What is GST, CGST, SGST, IGST, Definition of GST, CGST, SGST, IGST : The present system of indirect taxation has multiplicity of taxes levied by the Centre and State. This has led to a complex and conflicting principles in indirect tax structure, adding to the multiple compliance and administrative costs. There is no uniformity in tax rates and structure across States. There is cascading of taxes due to ‘tax on tax’. There are too many restrictions on seamless credit available, i.e., credit of excise duty and service tax paid at the stage of manufacture is not available to the traders while paying the State level sales tax or VAT, and vice-versa. Further, no credit of State taxes paid in one State can be availed in other States. (CST). In this article you may find complete details for all GST Acts like – What is CGST, What id SGST, What is IGST, What is GST etc…
Goods and Service Tax, which subsumes a large number of Central and State taxes into a single tax, is meant to mitigate the cascading effect of taxes, provide seamless credit and make way for a common market. However, realization of all the foregoing objectives appears to be a Herculean task and requires the co-operation of all States.
What is GST, CGST, SGST, IGST
What is GST (Goods and Service Tax)?
GST is a destination based tax and levied at a single point at the time of con sumption of goods or services by the ultimate consumer. GST is based on the principle of value added tax. GST law emphasizes on voluntary compliance and on accounts based reporting and monitoring system. It is a comprehensive levy and envisages tax collection on both goods and services at the same rate.
Internationally, GST was first introduced in France and now more than 160 countries have introduced GST. Most of the countries, depending on their own socio-economic formation, have introduced National level GST or Dual GST.
Definition of Good and Service Tax (GST)
The term GST is defined in Article 366 (12A) to mean “any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption”.
In terms of Section 2 (52) of the CGST Bill “Goods” means every kind of movable property other than money and securities but includes actionable claims, growing crops, grass and other things attached to or forming part of land which are agreed to be severed before supply or under a contract of supply.
In terms of Section 2(102) of the CGST Bill “Services” means anything other than goods, money and securities but includes activity relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.
Thus, all supply of goods or services or both would attract CGST (to be levied by Centre) and SGST (to be levied by State) unless kept out of the purview of GST.
There is no requirement of actual sale of goods under GST. The alternative methods of supply of goods could be in the form of:
- stock transfer;
- captive consumption in another location;
- supply on consignment basis or any other basis by the principal to his agent;
- supply on job work basis (if working under a returnable basis- no tax need be paid);
- any other supply such as donation, sample etc.
Central Goods and Service Tax (CGST)
The Central GST (CGST) is expected to replace the existing central excise duty and service tax. CGST would also cover sale transactions.
The Constitutional Amendment Act, 2016 contains suitable provisions to enable Centre to tax sales. CGST would be administered by the Central Government. The CENVAT credit balance available under CENVAT Credit Rules with the manufacture or service provider, as on the date of transition into GST, could be carried forward. In respect of tax paid goods in stock as on the date of transition credit not availed in the past or not eligible at that point of time, available under GST could also be availed and used towards disbursing CGST (Central GST) liability. There could be a time bound transition for carry forward of credit availed prior to introduction of GST. The declaration of closing stock as on the date of transition to claim credits, which were not earlier captured, would also be time bound.
State Goods and Service Tax (SGST)
State GST would replace State VAT, Entry tax, Octroi, Luxury tax, Entertainment tax etc. SGST would be levied on services as well. To enable taxing of services by the State, the Constitutional Amendment Act, 2016 contains suitable provisions. SGST is to be administered by the State Governments. SGST could be at a rate bit higher than CGST as per press reports. The SGST payable could be set off from the SGST credit or the IGST credit available. The closing input VAT balance available under VAT Act would also be made available to the dealer, as on the date of transition into GST, and could be set off towards SGST (State GST) liability. Further it is expected that the duty and tax paid on closing stock would also be available as credit, which may not have been claimed as set off in the VAT regime.
Inter State Goods and Service Tax (IGST)
IGST (expected to be equal to CGST + SGST) would be levied on all supplies of goods and/or services in the course of inter-state trade or commerce. IGST would be applicable to import of goods or services from outside country as well, which is indicated in the Constitutional Amendment Act, 2016. Further it is expected that the duty and tax paid on closing stock would also be available as credit, which may not have been claimed as set-off.
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