Types of GST in India

Jul 18, 2023 Alankit

Types of GST in India

The government announced a new indirect tax regime known as the Goods and Services Tax on July 1, 2017. It can be difficult to comprehend this new taxation system and how it will affect businesses. Here is a detailed guide on GST types in India. This will help you to know about not only all kinds of GST but also the different types of GST slabs and GST payment liability.

What is GST

GST stands for the Goods and Service Tax. It is an indirect sales tax levied on goods and services sold domestically for consumption. The tax is included in the final price of the product or service paid by the consumers at the time of sale and then passed to the government by the seller.

The Goods and Service Tax (GST) Act was passed on March 29th of 2017 in the Indian parliament and came into effect on July 01st, 2017. It was praised as a prominent reform in taxation, which replaced the excise duty, VAT, service tax, etc.

Under the reform of the GST regime, there are mainly five different types of GST slabs which ensure easy collection. From 0%, 5%, 12%, 18%, & 28%. Daily consumption items for the masses fall under the 5% tax bracket, while luxury items are included in the 28% tax bracket. Most of the other products are kept under the tax bracket of 18%.

Objective of GST

  • Eliminate multiple taxes: The Introduction of GST aims at subsuming multiple taxation systems which were already present and follow one nation - one market - one tax policy.
  • Limiting tax avoidance: Now, taxpayers can only claim an input tax credit on invoices by their respective suppliers, thus minimal chances of fake invoice claims.
  • Increase the taxpayer base: GST helped widen the tax base in India. As GST has combined the tax on goods and services, it increased registered businesses and government profits as well.
  • An improvised logistics system: Including a single taxation system which reduces the required paperwork ensures better cycle time, supply chain, turnaround times, and other benefits.
  • Less Compliance obligations: GST merged all indirect taxes into one tax system. As a result, government tax administration became easier and taxpayers faced less compliance obligations.

Different Types of GST in Tax Regimes

There are majorly four different types of GST, which are IGST, CGST, SGST and UTGST.

  1. CGST: CGST or Central Goods and Services Tax is levied on interstate supplies and governed by the central government.
  2. SGST: SGST or State Goods and Services Tax is majorly applied to Intra-state goods and supplies, which is administered by the state government.
  3. IGST: IGST or Integrated Goods and Services Tax changed on the goods and services supplied from one state. It is also applicable to importing into India and exporting from India.
  4. UTGST: UTGST or Union Territory Goods and Services Tax applies to all the union territories. All the revenue is collected by the UTs and can be levied on CGST only.

GST Payment Liability

Here are the following individuals or businesses liable to pay GST:

  • Independents who are registered under GST as well as making taxable supplies.
  • GST-registered individuals under the reverse charge mechanism.
  • Individuals who are registered and deduct tax at source.
  • E-commerce entrepreneurs who are listed under the GST tax regime.
  • E-commerce businesses registered are required to collect TCS.
  • Individuals, if any, supply goods or services on behalf of a supplier or manufacturer.

The introduction of the GST in India is unquestionably a significant gesture for the country's economy. The universality of GST rates has helped to keep prices competitive both inside India and internationally. In the end, this has increased revenue and consumption.

Why choose Alankit for GST Suvidha Provider?

Alankit is a well-known company in India that offers a range of financial and e-governance services, including GST-related solutions. With over a decade of experience in the taxation and compliance industry, we have developed a deep understanding of GST regulations and processes. We offer a comprehensive suite of services to cater to all your GST-related requirements.

Our dedicated support team is available to assist you with any queries or issues you may encounter. We are committed to helping you navigate the complexities of GST compliance effortlessly, allowing you to focus on your core business activities. Choose us as your GST Suvidha Provider, and experience the convenience and peace of mind that comes with a reliable and trusted partner.