There were many indirect taxes applied in the country. GST was introduced with the sole purpose of directing all the untoward taxes and streamlining them into one. GST was upheld to simplify to replace indirect taxes. The parliament has passed the Goods and Services Tax Act on 29th of March in 2017. Although the ACT came into effect only on the 1st of July, 2017.
Goods and services tax can be defined as a value addition at each stage which has comprehensive as well as continuous chain set of benefits to offer. GST is value addition, destination-based, comprehensive and multi-stage in nature. The mentioned elements are explained below:
One of the most important roles of GST is to remove the cascading tax effect on the sale of goods and services. This will also have a direct impact on decreasing the overall cost of the product. If GST will streamline the unwanted taxes, it would help in saving the original amount.
There is a GST Portal that has activities like registration, return filing, and others. The online portal makes the process swift and fast.
Following are the major advantages of GST:
Importers or their agent would be filled a declaration form known as a bill of entry to the customs department.
The client must fill the declaration forms for the customs clearance formalities, a bill of entry is filled along with other requisite documents on or before the arrival of the goods. After that, the bill of entry is filled, and an authorised Customs Officer checks it. Although for full clearance, the importer is obligated to pay the basic customs duty, IGST, and GST Compensation.
If the importer is failed to file the bill of entry within 30 days from the day receiving goods, then the commodity will be subjected to auction by the relevant authorities.
Once the product reaches the Customs department, then they are majorly classified into three main categories. Following are the major classification of the available goods.
The bill of Entry contains the following information:
Before claiming the category, it is essential to determine whether the transaction is an intrastate or interstate supply of goods and services. Types of transactions are mentioned below;
IGST comes under as a category under GST, but this form of tax is majorly applied on interstate transaction of goods and services. Although the tax shared between the central and state government is zero-rated.
IGST is governed by the GST act.
Integrated GST which is also known as IGST comes under the GST domain. IGST is mainly collected by the centre or inner state supply of goods and services. Article 269A of the constitution states that GST supplies in the practice of interstate trade or commerce should be imposed and collected by the Indian Government itself. The effective distribution of IGST between union and states shall happen under the provision of parliament’s law by the recommendations of Goods and Services Tax Council.
Moving forward to intrastate supplies of goods and services, the tax on these commodities are imposed by the state government.
SGST comes under the GST regime, therefore, for its operation, some of the untoward tax should be included in it. Taxes like VAT, state sales tax, entertained tax, luxury tax, entry tax, taxes on lottery, gambling, and betting and state cesses and surcharges.
Although if there is any tax liability, it can only be set off against SGST or IGST input tax credits.
If one is looking for the final or last category of GST regime, then it would be CGST. CGST is collected and levied by the central government and governed by the CGST ACT. As mentioned SGST falls under intrastate supply, similar CGST is handled by the Central Government.
Likewise, for the introduction of CGST, some taxes had to be subsumed. Taxes like (CST), additional customs duty—countervailing duty (CAD), central excise duty, service tax, special additional duty of customs (SAD), and surcharges and cesses.
Since India enjoys federalism, which means that both the central and the states have been assigned the authority and power to collect tax on their respective levels. As per the constitution of our country, both the governments have responsibilities to perform for which they need to raise the tax revenue.
Therefore, Central and State governments are implying GST simultaneously.
The reason behind following the three types of tax structure implementation is to assist taxpayers to take the credit, against each other. Ensuring the “ONE NATION, ONE TAX” reform.