What is SGST, CGST & IGST ?

Goods & Service Tax or GST will be levied on goods and services. It will replace all the various taxes and bring them under one umbrella to make compliance easier. It will replace the following taxes: (i) Taxes currently levied and collected by the Centre: Central Excise duty Additional Duties of Customs (commonly known as CVD) Special Additional Duty of Customs (SAD) Service Tax AND (ii) Taxes currently levied and collected by the State: State VAT #Central Sales Tax Entertainment and Amusement Tax (except when levied by the local bodies) Taxes on lotteries, betting and gambling *Why are we getting 3 taxes -SGST, CGST, IGST*? India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes. Both the levels of Government have distinct responsibilities to perform, as per the Constitution, for which they need to raise resources. A dual GST will, therefore, be keeping with the Constitutional requirement of fiscal federalism. The Centre and States will be simultaneously levying GST. 3 taxes will be implemented to help tax-payers to take credit against each other thus ensuring “One nation one tax”. What is SGST/CGST/IGST? The GST to be levied by the Centre on intra-State supply of goods and/or services is Central GST (CGST) and that by the States is State GST (SGST). On inter-state supply of goods and services, Integrated GST (IGST) will be collected by Centre. IGST will also apply on imports. GST is a consumption based tax i.e. the tax should be received by the state in which the goods or services are consumed and not by the state in which such goods are manufactured. IGST is designed to ensure seamless flow of input tax credit from one state to another. One state has to deal only with the Centre government to settle the tax amounts and not with every other state, thus making the process easier. For e.g.: – A dealer in Maharashtra sold goods to the consumer in Maharashtra worth Rs. 10,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%, in such case the dealer collects Rs. 1800 and Rs. 900 will go to the central government and Rs. 900 will go to the Maharashtra government. Now, if the dealer in Maharashtra had sold goods to a dealer in Gujarat worth Rs. 1,00,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%. In such case the dealer has to charge Rs. 18,000 as IGST. This IGST will go to the Centre. How will input tax credits be adjusted between states and centre? Suppose goods worth Rs. 10,000 are sold by manufacturer A in Maharashtra to Dealer B in Maharashtra. B resells them to trader C in Rajasthan for Rs. 17,500. Trader C finally sells to End User D in Rajasthan for Rs. 30,000. Suppose CGST= 9%, SGST=9%. Therefore, IGST=9 9=18% Since A is selling this to B in Maharashtra itself, it is an intra-state sale and both CGST @9% and SGST@9% will apply. B (Maharashtra) is selling to C (Rajasthan). Since it is an interstate sale, IGST@18% will apply. C (Rajasthan) is selling to D also in Rajasthan. Once again it is an intra-state sale and both CGST @9% and SGST@9% will apply.

Comments

  1. Unknown3 August 2017 at 03:15

    Hi saurabh,
    Well nice try on blog but the way you write the content is not the right way The content should be long and should be explained in key points. so that the users find it easy to read and and one more thing there should be a gap between paragraphs too. so all the best for your Next post and keep it up. And for more information on GST visit http://www.rbgconsultant.com/gst-services/igst-overview

    ReplyDelete

Post a Comment

Popular posts from this blog

Bharat Stage 'BS' Emission Norms Explained, What does it mean and how does it Impact

Image
Bharat Stage Emission Bharat Stage Emission standards are emission standards instituted by the Government of India to regulate the output of air pollutants from internal combustion engine equipment, including motor vehicles. The standards and the time line for implementation are set by the Central Pollution Control Board under the Ministry of Environment & Forests and climate change. The standards, based on European regulations were first introduced in 2000. Progressively stringent norms have been rolled out since then. All new vehicles manufactured after the implementation of the norms have to be compliant with the regulations.Since October 2010, Bharat Stage (BS) III norms have been enforced across the country. In 13 major cities, Bharat Stage IV emission norms have been in place since April 2010 and It's enforced for whole country from April 2017. In 2016, the Indian government announced that the country would skip the BS-V norms altogether and adopt BS-VI norms by ...
Read more

A NEW DATA PRIVACY LAW

Data is the life-blood of today’s digital economy and is driving new businesses that challenge conventional wisdom about markets. With the proliferation of smart-phones, every tap creates a digital footprint: valuable information that can be exploited by companies to generate everything, from customer preference to consumption patterns. Critically, the traditional notion of data being merely sensitive personal information is now being challenged as companies are also exploiting real-time data generated from daily activities such as one’s route preference whilst booking cab rides using an app. Even Government’s drive to digitise India on the back of initiatives such as JAM (Jan Dhan-Aadhar-Mobile) and the increased focus on digital payments is fuelled by data. As dependence on data continues to grow, so does the vulnerability of data subjects. Hence, any debate on data privacy must recognise the need for a comprehensive data privacy law, which not only contributes to and complements...
Read more