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Good & Service Tax: 1. What Is GST?

GST is India's new indirect tax that replaced existing indirect taxes. It consists of CGST, SGST, and IGST. CGST and SGST are charged on intra-state sales at rates divided equally between Center and States. IGST is charged at the combined CGST and SGST rate on inter-state sales and collected by the Center. GST was introduced on July 1, 2017 to create a single, unified Indian market by taxing supply of goods and services.

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113 views5 pages

Good & Service Tax: 1. What Is GST?

GST is India's new indirect tax that replaced existing indirect taxes. It consists of CGST, SGST, and IGST. CGST and SGST are charged on intra-state sales at rates divided equally between Center and States. IGST is charged at the combined CGST and SGST rate on inter-state sales and collected by the Center. GST was introduced on July 1, 2017 to create a single, unified Indian market by taxing supply of goods and services.

Uploaded by

Rabin Debnath
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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GOOD & SERVICE TAX

1. What is GST?
Full form of GST
GST means Goods and Service Tax
It is a tax which has been newly introduced in India
It has replaced Indirect taxes like VAT, CST, Excise, Service Tax etc.
However, taxes like Income Tax, Payroll, PF, ESI, will continue.

Why is GST being introduced

In each state of India, taxes and rules were different


GST will lead to same rates of tax on different state

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When has GST been introduced?
It has been introduced on 1 July 2017

Different Types of GST


GST was introduced so that we have common tax for all type of Sales
But Unfortunately One GST is not coming
There are 3 Different GST'S
1. CGST (Central GST)
2. SGST (State GST)
3. IGST (Integrated GST)

2. Difference between CGST SGST and IGST?


CGST SGST Integrated GST (Interstate GST)

Full form of CGST is Full form of SGST is Its full form is


Central Goods and Service Tax State Goods and Service Tax IGST Act (or Integrated Goods and Service
Tax)

CGST is also charged on Local SGST is also charged on Local IGST is charged on Central Sales (Sales
Sales within State Sales within State Outside State)

It is charged and collected by It is charged and collected by It is charged and collected by Central
Central Government State Government Government on Interstate Supply of Goods
and Services
It has replaced taxes like It has replaced taxes like VAT, It has replaced taxes like CST(Central Sales
Central Excise and Service tax Luxury tax and Entertainment Tax)
tax

Earlier Indirect Tax before GST

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New Indirect Tax after Implementation of GST

Which Type of GST on Which Sales

TYPE OF SALES TAX CHARGED


LOCAL SALE WITHIN STATE CGST+ SGST
CENTRAL SALE OUTSIDE STATE IGST

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What will be Rate of IGST?
Suppose Rate of tax on CGST is 9% and SGST is 9%
Rate on IGST will be 9%+9%=18%
Hence
TAX RATE ON IGST
=TAX RATE ON CGST+TAX RATE ON SGST

Example 1
Sales Amount=20000
Suppose Rate of tax on goods as per CGST is 9% and SGST is 9%
Make Bill assuming it is Local Sales within State
Answer:
Then on Sales within State of 20000
CGST=9%*20000=1800
SGST=9%*20000=1800
Total=23600

Example 2
Solve last question assuming it was Interstate Sales

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Answer:
In this case,
Sales Amount=20000
IGST=18%*2000=3600
Total=23600

3. Tax Rate in GST on Goods and Services


There are Different Rates of Taxes in GST like
 28%
 18%
 12%
 5%
 3%
 0.25%
 0%

All these are equally divided into CGST AND SGST in case of local Sales
However in Interstate Sales, IGST will be charged at Combined Rate

TAX RATE ON GOODS LOCAL SALES INTERSTATE SALES


ITEM RATE CGST SGST TOTAL IGST
28% 14% 14% 28% 28%
18% 9% 9% 18% 18%
12% 6% 6% 12% 12%
5% 2.50% 2.50% 5% 5%
3% 1.50% 1.50% 3% 3%
0.25% 0.125% 0.125% 0.250% 0.25%
0% 0% 0% 0% 0%

Tax Rate on Services


It is normally 18%, however for some services, different rates are prescribed

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