On July 1st, 2017, the country shifted to GST (goods and services tax), aiming to bring multiple indirect taxes into a unified taxation system. The GST, or goods and services tax, is a destination-based and comprehensive tax imposed at every stage of value addition.
Presently, the Goods and Services tax falls under four slabs, 5%, 12%, 18% and 28% and is categorised into four types. This categorisation of GST helps differentiate between inter-state and intra-state supplies and alleviates indirect taxes. To know more about GST India and its detailed analysis, read on.
Types of GST
As mentioned above about goods and service tax, individuals must understand the primary objective behind introducing this unified taxation system. The fundamental reason is to make the Central and State Governments independent.
Here are the different types of goods and services tax that exist in India:
- CGST (Central Goods and Services Tax)
CGST is imposed on the movement of goods within a state, and the accumulated revenues are distributed between Central and State Governments. For example, if the goods and services are supplied within Haryana state, then CGST will also be collected along with SGST or UGST.
- SGST (State Goods and Services Tax)
The State Government levies it on the intra-state trading of goods and services. In this case, the revenues are earned by the State Government as the dealings or transactions occur within the state. For example, if goods are manufactured and traded within Haryana, then SGST will be collected by the Haryana state.
- IGST (Integrated Goods and Services Tax)
This particular GST applies for inter-state transactions, which means dealings within the two states. It also applies to imports and exports where the charged tax amount is shared between Centre and State.
Moreover, IGST also helps claim the input tax credit and a facility that checks the cascading tax effect, thereby allowing business owners to substantially save at each stage of the supply chain. Besides, individuals can boost their supply chains by acquiring adequate working capital in the form of collateral-free business loans.
- UTGST (Union Territory Goods and Services Tax)
This stands for the transaction of goods and services in the Union Territories. One must note that it is only levied on Union Territories without a legislature. The Central Government primarily collects this tax amount, an alternative for SGST in UTs.
The goods and services tax has unified various indirect taxes, thereby making it convenient for business owners and individuals to clear their tax liabilities. However, any reform or change comes with certain benefits and drawbacks. In this regard, one must also learn about the GST bill advantages and disadvantages carefully to make an informed decision and act accordingly.
Moreover, certain organizations must register their business online and should know how to register for GST online and obtain a GSTIN number. This registration is mandatory for some that exceed the annual turnover limit.
Apart from these, keeping updated regarding GST registration and GSTIN and meeting its requirements improve the chances for individuals to avail of a business loan at a competitive interest rate. This is because their business operations are already registered under a government entity, thereby reducing the chances of fraudulent activities.
Moreover, while availing credit for business, credible and existing borrowers of Bajaj Finserv can also get the benefit of pre-approved offers on a range of secured and unsecured financial products. By availing of these offers, one can bypass the hassle of extensive documentation and accelerate the loaning process. Therefore, intending borrowers can check their pre-approved offers by mentioning their names and contact details.
The goods and services tax is imposed on almost all transactions of goods and services for domestic consumption. The customers pay this tax amount, and the businesses forward it to the Government. Moreover, this GST implementation reduces the chances of tax mix-up between Central and State Governments, thereby ensuring uniformity in the taxation system.