GST

The full form of GST is Goods and Services Tax. It is an indirect tax introduced in India from 1st July 2017. GST is a value-added tax levied on the manufacture, sale, and consumption of goods and services. It is a destination-based tax where the tax is collected at the place of ultimate consumption.

At every stage of supply, credit for taxes already paid on purchases or inward supply is allowed. The final tax burden falls on the consumer.

GST has replaced multiple indirect taxes in India, such as VAT, Service Tax, and Excise Duty. Differential tax rates are prescribed by the Central Board of Indirect Taxes & Customs (CBIC). A GST Council has been set up to frame and implement the law.

• Abolishing cascading effect (no tax on tax)
• Removing distinction between goods and services → unified concept of "supply"
• Introduction of E-way bill system
• TDS and TCS introduced in indirect taxation
• Single window clearance
• Freedom from multiple taxations
• Increased transparency

GST is the biggest tax reform post-independence. It aimed to fix flaws in the earlier indirect taxation system.

Objectives of GST:

• Remove cascading effect of taxes
• Eliminate confusion between "goods" and "services"
• Integrate all indirect taxes into one system
• Simplify compliance
• Increase transparency and efficiency

• VAT suffered from double taxation. Example: Manufacturers paid excise duty on goods; when dealers sold goods, VAT was levied again on excise-included prices → double taxation.
• GST solved this by taxing only the value added at each stage.

Central Taxes Subsumed:

• Central Excise Duty & Additional Excise Duties
• Excise Duty under Medicinal & Toilet Preparation Act
• Additional Customs Duty (CVD & Special CVD)
• Service Tax
• Central Sales Tax
• Cess and surcharges

State Taxes Subsumed:

• VAT and Sales Tax
• Entertainment Tax (except local bodies)
• Entry Tax
• Purchase Tax
• Luxury Tax
• Advertisement Tax
• Lottery, betting, and gambling taxes
• State cesses and surcharges

India follows a dual GST model (Centre + State simultaneously).

• Intra-state supply (within state):

• CGST (Central GST)
• SGST (State GST) / UTGST (Union Territory GST)

• Inter-state supply (between states/imports):

  • IGST (Integrated GST)

• Exports & supplies to SEZ → Zero-rated

GST registration is mandatory for:

• Businesses with turnover above ₹20 lakh (₹10 lakh for special states)
• Businesses making inter-state supply of goods/services
• E-commerce operators and sellers on e-commerce platforms
• Aggregators supplying services under their brand
• Casual taxable persons (temporary business)
• Non-resident suppliers in India
• Entities required to deduct/collect TDS/TCS
• Input Service Distributors (ISD)
• Suppliers of digital services from abroad to Indian customers
• Agents supplying goods for others

Exempt from GST:

• Agriculturists
• Businesses supplying only exempt/non-taxable goods or services

• CGST (Central GST): Levied by Centre on intra-state supply. Revenue goes to Central Govt.
• SGST (State GST): Levied by State Govt. on intra-state supply. Revenue goes to State Govt.
• UTGST (Union Territory GST): Levied by Union Territories (like Daman, Diu, Andaman).
• IGST (Integrated GST): Levied by Centre on inter-state supply & imports. Revenue shared with States.

• Intra-state transactions: CGST + SGST/UTGST (shared by Centre & State/UT)
• Inter-state transactions/imports: IGST (collected by Centre, distributed to States)

Example:
If CGST = 9% and SGST = 9%, then IGST = 18%.

• Petroleum products
• Alcoholic liquor
• Sale of land and buildings
• Services by courts/tribunals
• Services by MPs/MLAs/local authority members
• Actionable claims (except betting, gambling, lottery)
• Funeral & mortuary services

• 0% Slab: Exports, SEZ supplies, fresh vegetables, milk, etc.
• 5% Slab: Essentials like domestic LPG, sugar, tea, economy air travel, small restaurants, medicines, etc.
• 12% Slab: Packaged food items, mobile phones, fruit juices, ayurvedic medicines, business class tickets, etc.
• 18% Slab: Most goods and services → telecom, IT services, footwear, ice cream, hair oil, hotels (₹2,500–₹5,000/night), etc.
• 28% Slab: Luxury goods and services → 5-star hotels, automobiles, personal aircraft, aerated water, gambling, betting, etc.

Sole Proprietor / Individual

• PAN
• Aadhaar card
• Bank details
• Address proof
• Photograph

Partnership / LLP

• PAN
• Partnership deed
• Address proof (partners + office)
• Bank details
• Photos of partners
• Proof of authorized signatory

HUF (Hindu Undivided Family)

• PAN of HUF
• Aadhaar & PAN of Karta
• Bank details
• Photograph

Company (Indian or Foreign)

• PAN
• Certificate of Incorporation (MCA)
• MoA & AoA
• Address proof (office)
• PAN & Aadhaar of directors & signatories
• Bank details
• Photos

GST allows input tax credit (ITC). Taxpayers can claim credit of taxes paid on inputs while paying output tax. This prevents "tax on tax."

• IGST credit → used for IGST, then CGST, then SGST
• CGST credit → used for CGST, then IGST
• SGST/UTGST credit → used for SGST/UTGST, then IGST