What is GST? and Types of GST


Many people had the question “What is GST?” when it was introduced in India. We can say that GST has created a revolution in India. It changed the tax paying system of the country. Still, many people don’t have the clear idea about it. By reading this article you can get more information about GST.

What is GST?

GST stands for Goods and Service Tax. Different Taxes were charged by the old government like VAT, CST, Octroi, Luxury Tax and Entertainment Tax. Now there is only one tax for the whole nation, that is GST.  GST is a consumption based tax charged on manufacturing, sale, consumption on goods and services. It was established in India on 1 July 2017 by Arun Jaitley. It replaced multiple cascading taxes applied on goods and services by the central and state governments.

Before GST, Tax was charged by two different governments. Excise duty was charged by Central Government and VAT/CST was charged by the state government. GST comes under Indirect Tax. Manufacturer, Sellers/Traders, Dealers, Importer, Agents, and Service providers should pay GST. But they are not paying GST from their income. They collect GST from the consumers and give it to the government. Simply we can say that Gst is paid by the people.

Who is liable to register under GST?

  • A person who is earning 20 lakhs per year must pay GST (Rs 10 lakhs for North Eastern and the Hill States)
  • Existing VAT/Sales Tax dealers need to register under GST
  • The existing service providers who registered under Service Tax should register under GST.
  • Existing excise Dealers/Manufacturers who registered under Excise Law should register under GST.
  • People who are providing goods and services on the behalf of other registered taxable people whether as agent or chief or in any other capacity.
  • Those who are doing Inter-state trade should register under GST.
  • Input Service Distributor.
  • Casual Taxable persons.
  • Electronic Commerce Operator.
  • An E-commerce operator or an aggregator who are providing services under his trade name or his brand name.
  • People those who are paying tax under the reverse charge mechanism.
  • Non-Resident taxable persons.
  • Agents of a supplier.
  • The person who provides goods and services through E-commerce operator.

State taxes which are included in GST

  • Luxury Tax
  • VAT
  • Purchase Tax
  • Entertainment Tax which is not levied by local bodies
  • Taxes on Lottery, Betting & Gambling
  • Octroi and Entry Tax
  • State cases and Surcharges
  • State Sales Tax

Central taxes which are included in GST

  • Central Excise Duty
  • Additional Excise Duty
  • Central Sales Tax
  • Service Tax
  • Additional Customs Duty
  • Additional Customer Duty which is commonly known as Countervailing Duty (CVD)
  • Central cesses and surcharges
  • Special Additional Duty of Customers (SAD) – 4%
  • Excise Duty levied Medicinal and Toiletries Preparations (Excise Duties)
  • Central cesses and Surcharges

Taxes which are not included in GST

  • Stamp Duty
  • Custom Duty
  • Road and passenger tax
  • Entertainment Tax which is levied by local bodies
  • Electricity Duty
  • Toll and Entry Taxes
  • Vehicle Tax
  • Excise on liquor
  • Property Tax

Different percentages of GST on Goods and Services

0% – 50% of the items including foodgrains like raise, wheat, etc.

3% – Gold

5% – Mass consumption items like Spices, Tea, Coffee, Milk, Mustard oil, etc.

12% – processed food items

18% – soaps, oil, toothpaste, electronic items like refrigerators, camera, monitors, etc.

28% – luxury items such as white goods, cars, pan masala, tobacco, beverages, etc.

Types of GST

1.CGST (Central Goods and Service Tax)

CGST is a Tax charged on Intra-State (within a state) supplies of Goods and Services by the Central Government. It comes under GST. When the transaction of sale gets placed within the state, it will have two taxes. One is CGST which goes to the Central Government and the other one is SGST which goes to the State Government.

CGST replaced all existing Central Taxes.

2.SGST (State Goods and Service Tax)

SGST is a Tax charged on  Intra-State (within a state) supplies of Goods and Services by the State Government. It comes under GST. SGST replaced all existing State Taxes.

3.IGST (Integrated Goods and Service Tax) and

IGST is tax charged on all inter-state (between two states) supplies of Goods and Services. IGST is applicable on all goods and services in both cases of Imported into India and Export from India. It comes under GST.

Under IGST, the Central and State Government will share the Tax.

4.UTGST (Union Territory Goods and Service Tax)

UTGST is a Tax levied on goods and service When a transaction gets placed in any of the five Union Territories including Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Lakshadweep, and Andaman and the Nicobar Islands.

Delhi and Puducherry which are also a Union Territories of India already have their own legislatures, so SGST is applicable to them.

Under UTGST, GST Is CGST+UTGST

Note: In Intra State transaction, the seller should collect both CGST and SGST from the consumer. In Inter State transaction, the seller should collect IGST from the consumer.

Conclusion

Some people say that GST is the best one. The common aim of GST is “One Nation, One Tax”. The Indian government is trying to make the people understand the benefits of GST. I hope, after reading this article you have got the clear idea about GST,

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