Understanding the Goods and Services Tax
GST has reformed the indirect tax structure in India and
how goods and services are taxed in India. GST has impacted the complete
economic system of India from common man to big industries. In this article we
will understand the basics of Goods and Services Tax.
Who does it apply to?
GST is applicable to each and every individual whose
aggregate turnover is more than 40 Lakhs INR and 20 Lakhs for the North-Eastern
States. It is compulsory for the below-mentioned person to obtain GST
Registration or GSTIN. Here is the list of individuals on whom GST will be
applicable
(i) Any taxpayer carrying out inter-state supply of
goods or/and services.
(ii) e-Commerce operator or aggregators
(iii) CTP (Casual Taxable Person)
(iv) NRTP (Non-Resident Taxable Person)
(v) TDS deductor
(vi) TCS Collector
(vii) ISD (Input Service Distributor)
(viii) A person supplying OIDAR
(online information and database access or retrieval) services.
(ix) A persAt the inter-state level or supply of goods
or services on who needs to pay tax on the basis of the reverse charge
mechanism.
(x) An agent supplying goods or/and services on the
behalf of principal.
Persons who are excluded from the scope of GST
Here is the list of persons who are excluded from the
scope of GST
(i) Agriculturists
(ii) Any person who is engaged exclusively in supplying
goods and services or both that are not taxable or wholly exempt under GST.
What is the structure of GST as per the new law?
GST has subsumed the majority of old indirect tax
structures such as service tax, VAT, customs duty, entertainment tax, CST,
Excise, etc.
Comprehensively there are 2 types of GST in India.
(i) At the inter-state level or supply of goods or
services or both between two states.
(ii) At the intra-state level or supply of goods or
services or both within a state.
What are the components of GST?
Particularly, there are 3 components of GST and they
are:
(i) Integrate Goods and Services Tax (IGST)
IGST is collected on the interstate sale of goods or services
or both by the Central Government. For example supply of goods or/and services
between Delhi and UP.
(ii) Central Goods and Services Tax (CGST)
CGST is collected on the intra-state sale of goods or
services or both by the Central Government. For instance supply of goods within
the state borders of Delhi.
(iii) Integrate Goods and Services Tax (SGST)
SGST is collected on the interstate sale of goods or
services or both by the State Government. For example supply of services within
the state border of UP.
Note:
(i) All imports shall be considered as inter-state
supply.
(ii) All exports will be considered as a zero-rated
supply.
(iii) All supplies that make SEZ or EOU will be
considered a zero-rated supply.
Will the new GST allow tax cascading benefits?
Many of us are aware that service tax and VAT have
cascading benefits, which means you can avail credit of tax paid by you on
inputs.
Will the new GST permit tax cascading advantage?
Every taxpayer knows that service tax and VAT include
cascading benefits which imply you can benefit credit of tax paid by you on
inputs. For example in the case of VAT– you levy VAT on goods you sell and
while depositing this tax you can take credit of VAT paid by you on goods used
as inputs.
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