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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 was passed by Lok Sabha in 2015 and by Rajya Sabha on 3rd of Aug, 2016. It is going to be applicable from 1st July 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 the consumer is made is entitled to get the tax. GST would apply to all goods other than alcohol, 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 center
State GST (SGST) – levied by state
Integrated GST (IGST) – levied by the Central government on an inter-state supply of goods and services.

Read more – Understanding CGST, SGST and IGST

2 comments

  1. Sir
    Good Articles posted in your website which is easy to understand

    Regards

    Giri

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