GSTTaxation

What is GST Applicability

A person who is not registered under the GST regime will be unable to collect tax from his customers or claim any input tax credit for tax paid by them.

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GST Applicability: An Overview

Although GST is theoretically paid by suppliers, the burden is ultimately passed on to end-users. India is a quasi-federal country with the ability to levy and collect taxes through suitable legislation by both the central and state governments.

GST has replaced a variety of state and central taxes. Following is a list of the levies that were replaced:

  • Value-added tax (vat) or sales tax
  • Octroi
  • Entertainment tax
  • Tax on lottery or betting or gambling
  • Purchase tax
  • Luxury tax
  • Service tax
  • Additional excise duty
  • Central excise duty and so on

GST registration ensures that the state is capable of more efficiently identifying indirect taxpayers and guaranteeing tax compliance in the economy. The registration of any business organization under the GST Law entails acquiring a unique number from the relevant tax authorities for the purpose of collecting taxes on behalf of the government and claiming Input Tax Credit for taxes paid on inbound goods. 

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GST Applicability: Tax Slabs

The GST rate for various products and services in India is categorized into five slabs: 0% GST, 5% GST, 12% GST, 18% GST, and 28% GST. The GST Council reviews the products included in each slab rate on a regular basis to ensure that they are still relevant to industry demands and market developments. As per the current regime basic commodities are taxed at lower rates, while luxury goods and services are taxed at higher rates.

Types of GST and its Applicability

IGST

The Integrated Goods & Services Tax, or IGST, is a tax on interstate (between two states) goods and/or services, as well as imports and exports. The IGST Act governs the IGST, and the Central Government is responsible for collecting these taxes. The Central Government divides the taxes collected among the several states after they have been collected.

SGST

Intrastate (inside the same state) transactions are subject to the State Goods and Services Tax, or SGST. Both State GST and Central GST are charged on intrastate supplies of goods and/or services. The State GST or SGST is a tax collected by the state on products and/or services purchased or sold inside the state. The tax generated by the SGST is claimed only by the state government.

CGST

The Central Goods and Services Tax (CGST), like State GST, is a GST-based tax. This applies to intrastate (inside the same state) transactions.  Likewise, the CGST Act regulates CGST treatment and levy. The Central Government is in charge of collecting the CGST income.

UTGST

The Union Territory Goods and Services Tax (UTGST) is the UTs of India’s equivalent to the State Goods and Services Tax (SGST). The UTGST Act governs the sale of goods and services in the Andaman and Nicobar Islands, Chandigarh, Daman Diu, Dadra and Nagar Haveli, and Lakshadweep. Moreover, the Union Territory government is in charge of collecting the UTGST revenue.

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