GST (Goods and Services Tax )

GST is the biggest tax reform implemented in India. The lack of transparency in the tax system among consumers leads to a few people staying outside the tax system and increasing the prices of goods. GST came as a solution to all this. There are about 2,000 indirect taxes at the national and state levels. GST is a unified and integrated tax that replaces all of these. Along with the basic price of the product, there is excise duty , central sales tax , and state value added tax. A single tax called GST came into existence to replace all these group taxes. CGST, IGST, UTGST, and SGST are the four sub-taxes of GST. CGST and SGST are collected together from the consumers and shared equally by the center and the state .

GST is a unified indirect tax system that came into effect in India from July 1, 2017. GST was implemented through the 101st Amendment to the Constitution. This amendment was introduced as Article 246A in the Constitution. Tax is levied at all stages of production of goods and services from production to consumption. Value addition occurs at each stage and is collected. Thus, tax is levied only on the value addition at each stage. The final consumer does not have to pay the taxes paid initially later. If the total turnover in a financial year is more than Rs 20 lakh, traders must get GST registration. GST is levied at the rates of 0  percent,  5 percent, 12 percent, 18 percent and 28 percent on all goods or services supplied across the country.

Central and State GSTs 

GST is levied by the Central Government and the State Government on goods and services purchased and sold within the State. The Central Government levies it as Central GST (CGST) and the State Government levies it as State GST (SGST). These taxes are collected jointly from the consumers and shared equally between the Centre and the State. The Central GST and State GST rates are the same.

Integrated GST (IGST)

Integrated GST is levied on goods and services purchased and sold from one state to other states. GST is levied and collected on inter-state purchases and sales by the Central Government. The state share of this is paid by the Central Government.

GST in Union Territories (UTGST) 

UTGST is a tax levied by the Central Government on goods and services purchased and sold within the Union Territories.

Major taxes merged into GST

■ Central Excise Duty

■ Service Tax

■ Central Sales Tax

■ State Value Added Tax

■ Luxury tax

■ Advertising tax

■ Entrance tax

■ Entertainment tax

GST Council

The final adjudicator of all matters relating to GST is the GST Council, constituted under Article 279 of the Constitution of India . The   decisions of the GST Council are taken by a majority of two-thirds of the votes. One-third of the total votes are held by the Central Government and two-thirds by the State Government. Each State, irrespective of its population or size, has one vote in the Council. Union Finance Minister , Union Minister of State for Revenue/Finance , the State Finance Ministers or a Minister chosen by the State. The Union Finance Minister is the Chairman of the GST Council. The recommendations made by the GST Council are as follows:

■ Taxes , cesses and surcharges to be merged into GST

■ Goods and services to be brought under and excluded from GST

■ Setting tax rates

■ Time to include exempted goods and services in GST 

■ Determination of tax exemption limit based on total turnover

Items not included in GST 

The following are the items that are currently not covered by GST.

■ Petroleum products (crude petroleum, diesel, petrol, natural gas, jet fuel)

■ Electricity 

■ Alcohol for human consumption

GST number 

The GST number (GSTIN - Goods & Services Tax Identification Number) is obtained when registering for GST. GSTIN is a combination of the applicant's PAN card number and the code of the concerned state. The first two digits of the GST number are the GST code of the state. The following digits are the PAN card number.

GST codes of various states/territories

Kerala - 32, Tamil Nadu - 33, Karnataka - 29, Puducherry - 34, Lakshadweep - 31, Andhra Pradesh - 37, Telangana - 36, Goa - 30, Jammu and Kashmir - 01, Himachal Pradesh - 02, Delhi - 07, Maharashtra - 27.

Reverse charge 

Normally, the supplier is responsible for paying tax to the government. In contrast, the reverse charge is the system where the tax liability on the supply of all goods and services declared by the government as per the recommendations of the GST Council is shifted to the recipients of the supply.

Input tax

Input tax is the Central tax, State tax and Integrated tax levied on the supply of goods or services to a registered person. It includes tax paid on reverse charge basis and Integrated tax levied on import of goods. It does not include tax paid on composition basis. Input tax credit cannot be taken on goods which are lost, stolen, destroyed or written off. Input tax credit is also not allowed on goods given as gifts or free samples.