All About GST In India

GST stands for Goods and Service Tax; it has been put into action on 1st July 2017 also, it replaced all the indirect taxes such as customs charges, entertainment tax, central excise tax, etc. It is based on the lines of “One Nation One Tax.” It is a single tax that is applied on the life cycle of a product from the manufacturer to the consumer and the final consumer will pay only his part of the tax, not the entire supply chain. In this article, we are going to let you know “All about GST in India.”

• Objectives of GST
• Types of GST 
• Taxes that Incorporated into GST
• Advantages of GST

The primary goal behind the implementation of GST is to replace multiple indirect taxes with a single tax. It makes the tax system easier to administer. It provides relief in the overall tax burden of the consumers.

There are four types of GST under the new tax system of India.

• Central Goods and Services Tax (CGST)
• State Goods and Services Tax (SGST)
• Union Territory Goods and Services Tax (UTGST)
• Integrated Goods and Services Tax (IGST)

The transaction of goods and services inside the same state comes under CGST. Central goods and service tax is regulated by the CGST act. This tax is collected by the central government of India. Revenue generated by this tax is distributed between the state government and central government. 

For Example, if a seller of Goa manufactures and sells his product within the state, then CGST and SGST both will be applied to that product. SGST will go to the Government of Goa and Central goods and service tax will go to the central government.   

 CGST rate on different goods

• Packed and unbranded food items:5%
• Pharma (life-Saving drugs), Cotton, and natural fiber: 5%
• Readymade garments, Processed food, Ayurvedic and homeopathy medicines: 12%

 B. ​​​​​​State Goods and Services Tax (SGST)

The transactions of goods and services inside a geographical area come under state goods and services tax. The elements of SGST differ from place to place. Revenue generated by this tax is collected by the state government. State goods and services tax includes all the taxes charged by the state government, this is the indirect tax of the state.

UTGST is the same as state goods and services tax. It is charged on the transactions of goods and services in the union territories. This tax is charged on the products supplied in Lakshadweep, Andaman, and the Nicobar Islands, Daman Diu, Chandigarh, Dadra, and Nagar Haveli. This tax is applied only to the union territories.

This is the tax imposed on the supply of goods and services between two states and on exports and imports. The central government is responsible for collecting this tax according to the IGST tax. Collected taxes are divided among states. This tax is used in interstate transactions.

3. Taxes That Incorporated into GST

These are the taxes that are incorporated into GST in India.

• At the State Level
  • State Value Added Tax/Sales Tax
  • Entertainment Tax (Other than the tax levied by the local bodies)
  • Octroi and Entry Tax
  • Purchase Tax
  • Luxury Tax
  • Taxes on lottery, betting, and gambling
• At the Central level
  • Central Excise Duty
  • Additional Excise Duty
  • Service Tax
  • Additional Customs Duty (Countervailing Duty)
  • Special Additional Duty of Customs                                                                                                           

• It is a single tax system which makes it easy and simple to administer.
• It provides the transparency in taxation system and reduces the loopholes.
• It decreases the overall tax burden on the consumer.
• Easy tax compliance, increases the ease of doing business.
• It removes the cascading effects of taxes.

    Conclusion

Goods and services tax was put into action to replace all the indirect taxes with a single tax. GST plays a crucial role in the life of a common man by reducing the overall tax burden. It is increasing the production and development of various industries. We have also discussed the major four types of GST. As we know, every coin has two sides GST too has its merits and demerits. However, we have discussed the merits of GST as it has overcome the others. Because of the implementation of GST all the indirect taxes have been brought under one umbrella.