GOODS & SERVICE TAX (GST)

Goods and Services Tax (GST) is an indirect tax levied on the supply of goods and services in India. It replaced multiple indirect taxes such as VAT, Service Tax, Excise Duty, Entry Tax, and others, making the tax system simpler and more uniform.

Key Features of GST

• Introduced: 1 July 2017
• Type: Destination-based tax (tax is collected where goods/services are consumed)
• Applicable on: Supply of goods and services
• Administered by: Central and State Governments

Types of GST

1. CGST (Central GST) – Collected by the Central Government on intra-state transactions.
2. SGST (State GST) – Collected by the State Government on intra-state transactions.
3. IGST (Integrated GST) – Collected by the Central Government on inter-state transactions and imports.
4. UTGST (Union Territory GST) – Applicable in Union Territories without a legislature.

GST Tax Slabs

GST RateCommon Examples0%Fresh fruits, vegetables, milk, books5%Packaged food items, rail transport12%Processed food, mobile phones (certain periods/rules may differ)18%Most services, electronics, software, restaurant services (in many cases)28%Luxury goods, premium automobiles, tobacco-related products (with cess where applicable)

Example

Suppose you purchase a product worth ₹10,000 within the same state and the GST rate is 18%.

• Product Price: ₹10,000
• CGST (9%): ₹900
• SGST (9%): ₹900
• Total Amount: ₹11,800

If the sale is inter-state, then:

• IGST (18%): ₹1,800
• Total Amount: ₹11,800

Who Needs GST Registration?

Generally, GST registration is required if:

• Your aggregate turnover exceeds the prescribed threshold (varies based on the type of supply and state/category).
• You make inter-state taxable supplies in certain cases.
• You sell through e-commerce operators in specified situations.
• You fall under categories for which registration is mandatory under GST law.

Benefits of GST

• One unified indirect tax system.
• Reduces cascading (tax-on-tax) effect.
• Easier input tax credit (ITC) mechanism.
• Promotes ease of doing business.
• Improves tax compliance through an online system.