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GST

GST is a single comprehensive indirect tax that became operational from 1st July 2017.

It has amalgamated a large number of Central and State taxes and is applicable throughout the country with one rate.

GST has replaced many indirect taxes like:

VAT, Sales Tax, Excise Duty, Service Tax and so on…

The GST is expected to rise by 2% because of its introduction

 

Pre-GST Period

Prior to introduction of GST

Tax was calculated on the total value of goods at each stage of production

and not on additional value added at each stage.

This led to higher tax amount

Also, there was less Input Tax Credit (ITC) available to the tax payers

 

Post GST Period

After introduction of GST

Tax is calculated only on the addition in value of goods at each stage of production

and not on total value at each stage.

Now, the input of the tax is settled at each stage of production

So, the total amount of tax is also lesser.

 

Exceptions

5 Petroleum products are kept out of GST

State governments levy VAT on alcohol for human consumption

Tobacco and its products will have both GST and Central Excise Duty

 

GST Rates

There are 6 standard categories of GST:

  1.          0%
  2.          3%
  3.          5%
  4.         12%
  5.         18%
  6.         28%

Division of GST

1. GST is divided into CGST and SGST for intra state purchase and sale

Here, the tax collection is divided equally between Central and State Government

 

2. GST is termed as IGST only for inter state purchase and sale.

Here, all the tax collection goes to Central Government

 

NCERT Questions

Question 15

What do you understand by G.S.T?

How good is the system of G.S.T as compared to the old tax system?

State its categories.

View Answer

Other Books

Question 1

In the following questions, select the correct answers:

Which statement is incorrect for GST:

  1. GST is a single comprehensive indirect tax that has replaced many indirect taxes like: VAT, Sales Tax etc.
  2. There are 6 standard rates applicable to GST
  3. GST is calculate on the total amount at each stage of production.
  4. GST is calculated on the additional value at each stage of production
View Answer

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CA Maninder Singh is a Chartered Accountant for the past 12 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.