STRUCTURE AND CLASSIFICATION OF GST
India is a federal country where both Central government and State government has the power to excise their duty and have been assigned the power to levy taxes through appropriate legislation. Both the level of government has distinct powers to perform as described in the constitution and to follow up with these, they need revenue for this. So, the ministry of finance has decided the Dual GST approach where both the government can levy taxes.
CLASSIFICATION OF GOODS AND SERVICES TAX
Dual Goods and services tax system is been adopted in India to maintain relationship between the Central Government and the State government.
GST ON INTRA STATE/ GST ON INTER STATE
UT SUPPLY SUPPLY
Central GST State GST Integrated GST
(CGST 50%) (SGST 50%) (IGST 100%)
!)DUAL GST for supply of goods and services within the state
It would be a dual GST with the Central and state government both simultaneously levying tax on the same basis. The GST which would be levied by Central Government on inter state supply of goods and services would be Central GST (CGST)
And GST applied by state government on the intra state supply of goods and services would be called State GST (SGST).
There would be dual GST system State GST and Central GST on intra state supply of goods and services.
SGST will also be applied to Union Territory having legislation. Which are Delhi and Pondicherry.
Both CGST and SGST will be collected from the supply of goods and services within the state.
- CGST/SGST: For supplies within the state or union territory Central GST or State GST will be deposited into the accounts of respective governments government.
- IGST: For supply of goods and services from one state or union territory to another to another state that is inter state supply of goods and/or services.
Explanation with examples: –
Levy of Centre goods and services tax (CGST) or State goods and services tax.
Example: Suppose there is a men name Ravi who own a business of manufacturing Television in Madhya Pradesh where he needs to supply his manufactured goods within the state to another destination which is Katni also in Madhya Pradesh then he is only levied to pay CGST and SGST the amount he is paying like Centre goods and services tax (CGST) the amount will go into the account of Centre government and the amount of State goods and services tax (SGST) will go into the account of state government. Tax amount would be paid by the state receiving the amount
Levy of Integrated Goods and services tax(ITGST) or Union territory goods and services tax.
Example: Suppose the same person named Ravi is owing a business in the state Madhya Pradesh of manufacturing Television where he wants to supply his product to another destination which is in another state suppose Maharashtra then he needs to pay Integrated Goods and services tax alone would be collected by Centre Government. The rate of IGST would be double of CGST.
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