GST: A Comprehensive Guide for Business Owners


GST (Goods and Services Tax) is an indirect tax system in India, implemented on July 1, 2017. It is a comprehensive, multi-stage, destination-based tax levied on the value-added to goods and services at each stage of the supply chain. It is aimed at unifying the Indian tax system and replacing multiple existing indirect taxes such as VAT, Excise Duty, and Service Tax.

Top 10 Major GST Categories:

  1. 0% GST Rate: Essential commodities and services like grains, fresh fruits, vegetables, and healthcare services.
  2. 5% GST Rate: Basic necessities like footwear, edible oil, sugar, tea, coffee, and essential medicines.
  3. 12% GST Rate: Processed food items, butter, ghee, mobiles, apparel (above INR 1000), and handmade safety matches.
  4. 18% GST Rate: Most services, computers, electronic items, cosmetics, cement, and furniture.
  5. 28% GST Rate: Luxury and sin goods like tobacco, aerated drinks, high-end vehicles, and luxury hotels.
  6. 3% GST Rate: Gold and gold jewellery.
  7. 5% (2.5% CGST + 2.5% SGST) GST Rate: Restaurants with an annual turnover of up to INR 50 lakh.
  8. 12% (6% CGST + 6% SGST) GST Rate: Non-AC restaurants and those without liquor licenses.
  9. 18% (9% CGST + 9% SGST) GST Rate: AC restaurants, restaurants with liquor licenses, and five-star hotels.
  10. 5% (2.5% CGST + 2.5% SGST) GST Rate: Transport services (railways, air transport).

Exemptions under GST:

Some goods and services are exempt from GST, including:

  1. Agricultural produce
  2. Healthcare services
  3. Education services
  4. Non-AC train travel
  5. Hotel accommodation with a daily tariff below INR 1000

Information for Business Owners:

  1. GST Registration: Businesses with a turnover exceeding INR 20 lakh (INR 10 lakh for special category states) must register for GST. However, e-commerce operators, interstate suppliers, and casual taxable persons must register regardless of their turnover.
  2. Tax Collection and Payment: Businesses must collect and remit GST on the supply of goods and services. The tax liability must be paid in the form of CGST and SGST (central and state GST) for intrastate transactions and IGST (integrated GST) for interstate transactions.
  3. Input Tax Credit: Businesses can claim an input tax credit for the GST paid on goods and services used to make taxable supplies. This reduces the overall tax liability.
  4. GST Returns: Registered businesses must file GST returns regularly, detailing sales, purchases, and tax paid and received. The frequency of filing depends on the type of taxpayer and the annual turnover.
  5. Invoice Generation: Tax invoices must be issued, including details like GSTIN, HSN/SAC codes, and the tax amount collected.
  6. E-way Bill: For the movement of goods valued above INR 50,000, an E-way bill must be generated, which includes details of the consignor, consignee, transporter, and the value of goods.
  7. Record Keeping: Maintain accurate records of sales, purchases, stock, input tax credit, and output tax liability for a minimum of six years from the due date of filing the annual return.
  8. Audit and Assessment: Depending on the turnover, businesses may be subject to a GST audit by a chartered accountant or a cost accountant. They must also comply with them

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