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GST

GST is an indirect tax that replaced multiple indirect taxes in India. It was introduced on July 1, 2017 after 17 years of planning and debate. GST is levied on the supply of goods and services and is composed of CGST, SGST, IGST, and UTGST. It aims to create a unified Indian market, increase tax revenues, and make India a common market.

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25 views

GST

GST is an indirect tax that replaced multiple indirect taxes in India. It was introduced on July 1, 2017 after 17 years of planning and debate. GST is levied on the supply of goods and services and is composed of CGST, SGST, IGST, and UTGST. It aims to create a unified Indian market, increase tax revenues, and make India a common market.

Uploaded by

gracious lyngdoh
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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GST

What is GST?
• GST is known as the Goods and Services Tax. It is an indirect
tax which has replaced many indirect taxes in India such as
the excise duty, VAT, services tax, etc. The Goods and
Service Tax Act was passed in the Parliament on 29th March
2017 and came into effect on 1st July 2017.
• In other words,Goods and Service Tax (GST) is levied on the
supply of goods and services. Goods and Services Tax Law
in India is a comprehensive, multi-stage, destination-based
tax that is levied on every value addition. GST is a single
domestic indirect tax law for the entire country.
• The GST journey began in the year 2000 when a committee was set up
to draft law. It took 17 years from then for the Law to evolve. In 2017,
the GST Bill was passed in the Lok Sabha and Rajya Sabha. On 1st
July 2017, the GST Law came into force.
GST COUNCIL MEMBER
• UNION FINANCE MINISTER OF INDIA (CHAIRMAN)
• UNION MINISTER OF STATE (FINANCE) (MEMBER)
COMPONENTS OF GST
• There are three taxes applicable under this system
• CGST
• SGST
• IGST
• UTGST
Illustration:
• Let us assume that a dealer in Gujarat had sold the goods to a dealer in
Punjab worth Rs. 50,000. The tax rate is 18% comprising of only
IGST.
In such a case, the dealer has to charge IGST of Rs.9,000. This revenue
will go to Central Government
• The same dealer sells goods to a consumer in Gujarat worth Rs.
50,000. The GST rate on goods is 12%. This rate comprises CGST at
6% and SGST at 6%
• The dealer has to collect Rs.6,000 as Goods and Service Tax, Rs.3,000
will go to the Central Government and Rs.3,000 will go to the Gujarat
government since the sale is within the state
Before the Goods and Services Tax could be introduced,
the structure of indirect tax levy in India was as follows:
Tax Laws before GST
• In the earlier indirect tax regime, there were many indirect taxes levied
by both the state and the centre. States mainly collected taxes in the
form of Value Added Tax (VAT). Every state had a different set of
rules and regulations.
• Inter-state sale of goods was taxed by the centre. CST (Central State
Tax) was applicable in case of inter-state sale of goods
• For example, when goods were manufactured and sold, excise duty
was charged by the centre. Over and above the excise duty, VAT was
also charged by the state. It led to a tax on tax effect, also known as
the cascading effect of taxes.
Transaction New Regime Old Regime Revenue Distribution

Sale within the State CGST + SGST VAT + Central Revenue will be shared
Excise/Service tax equally between the
Centre and the State

Sale to another State IGST Central Sales Tax + There will only be one type
Excise/Service Tax of tax (central) in case of
inter-state sales. The
Centre will then share the
IGST revenue based on the
destination of goods.
Multi-stage
• An item goes through multiple change-of-hands along its supply
chain: Starting from manufacture until the final sale to the consumer.
Let us consider the following stages:
Value Addition

• The retailer packages the biscuits in smaller quantities and invests in


the marketing of the biscuits, thus increasing its value. GST is levied
on these value additions, i.e. the monetary value added at each stage to
achieve the final sale to the end customer.
Destination-Based
• Consider goods manufactured in Maharashtra and sold to the final
consumer in Karnataka. Since the Goods and Service Tax is levied at
the point of consumption, the entire tax revenue will go to Karnataka
and not Maharashtra.
Objectives of GST

• To achieve the ideology of ‘One Nation, One Tax’

• To subsume a majority of the indirect taxes in India

• To eliminate the cascading effect of taxes

• To curb tax evasion

• To increase the taxpayer base


• Online procedures for ease of doing business

• An improved logistics and distribution system

• To promote competitive pricing and increase


consumption
Advantages Of GST

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