What is GST?
The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017. It is also known as GST. It is an indirect tax which is passed to replace or abolish many indirect taxes in India like the central excise duty, central sales tax, VAT, services tax, additional duties of custom etc.
Under the GST the tax is levied on the basis of point of sale (place of supply). If the sales are within a boundary of a particular state/UT it’s called the case of intra-state sales, and as per GST act Central GST and State GST will be charged. And If the sales are outside the boundary of the particular state/UT it will be called as inter-state sales and accordingly the Integrated GST is chargeable. It is mandatory for supplier to mentioned the CGST, SGST or IGST as the case maybe in the TAX INVOICE.
What are the 3 types of GST?
In GST the three taxes are applicable which are mentioned above which are levied as per the nature of transaction we can understand the same with the help of some examples
It is the tax levied by the Central Government on an intra-state sale (supply within a state) It is applicable on every supply of goods or service which are sold or renderedwithin the geographical boundary of the state/UT.CGST will always be imposed with SGST that means in every transaction the half amount of tax will be CGST and other half will be SGST. Currently CGST have slabs rates as 2.5%, 6%, 9% and 14% which may have some change in future.
E.g., MR. Aof Delhi selling the goods to MR. B of Delhi in this transaction both the seller and buyer are from same state or transaction is happening within a state therefore the CGST & SGST will be charged as per the prescribed rate of that goods.
It is the tax collected by the state government on an intra-state sale (supply within a state) It is applicable on every supply of goods or service which are sold or renderedwithin the geographical boundary of the state/UT.SGST will always be imposed with CGST that means in every transaction the tax amount will be equally divided between CGST and SGST that means between central government and state government.
NOTE: The rate of CGST & SGST will always be the same
It is the tax collected by the central government on an inter-state sale (supply outside the state) It is applicable on every supply of goods or service which are sold or renderedoutside the geographical boundary of the state/UT.IGST will always be imposed individually that means in this transaction other tax will not be charged .
E.g., MR. Aof Delhi selling the goods to MR. B of Maharashtra in this transaction the seller and buyer are from different states or transaction is happening in a two different state therefore the IGST will be charged as per the prescribed rate.