Goods and Services Tax India: Complete Compliance Guide

GST revolutionized Indian taxation by replacing multiple indirect taxes with a unified system. Revised Tax provides expert GST services ensuring registration, compliance, input tax credit optimization, and strategic planning for businesses across India.

What is GST?

Goods and Services Tax is a destination-based consumption tax levied on supply of goods and services. Implemented on July 1, 2017, GST replaced Central Excise, Service Tax, VAT, and other state levies. The system comprises CGST (Central GST), SGST (State GST), IGST (Integrated GST), and UTGST (Union Territory GST).

GST Registration Requirements

Businesses with aggregate turnover exceeding ₹40 lakh (₹20 lakh for special category states) must register. Service providers face ₹20 lakh threshold (₹10 lakh for special states). E-commerce operators and inter-state suppliers require registration regardless of turnover. Voluntary registration allows claiming input tax credit even below thresholds.

GST Rate Structure

GST applies at four primary rates: 5%, 12%, 18%, and 28%. Essential goods attract nil or 5% rates. Standard goods face 12% or 18%. Luxury items, automobiles, and sin goods incur 28% plus cess. Services generally face 18% GST. Exemptions apply to healthcare, education, and certain food items.

Input Tax Credit Mechanism

Input Tax Credit allows businesses to offset GST paid on purchases against GST collected on sales. Credit flows seamlessly through the supply chain, preventing tax cascading. Conditions include tax invoice possession, return filing, and supplier's tax payment. Blocked credits include personal use items, motor vehicles (with exceptions), and certain services.

GSTR-1 Return Filing

GSTR-1 reports outward supplies monthly or quarterly depending on turnover. The return details invoice-wise sales to registered persons, consolidated B2C sales, and credit/debit notes. Filing deadline is 11th of following month for monthly filers and 13th after quarter-end for quarterly filers.

GSTR-3B Monthly Return

GSTR-3B is the main return showing summary of outward and inward supplies, input tax credit claimed, and tax liability. Filed monthly by 20th of following month, it requires tax payment before filing. Any mismatch between GSTR-3B and GSTR-1 triggers notices requiring reconciliation and explanation.

Composition Scheme Benefits

Small businesses with turnover up to ₹1.5 crore can opt for the Composition Scheme paying lower tax rates: 1% for traders, 2% for restaurants, and 6% for other suppliers. Benefits include simplified compliance with quarterly returns and annual filing. Limitations include no input tax credit and restrictions on interstate supply.

E-Invoicing Compliance

Businesses with turnover exceeding ₹5 crore must generate electronic invoices for B2B transactions. E-invoices require reporting to Invoice Registration Portal before supply. The portal generates IRN (Invoice Reference Number) and QR code. E-invoicing streamlines GST return filing and reduces errors.

E-Way Bill Requirements

Movement of goods worth over ₹50,000 requires e-way bill generation. Both interstate and intrastate movements above specified values need e-way bills. The document contains consignment details, transporter information, and vehicle number. Validity depends on distance: 200 km for first 24 hours, additional 100 km per day thereafter.

Reverse Charge Mechanism

Under reverse charge, recipient pays GST instead of supplier. Applies to imports, specified services from unregistered persons, and notified goods/services. Legal, accounting, and advocate services from partnerships trigger reverse charge. Registered persons must pay tax and may claim credit subject to conditions.

Time of Supply Rules

Time of supply determines when tax liability arises. For goods, earliest of invoice date, goods removal, or payment receipt triggers liability. Services become taxable on earliest of invoice date, completion of service, or payment receipt. Advance payments create immediate tax liability regardless of supply completion.

Place of Supply Determination

Place of supply determines whether CGST/SGST or IGST applies. For goods, location at supply commencement or installation determines place. Immovable property supply always occurs at property location. Services generally follow recipient location with specific rules for restaurant services, passenger transport, and certain other services.

Annual Return Requirements

GSTR-9 annual return consolidates all monthly/quarterly returns filed during financial year. Due by December 31st of following year, it requires reconciliation with financial statements. Businesses with turnover exceeding ₹5 crore must file GSTR-9C containing certified reconciliation statement from chartered accountant or cost accountant.

GST Refunds Process

Refunds arise from exports, inverted duty structure, accumulated input tax credit, or excess payment. Electronic Refund Ledger automatically credits certain refunds. Manual refund applications require processing within 60 days. Interest applies for delayed refunds beyond specified timelines. Proper documentation and reconciliation expedite refund processing.

GST Notices and Assessments

Tax authorities issue notices for return discrepancies, input tax credit mismatches, or delayed filings. Show cause notices require detailed response with supporting documents. Assessment orders determine tax liability if returns remain unfiled. Penalties range from ₹10,000 for return default to 100% of tax for evasion. Timely response and documentation prevent adverse orders.

Input Service Distributor

ISD mechanism distributes input credit from head office to branches. Common services like rent, professional fees, and centralized services flow through ISD. Registration requires separate GSTIN with ISD designation. Monthly ISD invoices distribute proportionate credit based on turnover or usage metrics.

Job Work Procedures

Principal manufacturers can send goods to job workers without payment of tax. Goods must return or be supplied from job worker's premises within specified time: one year for inputs, three years for capital goods. Detailed records tracking goods movement, job work completion, and returns ensure compliance.

Contact Revised Tax for comprehensive GST services including registration, return filing, refund processing, notice responses, audit support, and strategic tax planning for businesses across India.