India VAT Guide
India GST specialist
This guide is an overview of the India’s Goods & Services Tax (“GST”) system, focused on how it affects foreign businesses trading with India. It is general in nature and unlikely to cover the specifics of your scenario. It should be read as such and not be construed as advice. For advice as to how your business is affected by India GST please contact a Kreston Global India GST specialist.
- What is the tax called?
- What is the tax authority?
- What type of tax is it?
- What is it due on?
- What are the GST rates?
- What does a GST number look like?
- Is there a registration limit?
- When does a non- established entity need to register?
- When is the place of supply in the India?
- Does a non-established entity need a fiscal representative?
- How often do GST returns need to be submitted?
- Are penalties imposed for late registration?
- Are penalties imposed in other circumstances?
- Can GST incurred by overseas businesses be recovered?
- Can GST be deducted?
- Do I need to issue an invoice?
What is the tax called?
GST- Goods & Services Tax
What is the tax authority?
- Central Board of Indirect Taxes and Customs CBIC) for Union Government
- Commissioner of State Taxes for respective State Governments
What type of tax is it?
Goods and Services Tax is a destination-based consumption tax levied on supply of goods and services
What is it due on?
GST is due on the taxable turnover of supply of goods and services as per the specified rates
What are the GST rates?
The GST rates can vary depending on the type of goods or services supplied. There are following main GST rates:
- NIL Rate for basic groceries, healthcare services, and educational services.
- 5% for essential goods such as food items, medical equipment, and books
- 12% for goods such as clothes, mobile phones, and processed food items
- 18% for goods such as electronics, consumer durables, and some services such as restaurant and telecom services
- 28% for goods such as luxury cars, tobacco products, and other luxury items
What does a GST number look like?
Is there a registration limit?
GST registration depends on the aggregate turnover of the business and the state in which it carries on its business. It ranges from INR 1 million to INR 4 million depending on the state and whether the taxpayer is dealing in goods or services.
When does a non- established entity need to register?
A non-established entity needs to register in India on making taxable supply of goods or services in India or supplying online information and database access or retrieval services (OIDAR) from a place outside India to a person in India, other than a registered person.
When is the place of supply in the India?
For determining the place of supply in a transaction of supply of goods or services between a person located in India with another person located outside India, following rule shall be followed:
- Of goods imported into India shall be the location of the importer
- for goods exported from India shall be the location outside India.
- Default rule is the location of service recipient.
- Special provisions for services in connection with immovable property, performance-based service, event related services, Intermediary services etc.
Does a non-established entity need a fiscal representative?
A non-established entity is not required to appoint a fiscal representative for GST purposes. However, a non-resident taxable person (NRTP) who is not having a physical presence in India is required to appoint an authorized representative who is a resident of India and who will act as their representative for compliance under the GST law
How often do GST returns need to be submitted?
Periodicity of returns is monthly for businesses with aggregate turnover above INR 50 million and quarterly for others. Apart from monthly/ quarterly returns, an annual return also needs to be filed.
Are penalties imposed for late registration?
Businesses that are required to register under GST but fail to do so can be subjected to a penalty equal to 10% of the tax due or Rs.10,000/-, whichever is higher.
Are penalties imposed in other circumstances?
Yes – penalties are charged for Non-payment or short payment of GST, Fraudulent activities or willful evasion of GST, issuance of invoice without supply of goods or services etc. Amount of penalty ranges from minimum INR 10,000/- to 100% of tax evaded.
Can GST incurred by overseas businesses be recovered?
There is no such provision under GST law except for tourists visiting India. However, the rules and process for tourists is not yet notified.
Can GST be deducted?
In general, businesses are allowed to claim a credit for the GST paid on their purchases, which will reduce their GST liability. This credit is commonly known as the input tax credit (ITC). However, there are certain specified purchases on which ITC has been blocked under law. Further ITC is not permissible against exempted/ Non-taxable supplies.
Do I need to issue an invoice?
Businesses registered under GST are required to issue a tax invoice for all taxable supplies of goods or services. A tax invoice is an important document that helps to establish the nature and value of the goods or services supplied, the GST charged, and other relevant details.