What is GST?

 Known Facts About GST in India

GST (Goods and Services Tax) is one of India’s biggest tax reforms, implemented on July 1, 2017. Most people are aware of the basics: GST is an indirect tax that replaced many previous taxes and brought uniformity across the country. However, there are several lesser-known and interesting facts about GST that many people might not be aware of. Let’s explore some of these:

1. Five Different GST Slabs

Many believe GST has only 3 or 4 tax slabs, but actually, there are 5 main slabs:

• 0% (Zero Rated)
• 5%
• 12%
• 18%
• 28%

Additionally, certain goods and services (like luxury cars and tobacco) attract an extra ‘Cess’ over and above the highest slab.

2. GST Doesn’t Apply to Everything

It’s a common misconception that GST is applicable on all goods and services. In reality:

Petroleum products (petrol, diesel, crude oil) are currently outside the GST regime.

Alcohol and electricity are also exempt from GST.

3. The Mystery of GSTIN

Every GST-registered business gets a unique number called GSTIN (Goods and Services Tax Identification Number).

It has 15 digits.

The first 2 digits are the state code, the next 10 are the PAN number, followed by 1 entity code, 1 blank digit, and a final checksum digit.

4. Unique Input Tax Credit (ITC) Rules

One of GST’s biggest advantages is the Input Tax Credit (ITC), which allows businesses to offset the tax paid on purchases against the tax collected on sales.

However, if your supplier hasn’t filed their GST return, you cannot claim ITC.

Timely filing of returns is essential to avail ITC.

5. Anti-Profiteering Rule

After GST was introduced, the government set up an Anti-Profiteering Authority to ensure that companies pass on the benefit of reduced taxes to consumers.

If a company doesn’t reduce prices after a tax cut, strict action can be taken.

6. Mandatory E-Way Bill

If you’re transporting goods worth more than ₹50,000 across state lines, generating an E-Way Bill is mandatory.

Failure to produce an E-Way Bill can result in heavy penalties.

7. GST Compensation Cess

Some states lost revenue after GST was implemented, so the central government promised to compensate them for 5 years using the ‘GST Compensation Cess’.

This Cess is mainly applied to luxury items, tobacco, and cars.

8. GST Council – The Decision-Making Body

All major GST-related decisions are made by the GST Council, which includes the Finance Ministers of the Centre and all states.

Any decision requires at least 75% votes to pass.

9. Composition Scheme for Small Businesses

There’s a special ‘Composition Scheme’ for small businesses, allowing them to pay tax at a lower rate (1% or 5%) and file fewer returns.

However, businesses under this scheme cannot claim ITC.

10. GST’s Digital Ecosystem

GST is entirely digital – from registration to return filing and payments, everything happens online.

This has increased transparency and reduced tax evasion.

Conclusion

GST has simplified and made India’s tax system more transparent, but there are many aspects that are not widely known. Understanding these lesser-known facts can help both businesses and consumers make the most of

 the GST system. Hope you found these insights useful and informative!