FAQs on understanding GST (Goods and Services TAX)

With GST nearing its implementation date, we attempt to answer some common questions relating to certain aspects of GST.

Q 1: Is GST a destination/state based tax?

Ans: Yes, GST is a destination/state based tax on consumption of goods and services. GST is proposed to be levied at all stages, right from manufacture up to final consumption, with credit of taxes paid at previous stages available as setoff.

Q 2: Is Goods and Services Taxpayer Identification Number (GSTIN) needed at the place of origin of goods? Would it happen on the basis of place of consumption or supply of the goods?

Ans: As per the GST law, the levy of tax is triggered in the state in which movement of goods originates. Hence, GSTIN registration needs to be taken at the place of origin of the supply. The tax, however, would accrue to the taxation authority which has jurisdiction over the place of consumption.

Q 3: How do I register for GST? What are the requirements for GST registration?

Ans: Sellers need to register for GST online using the process described in the How to register for GST article. To know more about the GST registration requirements, you can refer to the documents required for GST post.
Please reach out to your Tax Consultant or GST service provider for detailed assistance in relation to the registration or otherwise relating to GST.

Q 4: What is the difference between GSTIN & TIN number?

Ans: TIN number is a registration number issued under the VAT laws. GSTIN is a registration number issued under the GST law.
While TIN number is an 11 digit number with the first 2 digits indicating the state code, the format of GSTIN is as under:
TIN Number format

Q 5: What are the salient features of returns to be filed under GST?

Ans: The salient features of the proposed returns filing procedures under GST are as follows:
>A common return would serve the purpose for both Centre and State Government filings.
>The major returns to be filed include returns for outward supplies, return for inward supplies/ purchases, monthly returns and annual return.
>Filing of returns is proposed to be completely online. All taxes can also be paid online.

Q 6: Can a seller enroll for GST without a VAT number/registration? If I do not have a VAT number, can I still enroll for GST?

Ans: Currently, this process has not been enabled. Tentatively, in the future, new sellers may have the ability to file a single application (online) for obtaining a fresh registration through the GSTN portal at www.gst.gov.in/.The registration number will be PAN based.

Q 7: What are the benefits of GST?

Ans: The benefits of GST (as per the FAQs on GST, issued by the Ministry of Finance, available at http://pib.nic.in/newsite/PrintRelease.aspx?relid=148240) are:

Easy compliance:

A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online.

Uniformity of tax rates and structures:

GST proposes to ensure that indirect tax rates and structures are common across India, thereby increasing certainty and ease of doing business.

Removal of cascading:

A system of seamless tax-credits throughout the value-chain, and across boundaries of states, would ensure that there is minimal cascading of taxes.

Improved competitiveness:

Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.

Gain to manufacturers and exporters:

The subsuming of major Central and State taxes in GST, complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. The uniformity in tax rates and procedures across India will also go a long way in reducing the compliance cost.

You can also read our FAQs on working with GST
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