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Types of GST and everything you need to know about GST

Apr 21, 2020 Alankit

Goods and Services Tax, GST is an indirect tax for the entire nation, which makes India a common united market by ensuring indirect taxes are replaced in the country. Passed in the Parliament on March 29, 2017, the Goods and Services Tax Act is a comprehensive and multi-stage tax levied on every value addition. The GST Act came into effect on 1st July, 2017 and holds a great significance as both the Central and State Government rely on the GST for their indirect tax revenue.

Types of GST

There are four different types of GST as listed below:

  • The Central Goods and Services Tax (CGST)
  • The State Goods and Services Tax (SGST)
  • The Union Territory Goods and Services Tax (UTGST)
  • The Integrated Goods and Services Tax (IGST)

1. The State Goods and Services Tax (SGST)

SGST is defined as one of the two taxes imposed on transactions of goods and services of every state. Levied by State Government of every state, SGST replaces every kind of existing state tax that include Sales Tax, Entertainment Tax, VAT, Entry Tax, etc. Under SGST, the State Government can claim the earned revenue.

2. The Central Goods and Services Tax (CGST)

CGST is referred as the Central Tax levied on transactions of goods and services which take place within a state. Imposed by the Central Government, CGST ensures to replace all other Central taxes inclusive of State Tax, CST, SAD, etc. Prices of goods and services under CGST are charged in accordance with the basic market price.

3. The Integrated Goods and Services Tax (IGST)

IGST is applied on the interstate transactions of goods and services. IGST is also applicable on the goods being that are imported to distribute among the respective states. The IGST is levied when the movement of products and services occur from one state to another.

4. The Union Territory Goods and Services Tax (UTGST)

Applicable on the Intra UT supply of goods and services, the aim to impose UTGST is to apply a collection of tax to provide benefits as same as SGST. The UTGST is applicable to five Union Territories namely Lakshadweep, Damn and Diu, Dadra and Nagar Haveli, Andaman and Nicobar Islands, and Chandigarh.

Benefits of GST

GST presents a transparent tax system imposed on the supply of goods and services. When an item is bought, a common individual sees only the state taxes applicable on the product label and not the various tax components embedded on the product.

The aim of imposing GST is to improve the ease of business operations by enhancing tax compliance, boosting revenue receipts of both central and state government and accelerating economy growth. Eradication of cascading of taxes result in lowered tax burden on many products.

Following are the few benefits of GST mentioned below:

  • Eradicates the cascading tax effect
  • Allows higher threshold to businesses for registration
  • Composition scheme for small business operations
  • Easy and Convenient online processes
  • Lesser Tax Compliance
  • Enhanced Efficiency of logistics

Products not a part of GST

Diesel, Crude oil, petrol, natural gas, and jet fuel are not involved under GST as of now. Liquor is kept out of GST and therefore it would require an amendment under constitutional provision to be brought into GST net.

How are decisions taken at the GST Council?

Decisions cannot be taken in the Council without the agreement of both The Union and the State Governments. A 75% majority of the weighted votes of members present and voting are eligible to take decision.

GST Rates in India

There are four slabs categorized based on goods and services, as proposed by the Government:

5%: Under this slab, household items are included like sweets, sugar, spices, tea, coffee, coal, edible oil, etc.

12%: Under this slab, computers and processed foods are included like cheese, ghee, ayurvedic medicines, cell phones, and fertilizers, etc. Services like work contracts, business-class air tickets, and non-ac hotels are also included.

18%: This slab qualifies for toothpaste, soaps, hair oil, etc. as well as capital goods and industrial intermediaries.

28%: This slab involves luxurious items such as premium cars, consumer durables – AC, Refrigerators, etc.

Alankit, as one of the leading top GST Suvidha Providers (GSPs) offers prominent GST services to taxpayers for the ease of all the stakeholders in the GST regime.

GSP (GST Suvidha Provider) is a top-notch entity authorized to enable a platform for GST compliances.

The Company serves as a one-stop solution for all GST compliance related services. For smooth implementation process of businesses, Alankit has introduced web or mobile-based GST accounting software:

  • GST Muneemji Software (Secure and Integrated cloud-based compliance software)
  • E-Raahi (E-way bill generating Application)
  • Saarthi(A Point of Sale (PoS) device for billing and business accounting)
  • Platinum Gateway: API services to companies; connecting your ASP solution to GSTN

To achieve compliance in the GST regime, the company has introduced one-of-its-kind e-Way billing software to generate bills in a hassle-free, affordable manner.

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