Despite one year having passed since the implementation of GST, some people are still confused as to what it is and what its purpose is. So here are a few things about GST that everyone should know about:
1) What is GST?
The GST is a single indirect tax that has replaced most of the indirect taxes that were prevalent in our country before July 2017. It has paved the way for a pan-Indian comprehensive system.
What GST has made possible is that there will only be a single tax applicable on the supply of goods and services, from the manufacturer to the consumer.
2) When is GST levied?
One of the most important aspects of GST is the point of the levy. Under GST laws, the point of the tax levy is ‘supply’. Supply here means the sale of goods and services. It has to be kept in mind, however, is that supply of goods and services can also take place without any actual sale occurring. Thus, supply may also include transfer, barter, rent, exchange, lease or even a supply made to a branch or an agent.
Therefore, a business will have to pay GST on supply. It will no longer have pay taxes on purchases.
3) Which Central and State Taxes have been subsumed under GST?
Central taxes that have been subsumed by GST include:
• Service Tax
• Duties of Excise
• Central Excise Duty
• Additional Excise Duties
• Additional Duties of Customs
• Central Surcharges and Cesses related to the supply of goods and services
The State taxes that have been subsumed under GST are:
• Luxury Tax
• Entertainment Tax (not for local bodies)
• VAT/ Sales Tax
• Taxes on gambling, betting and lottery
• Entry tax not in lieu of Octroi
• State cesses and surcharges related to the supply of goods and services
4) What are the types of GST?
GST is referred to as a destination-based tax. This is because GST is levied at the place where the supply of goods/services is done and not at the place of origin. Supplies can be done within a particular state (intra-state) and within two different states (interstate).
SGST or State GST is one of the two taxes levied on all intrastate transaction of goods and services. SGST replaced all other state taxes.
CGST or Central GST is the tax that is levied by the Central Government on transactions taking place within a state. It has replaced all the central taxes that were prevalent.
IGST or Integrated GST is applicable on the inter-state transaction of goods and services and on imports. This tax is collected by the Central Government and later given to the states.
Finally, there is UTGST or Union Territory Goods and Services Tax and it is applicable on the supply of goods and services in the Union Territories of India, including Andaman and Nicobar Islands, Dadra and Nagar Haveli and the Lakshadweep Islands.
5) What are different tax slabs in GST?
At present, there are eight tax slabs in GST- 0, 0.l, 0.25, 3, 5, 12, 18, 28. Discussions have been going regarding decreasing the number of slabs.
6) Which items have been kept outside the purview of the GST?
Petrol, diesel, natural gas, jet fuel and crude oil are currently outside the purview of GST. Alcohol for human consumption is also outside GST. However, it is taxed under the state taxes, as was the case before the implementation of GST.