GST : Important Facts About Goods & Services Tax In India
GST Tax In India : The goods and services tax system in India, which was implemented to transform the indirect tax system in the largest democracy in the world, is explain in detail below.
India levies an indirect tax known as GST, or goods and services tax, on the provision of goods and services. GST, a value-added tax, is levied at each point in the supply chain based on the precise amount of value contributed. GST, which is applicable throughout India, is also known as a destination-based consumption tax.
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Types of GST
There are four forms of GST:
- The supply of goods and services from one state to another is subject to the Central Goods and Services Tax, or CGST.
- State Goods and Services Tax, or SGST, is a tax levied on the provision of goods and services inside a state.
- Interstate sales of goods and services are subject to the Integrated Goods and Services Tax, or IGST.
- UTGST, or Union Territory Goods and Services Tax, is levied in conjunction with CGST on the delivery of goods and services in Union Territories.
GST background
14 years after it was initially mentioned in a study on indirect taxes by the Kelkar Task Force in 2003, GST was finally implemented in India on July 1st, 2017. State and the federal government may levy different taxes prior to the implementation of GST. In order to reduce the number of indirect taxes on the purchase of goods and services, prevent tax fraud, and harmonise the country’s tax structure, the Goods and Services Tax was implemented in India. GST is hailed as a “significant step in the field of indirect tax reforms in India” and carries the slogan “One Nation, One Tax.”
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| GST timeline |
| 2000: GST conceptualised; a committee is set up to design the GST model |
| 2003-04: Committee formed to recommend the introduction of GST |
| 2006: In the 2006-07 Budget Speech, FM announces the introduction of GST from April 1, 2010 |
| 2009: First discussion paper on GST released |
| 2011: Constitution (115th Amendment) Bill 2011 for incorporating relevant provisions of GST introduced in the Parliament |
| 2011-13: GST bill referred to Standing Committee |
| 2014: Constitution (115th Amendment) Bill lapsed with the dissolution of the 15th Lok Sabha |
| 2014-15: Constitution (122nd Amendment) (GST) Bill 2014 introduced and passed in May 2015 |
| August 2016: Constitution (101st Amendment) Act enacted |
| September 2016: Constitutional changes made to 101st Amendment come into force. GST Council was created; the first GST Council meeting held |
| May 2017: GST Council recommends rules |
| July 2017: GST launched |
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Taxes that the GST replaced
When the GST was implemented, it absorbed 13 cessers and 17 significant levies.
Major central-level taxes that GST subsumed:
- centralised excise tax
- Added excise taxes
- A service fee
- Countervailing duty or additional customs duties
- Special extra customs fees
Major state-level taxes that GST subsumed:
- Added-value tax
- Sales tax Entertainment tax Aside from the local body taxes,
- State-collected central sales tax imposed by the centre
- Entry tax and octroi
- Buying tax
GST Tax In India – GST Council
A combined forum of the federal government and the states is the GST Council. The GST Council is in charge of advising the union and the states on matters pertaining to the GST. The union and the state governments must agree on any decisions made by the GST Council. A decision is made when there is a 75% weighted vote of the members who are present and voting.
The GST Council consists of the following members:
- The chairman will be the Union Finance Minister.
- As a member, the union minister of state is in responsibility of finances and income.
- any official designated by each state government as a member, such as the minister in charge of finances or taxes.
Who must pay the GST?
GST must be paid by companies with yearly sales of over Rs 20 lakh. However, this limit is only allowed for special category and north-eastern states up to a maximum of Rs 10 lakhs. Regardless of this level, businesses engaged in interstate commerce are required to pay GST.
GST Tax In India – How does GST work?
Stage 1: Manufacturer
Let’s say a builder spends Rs 1,000 on materials to create a house complex. He also pays taxes totaling Rs. 100. Let’s imagine that, once the job is completed, he has added another Rs 1,000 worth of value to it. Consequently, the project is worth Rs 2100. Being a housing project, he must pay GST at 5% (or Rs. 105) in this instance. The constructor will be able to offset his tax burden, or Rs 100, against the money he has already paid in taxes under the new tax system. This indicates that the builder will only pay Rs. 5 in GST.
Stage 2: the service provider
Assume the developer hands over the housing project to a builder so they can sell the apartments. The builder purchases it for Rs 2,105 and adds Rs 95 in value, bringing the final cost to Rs 2,200. He must pay Rs 110 in GST at a rate of 5%. The builder can, however, offset the tax on his production of Rs 100 against the tax on the project he has already paid for. Thus, the GST he must pay is only Rs 10.
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Stage 3: Consumer
The entire cost of the unit is Rs 2,210 for a house buyer. He must pay Rs 110.5 in GST if the tax rate is 5%. However, he is permitted to deduct the tax of Rs 15, which was already paid by the builder and the constructor. He will then simply be required to pay Rs 95.5 in GST.
GSTN
The GSTN, or Goods and Services Tax Network, offers the common infrastructure needed for the federal government, the states, and the taxpayers to collaborate on a single platform for all activities relating to GST payments. GST registration, GST returns, GST payments, and GST verification are a few of them.
GST benefits
- Easy compliance
- Uniformity of tax rates and structures
- Improved competitiveness
- Gain to manufacturers and exporters
- Simple and easy to administer
- Better controls on leakage
- Higher revenue efficiency
- A single and transparent tax proportionate to the value of goods and services
- Relief in overall tax burden
GST Tax In India : HSN code
Harmonised System of Nomenclature is referred to as HSN. All goods and services in India are categorise using the Services and Accounting Code, or SAC, system. The SAC code is derive from the widely used HSN codes. The World Customs Organisation has established the HSN code as an international standard for products’ tariff nomenclature.
GST Tax In India : GST rate
GST rates are different for different categories of goods and services. To check the detailed list of GST rates for goods and services,
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GST Tax In India : Latest update
The highest ever GST revenue collection for April 2023 was Rs 1.87 trillion.
The finance ministry said in an official statement on April 1, 2023 that income from the Goods and Services Tax (GST) collection in April was 12% more than revenue from the same month previous year. It continued that throughout the month, revenues from domestic transactions, including the import of services, were 16% greater than they were in the same month previous year.
When finish commercial units are allocated, a one-time premium is paid that will be subject to 18% GST: AAR
According to the Gujarat Authority for Advance Ruling, developers who get a one-time premium on the allocation of commercial building units would be require to pay goods and services tax (GST) at an 18% rate. According to the AAR, this supply is taxable under Section 7 of the CGST Act, 2017. The AAR also made it clear that renting out commercial real estate in place of a one-time payment or a recurring payment qualified as “supply” as defined by Section 7(1) of the CGST Act.
The second-highest GST collection ever was recorded in March 2023.
In March 2023, the government received a total of Rs 1,60,122 crore in gross GST income. The gross GST collection has surpassed Rs 1.5 lakh crore for the fourth time in the current fiscal year, recording the second-highest collection since the introduction of the new tax system. The income for March 2023 is 13% more than the income from GST in the same month last year. In comparison to the same month last year, the income from imports of products was 8% higher and the income from domestic transactions, which includes the import of services, was 14% higher during the current month.
The maximum number of returns have ever been filed in March 2023. In comparison to the same month last year, 93.2% of statement of invoices (in GSTR-1) and 91.4% of returns (in GSTR-3B) from February were filed till March 2023.
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