Goods and Services Tax (GST) in India
Goods and Services Tax (GST) is an indirect tax used in India on the supply
of goods and services. It is a destination-based tax. The GST is imposed at every
step in the production process, but is meant to be refunded to all parties in the
various stages of production other than the final consumer and as a destination-
based tax, it is collected from point of consumption and not point of origin.
Goods and services are divided into five different tax slabs for collection of
tax: 0%, 5%, 12%, 18% and 28%. However petroleum product, alcohol and
electricity are not taxed under GST and instead are taxed separately by the
individual state govts, as per the previous tax system. There is a special rate of
0.25% on rough precious and semi-precious stones and 3% on gold.
The tax came into effect from 1 July 2017 through the implementation of the
101 amendment of the constitution of India by the Govt. of India. The GST
replaced multiple taxes levied by the central and st. governments.
The tax rates, rules and regulations are governed by the GST Council which
consists of the finance ministers of central govt. and all the states.
India adopted a dual GST model, meaning that taxation is administered by
both the Union and state governments. Transactions made within a single state are
levied with Central GST (CGST) by the Central Government and State GST
(SGST) by the State governments. For inter-state transactions and imported goods
or services, an Integrated GST (IGST) is levied by the Central Government. GST is
a destination-based tax, therefore, taxes are paid to the state where the goods or
services are consumed not the state in which they were produced. IGST
complicates tax collection for State Governments by disabling them from
collecting the tax owed to them directly from the Central Government.
HSN Code:
The purpose of HSN codes is to make GST systematic and globally
accepted.
HSN codes will remove the need to upload the detailed description of the goods.
This will save time and make filing easier since GST returns are automated.
Rate:
The GST is imposed at variable rates on variable items. Some industries and
products were exempted by the government and remain untaxed under GST, such
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, as dairy products, products of milling industries, fresh vegetables & fruits, meat
products, and other groceries and necessities.
Reverse Charge Mechanism:
Reverse Charge Mechanism (RCM) is a system in GST where the receiver pays the
tax on behalf of unregistered suppliers. The receiver of the goods is eligible
for input tax credit, while the unregistered dealer is not
Goods kept outside GST:
Alcohol for human consumption.
Petrol and petroleum products
QRMP Scheme:
This is a recent amendment in GST Taxation System. If a taxpayer opts for this
scheme he will have to file GST Returns on Quarterly basis instead of regular
monthly basis, but Tax payment will have to be done monthly. QRMP means
quarterly return monthly payment.
GST Council:
GST Council contains the following members (a) Union Finance Minister (as
chairperson) (b) Union Minister of States in charge of revenue or finance (as
member) (c) the ministers of states in charge of finance or taxation or other
ministers as nominated by each states government (as member). GST Council is an
apex member committee to modify, reconcile or to procure any law or regulation
based on goods and services tax in India. The council is headed by the union
finance minister of India assisted with the finance minister of all the states of India.
Goods and Service tax Network (GSTN):
"Goods and Services Tax Network" (GSTN) is a nonprofit organisation formed for
creating a sophisticated network, accessible to stakeholders, government and
taxpayers to access information from a single source (portal). The portal is
accessible to the Tax authorities for tracking down every transaction, while
taxpayers have the ability to connect for their tax returns.
Criticism:
Technicalities of GST implementation in India have been criticized by global
financial institutions/industries, sections of Indian media and opposition political
Page 2 of 5
Goods and Services Tax (GST) is an indirect tax used in India on the supply
of goods and services. It is a destination-based tax. The GST is imposed at every
step in the production process, but is meant to be refunded to all parties in the
various stages of production other than the final consumer and as a destination-
based tax, it is collected from point of consumption and not point of origin.
Goods and services are divided into five different tax slabs for collection of
tax: 0%, 5%, 12%, 18% and 28%. However petroleum product, alcohol and
electricity are not taxed under GST and instead are taxed separately by the
individual state govts, as per the previous tax system. There is a special rate of
0.25% on rough precious and semi-precious stones and 3% on gold.
The tax came into effect from 1 July 2017 through the implementation of the
101 amendment of the constitution of India by the Govt. of India. The GST
replaced multiple taxes levied by the central and st. governments.
The tax rates, rules and regulations are governed by the GST Council which
consists of the finance ministers of central govt. and all the states.
India adopted a dual GST model, meaning that taxation is administered by
both the Union and state governments. Transactions made within a single state are
levied with Central GST (CGST) by the Central Government and State GST
(SGST) by the State governments. For inter-state transactions and imported goods
or services, an Integrated GST (IGST) is levied by the Central Government. GST is
a destination-based tax, therefore, taxes are paid to the state where the goods or
services are consumed not the state in which they were produced. IGST
complicates tax collection for State Governments by disabling them from
collecting the tax owed to them directly from the Central Government.
HSN Code:
The purpose of HSN codes is to make GST systematic and globally
accepted.
HSN codes will remove the need to upload the detailed description of the goods.
This will save time and make filing easier since GST returns are automated.
Rate:
The GST is imposed at variable rates on variable items. Some industries and
products were exempted by the government and remain untaxed under GST, such
Page 1 of 5
, as dairy products, products of milling industries, fresh vegetables & fruits, meat
products, and other groceries and necessities.
Reverse Charge Mechanism:
Reverse Charge Mechanism (RCM) is a system in GST where the receiver pays the
tax on behalf of unregistered suppliers. The receiver of the goods is eligible
for input tax credit, while the unregistered dealer is not
Goods kept outside GST:
Alcohol for human consumption.
Petrol and petroleum products
QRMP Scheme:
This is a recent amendment in GST Taxation System. If a taxpayer opts for this
scheme he will have to file GST Returns on Quarterly basis instead of regular
monthly basis, but Tax payment will have to be done monthly. QRMP means
quarterly return monthly payment.
GST Council:
GST Council contains the following members (a) Union Finance Minister (as
chairperson) (b) Union Minister of States in charge of revenue or finance (as
member) (c) the ministers of states in charge of finance or taxation or other
ministers as nominated by each states government (as member). GST Council is an
apex member committee to modify, reconcile or to procure any law or regulation
based on goods and services tax in India. The council is headed by the union
finance minister of India assisted with the finance minister of all the states of India.
Goods and Service tax Network (GSTN):
"Goods and Services Tax Network" (GSTN) is a nonprofit organisation formed for
creating a sophisticated network, accessible to stakeholders, government and
taxpayers to access information from a single source (portal). The portal is
accessible to the Tax authorities for tracking down every transaction, while
taxpayers have the ability to connect for their tax returns.
Criticism:
Technicalities of GST implementation in India have been criticized by global
financial institutions/industries, sections of Indian media and opposition political
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