The introduction of the Goods and Services Tax ( GST ) Act in 2017 left a remarkable impact on the Tax Regime after independence. In 2017 there existed several misconceptions about the laws of GST. 7 years after the implementation of the GST Act some of these misconceptions still prevail.
MYTH: The GST Regime has made Goods and Services more expensive
FACT: The application of the Goods and Services Tax Act has not caused the rise of the prices of the Goods and Services but it has helped in reducing the prices of the products by actually removing the Cascading Effects in Taxes. Another fact related to this is that GST helped in showcasing the Indirect Taxes and expenses such as VAT ( Value Added Tax ) and Central and State Excise Duty related to the products and services more visible to the customer. Earlier all these indirect taxes related to the products were non-transparent to the Taxpayers of the Nation.
Read More: GST Anti-Profiteering Clause: Intentions Vs Impact
MYTH: All Taxes have been replaced by the GST
FACT: There are 17 Major Taxes that have been subsumed under the GST after the introduction, but there are still taxes that have not been subsumed under the GST Act. Basic Customs Duty, Electricity Duty, Taxes on Petrol, Diesel and Alcohol, Property Tax, and Stamp Duty on Property are many of the taxes that exist in the Tax Regime.
MYTH: YouCannot start a business without getting the Goods and Service Tax Identification Number ( GSTIN ).
FACT: Before the GST Regime, there were Unique Identification Numbers issued according to the State VAT Law known as Taxpayer Identification Number ( TIN ) by State authorities and the Service Tax Register Number by the Central Board of Indirect Taxes & Customs ( CBIC ).
However, after the implementation of the GST Act, these identification numbers were replaced by the Goods and Service Tax Identification Number ( GSTIN ). This is a 15-digit PAN-based Alphanumeric Code provided to the Taxpayers of each State under the GST Act after the registration.
For the beginning of a business, or for migrating the business to GST provisions they do not have to wait for the final GSTIN Number. Until the GSTIN has been issued, the Merchants could use the Provisional GSTIN that will be issued after completing the registration in the GST portal from the State VAT Department.
This Provisional GSTIN can be used by the merchant for 30 days from the date of issuing for carrying forward the business activities, by which stoppage of the business activities can be avoided clarified Revenue Secretary, Hasmukh Adhia. Meanwhile, during the 30-day timeline, the merchant has to complete the full registration process and obtain the original GSTIN Number.
The provisional GSTIN number is enough for businesses in generating e-way bills, and tax invoices and also for the filing of GSTR-1 returns. But to claim Tax-input credit and for the GSTR-2 filing the original GSTIN number is essential.
MYTH: The Merchant needs to generate all the Tax Invoices on the Computer/Internet
FACT: It is not true that the Invoices cannot be generated manually. According to GST Portals, there are two ways in which Invoices can be generated. First, by using the Excel/ Offline Tool, and second by using API mode, i.e. through GPS. So 24*7 Internet connectivity is not required for invoice generation. Internet connectivity is only required during the Final Monthly Filing, which can be managed with the help of an Internet Cafe.
MYTH: Merchants cannot do Inter-State Transactions
FACT: This is partially true because we can do Inter-State Purchase without GST Registration. But the Inter-State Sale of Taxable Goods, done either directly or through means of E-Commerce Platforms is not possible without GST Registration. Here the threshold limits are not applicable.
MYTH: GST is the solution for One Nation, One Tax.
FACT: The introduction of the GST Act has brought us under a Single Tax Regime. The GST Act intended to bring into effect the “ One Tax, One Nation ” regime in the country, but GST could not do it.
There are still commodities and services which are not brought under the ambit of GST. For instance, the Price of Petrol in Kerala is 106.16/ Litre, while in Tamil Nadu it is 100.88/ Litre. Every State imposes separate Sales Tax on Petroleum Products governed by specific Tax Acts, such as the Kerala General Sales Tax Act of 1963. Also, certain Liquors are not brought under the GST Act.
MYTH: You have to pay GST Twice while thetransactions are done with Credit Cards
FACT: No Extra GST shall be charged for the payment done with a Credit Card. But confusion may arise when an additional amount is being charged over the transaction i.e. the convenience fee charged for the speedy and smooth transaction. GST must be given for the convenience fee collected.
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