GST is an indirect tax regime levied on supply goods and services in India. For the collection of tax, goods and services are categorized into the five different tax slabs including 0%, 5%, 12%, 18% and 28%. The GST came into effect in India from 1st of July 2017. The replaced tax exist the multiple flowing taxes imposed by the state and central governments. In case you have a commercial existence in India and your business has a turnover of over ₹20, 00,000(For North eastern states, the limit would be ₹10, 00,000), it is suggested that you should register your business for GST.
Classification of GST
GST can be categorized into the following types:
- CGST - Central Goods and Services Tax
- UTGST/ SGST – Union/ State Territory Goods and Services Tax
- IGST -Integrated Goods and Services Tax (CGST+SGST/UTGST) As per the dual modified GST model, the tax imposed can vary on the basis of type of transaction.
Whenever a sale occurs within the same union territory or state, both CGST and UTGST/SGST will be implemented.
Whenever a sale occurs between two different union territories and states, IGST will be implemented. IGST is combination of SGST and CGST and is collected by central government. The address of the organization plays a main role in determining GST type to be applied.
The ChargeMonk system verifies the type of GST to be applied using the region of customer.
- In case the region of the customer matches with the address of your organization, SGST and CGST are applied on the purchase while in case the region of customer is different from yours, IGST is applied.
- In case you are functional in multiple regions then GSTIN has to be given for each region where you are active in. In case the region of customer falls within one of these regions, SGST and CGST are applied.
- When the consumer is from a region that doesn't fall within any of the regions where you operating, IGST is applied.
IGST is implemented in the case of B2C transactions only where the end consumer does not have a GST Identification Number (GSTIN).
In some situations, entities which are unregistered and do not have an existence in India might be obligated to comply with the regulations and collect GST.
If a sale is made outside of India, GST will not be levied as it is considered an export.
Scheduling Tax Change
Whenever any existing tax model is revised by the government, the consequent amendments are to be upgraded in the system by the midnight in order that the old tax model will not affect the future transactions. Schedule Tax feature mechanizes this process that saves all that manual effort.
In case you have configured tax for India already and want to schedule a date from when the existing tax model will expire, go to Schedule Tax option available in the ‘Tax configuration' page.
You can then continue to configure the GST settings that will be imposed once the current tax model expires.
Configuring the Indian GST
Step 1: Update Address of Organization
To set up the taxes in ChargeMonk, the primary step will be to update the address of your organization that can be done by this simple step Settings > Configure ChargeMonk > Business Profile
Step 2: Enable Tax
Go to Settings > Configure ChargeMonk > Taxes and just click the Enable Tax option.
Step 3: Configure the price type
You can configure the price type of each currency which you have enabled for your site by selecting the option Manage Catalog Price Types in the Taxes page. The price type is configured to ‘exclusive' by default. To get more information on this, refer here.
Step 4: Configure tax settings for India
Go to Settings > Configure ChargeMonk > Taxes > Add Region and select India from drop-down menu.
Step 5: Configure GST settings
You will be forwarded to the page to choose a mode of configuration to add the taxes. Now select Configure GST.
Step 6: ADD default GST rates
On clicking Add GST Rate a pop-up window will appear here you can set the default SGST/UTGST, CGST rates for all union territories and states.
The percentage of the additional Cess is optional and applied only on precise products.
Step 7: Add state tax rates
You can include the individual state tax rates by clicking Add state tax.
There are two scenarios where this feature is used,
Whenever you have a physical existence in more than one state in India. In case you have a commercial presence in 5 different states, all these states need to get registered for GST which leads to have multiple GSTIN. Using the Add state tax option *in the Configure GST* page, you can insert GSTIN for each state separately.
Whenever a SGST and CGST percentage of a particular product varies from the default tax rates and you have to prevail it.
- Assume that the tax rate of product A is 18% (SGST-8%, CGST-10%) throughout all the states of India, you can configure default CGST and SGST rates that will be utilized to tax the purchase of the product.
- For instance, assume that product A has a niche market in the state X where it is manufactured in large quantity then the state government can demand a higher tax rate that will lead to an important change in the CGST and SGST percentages. Now select Override default tax rates to prevail the default tax rates.
- Now along with the default tax rates, state wise SGST and CGST rates are also displayed.
Tax will not be implemented in case the billing/shipping address of the customer does not have ‘State' mentioned.
Once GST setup is completed, the GSTIN section appears in the billing info of customer while creating a new subscription.
The applied GST will appear as one of the line items in the invoice as given below:-