What is SGST?
SGST is States Goods and Services Tax. It is a component of GST which will be levied by the State Government on all goods and services. It applies to intra trade only. A dealer can use input tax credit of SGST against SGST or IGST.
SGST is intrastate. SGST is levied by the state government and would be paid to the accounts of the respective state governments.
What does SGST include?
SGST includes the following:-
1. Vat/Sales Tax
2. Entertainment tax
3. Luxury Tax
4. Tax on Lottery/Betting/Gambling
5. Octroi
6. Purchase Tax
Features of SGST:
1. Levied by the states through a statue on all transactions of goods and services made for a consideration.
2. SGST would be paid to the accounts of the respective states.
3. Exemptions- Exempted goods and services, products kept out of GST and transactions below prescribed threshold limits.
4. Basic features of law like charge ability, taxable event, measure, valuation and classification would be uniform across these States.
Benefits of GST
1. Expulsions of Multiple Taxes- Multiple indirect taxes will be eliminated. Taxes like Octroi, CENVAT, sales tax, service tax, excise etc will fall under GST.
2. Cost effective- For the common man, the double charging in the system will be eradicated in GST applicability. This will help common man save money.
3. Comfort of collaboration- One country, one tax system will be bought by GST. This shall curb unhealthy competition among states.
4. Uncomplicated Tax filing and Documentation- The businessman can heave a sigh of relief as there will be no multiple taxes, which means easy compliance and documentation.
5. Reduction of Cascading effect- GST is going to be applicable from all stages from processing to utilization. Tax credit benefit shall be provided at every stage by GST. Cost of the product will be reduced due to the reduction of cascading effect.
6. More employment- It is expected that demand for a product will enlarge as the GST will reduce its cost. Hence, to meet the demand and create more supply, employment opportunities will be created.
7. Increase in Gross Domestic Product- As demand grows, the gross domestic product will grow by 1-2% as estimated.
8. Tax Evasion Reduction- People will readily pay taxes as the rates have reduced due to GST. People will become more honest and pay taxes.
9. Increase in Revenue- All indirect taxes will be replaced with a single tax.
10. When product demand rises, so will tax revenue for state governments and central government.
Updated New GST Rates as from April 1st, 2018:
| Items | Old Tax Rate | Country |
|---|---|---|
| Second Hand medium and large cars and SUV’s | 28% | 18% |
| LPG supply for household domestic consumers by private LPG distributors | 18% | 5% |
| Bio-fuels powered buses | 28% | 18% |
| Sugar boiled confectionary | 18% | 12% |
| Drinking water packed in 20 Liter bottles | 18% | 12% |
| Drip Irrigation System | 18% | 12% |
| Cigarette filled rods | 12% | 18% |
| Tailoring service | 18% | 5% |
| Admission to Theme parks, Water parks, etc | 28% | 18% |