Goods and Services Tax concept introduced by the government to replace all indirect taxes and implement GST to make tax system less complicated and easily understandable. As we know that Lok Sabha has recently passed this valuable bill to bring historical and revolutionary impact on economy.
Here are three types of GST
IGST: It is integrated goods and Services tax.
CGST: It is Central goods and Services tax.
SGST: It is State goods and Services tax.
This tax is will be imposed by central and state government but amount will be collected by central government. Revenue will be shared by both parties (state and central government). This is option rule and will be imposed on sales and supplies and it will replace central goods and services tax. Composition scheme is not applicable will this policy. There is no policy for exemption in GST as per government rule. Merchants need to register their business to continue without any complication.
This tax is going to replace all taxes including sales tax, excise duty, custom duty, additional duty of excise (ADE), special additional duty (SAD), Countervailing Duty (CVD) and other taxes that government imposes on various products. Revenue generated by this tax will be collected by central government.
State government is going to impose this tax in place of entry tax, entertainment tax, VAT tax, sales tax, tax on lottery, luxury tax and other taxes. This tax will be applicable on supplies within state and state government will collect entire revenue generated through SGST.
If your turnover is more than 20 lakhs then both SGST and CST will be imposed on business and registration of CGST and SGST will be mandatory. If your turnover is more than 50 lakhs then you can use government composition policies to get extra benefits
Committee authorized by the government has introduced four tiered GST system, through which there will be lowest tax on products of daily needs to bring their price down. As per policy recommended by the committee there will be less tax on useful products and products that we use regularly and price of luxury items and unnecessary products will be higher. This tax system will bring balance in revenue generated by state and central government.
Services like professional charges, banking, telecom, fees, insurance etc.
Products like oil, electrical appliances, soap etc.
Car and White Goods
Mass consumption and common use food item like mustered oil, spices, tea etc.
Essential Farm Produced items like rice, wheat, food grains
Luxury products like luxury car, pan masala, tobacco