decorated bottles are made by so many girls, some panties and candles and whatnot.
And if you want to sell it online, Christmas gifts and all that, then in that case, even if your business has one rupee of turnover, because you’re selling online, it will be mandatory for you to get yourself registered under GST.
okay, so if you’re selling products online, then that 40 lakhs threshold disappears. Okay, so I hope you have understood the registration requirements.
There are so many details, I’ll just cover it at a very basic level. So let’s talk about few forms which you have to file under GST number.
one is GSTR1, second one is GST3B.
These two forms are currently required to be filled by various businessmen and professionals.
I’ll give you just one one liner about what is GSTR1 and what is GST3B?
One is basically about it gives so I as a businessman, I have to give details to the Government of India as to how much sale or how much services I’ve rendered the worth of that after submitting GST are one So just as an example, if I’ve sold goods worth rupees 10 lakhs in one month as an example okay.
if I’ve sold books worth rupees 10 lakhs in a month as an example then I have could tell this to the government that yes, I’ve sold these books telex work on these I have collected 18% GST and this is my total tax liability okay, this is what I have to tell in GST are one of course I have to give the details b2b b2c, all these details have to be given your b2b is business to business and b2c is business to customer.
Okay, then what happens with GST3B. Now in 3B Basically my tax liability is calculated. Okay, so, whatever sales have done, I’ll give you a very simple example just pay attention. Assume that I sold goods worth rupees 100 And I collected 18 rupees GST okay then what is my tax liability?
I collected 80 rupees from the customer as a businessman, I have to pay this 18 rupees to the government. Okay. But could it happen that me as a businessman, I have also paid GST to someone. Yes. So I’ll give you a simple example. Assume that I’m selling this calculator Okay.
When I sell goods, isolated 100 rupees have collected it in rupees okay, I’m a trader okay. So assume I purchased goods from a wholesaler at 80 rupees. Okay I purchased it 80 rupees and I have paid eight rupees GST as an example to the wholesaler right so let’s take this tension at 18 rupees collected from the customer and only eight rupees I have paid to the supplier okay.
So now I tell the government that 18 rupees collected minus eight rupees paid, I’m going to pay you only 10 rupees.
Okay, that is what is the concept of GST credit. In my next video I’m going to talk about this same concept of GST credit in a bit more detail.
I hope as of now you have understood a little bit so I just pay the net amount and not the gross amount collected as a GST.
To the government okay. So this is to be told in GSTR3B and whatever is a liability as to pay to the government by 20th of the next month.
So right now we are in the month of November. So whatever amount I collect from customers, I have to pay it by 20th of December. I hope you have understood this participant.