GST has made a comprehensive change in the way India does business. It has been a sea change in the way businesses file indirect taxes as well as how the Government agencies check tax evasion.

The GST has been designed in a way that checks under-invoicing, tax evasion, etc.

The previous tax regime had multiple layers of taxes which caused a lot of confusion and problems for business people and consumers alike.

The GST has also changed the manual system of filing taxes which was more prevalent in India in the pre-GST era. With the advent of the GST system, that has all changed. We now have the GSTN (Goods and Services Tax Network) which is the Information Technology infrastructure that underpins the entire GST system.

All transactions are now in electronic format which encourages transparency and a corruption-free environment. There are various forms that are required to be filled under the GST in an easy numbered format ranging from GSTR-1 to GSTR-9.

The best way to explain GST to a businessman is to explain the businesses which fall under GST as well as illustrate the various forms required under the GST system in a clear and concise manner.

Some of the key elements of GST which can be explained are listed below:

What Businesses Fall Under GST:

Any business which engages in trade or commerce even if it is for one occasion is classified as a business under the GST system. Even if the activity is ancillary to the main business it is still considered a business activity under the GST system.

With respect to financial or monetary benefits, it doesn’t matter under the GST, it is still considered a business activity.

Registration Of Business:

A person is an entity who carries out business activities in the territory of India and who is required to register as a business under the Goods and Services Tax Act. All entities who engage in business is considered a “taxable person” under the GST system.

A taxable person could be an individual, a Hindu Undivided Family, an LLP, a firm or a company. All of these entities are considered businesses by the GST Act.

Basic Requirements Of Registration:

Registration under the GST Act is mandatory for any entity that does business worth more than Rs. 20 lacs in any financial year. Unless the turnover for the business includes items that are GST exempt. Then those exempted goods do not count against the turnover cap.

The complete requirements for GST registration are made available under the GST council official website which has a comprehensive FAQ section.

GST Forms:

The basic idea of GST was to include complementary forms an invoices under the single unified GST system. The sellers and purchasers file complementary forms that have details of the entire transaction along the value chain.

The various forms range from GSTR -1 all the way to GSTR -11. The GSTR-9 is a very important form as it is the form that all regular taxpayers have to file annually. The first GSTR form which is required to be filed by taxable persons is the GSTR-1 form. This form gives a detailed outline of the outward supplies of goods and services. It is a monthly form and needs to be filled out and submitted by the 11th of the subsequent month of business.

Filing your tax returns are mandatory under the GST Act even if you have not had a single transaction. If no transactions are present, then the taxable person is required to file a Nil return.

You are not able to file a return for the present period if you haven’t filed the return for the previous periods as well. Also if the returns are not filed in a timely manner, then there are penalties which are stipulated under the GST Act as well, therefore, it is imperative to keep on top of the returns.

Small Business Under GST:

Small businesses have benefitted under the GST system as it has simplified the tax structure significantly. Small businesses can avail of the Composition Scheme under the GST Act.

The Composition Scheme allows businesses with a turnover of less than 1.5 crores can opt to pay a GST at a fixed rate and not have to deal with the various formalities which are applicable to bigger businesses.

A major aspect of the Composition Scheme is that the dealer opting for it may not claim any Input Tax Credit under the GST Act.

Conclusion:

In conclusion, the GST system has had its ups and downs, especially during the introductory phase as the system hadn’t been fine-tuned yet. If the steps outlined above are followed, a businessman will get a brief overview of the GST system and the various forms that he needs to keep a track of, especially the GSTR-9 form which is the most important annual return.