Introduction – GST Basics

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Introduction – GST Basics

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Category : GST

This is the first article of our GST Knowledge Series. This article is about basics of GST.

WHAT IS GST

India, having federal tax structure, Center as well as State both have the power to levy and collect taxes.

Goods and Service Tax  is a part of this system, Center and State both will be simultaneously levying the tax. Taxes will be implemented to help tax-payers to take credit against each other thus ensuring “One nation one tax”.

GST is a consumption based tax i.e. tax should be received by the state in which goods or services are consumed and not by the state in which such goods are manufactured.

GST1

Following taxes are going to be subsumed in the GST

  1. State Sales Tax VAT
  2. Central Sales Tax
  3. Service Tax
  4. Excise Duty
  5. CVD / SAD
  6. Entry / Purchase Tax
  7. Octroi
  8. Luxury Tax

Customs Duty and Taxes on Lottery, betting and gambling will be carried forwarded as separate tax.

TYPE OF TAXES

There are three types of taxes:

  1. Central GST (CGST)
  2. State GST (SGST)
  3. Integrated GST (IGST)
  • CGST  : Levy on supply of all goods and/or services within a state by the central government
  • SGST : Levy on supply of all goods and/or services within a state by the respective state government
  • IGST : Levy on all interstate supplies of goods and/or services by central government

GST

Hence, in case of intra-state CGST and SGST both are levied e.g. on an item, 18% tax is leviable then both, CGST and SGST @ 9% shall be levied.

And in case of intra-state, IGST shall be levied at 18%

TAX RATES

Proposed rates are 0, 5, 12, 18 and 28


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