The Simple Business Man

The GST Journey: From Chaos to Order
Before 2017, the Indian indirect tax landscape was a mess, plagued by multiple central and state taxes like VAT, Service Tax, Excise, and CST. This led to a “tax on tax” or cascading effect, making goods unnecessarily expensive. State-specific rules and border checkpoints created massive compliance headaches for businesses operating across India.
The Goods and Services Tax (GST), implemented on July 1, 2017, aimed to fix this by creating a “One Nation, One Tax” system. It swept away most of the old taxes, unifying them under a single framework. The core principle is that tax is applied to the “Supply” of goods or services, making the system simpler and more transparent.
Your Best Friend: Input Tax Credit (ITC)
The biggest benefit for businesses is the seamless flow of the Input Tax Credit (ITC). ITC allows you to reduce the GST you collect from your customers (Output Tax) by the GST you have already paid on your purchases (Input Tax). This ensures that businesses only pay tax on the value added by their operations, eliminating the costly cascading effect.
The Four Flavors of GST
GST is split to ensure revenue sharing between the Central and State governments. The type of GST charged depends on the location of the transaction:

• CGST (Central GST): Goes to the Central Government. Charged for sales within the same state (Intra-state supply), along with SGST/UTGST.
• SGST (State GST) / UTGST (Union Territory GST): Goes to the State/UT Government. Charged for sales within the same state/UT, along with CGST.
• IGST (Integrated GST): Charged for sales between different states (Inter-state supply) or imports. It equals the full GST rate (CGST + SGST combined) and goes to the Central Government, which then settles the state share.
  Essential Jargon for Every Businessman
• GSTIN: Your mandatory 15-digit tax identity number.
• HSN/SAC Code: Standard codes used to classify your goods (HSN) or services (SAC) to ensure the correct tax rate is applied nationally.
• Reverse Charge Mechanism (RCM): A specific scenario where the buyer, instead of the seller, is responsible for paying the GST to the government.
• Composition Scheme: A simpler, fixed-rate tax payment option for small businesses that cannot claim ITC and cannot charge GST to customers.
  What You Need to Do (Requirements)
  As a businessman, your key requirements under GST involve:
• Registration: Registering for a GSTIN if your turnover crosses the threshold or if you engage in inter-state trade.
• Accurate Billing: Ensuring your invoices correctly mention GSTIN, HSN/SAC codes, and the correct type of GST (CGST+SGST or IGST) based on the transaction location.
• Compliance and Returns: Regularly filing mandatory monthly returns (GSTR-1 for sales, GSTR-3B for summary liability and ITC payment) and ensuring timely payment of taxes.
• Record-Keeping: Maintaining proper records of all input and output transactions to support your ITC claims and pass any future audits.
  GST, while initially complex, has ultimately streamlined operations, minimized border hassles, and ensured tax neutrality, allowing Indian businesses to focus more on growth and less on multi-layered tax compliance.