Goods and Services Tax (GST) is the tax
imposed on the supply (consumption) of goods and services. It is a destination
based consumption tax and collected on those value- added items at each stage
of the supply chain.
A manufacturer in India, need not
pay GST wherever he/she manufactures.
GST is applicable to all goods and services except alcohol and specified
petroleum products. GST Act has proposed four tax rates, i.e. 5%, 12%, 18% and
having annual turnover,
within a state, below Rs.20 lakhs are exempted from GST. These small
traders need not
But the traders
having inter-state business should register and pay GST even the turnover is
below Rs.20 lakhs. Special provisions are there in the GST Act for the 8
northeastern states and Himschal
Pradesh, Uttarakhand and Jammu and Kashmir.
GST Act was passed on April 12, 2017.
GST came into effect from 1st July,
2017. It is the single biggest
tax reform since Independence. Several Countries like Russia, Canada,
Australia, Singapore, China, etc. have already introduced GST.
The right to levy tax is derived from
the Constitution of India. To permit the Centre and the States to levy taxes
onthe same goods and services needed unique amendment to the Constitution.
Accordingly 101st Constitution Amendment Act 2016 was passed and the
President’s acceptance was received on September 8, 2016. Under this Act, GST
Council, a constitutional body was to be formed to implement GST.
GST is of three kinds: CGST, SGST/UGST,
CGST - Central Goods and Services Tax
imposed and collected by the Central
Government on all supply of goods within a state (intra-state) under CGST Act
SGST - State Goods and Services Tax
imposed and collected by the State
Governments under State GST Act. (Tamil Nadu GST Act 2017 passed by Tamil Nadu
UGST - Union Territory Goods and Services Tax - imposed
and collected by the five Union Territory Administrations in India under UGST
IGST - Inter-State Goods and Services Tax - imposed and
collected by the Central Government and the revenue shared with States under
IGST Act 2017.
IGST on exports - All exports are treated as
Inter-State supply under GST. Since exports are zero rated, GST is
not imposed on all goods and services exported from India. Any input credit paid
already on exports will be refunded.