Basics of Goods & Services Tax GST (India)

Basics of Goods & Services Tax GST (India)

GST, which stands for Goods and Services Tax, came into India on 1 July 2017. The tax is charged on the manufacturing, sale, and purchase of goods and services. The tax is paid on every purchase, and the GST rates are set by the Central Board of Indirect Tax and Customs along with the GST Council.

What are Goods and Services under GST?

Any kind of movable property except money and security is claimed as goods. It can include crops, pets, eatables, automobiles, and so on. Everything other than cash, safety, and interests can be termed as services under GST.

The GST Excluded Goods and Services

GST is levied for almost every goods and service except for the below-mentioned ones. Petroleum products and alcoholic liquors are excluded from GST under the category of interests.

The GST exempted services are much longer, including services like the sale of land and buildings, benefits of court, turn to the employer by the employee (aspects related to the employment). All services that come under the funeral are not liable to pay the tax. The duties performed by the MPs, MLAs, municipalities, panchayats, and government members are also discharged of GST.

Structure of GST in India

The dual or concurrent model GST is adopted in India, where both the Central and State governments impose taxes. This act extends to the whole of India. The GST is categorized into four:

  • IGST (Integrated Goods and Service Tax): IGST is levied for the intrastate (outside the state) supply of goods and services and the export and import outside the country. The Central government is responsible for the collection of the tax, which will be later distributed to various states.
  • CGST (Central Goods and Service Tax): CGST is levied for the intrastate (outside the state) supply of goods and services. The Central government levies it, and the collected tax shall be transferred to the Central government.
  • SGST (State Goods and Service Tax): SGST is levied for the intrastate (outside the state) supply of goods and services. State government is responsible for collecting tax, and the State government uses the collected tax.
  • UTGST (Union Territory Goods and Service Tax): UTGST is levied for the intrastate supply of goods and services. UTGST is parallel to SGST. The collected UTGST shall be forwarded to the government of union territories. SGST is levied upon union territories like Delhi and Pondicherry as they act on their legislatures.

Who is obligated to pay the Taxes?

Suppliers whose annual aggregate exceeds Rs 20 lakhs, e-commerce sellers (the condition of Rs.20 lakhs is applied), and a Casual Taxable Person (CTP) of handcraft whose income exceeds several Rs.20 lakhs must be GST registered.

How to Calculate GST?

GST is the product of the value of supply, and GST percentage divided by the numeral hundred upon which the price to be charged is the sum of the importance of the collection and the GST amount.

The GST Rates in India

Even though the GST was implemented as one nation, one tax, and one rate, the rates are different for specific categories. Let’s take a look at it.

  • A tax of 1% is imposed upon the traders and manufacturers.
  • Suppliers of food and beverage services are supposed to pay 5% of tax.

The GST rates of goods vary from 0.25% to 28%, depending on the item.

  • A 5% tax is levied upon necessary commodities like households, cashews, medicines, and hearing aids.
  • Stationery items, processed foods, and computers are imposed with a tax of 12%.
  • 18% of tax is charged for aluminum foils, CCTV, setup boxes, a majority of cosmetics and industrial materials.
  • The highest tax of 28% is levied upon luxury cars, cigarettes, refrigerators, and aerated drinks.

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