About GST

GST is one indirect tax for the whole nation, which will make India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

For the implementation of GST in the country, the Central and State Governments have jointly registered Goods and Services Tax Network (GSTN) as a not-for-profit, non-Government Company to provide shared IT infrastructure and services to Central and State Governments, tax payers and other stakeholders. The key objectives of GSTN are to provide a standard and uniform interface to the taxpayers, and shared infrastructure and services to Central and State/UT governments.

GSTN is working on developing a state-of-the-art comprehensive IT infrastructure including the common GST portal providing frontend services of registration, returns and payments to all taxpayers, as well as the backend IT modules for certain States that include processing of returns, registrations, audits, assessments, appeals, etc. All States, accounting authorities, RBI and banks, are also preparing their IT infrastructure for the administration of GST. GST Tax Rates in India is 5%, 12%, 18% & 28%.

There would no manual filing of returns. All taxes can also be paid online. All mis-matched returns would be auto-generated, and there would be no need for manual interventions. Most returns would be self-assessed.

Types of GST in India

1. CGST - Central Goods and Service Tax
2. SGST - State Goods and Service Tax.
3. IGST - Integrated Goods and Service Tax.
1. CGST - Central Goods and Service Tax

CGST means Central Goods and Service Tax, one of the three categories under Goods and Service Tax (CGST, IGST and SGST) with a concept of one tax one nation. CGST falls under Central Goods and Service Tax Act 2016.

For easy understanding, when CGST is being introduced, the present central taxes of Central Excise Duty, Central Sales Tax CST, Service Tax, Additional excise duties, excise duty levied under the medical and toiletries preparation Act, CVD (Additional Customs duty – Countervailing Duty), SAD (Special Additional Duty of customs) surcharges and cesses are subsumed.

CGST is charged on the movement of goods and services of standard commodities and services which can be amended time to time by a separate body. The revenue collected under CGST is for Centre. However, input tax credit on CGST is given to states and such input tax could be utilized only against the payment of Central GST.
The above information is a brief idea about CGST in simple and easy to understand.

2. SGST - State Goods and Service Tax.

SGST means State Goods and Service Tax, one of the three categories under Goods and Service Tax (CGST, IGST and SGST) with a concept of one tax one nation. SGST falls under State Goods and Service Tax Act 2016.

For easy understanding, when SGST is being introduced, the present state taxes of State Sales Tax, VAT, Luxury Tax, Entertainment tax (unless it is levied by the local bodies), Taxes on lottery, betting and gambling, Entry tax not in lieu of Octroi, State Cesses and Surcharges in so far as they relate to supply of goods and services etc. are subsumed.

3. IGST - Integrated Goods and Service Tax.

IGST means Integrated Goods and Service Tax, one of the three categories under Goods and Service Tax (CGST, IGST and SGST) with a concept of one tax one nation. IGST falls under Integrated Goods and Service Tax Act 2016.

IGST is charged when movement of goods and services from one state to another. For example, if goods are moved from Tamil Nadu to Kerala, IGST is levied on such goods. The revenue out of IGST is shared by state government and central government as per the rates fixed by the authorities.

Benefits of GST

For business and industry For Central and State Governments For the consumer

Difference between Current Tax Structure and GST Tax

Current Tax Structure GST Tax
Number of Laws There are separate laws for separate taxes and respective VAT on states There is only ONE law
Tax Rate Existence of separate tax rates There will be one CGST rate and uniform SGST rate across all the states
Cascading effect (Taxes on Tax) Presence of cascading effect of taxes due to multiplicity in taxes Cascading effect is reduced which makes it very simple
Tax Burden High tax burden on taxpayers Tax burden is much reduced
Tax Structure Presence of multiple taxes makes compliance difficult Subsuming or absorbing the taxes into one makes compliance simple and easy
Prices for Consumers Usually very high due to cascading effect of taxes Prices are expected to be reduced
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