GST stands for Goods and Service Tax. The GST bill or the 122nd amendment of the Constitution 2014 was successfully implemented in the country on 1 July 2017. GST was launched as a indirect, consumption-based tax that actively replaces all the existing indirect taxes.
GST is an indirect tax which replaces other indirect taxes collected by the central and state government on manufacture, consumption and sell of goods and services all over India. Even though it was launched as a one tax system, there are multiple GST rates depending on the type of sale or purchase of goods/services.
There are three basic types of GST: Integrated GST (IGST), Central GST (CGST), and State GST (SGST). Imports in India are taxable under GST, however, there is no GST on exports. The duty paid on inputs imported from outside of India would be claimable as refund.
Various central and state taxes have been amalgamated into one tax (GST), with the aim to reduce double taxation and provide a common national market. Introduction of Goods and Service Tax (GST) not only reduced the overall burden of tax on goods but also provided the easier administration and enforcement.
The overall tax rate has been reduced, but tax collection are reportedly increasing due to increased number of assess. A special GST Council has been formed to ensure a smooth implementation, along with a dedicated IT platform called the GSTN (GST Network). The GSTN has three stakeholders - the technology partner NSDL, the centre and the states.
Taxes collected by the Centre and states before implementation of GST:-
Custom duty, Service tax, Central Excise Tax in center and value added tax(VAT), Central Sales Tax(CST), State Excise, Entertainment Tax, Entry Tax, Luxury Tax, Stamp duty, Electricity tax, etc.
Indirect Taxes after implementation of GST:-
After the implementation of GST, only one GST tax will be levied in any of the following three formats.
Both the centre and states receive their share in the collected indirect taxes on goods and services on the entire chain from manufacturing to delivery.
States get their revenue from provision of services whilst the Centre receives revenue from post manufacture activities. Taxes like entertainment tax, luxury tax, octroi, purchase tax etc may still be collected by local bodies, which report to the states.
Petrol and other fuels are out of GST cover, as of now. VAT is collected on petroleum crude and products by states.
GST for States
States were afraid that the implementation of GST will leave them without proper tax revenue since all the previously levied taxes are subsumed in GST. However, this is not the case. There is a provision of a separate State GST (SGST) in the GST rulebook. The states will continue to levy indirect taxes in the form of SGST on the intrastate supply of taxable goods and services in their regions. There is also the provision of an IGST (integrated GST) tax which is charged on taxable interstate supplies. The amount collected in IGST is distributed between the Centre and the states.
The GST bill has dual tax structure which gives freedom to administer independently on the same set of transactions.
GST for the Centre
Central government is confident that the immediate losses for states in terms of revenue collection caused by GST would be cared for soon. GST increases number of assesses and its rate lies in between 18-22% which is lower than the previous tax system. It therefore produces more revenue for both the Centre and the state government. Income from provision of services has replaced the loss from ending of VAT. Additional levy of 1% covers the CST loss. Collection on petroleum products in form of VAT until it comes under GST cover, and various taxes like octroi, purchase tax and entertainment tax etc levied by states also help in raising the funds for the development of these states.
Many taxation software manufacturer companies are helping businesses with the implementation and compliance with GST rules through dedicated GST software, helpline, apps, blogs and other ways. SAG Infotech has also developed the GST return e-filing software for the chartered accountants with several advanced features as unlimited client e-filing, billing generation, e way bill generation, import export facility, data security and much more. The software is available in all platform as desktop, web or mobile.
GST is an indirect tax which replaces other indirect taxes collected by the central and state government on manufacture, consumption and sell of goods and services all over India. Even though it was launched as a one tax system, there are multiple GST rates depending on the type of sale or purchase of goods/services.
There are three basic types of GST: Integrated GST (IGST), Central GST (CGST), and State GST (SGST). Imports in India are taxable under GST, however, there is no GST on exports. The duty paid on inputs imported from outside of India would be claimable as refund.
Various central and state taxes have been amalgamated into one tax (GST), with the aim to reduce double taxation and provide a common national market. Introduction of Goods and Service Tax (GST) not only reduced the overall burden of tax on goods but also provided the easier administration and enforcement.
The overall tax rate has been reduced, but tax collection are reportedly increasing due to increased number of assess. A special GST Council has been formed to ensure a smooth implementation, along with a dedicated IT platform called the GSTN (GST Network). The GSTN has three stakeholders - the technology partner NSDL, the centre and the states.
Taxes collected by the Centre and states before implementation of GST:-
Custom duty, Service tax, Central Excise Tax in center and value added tax(VAT), Central Sales Tax(CST), State Excise, Entertainment Tax, Entry Tax, Luxury Tax, Stamp duty, Electricity tax, etc.
Indirect Taxes after implementation of GST:-
After the implementation of GST, only one GST tax will be levied in any of the following three formats.
- IGST
- CGST
- SGST
Both the centre and states receive their share in the collected indirect taxes on goods and services on the entire chain from manufacturing to delivery.
States get their revenue from provision of services whilst the Centre receives revenue from post manufacture activities. Taxes like entertainment tax, luxury tax, octroi, purchase tax etc may still be collected by local bodies, which report to the states.
Petrol and other fuels are out of GST cover, as of now. VAT is collected on petroleum crude and products by states.
GST for States
States were afraid that the implementation of GST will leave them without proper tax revenue since all the previously levied taxes are subsumed in GST. However, this is not the case. There is a provision of a separate State GST (SGST) in the GST rulebook. The states will continue to levy indirect taxes in the form of SGST on the intrastate supply of taxable goods and services in their regions. There is also the provision of an IGST (integrated GST) tax which is charged on taxable interstate supplies. The amount collected in IGST is distributed between the Centre and the states.
The GST bill has dual tax structure which gives freedom to administer independently on the same set of transactions.
GST for the Centre
Central government is confident that the immediate losses for states in terms of revenue collection caused by GST would be cared for soon. GST increases number of assesses and its rate lies in between 18-22% which is lower than the previous tax system. It therefore produces more revenue for both the Centre and the state government. Income from provision of services has replaced the loss from ending of VAT. Additional levy of 1% covers the CST loss. Collection on petroleum products in form of VAT until it comes under GST cover, and various taxes like octroi, purchase tax and entertainment tax etc levied by states also help in raising the funds for the development of these states.
Many taxation software manufacturer companies are helping businesses with the implementation and compliance with GST rules through dedicated GST software, helpline, apps, blogs and other ways. SAG Infotech has also developed the GST return e-filing software for the chartered accountants with several advanced features as unlimited client e-filing, billing generation, e way bill generation, import export facility, data security and much more. The software is available in all platform as desktop, web or mobile.