+91-9696969696
The world of GST can be a confusing one, if you are just starting out as a business. Amidst the challenge of running and expanding your business, understanding the compliance process can be tedious than ever. But fear not! We have demystified all the GST jargons for you below so you can focus on building the business you want, without having to worry about anything else.
Building Blocks of GST
- GST (Goods and Services Tax): GST is a comprehensive indirect tax levied on most goods and services, replacing a bunch of older taxes. Think of it as a unified tax system you have to abide by while running a business in India.
- GSTIN (Goods and Services Tax Identification Number): A unique 15-digit alphanumeric ID given to you, once you register your business. It is like a PAN card for your business for tax purposes. You’ll need this for all GST-related activities. This is also needed in case you plan to apply for any government programmes or schemes.
- HSN (Harmonized System of Nomenclature): HSN Code is a code that helps determine the correct GST rate for your products. It is a universal system for classifying goods.
- SAC (Services Accounting Code): it is similar to what the HSN code stands for, but for services. It classifies and identifies different types of services for accurate GST rate.
Once the basics are clear, time to dig deeper. Don’t let the tough words fool you.
- Input Tax Credit (ITC): ITC lets you claim credit for the GST you’ve paid on your purchases (inputs) against the GST you owe on your sales (outputs). This avoids double taxation and helps your cash flow. It is also your GST superpower .
- Reverse Charge Mechanism (RCM): Typically, taxes are collected by business owners on behalf of the customers, which is then paid to the government. Reverse charge is when the buyer pays the tax directly to the government. In this, the buyer of goods or services is responsible for paying GST, not the seller. This is known as reverse charge.
- Composition Scheme: A simplified option for small businesses with a turnover below a certain limit. They pay a lower, fixed percentage of tax on their turnover.
The GST landscape continues to evolve, so it’s essential to stay updated. The official GST portal (
https://www.gst.gov.in/) is your go-to resource for the latest information, rules, and regulations. However, it is not a difficult process, once broken down adequately.
So sit back and focus on the most important of your business, i.e., running it. And , keep an eye on https://corporate.indiamart.com/blog/ for regular updates.