GOODS AND SERVICES TAX (GST)



What is the Goods and Services Tax (GST)?
GSTis the biggest indirect tax reform of India. GST is a single tax on the supply of goods and services. It is a destination based tax. GST has subsumed taxes like Central Excise Law, Service Tax Law, VAT, Entry Tax, Octroi, etc. GST is expected to bring together state economies and improve overall economic growth of the nation.

How the GST Systems Work:
Most countries with a GST have a single unified GST system, which means that a single tax rate is applied throughout the country. A country with a unified GST platform merges central taxes (e.g. sales tax, excise duty tax, and service tax) with state-level taxes (e.g. entertainment tax, entry tax, transfer tax, sin tax, and luxury tax) and collects them as one single tax.

WHAT ARE DIFFERENT TYPES OF GST?



Tax Levied By Central Government State Government Union territory Government Combined levy, collected by Central Government
Taxes that it will replace Service tax, excise duty, countervailing duty (CVD), special additional duty (SAD), Additional duties of excise(ADE), and any other indirect central levy VAT, sales tax, luxury tax, entry tax, entertainment tax, purchase tax, Octroi, taxes on lottery VAT, sales tax, luxury tax, entry tax , entertainment tax, purchase tax, Octroi, taxes on lottery Central sales tax (CST)
Applicability Supplies within a state Supplies within a state Supplies within a union territory Interstate supplies and import
Input Tax Credit Against CGST and IGST Against SGST and IGST Against UTGST and IGST Against CGST, SGST and IGST
Tax Revenue Sharing Central government state government Union territory government Shared between state and central governments
Exemption Limit Rs 20 lakh annual turnover Rs 20 lakh annual turnover Rs 20 lakh annual turnover Exemption limit not defined
Composition Scheme The dealer may use the benefit of turnover of Rs 50 lakh The dealer may use the benefit of turnover of Rs 50 lakh The dealer may use the benefit of turnover of Rs 50 lakh Composition Scheme is not available in this regard
Free Supplies CGST is applicable on free supplies SGST is applicable on free supplies UTGST is applicable on free supplies IGST is applicable on free supplies
Registration Not applicable till the turnover exceeds Rs 20 lakh Not applicable till the turnover exceeds Rs 20 lakh Not applicable till the turnover exceeds Rs 20 lakh Registration is necessarily mandatory if supply is made outside the states


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