GST rules and act

Basic Things You Should Know About GST

Prior to the GST regime, every business owner used to deposit many taxes excluding income tax. The taxes namely were service tax, VAT, excise duty or some sort of custom duty. Precisely, these and many other taxes have been subsumed by the GST policy. However, GST rules are not yet clear in the minds of individuals, possibly, because this tax regime is not just a change in the way tax is levied.

Hence, in this blog, we answer some of the basic questions pertaining to GST. Take a look.

When is GST Levied?

Many people are still unaware of the point when GST is levied. The point when the tax is levied is ‘supply’. The meaning of supply is not only limited to the actual sale of goods and services. Supply of products also means exchange, rental, barter, lease, and transfer. Besides, it also includes supply made to any branch or agent. Hence, if you run a business which works on any of the foretold things, GST replaces all of the taxes paid on purchases. This also makes it mandatory for you to levy GST on your good and services at the point of supply accordingly.

Types of GST

Goods and services tax (GST) is majorly divided into three kinds. As per the GST rules and act, they are CGST, IGST, and SGST. The business should work on identifying the destination they are supplying their products and services to. The sale can be inter-state or intra-state. If the destination of the goods or services supplied is not in the same state, it is inter-state supply. Moreover, if you are supplying products to foreign countries, you don’t need to levy GST on them. You would just need to do GST registration. Furthermore, if the supply is intra-state, both CGST and SGST will be levied on it. IGST is imposed on imports. IGST is the total of CGST and SGST.

GST rules and act

Who Should Prepare for GST?

If your business was earlier registered under any kind of tax like excise duty, VAT or service tax, your business definitely comes under the one who needs to register their businesses under GST. The businesses who have a turnover of less than rupees 20 lakh and do not supply goods inter-state do not make it to the mandate list of GST registration. The north-eastern states have a limit of Rs. 10 lakh. However. It becomes mandatory for those businesses to register that have a turnover of more than 20 lakhs and more than 10 lakh in the north-eastern countries.

Moreover, if you supply your goods and services online through a website, it becomes pertinent for you to register your business under GST.

Should You Voluntarily Opt for GST Registration?

According to GST rules, it is not compulsory for businesses who do not supply in states other than their own and have a turnover of less than 20 lakhs. However, it is always a smart decision to willingly register for GST.