Goods and services tax (gst)

Intro pg 1--
Introduction:
WHAT IS GST?
-Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold
for domestic consumption. It is a comprehensive indirect tax that replaces multiple pre-
existing taxes such as central excise duty, service tax, state-level value-added tax (VAT),
central sales tax, etc., with a single tax.
- GST follows a dual structure, with both central and state governments having the authority
to levy and collect the tax.
-It is designed to streamline the taxation system, reduce complexities, eliminate cascading
effects, and improve tax compliance. GST allows businesses to claim Input Tax Credit,
offsetting the tax paid on inputs against the tax payable on outputs, thus preventing tax on tax
and ensuring tax is levied only on value addition.
-In India, GST was implemented on July 1, 2017 marking a historic tax reform
-A CUSTOMER WHO BUYS THE PRODUCT PAYS THE SALE PRICE +GST WHICH IS
REMITTED TO THE GOVERNMENT BY THE BUSINESS SELLING GOODS AND
PROVIDING SERVICES

OBJECTIVES OF GST--- PG 2&3

1. Simplification of Tax Structure: One of the primary objectives of GST is to simplify

the tax structure by replacing multiple indirect taxes with a single tax. This
simplification reduces compliance burdens for businesses and promotes ease of doing
business.
2. Elimination of Cascading Tax Effects: GST aims to eliminate the cascading effect
of taxes, also known as tax on tax, by allowing businesses to claim Input Tax Credit
(ITC) for the tax paid on inputs. This ensures that tax is levied only on the value
added at each stage of production and distribution.
3. Widening of Tax Base: By bringing more goods and services under the tax net, GST
helps widen the tax base, thereby increasing tax revenue for the government. This
expanded tax base contributes to fiscal sustainability and reduces the reliance on
direct taxes.
4. Promotion of Economic Efficiency: GST promotes economic efficiency by
removing distortions in the tax system and creating a level playing field for
businesses. It encourages businesses to focus on factors such as productivity,
innovation, and competitiveness rather than tax planning.
5. Boosting Tax Compliance: The implementation of GST often leads to improved tax
compliance due to its transparent and technology-driven administration. With
streamlined procedures and automated processes, GST reduces opportunities for tax
evasion and improves tax enforcement.
 6. Reduction of Tax Evasion: GST aims to reduce tax evasion by creating a robust and
transparent tax system with real-time tracking of transactions. The introduction of
GST often includes measures such as electronic invoicing, online return filing, and
data analytics to detect and deter tax evasion.
7. Facilitation of Interstate Trade: In countries with a federal structure like India, GST
facilitates interstate trade by replacing multiple state-level taxes with a single
integrated tax. This eliminates barriers to interstate movement of goods and promotes
economic integration across states.
8. Consumer Benefits: While the primary focus of GST is on tax reform and revenue
generation, it is also expected to benefit consumers through lower prices, especially in
the long run. With the elimination of cascading taxes and increased competition, GST
can lead to reduced prices for goods and services.

Overall, the objectives of GST are aimed at creating a more efficient, transparent, and
equitable tax system that supports economic growth, improves tax compliance, and enhances
the welfare of both businesses and consumers.

The Four Different Types of GST Tax in India are:

 Integrated Goods and Services Tax (IGST)

 State Goods and Services Tax (SGST)
 Central Goods and Services Tax (CGST)
 Union Territory Goods and Services Tax (UTGST)

Additionally, the government has fixed different taxation rates under

each, which will be applicable to the payment of tax for goods and/or
services rendered.

1. Integrated Goods and Services Tax or IGST

 The Integrated Goods and Services Tax or IGST is a tax under the
GST regime that is applied on the interstate (between 2 states)
supply of goods and/or services as well as on imports and exports.
 The IGST is governed by the IGST Act. Under IGST, the body
responsible for collecting the taxes is the Central Government. After
the collection of taxes, it is further divided among the respective
states by the Central Government.
 For instance, if a trader from West Bengal has sold goods to a
customer in Karnataka worth Rs.5,000, then IGST will be applicable
as the transaction is an interstate transaction.
  If the rate of GST charged on the goods is 18%, the trader will
charge Rs.5,900 for the goods. The IGST collected is Rs.900,
which will be going to the Central Government.

2. State Goods and Services Tax or SGST

 The State Goods and Services Tax or SGST is a tax under the GST
regime that is applicable on intrastate (within the same state)
transactions. In the case of an intrastate supply of goods and/or
services, both State GST and Central GST are levied.
 However, the State GST or SGST is levied by the state on the goods
and/or services that are purchased or sold within the state. It is
governed by the SGST Act. The revenue earned through SGST is
solely claimed by the respective state government.
 For instance, if a trader from West Bengal has sold goods to a
customer in West Bengal worth Rs.5,000, then the GST applicable
on the transaction will be partly CGST and partly SGST.
 If the rate of GST charged is 18%, it will be divided equally in
the form of 9% CGST and 9% SGST. The total amount to be
charged by the trader, in this case, will be Rs.5,900. Out of the
revenue earned from GST under the head of SGST, i.e. Rs.450,
will go to the West Bengal state government in the form of
SGST.

3. Central Goods and Services Tax or CGST

 Just like State GST, the Central Goods and Services Tax of CGST is a
tax under the GST regime that is applicable on intrastate (within the
same state) transactions. The CGST is governed by the CGST Act.
The revenue earned from CGST is collected by the Central
Government.
 As mentioned in the above instance, if a trader from West Bengal
has sold goods to a customer in West Bengal worth Rs.5,000, then
the GST applicable on the transaction will be partly CGST and partly
SGST.
 If the rate of GST charged is 18%, it will be divided equally in
the form of 9% CGST and 9% SGST. The total amount to be
charged by the trader, in this case, will be Rs.5,900. Out of the
revenue earned from GST under the head of CGST, i.e. Rs.450,
will go to the Central Government in the form of CGST.
4. Union Territory Goods and Services Tax or UTGST

 The Union Territory Goods and Services Tax or UTGST is the

counterpart of State Goods and Services Tax (SGST) which is levied
on the supply of goods and/or services in the Union Territories (UTs)
of India.
 The UTGST is applicable on the supply of goods and/or services in
Andaman and Nicobar Islands, Chandigarh, Daman Diu, Dadra, and
Nagar Haveli, and Lakshadweep. The UTGST is governed by the
UTGST Act.
 The revenue earned from UTGST is collected by the Union
Territory government. The UTGST is a replacement for the
SGST in Union Territories. Thus, the UTGST will be levied in
addition to the CGST in Union Territories.

COMPUTATION N TAX SLABS FRM SHEET N TEXT

WHY WAS GST IMPLEMENTED?

Goods and Services Tax (GST) was implemented to streamline the tax structure
by replacing numerous indirect taxes with a unified tax system, reducing
complexity and compliance burdens for businesses. By eliminating cascading
effects, where taxes were levied on top of taxes, GST ensures that tax is levied
only on the value added at each stage of production and distribution, fostering
economic efficiency. Additionally, GST widens the tax base, enhances tax
compliance through transparent and technology-driven administration, facilitates
interstate trade by replacing multiple state-level taxes with a single integrated
tax, and aims to benefit consumers by potentially lowering prices through
increased competition and efficiency gains. Overall, GST serves as a pivotal tax
reform measure aimed at promoting economic growth, simplifying tax
compliance, and enhancing the welfare of businesses and consumers alike.

BENEFITS---FRM SHEET

REDUCTION IN AMT----
EXAMPLES FRM SHEET

FMCG Products: Fast-moving consumer goods (FMCG) such as soaps, toothpaste,
shampoo, and packaged food items became cheaper post-GST. The reduction in tax rates
under GST led to lower prices for these essential consumer goods.
 Household Appliances: Household appliances like refrigerators, washing machines, and
air conditioners witnessed a decrease in prices post-GST. The rationalization of tax rates and
input tax credit benefits passed on to consumers resulted in reduced prices for these durable
goods.
 Textiles and Apparel: The textile and apparel sector experienced a reduction in prices
following the implementation of GST. Tax rates on textiles and garments were standardized,
eliminating the cascading effect of taxes and leading to lower prices for consumers.
 Footwear: Prices of footwear, including shoes and sandals, decreased after GST
implementation. Previously, footwear attracted varying tax rates across states, but GST
streamlined the tax structure, resulting in uniform tax rates and lower prices for consumers.
 Restaurant Services: Dining out at restaurants became more affordable post-GST. The
earlier tax regime subjected restaurant services to multiple taxes, including VAT and service
tax. Under GST, restaurants benefited from input tax credit, leading to reduced tax incidence
and, subsequently, lower prices for consumers.
 Telecommunication Services: Telecommunication services, including mobile phone
plans and internet services, witnessed a reduction in prices post-GST. The standardization of
tax rates and input tax credit provisions contributed to the decrease in prices for these
services.