What is Goods and Services Tax (GST)?

Ans. It is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer.

What are GST slab rates?

Ans. The GST will be levied at multiple rates ranging from 0 to 28 percent. GST council finalised a four-tier GST tax structure of 5%, 12%, 18% and 28%, with lower rates for essential items and the higher for luxury and de-merit goods that would also attract an additional cess

Which taxes at the Centre and State level are being subsumed into GST?

Ans.At the Central level, the following taxes are being subsumed:
a.       Central Excise Duty,
b.      Additional Excise Duty,
c.       Service Tax,
d.      Additional Customs Duty commonly known as Countervailing Duty, and
e.       Special Additional Duty of Customs.
At the State level, the following taxes are being subsumed:
a.       Subsuming of State Value Added Tax/Sales Tax,
b.      Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
c.       Octroi and Entry tax,
d.      Purchase Tax,
e.       Luxury tax, and
f.       Taxes on lottery, betting and gambling.

Who is liable to pay GST under the proposed GST regime?

 Ans. Under the GST regime, tax is payable by the taxable person on the supply of goods and/or services. Liability to pay tax arises when the taxable person crosses the turnover threshold of Rs 20 lakhs (Rs 10 lakhs for NE and Special Category States) except in certain specified cases where the taxable person is liable to pay GST even though he has not crossed the threshold limit. The CGST / SGST is payable on all intra-State supply of goods and/or services and IGST is payable on all inter- State supply of goods and/or services. The CGST /SGST and IGST are payable at the ratesspecified in the Schedules to the respective Acts.

How will the goods and services be classified under GST regime?

 Ans. HSN (Harmonised System of Nomenclature) code shall be used for classifying the goods under the GST regime. Taxpayers whose turnover is above Rs 1.5 crores but below Rs 5 crores shall use 2-digit code and the taxpayers whose turnover is Rs 5 crores and above shall use 4-digit code. Taxpayers whose turnover is below Rs. 1.5 crores are not required to mention HSN Code in their invoices. Services will be classified as per the Services Accounting Code (SAC).

How will imports be taxed under GST?

 Ans. Imports of Goods and Services will be treated as inter-state supplies and IGST will be levied on import of goods and services into the country. The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available on the GST paid on import on goods and services.

How will Exports be treated under GST?

 Ans. Exports will be treated as zero rated supplies. No tax will be payable on exports of goods or services, however credit of input tax credit will be  available and same will be available as refund to the exporters. The Exporter will have an option to either pay tax on the output and claimrefund of IGST or export under Bond without payment of IGST and claim refund of Input Tax Credit (ITC).

What is the scope of composition scheme under GST?

Ans. Small taxpayers with an aggregate turnover in a preceding financial year up to [Rs 1.5 Crore] shall be eligible for composition levy. Under the scheme, a taxpayer shall pay tax as a percentage of his turnover in a state during the year without the benefit of ITC. Right now, the rate of tax is 1 per cent for manufacturer & traders; 5 per cent for specific services as mentioned in para 6(b) of Schedule II Viz Serving of food or any other article for human consumption. A tax payer opting for composition levy shall not collect any tax from his customers.

Will the composition scheme be optional?

Ans. Yes

What is meant by Reverse Charge?

Ans. It means the liability to pay tax is on the recipient of supply of goods and services instead of the supplier of such goods or services in respect of notified categories of supply.

FAQs on Income Tax:

What is Income-tax?

Ans. It is a tax levied by the Government of India on the income of every person. The provisions governing the Income-tax Law are given in the Income-tax Act, 1961.?

What is the period for which a person’s income is taken into account for the purpose of Income-tax?

Ans. Income-tax is levied on the annual income of a person. The year under the Income-tax Law is the period starting from 1 st April and ending on 31 st March of next calendar year. The Income-tax Law classifies the year as (1) Previous year, and (2) Assessment year.
The year in which income is earned is called as previous year and the year in which the income is charged to tax is called as assessment year.

Who is supposed to pay Income-tax?

Ans. Income-tax is to be paid by every person. The term 'person' as defined under the Income-tax Act covers in its ambit natural as well as artificial persons.For the purpose of charging Income-tax, the term 'person' includes Individual, Hindu Undivided Families [HUFs], Association of Persons [AOPs], Body of individuals [BOIs], Firms, LLPs, Companies, Local authority and any artificial juridical person not covered under any of the above.
Thus, from the definition of the term 'person' it can be observed that, apart from a natural person, i.e., an individual, any sort of artificial entity will also be liable to pay Income-tax.?

How does the Government collect Income-tax?

 Ans. Taxes are collected by the Government through three means: a) voluntary payment by taxpayers into various designated Banks. For example, Advance Tax and Self Assessment Tax paid by the taxpayers, b) Taxes deducted at source [TDS] from the income of the receiver, and c) Taxes collected at source [TCS]. It is the constitutional obligation of every person earning income to compute his income and pay taxes correctly.

How will I know how much Income-tax I have to pay?

Ans. The rates of Income-tax and corporate taxes are available in the Finance Act passed by the Parliament every year. You can also contact us at info@khatewala.com or by visiting our office for the same.

From where can I take the help of any expert on Income-tax related matters?

 Ans. You can take the help of khatewala.com from our website or the help of Public Relations Officer [PRO] in the local office of the Income-tax Department.

 When do I have to pay the taxes on my income?

Ans. Generally, the tax on income crystallizes only on completion of the previous year. However, for ease of collection and regularity of flow of funds to the Government for its various activities, the Income-tax Act has laid down the provisions for payment of taxes in advance during the year of earning itself. It is called as ‘pay as you earn’ concept. Taxes may also be collected on your behalf during the previous year itself through TDS and TCS mode. If at the time of filing of return you find that you have some balance tax to be paid after taking into account the credit of your advance tax, TDS & TCS, the shortfall is to be deposited as Self Assessment Tax.

Why should I file income tax return?

 Ans. Filing IT returns is mandatory for those who earn a certain annual income within a pre-determined due date. Even if your income level does not qualify for mandatory filing of returns, it may still be a wise choice to voluntarily do so. Why? For instance, the returns can serve as proof of your income if you apply for a loan as a co-borrower. If international travel is on your list, IT returns can be useful when applying for a visa. Additionally, in most states, registration of immovable properties requires advancing as proof of tax returns for the last three years.