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GOODS AND SERVICE TAX (GST)


Goods and Service tax(GST) is a tax levied on the supply of Goods and Services (as on date most of the Goods and services has been brought under GST purview) specified by the GST Council under the GST Law, 2017 and this this is effective w.e.f 1st July 2017

GST is one indirect tax for the entire country and has replaced the following indirect taxes of the Pre-GST Regime :

  • Central Excise Duty
  • Duties of Excise
  • Additional Duties of Excise
  • Additional Duties of Customs
  • Special Additional Duty of Customs
  • Cess
  • State VAT
  • Central Sales Tax
  • Purchase Tax
  • Luxury Tax
  • Entertainment Tax
  • Entry Tax
  • Taxes on advertisements
  • Taxes on lotteries, betting, and gambling

(However, the chargeability of CST for Inter-state purchase at a concessional rate of 2%, by issue and utilisation of c-Form is still prevalent for certain Non-GST goods such as: (i) Petroleum crude; (ii) High-speed diesel; (iii) Motor spirit (commonly known as petrol); (iv) Natural gas; (v) Aviation turbine fuel; and (vi) Alcoholic liquor for human consumption in respect of following transactions only:

  • Resale
  • Use in manufacturing or processing
  • Use in the telecommunication network or in mining or in the generation or distribution of electricity or any other power)

GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition that has removed the cascading effect of Tax of the Pre GST Regime, resulting in Lesser Net Tax on goods and Services, Lesser Compliances, having higher registration threshold and which is completely online. Composition Scheme for Small Businesses and defined treatment for e-commerce has made it hassle free. GST has gone a long way in regulating the unorganised sector.

The taxes applicable under this system are :

  • CGST: Collected by the Central Government on an intra-state sale
  • SGST: Collected by the State Government on an intra-state sale
  • IGST: Collected by the Central Government for inter-state sale
  • UTGST: Collected by Union territories on an intra-Union territory sale

CGST, SGST, IGST and UTGST has replaced all the above taxes.

(The Union Territory Goods and Services Tax, commonly referred to as UTGST, is the GST applicable on the goods and services supply that takes place in any of the five Union Territories of India, including Andaman and Nicobar Islands, Dadra and Nagar Haveli, Chandigarh, Lakshadweep and Daman and Diu. This UTGST will be charged in addition to the Central GST (CGST) explained above. For any transaction of goods/services within a Union Territory: CGST + UTGST.

The reason why a separate GST was implemented for the Union Territories is that the common State GST (SGST) cannot be applied in a Union Territory without legislature. Delhi and Puducherry UTs already have their own legislatures, so SGST is applicable to them.)

GST Law comprises of

The Following need to register for GST

  • Individuals registered under the Pre-GST law (i.e., Excise, VAT, Service Tax etc.)
  • Businesses with turnover above the threshold limit of Rs. 20 Lakhs (Rs. 10 Lakhs for North-Eastern States, J&K, Himachal Pradesh and Uttarakhand)
  • Casual taxable person / Non-Resident taxable person
  • Agents of a supplier & Input service distributor
  • Those paying tax under the reverse charge mechanism
  • Person who supplies via e-commerce aggregator
  • Every e-commerce aggregator
  • Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person

(The GST Council has increased the threshold limit from the existing Rs.20 Lakhs to Rs.40 Lakhs ((Rs. 20 Lakhs for North-Eastern States, J&K, Himachal Pradesh and Uttarakhand from Rs.10 lakhs) and hiked annual composition limit to Rs.1.50 Crores w.e.f 01.04.2019)

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