The Goods and Service Tax (GST) is a consumption-based tax that is charged at the point of consumption. It is imposed at all stages of consumption, i.e. from manufacturing till its consumption or utilization by the consumers.
So what comes next after you get your GST Identification Number (GSTIN)?
Step 1: Showcase the GST Registration Certificate
Once you obtain your GST registration certificate, make sure to put them up for public display at a popular location within your place of business. It is mandatory for every registered firm possessing a valid GST Identification Number (GSTIN) to display the same for the knowledge of their customers.
Step 2: Establish or Confirm the Supply Point
Establishing or confirming the supply point plays a vital role in determining the nature of GST that would be levied. For instance, if the supply takes place within Kerala, then CGST or SGST will be levied; whereas, if the nature of supply is interstate (from one state to another such as Kerala to Delhi) then IGST will be applicable.
Step 3: Issue Invoices and Cash Memos that are GST compliant
The invoice plays a vital role in enabling the buyer to avail the right input tax credit. Therefore, it is important for a firm that has been issued GST registration certificate to start issuing GST compliant invoices and cash memos. Once the firm obtains GST registration, it must provide rectified invoices for the period from the effective date of registration and conclude with the date on which GST registration certificate was issued.
Invoices and Cash Memos issued by a GST compliant firm must have the following details in it:
- Name, address and GST Identification Number of the supplier.
- Invoice Number (max. 16 characters), distinct for each financial year.
- Date on which the invoice was issued.
- Name, address and GST Identification number or UIN, of the receiver.
- HSN code for the goods or services for which the invoice/memo is being issued.
- Details of the goods or services for which the invoice/memo is being issued.
- Quantity of the goods being provided by the supplier.
- Total value of the goods being provided by the supplier.
- Taxable value of the goods/services, after taking into account the discount being provided by the supplier.
- Place of supply, along with the name of the state in case of inter-state supply.
- Whether the tax is payable on reverse charge basis.
- Manual/Digital signature of the supplier or his authorized representative.
It is mandatory to raise the tax invoice within 30 days from the date on which the service has been provided. Further, it is not mandatory to raise a tax invoice if the value of supply falls below Rs. 200/- (Rupees Two hundred) and subject to the conditions that:
- The receiver is not a registered individual/entity.
- The receiver does not need any such invoice.
Step 4: Impose, Collect and deposit GST on every taxable transaction
Once the firm obtains GST registration, it can start imposing GST in accordance with the rates provided in the GST legislation, upon every taxable transaction that falls under its purview. At present there are four slabs of fixed rates, i.e. 5%, 12%, 18% and 28%, respectively; these rates have been decided for different classes of goods and services depending upon their distinct HSN code.
Further, the GST collected by the supplier is liable to be deposited with the Government on or prior to filing of the GSTR-3B form. The supplier can make this deposit either online via https://payment.gst.gov.in/payment/ or through bank counter.
Step 5: File Form ITC-01 for claiming input tax credit
For the firm to avail input tax credit, it is mandatory to file the ITC-01 form within 30 days of receiving the GST registration. The ITC-01 form is utilized to claim the CGST, SGST or IGST, whichever has been paid at the time of acquisition of inputs or utilization of input services during the production of the final goods.
Step 6: Preserve the accounts and records
In accordance with the GST law, it is mandatory for every registered firm/person to preserve proper records with the following details:
- Production/Manufacture of Goods.
- Inward/Outward supply of goods and services
- Stock of goods.
- Input tax credit that has been availed.
- Goods/services that have been either imported or exported.
- Supplies that attract payment of tac on reverse charge.
These accounts must be preserved for a duration of 72 months starting from the due date of filing of the annual return through GSTR-9 or GSTR-9A for the financial year.
These records can also be preserved through electronic modes.
Failure to maintain track of accounts with the specified details may attract a penalty of Rs. 10,000/-.
Step 7: File GST Returns
GST returns can be filed through the GST portal. For normal taxpayers, it is mandatory to file GSTR-1 form to provide details of the sales and GSTR-3B to provide summary of sales and ITC.
It is always advisable to file the returns on time, to avoid any kind of late fees or penalties.
Step 8: Be informed of application of Reverse Charge
Under the reverse charge process, often come transactions take place wherein the tax is deposited by the buyer to the government. Thus, in this process it is the recipient of the goods/services that pays the tax, instead of the buyer, which is a deviation from the usual norm.
The Goods & Service Tax (GST) is a multilevel and elaborately modeled tax regime that has absorbed into its fold almost all the indirect taxes that existed prior to it, excluding a few state-based taxes. The GST is charged at almost each phase of manufacturing, but exists with the intention of being refunded to all the parties involved in the production, and is collected at the source of consumption instead of source of origin.