The Fundamentals and Importance of the Goods and Services Tax

The Fundamentals and Importance of the Goods and Services Tax

The Goods and Services Tax (GST) system came into effect in July 2017. It is a single, comprehensive tax that you have to pay the central government on the products and services that you buy.

The GST Act put in place of the old tax structure that had double taxation or the cascading effect of a plethora of indirect taxes like the Value Added Tax (VAT), Excise Duty, Entertainment Tax, and so on.

The Basics of the Goods and Services Tax Identification Number

A Goods and Services Tax Identification Number (GSTIN) or GST number is a term used for a unique identification number that you receive upon completion of the GST registration process. This 15-digit number is exclusive to each business.

Having a GSTIN is beneficial in many ways. You need to make sure you come across as authentic to the market and the government. Getting your GSTIN can solidify your chances of getting recognized as a legitimate goods and services provider. You may also use your GSTIN to file GST returns and prevent tax evasions and fraud. Apart from the benefits mentioned above, GSTIN maintains the integrity and security of your transactions and protects you from fraudulent businesses.

How can I register for GSTIN?

Completing the GST registration process to get a GST number is not a complicated process. This is how it goes:

  • Go to the services section and click on the new registration tab. Submit all your essential details, including your email ID, phone number, and Personal Account Number (PAN) and go to the next step of the process.

  • In this step, you will get an OTP on your phone. Enter this OTP and get your Temporary Reference Number (TRN).

  • Head back to the services section, click on the registration option, and then click on new registration. Enter your TRN and the given captcha code.

  • Once you get the second OTP, enter it, and you will get redirected to the saved applications page.

  • Now, submit all the business-related details, including business location, bank account details, and many other details. Besides, you will have to send the necessary documents to supplement the information you submit.

  • Fill up and submit your application upon completing your verification process through methods like E-signature, Electronic Verification Code (EVC), or Digital Signature Certificate. Check your phone and email ID to see if you’ve gotten your 15-digit Application Reference Number (ARN). If you wish to track your GST registration status, you will have to use the ARN to do so.

Is it compulsory to make your GST payment Online?

Before you consider paying GST online and start searching for the best ways to do so, you will have to determine when you are required to make a GST payment online. Here’s when:

  • If you have completed your GST registration process and moved supplies of taxable products and services

  • If you have registered your business to the Goods and Services Tax under the Reverse Charge Mechanism (RCM)

  • If you happen to be an E-commerce operator and move supplies of products and services of different categories, you will have to make a GST payment online

  • If you happen to be registered to the Goods and Services Tax and are deducting TDS, you are required to make a GST payment online.

How to make my GST payment online?

You may make your GST payment online in one of two ways. Here are the two payment methods:

Credit Ledger

If you are qualified to use a credit ledger, you can claim Input Tax Credit and pay GST online. However, you cannot use Input Tax Credit to pay penalties, late fees, and interest. It can be used only for GST payments online.

Cash Ledger

You can use the cash ledger to make GST payments online or offline. However, you will have to make sure the GST portal produces a challan for your GST payment online.

If you were in search of a light, easy-to-understand article to get you started with GST and its important aspects, this should have you covered.

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