India India

Goods

GST

Cumulative GST rate in India depend on the good code and differ from 0 to 28%.
18% is a rate that applies to majority goods and services. Here you can see several examples of a cumulative VAT (IGST) rates:

  • CGST – Central Goods and Services collected by the central government and applicable on transactions intra state i.e. within a state.
  • SGST – State Goods and Services Tax collected by the respective state government and applicable only on the transactions that are intra state i.e. within the state.
  • IGST – Integrated Goods and Services Tax collected by the central government and applicable when goods or services are being supplied from one state to another state and also on imports.
  • UTGST (or UGST) – Union territory Goods and Services Tax collected by the Union Territory government only and applicable in all the Union Territories of India. It taxes transactions within 1 Union Territory only.

 

GST rates

The following rates apply to goods in India.

  • 0% – some food as milk, fresh fish and vegetables
  • 5% – some food and goods as apparel, footwear, vital medicines and coal
  • 12% – most goods as phones and processed foods (cheese, frozen meat)
  • 18% – scented candles, water heaters, detergents
  • 28% – “luxury” goods, for example, cars, yachts, aircrafts and casinos fall under this category

As can be seen from the examples given, in India it is difficult to immediately determine the rate applied to a particular product, therefore it is necessary to treat this issue with great attention.

GST registration threshold

Local businesses with turnover above the threshold limit of Rs.40 lakh (appr. 52 800 USD) or Rs.20 lakh (appr. 24 400 USD) or Rs.10 lakh (appr. 13 200 USD) (depending on the category of state) are required to register for GST.

Remote Sellers

There is compulsory GST registration requirement for non-resident taxable persons making taxable supply of goods or services to individuals or companies located in India irrespective of their turnover. In the CGST Act, a “non-resident taxable person” has been defined any person who occasionally undertakes transactions involving the supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India. And Section 24 of the CGST Act, has mandated that non-resident taxable persons making taxable supply mandatorily obtain GST registration.

The same applies to entities who supply via e-commerce platforms.

Requirements for online marketplaces

In India online marketplaces are required to collect and remit GST under the law known as “Tax Collection at Source (TCS)”.

India’s Central Goods and Services Tax Act Section 52 says: “These operators should collect “an amount calculated at such rate not exceeding one per cent of the net value of taxable supplies made through it by other suppliers.”

It mean that sellers are still must to collect the GST on their sales to Indian customers and online platform will take 1% of the sellers’s taxable transactions and pay it to the government.

Registration procedure

GST registration for a foreign taxable entity requires the electronica submission of the following documents:

  • Certificate of incorporation with confirmation of the place of business
  • Identity Proof
  • Bank Account information
  • Application form GST REG 09

 

The registration application should be filled at least five days prior to the commencement of business in India. Non-resident taxpayers must pay a certain amount as a registration deposit for goods and services tax. The amount of the GST registration deposit will be equal to the expected tax liability during the registration period.

After submitting the GST registrations, a reference number of the application for payment of the advance tax will be provided.

The registration for the Non-resident taxable person is valid for 3 months. To postpone the GST status a new form GST REG-11 should be filled electronically before the end of the validity of initial registration.

Tax representative

A non-resident taxable person is obliged to appoint an authorized representative in India with a valid Permanent Account Number.

GST payment and filing date

Non-residents are required to file GST returns and pay the tax due monthly. Deadline is the 20th of the month following the reporting period.

Penalties

If the entity does not register for GST, they have to pay a penalty of 10% on the tax due subject to the amount of 10 000 RS (appr. 132 USD). However, in the case of evading taxes deliberately, the entity is liable to a penalty of 100% on the tax due.

Digital services

Effective since of July 2017.  

As per the IGST Act, online information and database access or retrieval services provided to B2C or to non-taxable entities by foreign companies are subject to Indian GST if the location of the customer is India.

 

Standard rate 

18 % 

 

VAT Reduced rate

There is no reduced rate. 

 

VAT calculation peculiarity

VAT= Total revenue * 18/118 

 

Threshold

The revenue threshold is €0 for digital services. 

Pieces of evidence

The person receiving DIGITAL Service would be deemed to be located in India if any 2 of the following non-contradictory conditions are satisfied:

  1. The location of address provided by the service recipient via the Internet is India.
  2. The Credit/Debit/any other card by which the service recipient settles the payment has been issued in India.
  3. The service recipient’s billing address is in India. 
  4. The service recipient’s bank in which the account is used for payment is maintained is in India. 
  5. The country code of the subscriber identity module (SIM) card used by the service recipient is in India. 
  6. The location of the service recipient’s fixed landline, through which the service is received by the person, is in India. 

E-services list

  • Website supply, web-hosting, distance maintenance of programmes and equipment 
  • Supply of software and updating thereof 
  • Supply of images, text and information and making available of databases 
  • Supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events 
  • Supply of distance teaching 

Registration procedure

Companies need to fill a single registration in Form GST REG-10, then present this form at principal commissioner of central tax, Bengaluru west.

The average time taken to obtain a GST Certificate is about 5 – 10 working days.

E-merchants can instead appoint a tax agent which will bear all GST obligations instead of the merchant.

VAT returns filing date

Digital service providers will have to file return monthly by 20th of the month succeeding the month for which return is filed as well as an annual return, amounting to 13 returns per annum

The return is to be filed even if there is no business activity for any period under tax (Nil return in such cases).

No Input Tax Credit is available. 

The return can be filed only after payment of due taxes and any other amounts due

Return for current period can’t be filed before filing return for the previous tax period. 

VAT payment date

Due date for the period July-December 2017 for Non-Resident foreign taxable person is 31 st January 2018. 

Penalties

If GST Returns are not filed within time, a company will be liable to pay interest and a late fee.

Interest is 18% per annum. It has to be calculated by the taxpayer on the amount of outstanding tax to be paid. The time period will be from the next day of filing to the date of payment.

As per the latest update, late fees for GSTR-5A earlier reduced stands withdrawn. So, the Late fee of Rs 200 per day (or Rs. 100 per day in case of NIL return filing) shall apply with effect from 7th March 2018.