Goods and Services Tax India

What is GST

Implemented by the nations worldwide with individual customisations, the tax has been successful in simplifying the indirect taxation structure of India. Customers are required to pay tax on the purchase of goods or services as an inclusion in the final pricing. The tax collected by the seller is to be paid to the government, thus implying indirect taxation. GST rates are uniformly applied on different goods and services; they have been categorised under different slab rates. Luxury goods are classified under higher slabs, necessities have been included in lower and nil slab rates.

Journey of GST in India

The journey GST began in the year 2000, the Prime Minister of India introduced the concept of Goods and Services Tax (GST). He also formed a committee to draft new indirect tax law. However, its implementation process took years, and the bill went through multiple introductions, amendments and rescheduling. Here’s a summation of GST’s chronology, from drafting to final implementation.

Difference between GST Tax and Old Tax Structure

Know about online GST registration process and fees.

Types of GST

GST is primarily categorized into three types, i.e. Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST). Read on to know about the particulars of each type of GST.

• Central Goods and Services Tax: 

CGST is applicable on intra-state supply of goods and services. Thus, the revenue collected from taxpayers under this tax is collected by the Central Government. The introduction of the CGST led to the abolition of central taxes such as Central Excise Duty, Customs duty, Service Tax, etc. Typically, taxpayers are charged CGST along with SGST and the rates are the same.

• State Goods and Services Tax:

SGST is also applicable on goods and services that are sold within the state (intra-state). SGST too replaced several other taxes, including Value Added Tax (VAT), Entertainment Tax, Entry Tax, State Sales Tax, and any applicable surcharges. Revenue collected through SGST is directed towards the State Government.

• Integrated Goods and Services Tax:

Integrated Goods and Services Tax or IGST is charged on products and services that are transacted inter-state. It is also applicable on goods that are imported. The revenue from IGST is distributed among all the states. IGST was implemented to streamline the tax process and ensure that each state only transacts with the Union Government.

Apart from these, there’s also the Union Territory Goods and Services Tax (UTGST).

• Union Territory Goods and Services Tax:

As the name suggests, UTGST is applicable in the union territories of the country. It is levied on the goods and services supplied within the union territories of Chandigarh, Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, and Lakshadweep. UTGST is collected along with CGST.

What are the New Compliances Under GST?

The new GST tax regime has introduced several new systems. They are as follows:

• E-Way Bills

GST introduced a centralized system of bills by the introduction of “E-way bills”. This system was launched for inter-state and intra-state movement of goods in a staggered manner.

Manufacturers, traders and transporters can quickly generate e-way bills for transportation of goods from the place of its origin to its destination with ease. Tax authorities are also benefited as the E-way bill system helps reduce the time consumed at check -posts and reduces tax evasion..

• E-invoicing

Recently, the e-invoicing system has been launched on a trial basis starting from January 2020 and applicable from October 2020. This system requires large businesses with an annual aggregate turnover of more than Rs.100 crore to comply with some requirements. They must obtain a unique invoice reference number for every business-to-business invoice by uploading on the GSTN’s portal known as the invoice registration portal. The portal verifies the correctness and genuineness of the invoice. After that, it authorizes using the digital signature along with a QR code. E-invoicing allows interoperability of invoices and helps reduce data entry errors. It is designed to pass the invoice information directly from the IRP to the GST portal and the e-way bill portal. It will, therefore, eliminate the requirement for manual data entry while filing ANX-1/GST returns and for the generation of part-A of the e-way bills.

Also read about the various components of GST

Advantages Of GST

Benefits for Traders and Manufacturers:

• Easy compliance

• Uniformity in tax rates and structure

• Removal of cascading or compounding effect of taxes

• Enhance the competitiveness

• Growth towards the development of a common national market

Benefits for Central and State Government:

• Simple and easy administration

• Improved compliance and revenue collections

• Better revenue effectiveness

Consumers Benefits:

• Payment of the single and transparent tax

• Reduction of the burden of the taxpayers

GST Helpline

Taxpayers often find themselves confused or skeptical about GST filing. To clarify their questions or doubts, they can use the dedicated GST helpline and connect with the concerned authority. The means of contact are as follows:

Toll-free Phone Number: 1800 1200 232

Self Help Portal: https://selfservice.gstsystem.in/

Tax Laws before GST

In the earlier tax regime, there were many indirect taxes levied by both the state and the central government. The states mainly collected taxes in the form of Value Added Tax (VAT). Every country had a different set of rules and regulations. The centre taxed Inter-state sale of goods. CST (Central State Tax) was applicable for inter-state sale of goods. These indirect taxes such as the entertainment tax, octroi and local tax were levied together.

The following are the list of indirect taxes that were applicable in the pre-GST regime:

• Central Excise Duty

• Duties of Excise

• Additional Duties of Excise

• Additional Duties of Customs

• Special Additional Duty of Customs

• Cess

• State VAT

• Central Sales Tax

• Purchase Tax

• Luxury Tax

• Entertainment Tax

• Entry Tax

• Taxes on advertisements

• Taxes on lotteries, betting, and gambling

Taxes like CGST, SGST, and IGST have replaced all the above taxes.

What changes does GST bring in

The Goods & Services Tax or GST brought a major change in the taxation visuals in India. Earlier, different taxes were paid separately to the state and the centre. However, GSTIN subsumed all taxes into one, and now there is the practical application of ‘One nation, one tax.’ Some of the changes that GST brought in are as follows:

• No multiple taxes to be paid

• Replacement of indirect taxes like excise duty and sales tax into one

• Clear distinction of taxes on luxuries and necessities

• Introduction of simplified ways to fill Income Tax Returns and taxes, for instance through GST online portal or website

• Boost for Real estate and MSME sector

• Ease for transportation of goods, as no separate taxes

• Tax administration under both State and Central governments

• Transparency in the taxation process

Also know about the impact of GST on personal loans.

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