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September 23, 2023

13 MISCONCEPTIONS ABOUT GST IN INDIA

by Admin in Income Tax

13 MISCONCEPTIONS ABOUT GST IN INDIA

  1. There are many misconceptions about GST in India. One of the myths is the business is required to be compulsorily registered under GST. In reality the Dealer is required to apply for registration with 30 days if at all he becomes liable for GST registration.

2) The second myth is the dealer under GST has to file 3 returns in a month. In reality once you are register for GST, you got to file only one return made of 3 parts. Part one is details of all outward supplies (sales) made in previous month. Part two is an auto generated return consisting of details of all inward supplies (purchases) made in previous month and the part three is assessment

3) The third myth is that every invoice details needs to be uploaded on GST Portal. The reality is different where there is no need for a retailer selling goods to final consumers to upload any invoice on the portal. It is only where a business house sells goods to another business house the invoices of these transaction which are popularly known in GST parlance as B2B transaction i.e. Business to Business transactions.

4) The fourth myth is that the employees who incur expenses towards the company are subject to GST when reimbursed by the company. The reality is otherwise. These reimbursements are not chargeable under GST. Here again the purchases from an unregistered dealer by an employee could be subject of GST when he is being reimbursed.

5) The fifth myth is that the computer set up is necessary to generate business under the GST regime.

This is true for e-invoicing where taxpayers with aggregate turnover during the FY 2019-20 is more than Rs.500 crore effective from 1st Oct. 2020. Wef Jan 1, 2021 the taxpayer with an Rs.100 crore turnover will also get the e-invoicing option. Even though e-invoice becomes mandatory for every invoice, debit note, credit note yet there are some exceptions to it.

6) The Sixth myth is that an unregistered dealer cannot purchase or buy goods from dealers of other state. The reality is there is no restriction for an unregistered dealer to buy goods from anywhere.  Unless a dealer obtains GSTIN under the GST he cannot do inter-state sale.

7) The seventh myth is small businesses will not be able to survive because of GST compliances as they need internet for this. In reality the business can file returns off line and other things also can be managed through offline. The eight myth is that the GST rate a high which has pushed the prices beyond reach to a class of customers.

8)  The reality is the GST rate have been divided into 6 segments: 0.25%, 3%, 5%, 12%, 18% and 28%. Under the old regime only VAT was visible to consumers and excise duty was not shown. The GST has subsumed all the indirect taxes so it looks big as compared to the old regime but it has only become more transparent rather than expensive.

9) The Ninth myth is about GST being levied on old Jewellery sold to the jeweller. It is not so except when an unregistered jeweller sells old Jewellery to a registered jeweller the GST will have to be paid under reverse charge.

10) The tenth myth takes the cake, where it is said that the credit card payment for a transaction will cost double. This is utterly rubbish. It is same as you do a cash transaction. There could be some charges to it depending on the bank. Some banks do not charge extra but some do charge a bit extra.

11) The Eleventh myth is about need to generate all invoices on computer or internet only.  The reality is that an invoice can be made manually as well.

12) The twelfth myth is on provisional ID one cannot do business and waiting is required for final ID to do business. It is not correct. You can do business as provisional ID will be your final GSTIN number. Start business.

13) The thirteenth myth is that if you had exempt business which is now taxable so new registration is needed. It is not so. You can continue with your business which was earlier exempt but get a new registration within 30 days now that it is no more exempt.

The Government is working tirelessly to clear misconceptions on GST. The Government is working to clear incorrect information related to Goods and Services Tax (GST). About provisions, compliance procedure amongst traders, general public and its officers particularly from GST department. The GST has made taxation system easy and transparent. People are slowly but surely starting to believe in the GST system and its theme to elevate the GDP of the country which is looking forward to the Government’s promise of 5 trillion economy which only time will tell whether it was a well thought developmental strategy or just a populist slogan. Each year we will have results on hand to know exactly if things are moving towards the envisaged goal. Till then let’s keep our fingers crossed.

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