What is GST
GST stands for Goods and Services Tax. It is an indirect tax levied on the supply of goods and services throughout India. The GST was introduced in India on July 1, 2017, with the aim of simplifying the tax structure, reducing tax evasion, and creating a unified market across the country.
Under the GST system, various types of taxes that were previously levied by both the central and state governments were replaced by a single tax regime. The different types of taxes that were subsumed under GST include:
- Central Excise Duty
- Service Tax
- Countervailing Duty (CVD)
- Special Additional Duty of Customs (SAD)
- Value Added Tax (VAT)
- Central Sales Tax (CST)
- Entry Tax
- Entertainment Tax
- Luxury Tax
- Taxes on advertisements
- Taxes on lotteries, betting, and gambling
GST types in India
The GST system in India is a dual GST, which means it is administered by both the central and state governments. Types of GST in India include:
- Central Goods and Services Tax (CGST): Collected by the Central Government on intra-state supplies of goods and services.
- State Goods and Services Tax (SGST): Collected by the State Governments on intra-state supplies of goods and services.
- Integrated Goods and Services Tax (IGST): Collected by the Central Government on inter-state supplies of goods and services and on imports. It is distributed between the central and state governments based on a pre-defined formula.
Additionally, certain goods and services are exempted from GST, while others are taxed at a lower rate known as the reduced rate. There is also a special rate category for specific goods and services, such as luxury items and sin goods like tobacco and alcohol.
Overall, GST has significantly transformed the Indian tax system and has streamlined tax administration, making it more efficient for businesses and consumers alike.