Goods and Service tax act
GST stands for Goods and Service Tax.It is an indirect tax on manufacture, sale and consumption of goods and services at central and state level. It is introduced to replace multiple indirect taxes and services like State VAT, central Sales Tax, Entertainment and amusement Tax, Entry Tax, Purchase Tax, Luxury Tax, Tax on Betting, Lottery and gambling by the Indian state and central government.
GST is consumption based tax, it means that the state in which final sale to consumer is made to entitled to get the tax. GST is applicable to all goods other than crude petroleum, motor spirit, diesel, aviation turbine fuel and natural gas.
What are the individual taxes which are replaced by GST
GST would replace following taxes
a) Taxes currently levied and collected by Central Government
Central Excise duty
Duties of Excise - medicinal & toilet preparation
Additional Duties of Excise - Goods of Special Importance
Additional Duties of Excise – Textiles & Textile products
Additional Duties of Customs (CVD)
Special Additional Duties of Customs (SAD)
Central surcharges and cesses so far as they related to supply of goods and services
b) Taxes currently levied and collected by State Government
Central Sales Tax
Entertainment and Amusement Tax
Taxes on Advertisement
Taxes on lotteries, betting and gambling
State surcharges and cesses as they related to supply of goods and services
Administration of GST in India
There will be two components of GST
CGST (Central Goods and Service Tax)
SGST (State Goods and Service Tax)
Both central government and state government will simultaneously levy GST across the value chain. Central government would levy and collect tax on central goods and state government would levy and collect tax on goods on all transactions within state.
The input tax credit of CGST would be available for discharging output tax at each stage. Similarly, the credit of SGST will be available for discharging output tax at each stage within state. No cross utilization of credit would be permitted.
Goods and service tax will give more relief to trade, industry and agricultural field through comprehensive and wide coverage of input tax set off .These complete chain of set offs will results in widening of tax base and better tax compliance leading to lower tax burden to industry, trade and agriculture.