CS PROFESSIONAL COMPUTATION OF GST LIABILITY
The Goods and Services Tax is a tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is transferred to the government by the businesses selling the goods and services. GST provides revenue for the government.
FOLLOWING STEPS TO BE FOLLOWED FOR COMPUTATION OF GST
- Whether goods and services lie in the exemption list
Check whether your respective goods and services are in the exempt list and be treated neither as goods nor as supplies which are as under:-
- Services offered by an employee to the employer in the course or relation to employment
- Services offered by court and tribunal
- Services offered by members of Parliament, state legislature, Panchayats and Municipalities
- Duties performed by any person who holds the post in pursuance of the provisions of the constitution in that capacity
- Duties performed by any person as a Chairperson – member or director in a body established by the central government and state government
- First, we have to find out goods and service rate tax applicable on goods and service:– first we have to find out what will be the applicable rate on required goods and services which is mentioned in GST act. After selecting the tax rate, we will select the HSN code for supply. According to GST, there is 5 slab rates defined by the ministry, 5%, 12%, 18%,and 28%.
- Determine whether your taxability lies as CGST, SGST,and IGST
For determining whether its IGST, SGST and IGST, wewill have to determine the place of supply and place of supply is where goods and service are being delivered. For services and goods related to OIDAR and reverse supply, supply determination is a complex issue.
Interstate supplies are those supplies of goods and service between two states which comes under IGST
Intrastate supplies are supplied within a state which comes under CGST and SGST
- Whether supply of goods and service under reverse charge
In normal cases of supply, the provider is liable to collect taxes from the recipient and remit this to the government but in some cases,the recipient is liable to pay tax in case of notified services by the government.
- Whether supplier is enrolled under the composition scheme
Composition scheme requires the supplier to file 3 GST return a month and maintain extensive accounts. Business having a turnover of less than rupees 75 lakhs can register under GST composition scheme and can pay simple return under this scheme. A composition dealer cannot issue tax invoice and that’s a reason he cannot collect tax from their customers
- Check whether which type of transaction is it in GST regime
There are many transactions in the GST regime such as business to business and business to consumers, but only in business to the business scenario, input tax credit can be claimed and for claiming that input tax credit respected person should have GSTIN number. However, in the case of business to the consumer, there is no requirement of GSTIN as goods and services are transferred to end consumer.
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