The Goods and Service Tax (GST) is a multi-stage, destination based tax which has replaced many Indirect Taxes in India. It can be termed as a value added tax levied on most goods and services sold for domestic consumption. GST is the biggest indirect tax reform of India which will subsume Central Excise Law, State VATs, Service Tax Law, Luxury Tax, Entry Tax etc. It will help India make into one unified common market also expecting to bring together all state economies leading to improve the overall economic growth of the nation.
The Goods and Service Tax (GST) was passed in the Parliament on 29th March 2017. On 1st July 2017 the Act came into effect.
The Goods and Service Tax (GST) was launched by the Former President of India, Pranab Mukherjee at midnight on 1st July 2017. It was a historic midnight as both the houses of the Parliament could be seen convened at the Central Hall of the Parliament.
GST is divided into five categories - 0, 5, 12, 18 and 28 percent. The tax will be levied along with additional cess. Therefore, there can be an increase in the rates for different products. The various types of commodities included under the slabs are as follows:
1. 0% - The food items like milk, dairy products, meat, fish, fresh fruits, vegetables, non branded cereals, flour, jaggery. Judicial, non-judicial stamp papers, non precious metal bangles, agriculture implements and hand tools are priced under this category.
2. 5% - The mass consumption like spices, mustard oil, paneer, frozen vegetables, coffee, tea, spices, cashew nuts. Some items in the fuel category like bio gas, kerosene and coal, item from health industry like medicine, insulin and also fertilizers, first day covers and lifeboats are priced under this category.
3. 12% - The frozen food products like meat, butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices. Cell phones and cutlery items like spoons, forks, ladles, skimmers, cake servers, fish knives. Ayurvedic medicines and all diagnostic kits and reagents comes under this category.
4. 18% - Some of the food items like biscuit, flavored refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasonings and mineral water. Footwear costing more than 500 also comes under this category. Some products like note books, steel products, headgear and its parts, aluminum foil, weighing machinery (other than electric or electronic weighing machinery), bamboo furniture, swimming pools and padding pools are priced under this category.
5. 28% - Some of the residuary set of edibles which include chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala and aerated water falls under this category. An array of personal care items like deodorants, shaving creams, after shave, hair shampoo, dye and sunscreen are in the highest tax slab as well.Water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers and hair clippers are also clubbed under this category. Automobiles, motorcycles and aircraft for personal use will also be a part of this category.
There are 4 types of GST:
1. CGST- CGST stands for “Central Goods and Services Tax”. It is governed by CGST Act and is a tax which is levied on Intra State supplies of both goods and services by the Central Government. The State and Central Governments will agree on combining their levies with an appropriate proportion for revenue sharing between them.
2. IGST - IGST is a part of Goods and Service Tax (GST). Integrated Goods and Service Tax is a tax levied on all Inter – State supplies of goods and / or services and will be governed by the IGST Act. IGST is a concept of one tax one nation. Under Article 269 A of the Constitution, the inter – state trade and commerce activities that involve the movement of commodities and services shall be levied with an integrated tax (IGST) under the GST regime.
3. UTGST - UTGST stands for “Union Territory Goods and Service Tax”. The UTGST bill is presented in some specific parts of India like Union Territories like Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Delhi (National Capital Territory of Delhi), Lakshadweep and Puducherry. The main purpose of UTGST bull is to apply a collection of tax on every Intra UT supply of goods and service in the Union territories in absence of legislature and has similar properties as that of SGST.
4. SGST – SGST stands for “State Goods and Services Tax”. It is a tax which is levied on Intra State supplies of both goods and services by the State Government also governed by the SGST. The revenue collected SGST goes to the State Government.