GST and it's types

 Introduction of GST

The Goods and Services Tax (GST)

The Goods and Services Tax (GST) is a successor to VAT used in India on the supply of goods and service. Both VAT and GST have the same taxation slabs. The tax came into effect from 1 July 2017 in India. 

Goods and service tax or GST will be one tax to subsume all taxes. It will bring in “One nation one tax” regime.  Being a completely new form of indirect taxation there are many questions in the minds of the organizations.

The 54th GST Council meeting was held on 9 September 2024 in New Delhi.

Different Types of GST

CGST (Central Goods and Services Tax)

SGST (State Goods and Services Tax): 

IGST (Integrated Goods and Services Tax): 

UTGST (Union Territory Goods and Services Tax): 

Different tax slabs 

Goods and services are divided into 5 different tax slabs for collection of tax: 0%, 5%, 12%, 18% and 28%.

GSTN

GSTN stands for Goods and Service Tax Network, is a non-profit non-government company. It provides shared IT infrastructure and service to both central and state governments including taxpayers and other stakeholders. The registration Front end services, Returns, and payments to all taxpayers will be provided by GSTN.

GSTIN, short for Goods & Services Tax Identification Number is a 15-digit, unique identification number allotted to each taxpayer (GST registered business, firm, dealer, supplier, business entity) once they have registered under the GST regime in India.

Harmonized system of Nomenclature (HSN)

The Harmonized system of Nomenclature (HSN) code is used for classifying goods under the Goods and Services Tax (GST) in India. The HSN code is a six-digit code that uniquely identifies a product. The first two digits of the code identify the chapter, the next two digits identify the heading, and the last two digits identify the subheading.

Valuation of Supply under GST

GST will be charged on the ‘transaction value’. Transaction value is the price actually paid (or payable) for the supply of goods/services between un-related parties (i.e., price is the sole consideration) The value of supply under GST shall include.

What is a Bill of Supply?

 A bill of supply is usually issued when a business sells goods and services that are classified as exempt from GST. For example, a fruit vendor would not be issuing a regular Tax Invoice on sale but raise a Bill of Supply for his customers. 

A tax invoice

A tax invoice is a document used to record a transaction between a buyer and a seller. It shows the sale details, including the quantity and price of the goods or services, any applicable taxes, and the total amount due. In other words, it's a record of the money changing hands.

RCM

Reverse Charge Mechanism means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply. For example, when an unregistered vendor sells goods to a registered buyer (under section 9(4) of the CGST Act), the buyer must pay GST directly.

E-Way bill

E-Way bill system is for GST registered person / enrolled transporter for generating the way bill (a document to be carried by the person in charge of conveyance) electronically on commencement of movement of goods exceeding the value of Rs. 50,000 in relation to supply or for reasons other than supply or due to inward supply from an unregistered person.

zero-rated goods and Exempt Goods

 a “zero-rated good,” the government doesn’t tax its sale but allows credits for the value-added tax paid on inputs. If a good or business is “exempt,” the government doesn’t tax the sale of the good, but producers cannot claim a credit for the VAT they pay on inputs to produce it.

Sources: 

https://onlinecourses.nptel.ac.in/

https://www.taxpolicycenter.org/

https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India)