Understanding the India Goods and Services Tax (GST)

To operate in India, an organization must register with various tax authorities and obtain permits that identify registration numbers at various stages of the business cycle and by different parties such as federal and state governments. The India Goods and Services Tax (GST) law subsumes many of the earlier taxes into itself and provides for different registration, accounting and reporting requirements. Every entity liable to tax under this law requires it to register with the GST Tax Authority and acquire a Goods and Services Tax Identification Number (GSTIN) which is fifteen alphanumeric characters in length. The GST structure includes the following:

• Intra State CGST + SGST – A sum of the respective central and state taxes in place of the earlier central and state taxes and levies for Intra State supply of goods and services.

  Note: You may use tax code SGST in respect of UTGST provided separate GL Accounts are setup to store UTGST amounts.

• Inter State IGST – A central tax in place of the central and state taxes with the consuming state to get a share of the revenue of this.

• Imports into India – Basic customs duty as existing + IGST in place of the earlier CVD and SAD.

• Exports and Deemed Exports from India – Pay IGST @ 0% with input tax credit or pay GST and get a refund.

For all sales orders, quotes, counter sale orders shipped within the state, State GST (SGST) / UTGST and Central GST (CGST) should be calculated. For all sales orders, quotes, counter sale orders shipped outside the state, Integrated GST (IGST) should be calculated based on the receiving state.

Every GST entity is required to file GST returns in the prescribed format for a given tax period. It is mandatory to file a nil return in case there is no business activity during the said period of tax return.