GST | Goods and Service Tax in India | What is GST?
- Blog|GST & Customs|
- 939 Views
- 2 Min Read
- By Taxmann
- Last Updated on 5 June, 2021
Goods and Services Tax (GST) is the biggest indirect tax reform in India. GST will subsume Central Excise Law, Service Tax Law, State VATs, Entry Tax, Luxury Taxes, Octroi etc. Earlier, there were so many taxes which were levied on goods such as Excise, VAR, entry tax, octroi. Similarly, service tax, entertainment tax, luxury tax were levied on services. Now, there will be only a single tax i.e. GST and it will make the dream of One Nation, One Tax feasible.
What is GST in India?
GST is one indirect tax for the whole nation, which will make India one unified common market. GST is a single tax on the supply of goods and services. GST is a destination-based tax that is levied only on value addition at each stage because credits of input taxes paid at the procurement of inputs will be available. Thus, the final consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages
Also Read: Benefits of GST in India
What taxes will be levied under GST?
Since India is a federal country, Centre Government and State Government both have powers to levy taxes. Under GST regime, the Centre and State both have the power to levy GST. Therefore, GST in India is divided into two parts:
- Central GST (CGST)
- State GST (SGST)
GST will be divided into two components, one is CGST which is levied by Central Government and other is SGST which is levied by State Government.
However, there will be one more type of GST is Integrated GST (IGST). IGST will be levied on inter-state transactions. Since there are chances that people will get confused in case of transactions between two persons of two different States and there will be difficulty setting off dues of taxes between two States, thus IGST will be levied by the Centre. Now, the Centre will apportion the State’s portion of GST from IGST to the relevant State.
Author Bio: CA Vishal Raheja is a writer and editor for the GST Research and Development Department of Taxmann. He is also alumni of Shree Ram College of Commerce and a qualified UGC-NET
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