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What is Goods & Service Tax (GST) and its Fundamentals

Goods and Service Tax (GST) is a system of indirect taxation which is adopted by 150 countries all over the world. In India GST bill is passed by loksabha in 2015 and by rajya sabha on 3rd of Aug, 2016. It is expected to be roll out on 1st of April, 2017.

After implementation of GST, all the indirect taxes will be subsumed in it. The taxes which are subsumed by GST are

Central Indirect Taxes

  • Central Excise Duty
  • Additional Excise Duties
  • Service Tax
  • Additional Customs Duty (CVD)
  • Special additional custom duty
  • Central Surcharges and Cess

State Indirect Taxes

  • VAT/Sales Tax
  • Entertainment Tax
  • Central Sales Tax
  • Octroi and Entry Tax
  • Purchase Tax
  • Luxury Tax
  • Tax on Lottery
  • State Cesses and Surcharges
  • gst fundamentals

GST is a consumption based tax, it means that the state in which the final sale to consumer is made is entitled to get the tax. GST would apply to all goods other than crude petroleum, motor spirit, diesel, aviation turbine fuel and natural gas.

The GST system in India will contain three structures of tax

Central GST (CGST) – levied by centre
State GST (SGST) – levied by state
Integrated GST (IGST) – levied by Central government on inter-state supply of goods and services.

Read more – Understanding CGST, SGST and IGST

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