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What Are The Types Of GST In India

17 Jul 2023

Types Of GST In India

Central Goods and Services Tax, Integrated Goods and Services Tax, State Goods and Services Tax and Union Territory Goods and Services Tax are the four different types of GST taxes. Each of them imposes taxes at a different rate.

When the Goods and Services Tax was implemented as a new indirect tax structure on July 1, 2017, there was a great deal of uncertainty on how the new taxation system would affect companies and the payment of taxes. Many municipal taxes placed on goods and services have been absorbed by the Goods and Services Tax (GST).

What Are The Different Types Of GST Taxes In Brief?

There are four main types of GST in India, according to the recently introduced tax system:

1. Integrated Goods And Services Tax 

The Integrated Goods and Services Tax, also known as the IGST, is a tax imposed under the GST system that is levied on exports, imports, plus interstate (between two states) supply of products and/or services.

The IGST Act controls the IGST. The Central Government is in charge of collecting taxes underneath the IGST. The Central Government further divides the taxes once they have been collected among the corresponding states.

For instance, because the transaction was an interstate one, IGST would be applicable if a merchant from Uttarakhand sold goods worth ₹5,000 to a consumer in Karnataka. The dealer would charge ₹5,900 for the products if the GST rate applied to them is 18%. The Central Government would get the IGST received in the amount of ₹900.

2. State Goods And Services Tax

For intrastate (inside the same states) transactions, the SGST, is a tax underneath the GST framework. Both the SGST and CGST are imposed in the event of an intrastate transportation of goods and services.

Nonetheless, the state governments impose the State Goods and Services Tax on any products or services that are bought or sold inside the state. The SGST Act controls it. The corresponding state government is the only one who may claim the SGST money.

For instance, the GST that applies to the transaction would be split between SGST and CGST if a merchant from Uttarakhand sells items to a consumer in Uttarakhand. If there is an 18% GST charge, it will be split evenly into 9% CGST and 9% SGST. In this instance, the merchant would charge a total of ₹5,900. The Uttarakhand state government would get SGST in the amount of ₹450 from the GST income received under the SGST heading.

3. Central Goods And Services Tax

The Central Goods and Services Tax, also known as CGST, is a tax imposed underneath the GST system that is applied to intrastate (inside the same state) operations. It is similar to the State GST. The CGST Act controls the CGST. The Central Government is responsible for collecting the CGST income.

As stated in the example above, if a merchant from Uttarakhand sold goods worth ₹5,000 to a consumer in Uttarakhand, the GST that applied to the transaction would be split between SGST and CGST. If there is an 18% GST charge, it will be split evenly into 9% CGST and 9% SGST. In this instance, the merchant would charge a total of ₹5,900. The Central Government would get CGST in the amount of ₹450 from the GST income received under the CGST heading.

4. Union Goods And Services Tax 

The SGST, which is imposed on the supply of products and/or services in the Union Territories (UTs) of India, is mirrored by the UTGST.

In the Andaman and Nicobar Islands, Daman Diu, Dadra, Chandigarh, and Lakshadweep, and Nagar Haveli, products and/or services are subject to the UTGST. The UTGST Act controls the UTGST. The Union Territory government has the responsibility of collecting the UTGST revenues. In Union Territories, the SGST is replaced by the UTGST. Consequently, in Union Territories, the UTGST will be imposed similarly to the CGST.

The government has also established several tax rates under each, which will be used to calculate the tax due on products and/or performed services.

Wrapping Up

Previous state taxes including VAT, purchase tax, luxury tax, and octroi are now composed of the GST, together with erstwhile general taxation like central excise duty, customs duty, and service tax. Today, under the one-nation, one-tax system, a straightforward three-fold breakdown has been developed, enabling the central government and the states to impose taxes.

 

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