Goods and Services Tax or GST is a new jewel in the crown of Indian taxation. Or is it so? No, the concept of GST is as old as 1954, when France decided to replace their existing tax system with GST.
Since 1954, as many as 160 countries around the world experimented with GST, and what we see in India today is the most refined and updated version of this one of its kind tax.
This article points out how a simple GST online registration can open up new doors for your business and the ultimate strategy you need to mould your business for extracting the best benefits out of GST.
Do You Need GST Registration?
You need GST registration, if you are an individual running a business, whose annual turnover is more than INR 20 lakhs (for all states, except special category states) and INR 10 lakhs (for special category states, such as Himachal Pradesh, Uttarakhand, and North-Eastern states).
GST is also applicable for all HUF, firms, or any other establishment responsible for paying tax.
How Can You Register for GST?
Registering for GST is a simple process and takes no more than five minutes. All you have to do is to visit the GST portal and register as a new taxpayer.
After the first step, you have to fill in a few details to receive the Temporary Reference Number or TRN. Once you upload the documents stipulated by the GST Act, you become eligible to receive your Application Reference Number or ARN and the GST number.
What Changes do You Need to Comply With GST Norms?
- Invoice Format
All GST-registered businesses have to include certain points in the invoice they issue. The additional details you have to include in the invoice are Unique Tax Invoice Number (UTIN), HSN or Accounting Code, and Tax rate and amount of particular goods or services, along with other details. Click here to see how a GST invoice looks like in real.
In its 35th meeting held on 21st June 2019, the GST Council decided to make e-invoicing mandatory for businesses with an annual turnover of INR 100 crore and above, w.e.f. April 2020. To comply with e-invoicing standards, you have to request your accounting software provider to adhere to the PEPPOL standards.
Before e-invoicing, all businesses had to manually upload invoice details through GSTR-1, which was then available for viewing on GSTR-2A. Post this; the consignor was required to generate the e-way bill by entering it in JSON manually or by importing it in excel.
E-invoicing makes data transfer easier by eliminating the need to manually fill data. The e-invoice automatically moves from the Invoice Registration Portal (IRP) to the GST portal, thus saving time and labour.
- Input Tax Credit
One of the best features of GST is that it allows you to avail of Input Tax Credit, which means you can adjust the GST collected on sales with the GST paid for acquiring input. Let us understand this with an example.
You are an easy chair manufacturer. To produce one easy chair, you have to buy leather worth INR 5000 that draws a tax of 18%. Also, you need other raw materials worth INR 1000, that has a 28% tax. Hence, the total tax you paid is INR 900 plus INR 280, which makes it INR 1180.
Now, you plan to sell the easy chair at INR 8000, where the tax rate is 18%. Hence, you pay INR 1440 as tax. While filing returns, you can deduct the input tax of INR 1180 from the output tax of INR 1440, and deposit INR 260 as the actual tax.
To claim ITC, you have to furnish the debit note, tax, and supplementary invoice.
- Take Help of a GST Billing Software
As GST is new, many issues need to be addressed. Rather than understanding all provisions, it is better to hand over your responsibilities to accounting software that has everything you need to comply with the latest GST laws and regulations.
A GST billing software is secure, fast, reliable, and the most cost-effective way to sail through the jargon-filled world of GST.
Conclusion
Now that you have understood the changes you need to do to your existing method of tax filing; it is time to calculate the applicable GST for your goods and services by using the GST calculator India. A GST calculator allows you to get perfect estimates, thereby making manufacturing or delivery of goods and services precise and cost-effective.
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