The Goods and Services Tax (GST) is an indirect tax system introduced in India on 1st July 2017. It replaced the multiple taxes levied by the central and state governments, making it a unified tax system for the entire country. Kerala is one of the states in India that has implemented GST successfully. In this blog, we will discuss GST accounting in Kerala and how it has impacted businesses.
Registration under GST
Under the GST regime, every business with an annual turnover of more than Rs. 20 lakhs is required to register for GST. The registration process is online and can be completed through the GST portal. Once registered, the business is issued a GST identification number (GSTIN), which is a unique 15-digit number. The GSTIN is used for all GST-related transactions.
GST Returns
Under the GST regime, businesses are required to file monthly, quarterly or annual returns depending on their turnover. In Kerala, businesses with a turnover of less than Rs. 5 crores can opt for quarterly returns, while those with a turnover of more than Rs. 5 crores have to file monthly returns.
The GST returns can be filed online through the GST portal. The returns contain details of all the sales and purchases made by the business during the specified period. It also includes details of the GST collected and paid. The returns have to be filed by the 20th of the following month for monthly returns and by the 30th of the following month for quarterly returns.
Input Tax Credit
Input tax credit (ITC) is one of the key features of GST. It allows businesses to claim credit for the GST paid on purchases against the GST collected on sales. This means that the tax paid on inputs can be set off against the tax collected on outputs. This helps to reduce the tax liability of the business.
In Kerala, businesses can claim ITC on all purchases except for a few specified items. However, the ITC can only be claimed if the supplier has also filed their GST returns and paid the GST.
Impact on Businesses
The implementation of GST in Kerala has had a significant impact on businesses. It has simplified the tax system and made it easier for businesses to comply with the tax laws. The online filing of returns and payments has made the process more efficient and reduced the paperwork.
However, some businesses have faced challenges in the transition to the GST regime. The new tax system has resulted in changes in pricing and cash flow, which has affected some businesses negatively. However, overall, the implementation of GST has been successful in Kerala, and businesses have adapted to the new system.
GST Rates
Under the GST regime, goods and services are taxed at different rates. The GST rates range from 0% to 28%, with the majority of goods and services being taxed at 18%. In Kerala, some goods such as coconut oil, pappad, and books have been exempted from GST. Additionally, some services such as healthcare and education have also been exempted.
GST Audit
Under the GST regime, businesses with an annual turnover of more than Rs. 2 crores are required to undergo a GST audit. The GST audit is conducted by a qualified chartered accountant or a cost accountant. The audit verifies the accuracy of the GST returns filed by the business and ensures that they comply with the GST laws.
Penalties for Non-Compliance
Under the GST regime, businesses are required to comply with the GST laws, failing which penalties may be levied. In Kerala, penalties for non-compliance include late fees for filing returns after the due date and interest on delayed payments of GST. Additionally, businesses that intentionally evade taxes may face fines and even prosecution.
GST Composition Scheme
Under the GST regime, small businesses with a turnover of up to Rs. 1.5 crores can opt for the composition scheme. Under this scheme, businesses can pay a fixed rate of tax on their turnover and are not required to maintain detailed records of their purchases and sales. In Kerala, businesses under the composition scheme can pay a tax rate of 1% for manufacturers, 2.5% for restaurants, and 0.5% for other businesses.
GST E-Way Bill
Under the GST regime, businesses are required to generate an e-way bill for the movement of goods valued at more than Rs. 50,000. The e-way bill is an electronic document that contains details of the goods being transported, the supplier, and the recipient. The e-way bill is generated through the GST portal and is valid for the duration of the journey.
GST Council
The GST Council is a body of representatives from the central and state governments that oversees the implementation of GST in India. The GST Council decides on the GST rates, exemptions, and other policies related to GST. The GST Council meets regularly to review the progress of GST implementation and to make necessary changes to the GST laws.
Conclusion
In conclusion, GST accounting in Kerala has been successfully implemented, and businesses have adapted to the new tax system. The GST composition scheme and e-way bill have helped to simplify the compliance process for businesses. The GST Council plays a crucial role in overseeing the implementation of GST in India and making necessary changes to the GST laws. Overall, GST has been a positive step towards a unified tax system in India, and it has benefitted businesses in Kerala and the rest of the country.
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