Chapter 1: Overview of GST - Overview and Journey so Far

Overview of GST: Importance and Journey So Far


In this video, let’s go on a trip down memory lane, recollect all that we know about GST,

its importance and the road it has travelled so far.

We shall start with a few basic terms, terms each one of you must be familiar with when the subject

of GST is discussed.

GST

● GST stands for Goods and Services Tax.

● It is one of the biggest indirect tax reforms of the country.

● It is a comprehensive, multi-stage, destination-based tax that is levied on every value addition

in the supply of goods and services.

GSTIN

Just as the PAN is a proof of identity from the point of view of Income Tax, similarly a

GSTIN (GST Identification Number) is a unique number allotted to every taxpayer registered

under the GST regime. The GSTIN will be a 15-digit PAN based unique number, allotted

state-wise to every taxpayer.

GST Council

The GST Council is a governing body to regulate and direct each and every step for the

implementation of goods and service tax in the nation over rates and measures. The Council is

responsible for drafting GST Rules on registration, payment, valuation, due dates, input tax

credit and other related matters.

GSTN

The GSTN is a non-profit, non-government organization. It manages the entire IT system of

the GST portal, which is the mother database for everything GST.

GST Portal

The government of India’s official GST portal – www.gst.gov.in – is a one-stop solution for all

information, filing and other activities related to GST. To be able to access the GST portal,

the taxpayer must first register on the website along with a registered mobile number,

username and password.

CBIC (Central Board of Indirect Taxes and Customs)

The CBIC (formerly known as CBEC) is the apex policy making body for indirect taxes.

It supervises all field formations related to GST and also assists the government in

policy-making related to GST.

Who must comply with GST laws?

Every person registered under the GST regime must comply with the GST laws.

The following persons are required to obtain a GST registration:-

● In the case of Service Providers, any person/entity who provides services in excess of

Rs. 20 lakhs in aggregate turnover in a year

● Any person who is engaged in the exclusive supply of goods whose aggregate turnover

crosses Rs. 40 lakhs in a given year (Rs. 20 lakhs for special category states)

Inception of GST

The whole idea behind the introduction of GST was to simplify the indirect tax system in India and

replace the inefficient and non-transparent system with regard to indirect taxes in India, which was a

result of imposing several varied taxes on goods and services.

GST came into effect from the 1st of July, 2017 with the intention to provide efficiency and

transparency to taxation. The discussions regarding the GST Bill had been in the process for more

than two decades. When it was first introduced, it had five tax slabs, and the goods and services were

spread across these slabs. The newly introduced GST rates were also higher as compared to the older

systems that were in place.

Over time, the GST rates for quite a few goods and services were reduced, acknowledging the burden

on the taxpayers. With the introduction of GST, the indirect tax system has become much more

simplified, uniform and has turned India, as a whole, into one common market.


Let us take a look at some of the Advantages and Disadvantages under GST-

Advantages of GST

● The cascading effect of taxes has been eliminated as GST it is now just one common tax on

which input tax credit can be taken

● The compliance burden on businesses is lesser now since there is no need to comply with

multiple taxes like Excise, VAT and Service Tax

● Through the implementation of GST, a uniform taxation law exists across the country

and across different sectors with respect to indirect taxes

● The possibility of tax evasion has minimised since the introduction of GST

Disadvantages of GST

● GST has been called “Disability Tax”, as it taxes articles such as wheelchairs, hearing aids etc

● Petroleum products are still not under the purview of GST, resulting in states levying their

own taxes on this sector

● As per GST law, businesses need to register in all states that they are operating in, increasing

the burden of compliance

● There have been increased operational costs for small businesses due to the necessity to hire

an expert to comply with the various procedures and file multiple returns under GST


Terms you must know-

We have already discussed a few terms earlier. Here’s are a few more to bear in mind:-

● HSN Code

HSN is the Harmonised System of Nomenclature – an internationally accepted method

of naming, classifying and identifying goods, identified by a 2-8 digit code.

● SAC

SAC is the Services Accounting Code – similar to HSN, it is a method of

nomenclature to identify, classify and define services under GST.

● Input Tax Credit

It is a tax that a business pays on its purchases, which can be utilised to reduce the tax

liability of that business on its sales.

● CGST and SGST

GST levied on an intra-state transaction has two components – CGST and SGST.

The tax collected under CGST becomes revenue for the Central Government.

The tax collected under SGST becomes revenue for the State Government.

● IGST

Integrated Goods and Services Tax or IGST will apply to all inter-state transactions.

The revenue earned will be split between the Central Government and the destination

state.


GST Council Meetings

The GST Council schedules meetings on a regular basis to review the progress that GST is making,

also to work about and improve upon any aspect/matter related to GST that they deem fit.

Over the past four years, a total of 34 Council meetings have been conducted. 7 of those meetings

were held in 2016, 17 of them in 2017, 7 in 2018 and 3 so far in 2019.

Over the span of these 34 meetings, the key discussion was on regulations and threshold limits under

the composition scheme, threshold for GST registration, GST rates and slabs, E-way Bills, reforms in

the Real Estate sector, etc.


With this, we end our first chapter an Overview of GST and hope to see you again in the next chapter

where we tackle other concepts of GST. Thank you and by-bye.


We hope that this overview of GST has been useful to you, and we will come up with many more

videos to take you with us on the journey of GST in India, and everything you need to know. Thank

you.