The goods and services tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. In effect, GST provides revenue for the government.
What are the components of GST?
There are 3 taxes applicable under this system: CGST, SGST & IGST.
• CGST: Collected by the Central Government on an intra-state sale (Eg: transaction happening within Maharashtra)
• SGST: Collected by the State Government on an intra-state sale (Eg: transaction happening within Maharashtra)
• IGST: Collected by the Central Government for inter-state sale (Eg: Maharashtra to Tamil Nadu)
In most cases, the tax structure under the new regime will be as follows:
Transaction | New Regime | Old Regime | |
Sale within the State | CGST + SGST | VAT + Central Excise/Service tax | Revenue will be shared equally between the Centre and the State |
Sale to another State | IGST | Central Sales Tax + Excise/Service Tax | There will only be one type of tax (central) in case of inter-state sales. The Centre will then share the IGST revenue based on the destination of goods. |
Type of Taxpayers | Type of Supplies | Exemption Limit Up To March 31, 2019 | Exemption Limit With Effect From April 1, 2019 |
Normal taxpayers | Supply of goods only | Aggregate annual turnover of up to Rs. 20 lakhs | Aggregate annual turnover increased to up to Rs. 40 lakhs |
Special category states | Supply of goods only | Aggregate annual turnover of up to Rs. 10 lakhs | Aggregate annual turnover increased up to Rs. 20 lakhs |
Normal taxpayers | Supply of services only | Aggregate annual turnover of up to Rs. 20 lakhs | Aggregate annual turnover of up to Rs. 20 lakhs (remains unchanged) |
Special category states | Supply of services only | Aggregate annual turnover of up to Rs. 10 lakhs | Aggregate annual turnover of up to Rs. 10 lakhs (remains unchanged) |
In Case of Normal Taxpayer
The GST turnover limit for supplier of goods only was Rs. 20 lakhs under the original GST structure rolled out by the government in July 2017. This was except the special category states.
In other words, supplier of goods having an aggregate annual turnover of up to Rs 20 Lakhs in the preceding financial year were not required to register under the GST Law.
Thus, supplier of goods with aggregate annual turnover in the preceding financial year of Rs 20 Lakhs and above need to compulsorily register under GST.
This exemption limit, however, has been doubled by the GST Council from Rs. 20 lakhs to 40 lakhs in the 32nd GST Council meeting.
Furthermore, this exemption limit of up to Rs 40 Lakhs is not applicable for persons who are:
• Required to take compulsory registration under Section 24 of the CGST Act
• Involved in making supply of goods such as:
• Ice cream and other edible ice whether or not containing cocoa
• Pan masala
• Tobacco and tobacco manufactured substitutes
In Case of Special Category States
GST registration limit for north eastern and hilly states was Rs. 10 lakhs in the initial GST regime.
The Special Category States include:
• Arunachal Pradesh
• Assam
• Jammu and Kashmir
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Sikkim
• Tripura
• Himachal Pradesh
• Uttarakhand
This too has been raised from Rs. 10 lakhs to Rs. 20 lakhs for supply of goods as per the 32nd GST Council meeting.
However, the hilly and north eastern states were given an option. They could either choose Rs. 20 lakhs or Rs. 40 lakhs as the turnover limit for GST exemption in case of supplier of goods.
Services Registration Limit:
In Case of Normal Taxpayer
The GST turnover limit for supplier of services was Rs. 20 lakhs except the special category states under the original GST structure rolled out by the government in July 2017.
However, this exemption limit for service providers remains unchanged i.e. Rs. 20 lakhs as announced in the 32nd GST Council Meeting.
In Case of Special Category States
GST registration limit for service providers in North eastern and hilly states was Rs. 10 lakhs in the initial GST regime.
This exemption limit remains unchanged i.e. Rs 10 lakhs as per the 32nd GST Council Meeting.
Composition Scheme Registration Limit
The GST Registration Limit for taxpayers registered under Composition Scheme varied according to the category of taxpayers. These were as follows:
In Case of Traders and Manufacturers
All the traders and manufacturers having an aggregate annual turnover of up to Rs 1 Crore in the preceding financial year could register as composition dealers under the GST law. The rate of GST applicable on such traders and manufacturers was 1%.
However, as per the 32nd GST Council Meeting, the GST Registration Limit for manufacturers and traders registered as composition dealers has increased.
Accordingly, traders and manufacturers having an aggregate annual turnover of up to Rs 1.5 Crores in the preceding financial year can now register as composition dealers under GST.
But, the GST rate applicable on such traders and manufacturers remains unchanged, that is, 1%.
In Case of Restaurant Service Only
Service providers offering restaurant services only with an aggregate annual turnover of up to Rs 1 Crore in the preceding financial year could register as composition dealers under the GST law. Furthermore, the rate of GST applicable on such service providers was 5%.
However, as per the 32nd GST Council Meeting, the GST Registration Limit for Restaurant service providers registered as composition dealers has also been increased.
Accordingly, Restaurant service providers having an aggregate annual turnover of up to Rs 1.5 Crores in the preceding financial year can now register as composition dealers under GST.
But, the GST rate applicable on such restaurant service providers remains unchanged, that is, 5%.
In Case of Other Service Providers
Service providers, other than restaurant related services, could not opt for Composition Scheme under the original GST framework.
However, a new Composition Scheme shall now be available for Suppliers of Services or Mixed Suppliers with a Tax Rate of 6% (3% CGST +3% SGST) as per 32nd GST Council Meeting.
And the threshold annual turnover for these service providers in the preceding Financial Year must be up to Rs 50 lakhs.
Compulsory Registration
There are certain category of persons who are required to register under GST compulsorily. Section 24 of the CGST Act, 2017 lists those categories. Accordingly:
• Persons making inter-state taxable supply
• Casual taxable persons
• Persons required to pay tax under reverse charge
• Individuals required to pay tax under sub-section (5) of section 9
• Non-resident taxable persons
• Persons who are required to pay Tax Deducted at Source (TDS) under section 51. This is immaterial of the fact that whether they are separately registered under the Act or not.
• Input Service Distributor, whether separately registered under the Act or not.
• Persons supplying goods or services other than supplies specified under sub-section (5) of section 9. Such supplies are made through an electronic commerce operator who is required to collect tax at source under section 52.
• Every electronic commerce operator
• Persons making taxable supply of goods or services on behalf of other taxable persons as an agent or otherwise.
• Any other person notified by the government on the recommendations of the Council.
• Persons supplying online information and database access or retrieval services from a place outside India. Such services are supplied to a person other than a registered person in India.
As mentioned above, the GST Council in its 32nd meeting gave an option to the hilly and north eastern states to choose either Rs. 20 lakhs or Rs. 40 lakhs as the turnover limit for GST exemption in case of supplier of goods.
Thus, following is the status of the States adopting the various thresholds for GST registration in case of supply of goods.
States That Accepted Rs 10 Lakhs | Normal States That Accepted Rs 20 Lakhs | States That Accepted Rs 40 Lakhs Threshold Limit |
1. Manipur | 1. Arunachal Pradesh | Remaining 21 States and 5 Union Territories |
2. Mizoram | 2. Meghalaya | |
3. Nagaland | 3. Puducherry | |
4. Tripura | 4. Sikkim | |
5. Telangana | ||
6. Uttarakhand |
Now, Delhi and Puducherry are considered normal states and not special category states for the purposes of GST. Accordingly, there would be 31 States where SGST + CGST would be levied and 5 Union Territories where UTGST + CGST would be levied.
Secondly, registration of a taxpayer is mandatory as per section 24 of the CGST Act, 2017. However, the exemption from registration is granted to a person making inter-state supplies of handicraft goods up to an aggregate turnover of Rs 20 Lakhs (Rs 10 Lakhs in case of Manipur, Mizoram, Nagaland and Tripura).
This exemption would be applicable if the taxpayer supplying goods from any of the above-mentioned states has a PAN. Moreover, the goods supplied by such a taxpayer must move under the cover of e-way bill, irrespective of the value of the consignment.
GST registration holders are required to file GSTR-3B return every month providing details of sales and purchases made in a month to the Government. GSTR-3B return is due on the 20th of each month.
In addition to GSTR-3B return, businesses registered under GST must file GSTR-1 return. GSTR-1 return must be filed every month by businesses having annual revenue of over Rs.1.5 crores. In case a business has a yearly revenue of less than Rs.1.5 crores, GST return should be filed every quarter.
Annual GST return must be filed by all GST entities having GST registration. The due date for filing GST annual return for FY 2017-18 is 31st December 2019. The due date for filing GST annual return for FY2018-19 is 31st March 2020.
GST Return Due Dates
The following are upcoming GST return due dates:
• November GSTR-3B will be due on 20th of December 2019.
• November GSTR-1 return for persons having annual revenue of more than Rs.1.5 crores will be due on 11th December 2019.
• October – December GSTR-1 return for persons having annual revenue of less than Rs.1.5 crores will be due on 31st January 2020.
Keep watching this page for the latest updates to GST return due dates.
Failure to file GST returns on time to can lead to penalties and cancellation of GST registration. If GST return is continuously not submitted for six months, then the GST registration would be cancelled, and the person would not be able to obtain another GST registration – unless all the late filing penalty is paid.
The penalty for late filing GST return is different for persons having NIL return and persons having turnover. In case a person has no business, NIL GST return must be filed. Failure to file NIL GST return can lead to a penalty of Rs.20 per day for each of the GSTR-3B return and GSTR-1 return. So, failure to file NIL GST return can result in a penalty of Rs.40 per day or Rs.1200 per month.
In case a person has business activity during the period for which GST return is late-filed, then a penalty of Rs.50 per day will be applicable for late GSTR-3B return and Rs.50 per for GSTR-1 return. Hence, a penalty of more than Rs.3000 per month would be applicable.
In addition to the above late filing fees, the person would also have to pay interest at the rate of 18% on GST payment remitted late to the Government.
All persons registered under the Composition Scheme are required to file FORM GSTR-4A every quarter through the GST Common Portal or through a GST Facilitation Centre. GST return for those enrolled under Composition Scheme is due on the 18th of the month, succeeding a quarter. Hence, GST return for composition scheme would be due on April 18th, July 18th, October 18th and January 18th. The GST return filed by a Composition Scheme supplier must include details of:
• Invoice wise inter-State and intra-State inward supplies received from registered and unregistered persons
• Consolidated details of outward supplies made
Also, if a registered person opted to pay tax under composition scheme from the beginning of a financial year, then the taxpayer must file monthly GST returns on the 10th, 15th and 20th of each month and monthly returns till the due date of furnishing the return for the month of September of the succeeding financial year or furnishing of annual return of the preceding financial year, whichever is earlier. Hence, even if a taxable person under GST opted for composition scheme from April onwards, the taxpayer must continue filing monthly GST returns until September.
While filing the GST composition return, the taxpayer is also required to discharge liability towards tax, interest, penalty, fees or any other amount payable under GST by debiting the electronic cash ledger. GST composition is levied at the following rates:
• Manufacturers, other than manufacturers of such goods as may be notified by the Government – 1%.
• Suppliers making supplies – 2.5%
• Any other supplier eligible for composition levy – 0.5%
Its important to note that any taxpayer who has opted for the GST composition scheme will not be eligible to avail input tax credit on receipt of invoices or debit notes from the supplier for the period prior to opting for the composition scheme.
