What is GST?
GST is a consumption-based value-added tax implemented on goods and services within a country. It stands as a comprehensive, indirect tax system applied nationwide. Exploring the different types of GST is crucial. Enroll in GST Training In Pondicherry at FITA Academy for an in-depth understanding.
The tax is integrated into the final product price, and consumers pay the total price, including GST. Consequently, businesses or sellers remit the GST portion to the government.
The Central Government of India oversees this tax. Intrastate transactions are bifurcated between the central and state governments, termed CGST and SGST.
Objectives of GST
- Elimination of multiple tax systems.
- Increased business compliance.
- Price reduction.
- Enhanced national revenue.
- Improved efficiency and productivity.
Taxes replaced by GST include VAT, Octroi, Entertainment Tax, Tax on Lottery, Luxury Tax, Purchase Tax, Service Tax, Additional Excise Duty, Central Excise Duty, and more.
Different Types of GST Tax
Inter-State transactions
Transactions occurring between two states. For instance, a Jharkhand supplier sells iron ore to a buyer in West Bengal. The GST collected is divided between the central government and the state government of West Bengal (the state of consumption).
Intra-State transactions
Business activities occur within a single state, like when a Jharkhand-based company sells iron ore to a local consumer. GST is allocated to both the Central and Jharkhand state governments in such cases.
Categories of GST based on transaction nature:
- State Goods and Services Tax (SGST)
- Central Goods and Services Tax (CGST)
- Integrated Goods and Services Tax (IGST)
Components of GST
SGST
State governments impose SGST on intrastate transactions of goods and services. The revenue collected goes to the respective state government where the transaction occurs, consolidating previous taxes like purchase, luxury, VAT, Octroi, etc.
CGST
The Central Government levies CGST on intrastate goods and services transactions. It is levied additionally to SGST or UGST, with the proceeds divided equally between the centre and the states.
IGST
Interstate transactions of goods and services, including imports and exports, attract IGST. The revenue generated is divided between the central and state governments. To expand your knowledge of GST, join the GST Training Institute In Hyderabad to enhance your skills.