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Basics of GST

Goods and Service Tax (GST) is applicable in India from 1st July 2017. Before 1st July 2017, service tax is applicable on services and vat, excise duty etc. are applicable on goods.

GST is not applicable on alcohol, crude petroleum, motor spirit, diesel, aviation turbine fuel and natural gas.

Here is a list of taxes which are applicable before GST and is no longer applicable.

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 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.

WHAT IS CGST, SGST AND IGST?

The GST system in India contains three types of GST. They are

  1. Central GST (CGST) – levied by central government
  2. State GST (SGST) – levied by state government
  3. Integrated GST (IGST) – levied by the Central government on an inter-state supply of goods and services

On sale of goods/service either IGST is to be charged or SGST & CGST both to be charged. If the business is in union territory then UTGST will apply in place of SGST. The difference is only in name, the concept is same.

Applicability of different types of tax

Transaction Type Type of GST Applicable Example
Intra-state (i.e sale within same state) CGST + SGST A dealer in Delhi makes a sale to another dealer in Delhi. GST rate is 18%, so CGST of 9% and SGST of 9% will be applicable.
Inter-state (i.e sale outside state) IGST A dealer in Mumbai makes a sale to dealer in Delhi. GST rate is 5%, so 5% IGST will be applicable.

Additional Read  – Why there is a need for 3 types of GST – CGST, SGST & IGST

 

About Rohit Pithisaria

Rohit Pithisaria founded TaxAdda in July 2012. He is Practicing Chartered Accountant from Jaipur and been in practice for more than 7 years. He is actively writing from very beginning of his professional career and is author of various tax articles and blogs.

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