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Goods Services Tax

About GST

Goods and Services Tax (GST) is an indirect tax (or consumption tax) levied in India on the supply of goods and services. GST is levied at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.

The GST replaces numerous different indirect taxes such as:

  1. Central Excise Duty
  2. Service Tax
  3. Countervailing Duty
  4. Special Countervailing Duty
  5. Value Added Tax (VAT)
  6. Central Sales Tax (CST)
  7. Entertainment Tax
  8. Entry Tax
  9. Purchase Tax
  10. Luxury Tax
  11. Advertisement taxes
  12. Taxes applicable on lotteries.

GST Rates

The GST rates in India have been determined as follows:

  1. Exempt – 0%
  2. Precious Stones – 0.25%
  3. Gold – 3%
  4. Merit Rates – 5%
  5. Standard Rates – 12% & 18%
  6. Demerit Rates – 28%
  7. Compensation Cess – levied over and above the demerit rates

Taxes level:-

At the Central level, the following taxes are being subsumed:

  1. Central Excise Duty
  2. Additional Excise Duty
  3. Service Tax
  4. Additional Customs Duty commonly known as Countervailing Duty
  5. Special Additional Duty of Customs

State level:-

  1. Subsuming of State Value Added Tax/Sales Tax
  2. Entertainment Tax
  3. Octroi and Entry Tax
  4. Purchase Tax
  5. Luxury Tax
  6. Taxes on lottery, betting and gambling.

The GST replaces numerous different indirect taxes such as:

  1. Central Excise Duty
  2. Service Tax
  3. Countervailing Duty
  4. Special Countervailing Duty
  5. Value Added Tax (VAT)
  6. Central Sales Tax (CST)
  7. Entertainment Tax
  8. Entry Tax
  9. Purchase Tax
  10. Luxury Tax
  11. Advertisement taxes
  12. Taxes applicable on lotteries.

GST Regime – Some Salient Features

Some of the salient features of the GST regime are:

Dual GST:In consideration of the federal structure of India, Dual GST has been chosen as the apt model wherein tax would be jointly levied by both Centre and the states on supply of goods and services.

Components of GST:

  1. CGST (Central GST)
  2. SGST (State GST)
  3. IGST (Integrated GST)

Levy of GST:On intrastate transactions CGST + SGST will be applicable and on interstate transactions & Imports, IGST will be applicable.

Taxes Subsumed under GST:Central Excise, Service Tax, CST, VAT, Entertainment Tax, Luxury Tax, Octroi and Entry Tax, Purchase Tax.

Taxes not subsumed under GST:Basic Customs Duty, Stamp Duty, Property Tax, Toll Tax.

Items exempt from GST:Petrol / Diesel / Aviation fuel / Natural Gas, Electricity.

Taxable persons under GST

Short answer is a person who carries out any business at any place in India and who is registered or required to be registered under the GST Act. Amongst others, GST registration is mandatory for:

  1. Any business whose turnover in a financial year exceeds Rs 20 lakhs (Rs 10 lakhs for North Eastern and hill states).
  2. An input service distributor.
  3. An input service distributor.
  4. An E-commerce operator or aggregator.
  5. A person who supplies via e-commerce aggregator.

GST Return


  1. GSTR-4:Return for compounding taxable person
  2. GSTR-9A:Annual Return

Specific Registered Dealer

  1. GSTR-5:Return for Non-Resident foreign taxable person
  2. GSTR-5A:Return for Non-resident persons providing OIDAR services
  3. GSTR-6:Return for Input Service Distributor
  4. GSTR-7:Return for authorities deducting tax at source
  5. GSTR-8:Details of supplies effected through e-commerce operator and the amount of tax collected.
  6. GSTR-10:Final Return
  7. GSTR-11:Details of inward supplies to be furnished by a person having UIN and claiming refund

GST Return

A return is a document containing details of income which a taxpayer is required to file with the tax administrative authorities. This is used by tax authorities to calculate tax liability.

Under GST, a registered dealer has to file GST returns that include:

  1. Purchases
  2. Sales
  3. Output GST (On sales)
  4. Input tax credit (GST paid on purchases)

Types of GST Returns:

1.Any Regular Business

  1. GSTR-1:Details of outward supplies of taxable goods and/or services affected from July 2018 to March 2019 ( Taxpayers whose turnover is more than Rs. 1.5 Crores in previous year).
  2. GSTR-2:Details of inward supplies of taxable goods and/or services effected claiming input tax credit.
  3. GSTR-3:Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax.
  4. GSTR-9:Annual Return
  5. GSTR-3B:Return for the months of up to March 2019


If any of the offenses are committed then a penalty will have to be paid under GST. The principles on which these penalties are based are also mentioned by law.

For late filing:Late filing attracts penalty called late fee. The late fee is Rs. 100 per day per Act. So it is 100 under CGST & 100 under SGST. Total will be Rs. 200/day*.The maximum is Rs. 5,000.There is no late fee on IGST in case of delayed filing.

Along with late fee, interest has to be paid at 18% per annum. It has to be calculated by the taxpayer on the tax to be paid. The time period will be from the next day of filing to the date of payment.

For not filing:-If you don’t file any GST return then subsequent returns cannot be filed. For example, if GSTR-2 return of August is not filed then the next return GSTR-3 and subsequent returns of September cannot be filed. Hence, late filing of GST return will have a cascading effect leading to heavy fines and penalty.

Offences & Penalties


There are 21 offenses under GST. We have mentioned a few here. For the entire list of 21 offenses please go to our main article on offenses.

The major offenses under GST are:

  1. Not registering under GST, even though required by law
  2. Supply of any goods/services without any invoice or issuing a false invoice
  3. The issue of invoices by a taxable person using the GSTIN of another bona fide taxpayer
  4. Submission of false information while registering under GST
  5. Submission of fake financial records/documents or files, or fake returns to evade tax
  6. Obtaining refunds by fraud
  7. Deliberate suppression of sales to evade tax
  8. Opting for composition scheme even though a taxpayer is ineligible

Benefit Of GST

your complete Business solution

Elimination of Cascading Effect of Taxes:

  • GST subsumes most of the indirect taxes being levied across the country, thus eliminating the “tax on tax” effect which has been plaguing the supply chain and increasing costs for the end user.

Seamless flow of Input Tax Credit

  • The seamless availability of Input Tax Credit will actually encourage suppliers to pay taxes, bringing down the tax evasion level as well as that of tax corruption

Common Market

  • GST will effectively dissolve state boundaries, as the same tax rate prevails across the entire country. Also the removal of Central Sales Tax (levied earlier on inter-state sales) and the removal of VAT (different in different states) will mean that the entire country will become a level playing ground for all businesses.

Better Days for Under Developed States

  • GST being a consumption based, destination based tax, it will provide a huge boost to consumption heavy states, who can now utilize the revenue jump to focus on industrialization and manufacturing.ill not be required to use HSN codes

Technology led Law

  • GST has been designed in such a manner than compliance will now become largely based on technology. The reduction of human intervention will make the process much more transparent, corruption-free and efficient.

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