GST

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Last Updated: September 28,2017 09:18 AM
All things you need to know about GST is granted here. Grab all essential points on Goods and Services Tax shortly GST, from this page. Explore the need, benefits and working of GST in India. Know the concept of CGST, SGST, IGST. Discover exact GST rates for all goods and services, here. In this page, you can obtain new updates on GST instantly.
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Synopsis of GST in India:

GST Full Form Goods and Services Tax
Type Indirect Tax
Came into force across India (except Jammu & Kashmir) on 1 July 2017
GST launched in Jammu and Kashmir on July 8, 2017
GST To be levied on Supply of goods or services
GST Applicable Throughout India
Four-tier final GST rate slabs 5%, 12%, 18% and 28%
13 Indirect Taxes replaced by GST Central Excise Duty,
Service Tax,
Countervailing Duty,
Special Countervailing Duty,
Value Added Tax (VAT),
Central Sales Tax (CST),
Octroi,
Entertainment Tax,
Entry Tax,
Purchase Tax,
Luxury Tax,
Advertisement taxes,
Taxes applicable on lotteries.
GST  introduced by Arun Jaitley
Chairman of GST Council Arun Jaitley
Background History
Introduced as Act The Constitution (One Hundred and First Amendment) Act 2016
Constitutional Amendment Bill Constitution 122nd Amendment Bill, 2014
Idea of GST first raised during meeting in 1999 between Prime Minister Atal Bihari Vajpayee and
three former RBI governors
namely IG Patel, Bimal Jalan and C Rangarajan.
GST Bill First published in 16th Lok Sabha on December 19, 2014
GST Bill - Date Passed in Rajya Sabha 03 August 2016
Amended GST Bill was passed by the Lok Sabha on 8 August 2016
GST Bill received assent from President Pranab Mukherjee on 8 September 2016
Article Article 368 of the Constitution
First state which ratified the GST bill Assam (on 12 August 2016)
 

What is GST?

GST - Marvelous way for a new Common National Market.
Goods and Services Tax (GST) is an indirect tax at the national level, levy on consumer when buying goods or services. This is the single tax levy on goods and services, from the manufacturing stage until its delivery stage. GST came into effect throughout India on 1 July 2017 and replaced several cascading indirect taxes levied by the central and state governments.
 
Goods and Services Tax is a comprehensive nationwide indirect tax on the manufacture, sale and consumption of goods and services. This is the great step in the field of India’s indirect tax reforms since independence. Goods and Services Tax (GST) can also be considered as ‘Consumption or Usage tax’.

Know the exact History of GST in India now.

Why GST in India?

  • The main aim of GST is to bring “One Nation, One Tax” system.
  • In India, there was several indirect taxes for goods and services, which vary from one state to another.
  • The GST Bill aims to provide an ‘uniform tax rate’ for all goods and services throughout India.
  • Under GST Bill, each citizen can pay ‘one single tax’ on goods and services, from the manufacturing stage until its delivery.
  • This reduces multiple taxes levied by
    • centre (excise tax, service tax etc),
    • by state (VAT, CST, entry tax etc) and then
    • also by local municipal bodies (octroi, LBT etc).
For Example:- In the case of cloth manufacturing, Central government levies the indirect tax called central exercise at factory gate. When this cloth reaches a retail outlet and ultimately goes in hands of the consumer (who buys the cloth), State Government levies Value Added Tax (VAT) as a tax on the cloth consumption. So consumer have to pay two taxes, a tax at the factory gate (levied by central Govt), which adds to the cost of the shirt and another tax on the final price (in the form of VAT levied by State Govt). This tax burden is now replaced by single GST.


Benefits of GST:

World’s first country implemented GST Law is France (in the year 1954). More than 160 countries have implemented this GST system. Following are the great benefits of GST in India.

Consumer side benefits:

  • Uniform prices for goods and services throughout India.
  • GST surely reduces tax burden of Indian citizens by removing multiple indirect taxes being levied by the Centre as well as State, as the cost of most goods and services in India today are laden with many hidden taxes.
  • This means that consumer will now bear only the GST charged at the previous point of the supply chain and not from the manufacturing stage. This reduces tax burden for final consumer.
  • Final cost of goods is expected to be lower due to seamless flow of input tax credit between the manufacturer, retailer and service supplier.
  • Overall tax on several commodities and services will come down. This will benefit consumers  more.

Benefits for Central and State Governments:

  • GST replaces several indirect taxes at the Central and State levels, which leads to Simple and easy administration of tax system throughout India.
  • GST will also make Indian products competitive in the domestic and international markets, which gains huge profit for Central and State Governments. GST would have a boosting impact on India’s economic growth.
  • Improve the overall investment climate in India which will naturally benefit the development in the Indian states.

Benefits for Business and Industry:

  • Free Flow of Goods and Services - No Checkpoints.
  • Reduction in multiplicity of taxes:- There will be a common market in the absence of CST (Central Sales Tax - indirect tax imposed only on goods sold from one state to another state) and entry tax.
  • Simpler Invoicing:- At present, the invoices are more detailed because taxes on goods and services are written separately for one transaction. With the implementation of GST, only one rate will be written.
  • GST replaces entry tax:- Abolition of entry tax is great boon for the movement of goods by road transport.
  • Relief on Big central excise tariff:- Eight digit classifications under central excise tariff (like 44079990, 76069110.) will be replaced by one rate.
  • With the implementation of GST, zero rating is more comprehensive.
  • Companies with the turnover of Rs. 20 lakh (Rs. 10 lakh for special category state) annually are exempted from GST.
  • More efficient neutralization of taxes especially for exports.


How GST works in India?

Against the previous principle of origin based taxation, GST is a destination-based tax. GST follows a multi-stage collection mechanism. The Goods and Services Tax (GST) will be collected at every stage (from manufacturing stage of a product until its delivery to end consumer) and the credit of tax paid at the previous stage is available as a set-off at the next stage of transaction. This helps to eliminate “tax on tax” system.
 
Previous indirect tax structure in India can be understood clearly from the following chart:

                 
Now GST (Goods and Services Tax) replaces all these indirect taxes levied by Central and State Governments.
When Goods and Services Tax is implemented, there will be 3 types of applicable Goods and Service Taxes viz CGST, SGST & IGST.
 

 
CGST - Central Goods and Services Tax: the revenue will be collected by the central government
 
SGST - State Goods and Services Tax: the revenue will be collected by the state governments for intra-state sales (i.e., sale within particular state in India)
 
IGST - Integrated Goods and Services Tax: the revenue will be collected by the central government for inter-state sales (i.e., sale between various states in India)
 
Import of goods will be treated as inter-State supplies and will be subject to IGST in addition to the applicable customs duties. Exports will be treated as zero-rated supplies which means no tax will be payable on exports of goods or services.
 
CGST, SGST & IGST concepts can be better understood from the following diagram:
 
 
Transaction of goods New Regime Old Regime Points to Note
Sale within the particular state CGST + SGST VAT + Central Excise/ Service tax Revenue will now be shared between the Centre and the State
Sale to another State IGST Central Sales Tax + Excise/ Service Tax There will only be one type of tax (central) now in case of inter-state sales.
 

What are the various tax slab rates under GST?

Union government categorised 1211 items under various GST tax rates in India. There are mainly Four tax rates to be levied as GST namely 5%, 12%, 18% and 28%. There will be no GST for Education and healthcare. Gold and rough diamonds do not fall under the current GST rate slab ambit. Gold will be taxed at 3% and rough diamonds will be taxed at 0.25%.



Know the GST Rates for all Goods in India
Grab the GST Rates for all Services in India

Stay tuned with Fresherslive to know all essential details on Goods and Services Tax (GST) rates in India as well as detailed History of GST in India.


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