GST - Brief Information about goods and services tax


About GST

GST for a service provider with operations in only one state, GST is going to be excellent because without too much of compliance burden, you tend to get more input-tax credits. But, if you are a service provider in more than one state, and I believe, the majority would have operations in multiple states; in that case it would be hugely different under GST.

Service providers now have to grapple with a completely new set of facts. Many of them are going to be assessed in several states, several of them would have to obtain registration in new states, which they are not familiar with.

However, there has been much confusion when it comes to registration in different states and when does a service provider need to look at a multi-state registration. To make things very clear, merely because you provide services in a particular state, you are not required to register in that state. That is not required at all. It is only when you have operations in a particular state, which is a place of business or office that you have to register in that state.

Service provision is typically of a nature where in order to succeed in your business in a state, you will have to set up an office in that state. So if you are a Bangalore-based company and if you are selling your solutions in Mumbai and Delhi, at some stage in your evolutionary process you will set up your office in that city. For you it makes sense to have an office in that city and have a person manning that office instead of you going there frequently.


When you have that kind of setup with more than one state of operation, you are required to obtain multiple registrations, you have to do the compliance of each of those registrations, the invoicing has to be organized according to that state and therefore the input tax credit also becomes state-centric. This is the reason that for multiple state service providers, it is a mixed bag.

In the past, even if you are operating in 20 states, you could have obtained just one registration, which is for the place where you are headquartered. The theory was that as long as you are paying the right amount of tax, how does it matter? Now you have to break down that tax into relevant states and pay that to the relevant state.

For a very long time, many companies and many industry bodies, including the ones representing the technology industry tried to get centralized registration for several categories of companies under the GST. In fact at the forefront of such representations was the banking, financial services and technology companies. For a very long point of time industry bodies tried to persuade the government to continue having a centralized registration for these two to three sectors.

However, the states did not agree because in terms of the bargain that the Centre had with states, they had agreed with the states that they will be able to tax services and if you provide the states the power to tax services but take away technology and financial services, there is hardly anything left for the states to tax. That is why if you are a service provider having operations in more than one state, at least for the initial one-two years, it is going to be a mixed bag. It is also going to entail significantly high compliances and chances are you will have to deal with problems that you have never dealt with before.


GST Tax Calculation Formula


All one needs to do is input the net amount of a good or service and the applicable GST rate (5%, 12%, 18% or 28%) into the tool. Click on the 'Calculate' button and instantly get the gross price of the good or service. GST calculation is represented by the below

example:


A goods or service is sold at the rate of Rs.500. GST rate is 18%. Gross amount of the goods or service = 500 + [500 x (18/100)] = Rs.590

Formula for GST calculation:

Add GST:

GST Amount = (Original Cost x GST%)/100

Net Price = Original Cost + GST Amount
Remove GST:

GST Amount = Original Cost - [Original Cost x {100/(100+GST%)}]

Net Price = Original Cost - GST Amount 


Abbreviations in GST


*CPIN* - Common Portal Indentification Number. (14 Digit, Valid for 15 days.)

*CIN* - Challan Indentification Number. (17 Digit where 14 Digit CPIN + 3 Digit Bank Code.)

*BRN* - Bank Reference Number ( Transaction Number)

*E-FPB* - Electronic Focal Point Branch.

*Major Heads* - IGST, CGST, SGST/UTGST, CESS

*Minor Heads* - Tax, Interest, Penalty, Fee, Others

*E-Ledgers* - E-Cash, E-Credit, E-Liability.

*GSPs* - GST Suvidha Providers

*ASPs* - Application Service Providers

*ITC* - Input Tax Credit

*ISD* - Input Service Distributor

*LUT* - Letter of Undertaking

*SEZ* - Special Economic Zone

*EOUs* - Export Oriented Units

*BoS* - Bill of Supply

*JsON* - JavaScript Object Notation

*P2P* - Principal to Principal

*P2A* - Principal to Agent

*B2B* - Busines to Business

*B2C* - Business to Customer

*B2BUR* - Business to Unregistered Business

*HSN* - Harmonized System of Nomenclature Code

*SAC* - Service Acconting Code

*EBN* - E-Way Bill Number

*EVC* - Electronic Verification Code

*ARA* - Application for Advance Ruling

*FC* - Facility Center

*UIN* - Unique Identification Number

*GSTIN* - Goods & Service Tax Identification Number

*UTGST* - Union Territory Goods & Service Tax

*CGST* - Central Goods & Service Tax

*SGST* - State Goods & Service Tax

*IGST* - Integrated Goods & Service Tax

*NEFT* - National Electronic Fund Transfer

*RTGS* - Real Time Gross Settlement

*SCN* - Show Casue Notice

*RCM* - Reverse Charge Mechanism

*OCPB* - Over the Counter Payment in Branches

*ARN* - Application Reference Number

*DSC* - Digital Signature Certificate
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