An Overview of GST- Benefits & Important Components

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GST stands for Goods and services tax, which replaces the former indirect tax system in India like VAT, E-Duty, Service Tax, and many other indirect taxes. Here, we have given an Overview of GST which includes the definition, its benefits and other information. The GST got an approval on the 29th of March 2017 in the parliament and came into effect on 1st July 2017 in India. GST is more like a destination-based tax on the consumption of the various types of goods and services.

Let’s understand more details under this Overview of GST which includes some common things as well.

Important components of GST

There are mainly three important components of GST, that is CGST, SGST, and IGST Let’s see what these terms stand for.

CGST (Central Goods and Service Tax)

When any service or product is getting sales in between two states, then CGST applies. The Central Government of India collects this tax under CGST. Section 8 under the GST act clearly says that the rate of CGST must not exceed 14% for the intra-state supplies of any goods or services.

The tax will be collected by the Central government but the CGST will be levied intrastate supply and that will be governed by the state government

SGST (State Goods and Service Tax)

For the inter-state supplies of any goods or services, the State Government collects SGST. In this case, also the levied will be on the intrastate supply but it will be governed by the central government.

The liability of any tax obtained under SGST could be set off IGST or SGST input tax credit only.

IGST (Integrated Goods and Services Tax)

In this tax system, the tax is levied on the supply of goods and services and the same is regulated under the IGST Act. Moreover, IGST applies to the import and export of goods and the received amount in form of tax will be shared between the Centre and States.

Benefits of GST for common people & the Government

There are several benefits of GST in India and all are beneficial to both the common citizen and the Government of India. This list is long but let’s see some of the important benefits of GST.

  • The structure of the tax will remain the same across the country that is one nation one tax. There will be no separate tax to the state and central government, which is great. It will be easy for the government as well as for the citizens of the country to pay a single tax to the Government.
  • You will get to see more transparency in business which is an added advantage of GST.
  • Now there will be very slight chances of ignoring the tax and getting away from paying the tax and thus improving the economy and administration of the country.
  • The revenue collection will be more and the cost of the collection will be less due to the use of GSTIN.

Taxes that come under the Central government

  • Duties of Excise
  • Central Excise duty
  • Additional Duties of Customs which is also known as CVD
  • Additional Duties of Excise, applicable to the textile and its products.
  • Cesses and Central Surcharges so far as they relate to supply of goods and services
  • Special Additional Duty of Customs which is also known a SAD

Taxes that come under the state Government

  • State VAT
  • Luxury Tax
  • Central Sales Tax
  • Cesses and State Surcharges so far as they relate to the supply of goods and services
  • Purchase Tax
  • Taxes on, gambling lotteries and betting
  • Taxes on advertisements

Under this Overview of GST, you knew that the tax system has changed entirely after GST came into effect in India. Both the tax system was brought for the benefit of both the common citizen and government. GST seems more beneficial to the Government and it will help them to function well after collecting taxes from eligible citizens.

Now there will be less chance to do any spam with the tax because of the GST transparency model. It should be the duty of every individual and they must pay the tax or GST to the Government.

GST collections February 2021 rise 7% to ₹1.13 lakh crore

If you want any other guidance related to GST Registration or GST Return Filing please feel free to talk to our business advisors at 8881-069-069.

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