Businesses transitioning to the Goods and Services Tax (GST) regime in India must understand several fundamental provisions and laws to ensure a smooth changeover. This guide highlights essential points to consider during this shift.

Migration to GST

Existing taxpayers, previously registered under Excise, VAT, or service tax, are required to enroll on the Common Portal for GST. Upon successful enrollment, they receive a provisional registration certificate that includes their unique Goods and Services Tax Identification Number (GSTIN).

New Registrations under GST

Certain entities are required to register under the new GST framework:

• New businesses initiating operations.
• Manufacturers whose turnover falls below the previous Rs. 1.5 crore threshold, now subject to the reduced GST threshold of Rs. 20 lakhs.
• Any trader with a turnover under Rs. 20 lakhs who engages in online sales.
• Traders routinely conducting inter-state sales.
• Voluntary registration for businesses is also permitted.

Taxability of Goods/Services Supplied Post-GST

The taxability of goods or services supplied post-GST implementation is determined by the point of taxation rules. If the point of taxation for goods or services occurs prior to the GST rollout, taxation will follow the previous laws, and GST will not apply. However, any part of a supply where the point of taxation falls after GST implementation will be subject to GST.

Carrying Forward Input Tax Credit (ITC) after GST Transition

Businesses can carry forward CENVAT Credit and VAT credit on their existing stock into the GST regime. For goods on which integrated tax (like CST) was paid, the Input Tax Credit (ITC) will be 30% for items subject to 18% or higher GST, and 20% for other categories of goods.

Treatment of Returned Goods

For returned goods, the original removal from the supplier’s premises must have occurred no more than six months before GST implementation. The goods must be returned within six months of the GST implementation date. Failure to return goods within this timeframe renders the supplier ineligible for a tax refund. Similar regulations apply to excise duties.

Composition Scheme Eligibility

The Composition Scheme is accessible to businesses with an annual turnover of up to Rs. 50 lakhs. These are some key considerations for a seamless transition to GST.