This article is about GST in India. You can learn more about GST full form, Meaning of GST, Types, Rates of GST. FAQs at the end will provide you in-depth knowledge about GST.
What is the full form of GST?
GST Full Form is Goods and Services Tax.
GST is known as the Goods and Services Tax. It is an indirect tax that has replaced many indirect taxes in India, such as excise duty, VAT, services tax, etc. The Goods and Service Tax (GST) Act was passed in Parliament on 29th March 2017 and came into effect on 1st July 2017.
The whole nation follows this unified tax structure. GST applies to both goods and services. India follows a dual system of GST to keep both the Centre and State independent of each other.
Before learning more about GST, let’s try to understand how taxes in India work.
The Government of any country requires money for its functioning, and taxes are a primary source of revenue. Thus Government collects taxes and spends by Govt. on the public.
Types of Tax in India
There are mainly two types of taxes:
- Direct Tax.
- Indirect Tax.
What is Direct Tax?
A direct tax is a tax that an organization and person pays directly to the entity that imposed it. An individual pays direct Tax straight or directly to the Government.
An individual taxpayer, for example, income tax, land tax, poll tax, personal property tax, real property tax, and taxes on assets.
Government compute direct Tax based on the ability of the taxpayer to pay, which means that the higher their capability of paying is, the higher their taxes are.
Direct taxes in India are overseen by the Central Board of Direct Taxes (CBDT). It was formed as a result of the Central Board of Revenue Act, 1924.
Direct Tax is imposed on the income of an individual. The amount of Tax payable varies on the individual’s income from various sources such as salary, house rent income, etc. So, the more you earn, the more Tax you pay to the Government, which essentially means the rich pay more Tax than the poor.
What is Indirect Tax?
In short, Indirect Tax is a tax levied on goods and services or a transaction rather than on income or profits. This tax is not imposed directly on the income of individuals.
It increases the cost of MRP (Maximum Retail Price).
Indirect Tax is imposed on the manufacturer or supplier and then passed on to the consumer as part of the purchase price of a good or service.
The consumer is ultimately paying the indirect Tax by paying for the product.
Example of Indirect Tax:
Sales tax, Value-Added Tax (VAT), Excise tax, and Customs Duties are examples of indirect taxes.
The Taxes that were replaced by the GST
The implementation of the Goods and Services Tax (GST) replaced a number of taxes of both the state and the center. The levies that were replaced are listed below:
List of State taxes:
- Value Added Tax (VAT) or Sales Tax
- Entertainment Tax
- Tax on Lottery or Betting or Gambling
- Purchase Tax
- Luxury Tax
List of Central taxes:
- Service Tax
- Additional Excise Duty
- Central Excise Duty and so on
What are the types of GST and Explanation
As per the newly implemented tax system, there are four types of GST for example,
- Integrated Goods and Services Tax (IGST).
- State Goods and Services Tax (SGST).
- Central Goods and Services Tax (CGST).
- Union Territory Goods and Services Tax (UTGST).
Furthermore, the taxation rate under each of them is different. The government has fixed different taxation rates under each, which will be applicable to the payment of tax for goods and services rendered.
01. What is Integrated Goods and Services Tax or IGST?
IGST stands for Integrated Goods and Services Tax.
IGST is one of the three components of the Goods and Services Tax. IGS tax is levied when there is an inter-state (between 2 states) transfer of goods and services and imports and exports.
IGST Act governs the IGST. Under IGST, the body responsible for collecting the taxes is the Central Government. After collecting taxes, Central Government then divides further among the respective states.
An example for IGST:
If a seller from Mumbai has sold goods to a customer worth Rs.10 000, then IGST will be applicable as it is an interstate transaction. If GST’s rate on the goods is 18%, the trader will charge Rs.11 800 for the goods. The IGST collected is Rs.1 800, which will be going to the Central Government.
02. What is State Goods and Services Tax or SGST?
SGST full form is State Goods and Services Tax.
SGST is one of the three main categories of Goods and Service Tax, i.e. (CGST, IGST, and SGST).
State Goods and Services Tax carries a concept of one tax one nation. It falls under the State Goods and Service Tax Act 2016.
SGST Act governs the State Goods and Services Tax. It is a tax imposed on Intra State supplies of both goods and services by the State Government.
An example for SGST:
Let’s assume Raja is a trader in West Bengal. He sold goods to Paresh in West Bengal worth Rs. 20,000. The GST rate is 18%, comprising an SGST rate of 9%. In such a case, the dealer collects Rs. Three thousand six hundred (3600), of which Rs. 1,800 will go to the West Bengal state government in the form of SGST.
03. What is Central Goods and Services Tax or CGST?
CGST stands for Central Goods and Services Tax.
The Central Goods and Services Tax of CGST is a tax under the GST regime. CGST is applicable on intrastate (within the same state) transactions.
CGST Act governs Central Goods and Services Tax. The revenue earned from Central Government collect the CGST.
An example of CGST
Let’s suppose Ramesh is a trader in Delhi. He sold goods to Mahesh in West Bengal worth Rs. 20,000. The GST rate is 18%, inclusive of the CGST rate of 9%. In such a case, the dealer collects Rs. Three thousand six hundred (3600), of which Rs. 1800 will go to the Central Government.
04. What is Union Territory Goods and Services Tax or UTGST?
The UTGST full form is Union Territory Goods and Service Tax.
Union Territory Goods and Services Tax is applicable to the goods and services supply in any of India’s five territories.
UTGST State List
UTGST applies to those union territories where we do not have a separate legislature.
The list includes the following union territories:
- Andaman and Nicobar islands
- Daman and Diu
- Dadra and Nagar Haveli
The UTGST Act governs the UTGST. Union Territory government earns the revenue and collects tax. The UTGST is a replacement for the SGST in Union Territories.
Thus, the UTGST will be levied in addition to the CGST in Union Territories.
Union Territory GST contains same tax rates of 0%, 5%, 12%, 18% and 28%.
Tax exemption criteria for goods and services decided by the government for SGST will be the same for UTGST.
SGST, CGST and IGST rates of some daily use items
|Daily usage items for example, tea, coffee (except instant), edible oil, spices, and sugar. Charcoal, necessary drugs and Indian Sweets are also covered under this GST slab.||2.50%||2.50%||5%|
|Processed food and computers||6%||6%||12%|
|Body soaps hair oil, and toothpaste, capital goods, and industrial intermediaries.||9%||9%||18%|
|Luxury items like luxury and posh cars. Consumer durables like Air Conditioners and refrigerators, aerated drinks, cigarette packs, and high-end motorcycles||14%||14%||28%|
GST Meaning in various Indian Languages
English- Goods and Services Tax
Bengali- পণ্য ও পরিষেবা কর
Arabic- ضريبة السلع والخدمات
Hindi- वस्तु एवं सेवा कर
Gujarathi- સામાન અને સેવાઓ કર
Kannada- ಸರಕು ಮತ್ತು ಸೇ ವಾ ತೆರಿಗೆ
Malayalam- വസ്തുക്കളും സേവന നികുതിയും
Marathi- वस्तू आणि सेवा कर
Punjabi- ਗੁਡਸ ਐਂਡ ਸਰਵਿਸਿਜ਼ ਟੈਕਸ
Nepali- सामान र सेवा कर
Sindhi- سامان ۽ خدمتون ٽيڪس
Tamil- பொருட்கள் மற்றும் சேவைகள் வரி
Telugu- వస్తువులు మరియు సేవల పన్ను
Urdu- سامان اور خدمات ٹیکس
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FAQs about GST- Goods and Service Tax
Q: What kind of tax is GST?
Ans: What is GST in India? GST is known as the Goods and Services Tax. It is an indirect tax. GST has replaced many indirect taxes in India such as excise duty, VAT, services tax, etc.
Q: What are the 4 types of GST?
Ans: The four types of GST in India are;
- Central Goods and Service Tax (CGST),
- State Goods and Services Tax (SGST),
- Union Territory Goods and Services Tax (UTGST),
- Integrated Goods and Services Tax (IGST).
Q: What is the limit for taking registration under GST law?
Ans: It is mandatory for businesses or organizations with a turnover of ₹ 40 Lakh for goods, and ₹ 20 Lakh for services to register under GST.
In the case of special category states the said limit is halved, i.e., ₹ 20 Lakh for goods and ₹ 10 Lakh for services.
Q: Who decides GST rates?
Ans: GST Council decides the GST rates. The council has 33 members, including the State Finance Ministers. The Council is headed by the Union Finance Minister.
Q: Is there any time limit for registering in GST?
Ans: Yes, you should apply for GST registration within 30 days from the date on which you became liable for registration.
However, a casual taxable person and a non-resident are required to get GST registration at least 5 days before the commencement of business.
Q: What are the different GST rates on services?
Ans: Four different GST rates are applicable on services. These are-
- 5% (eg. tour operated services).
- 12% (eg. air travel except economy ).
- 18% (eg. outdoor catering) and
- 28% (eg. gambling).
Q: Who has to pay GST?
Ans: Who is liable to pay GST? Generally the supplier of goods or service is liable to pay GST. Nevertheless in specified cases for example, imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism.
Q: What is difference between income tax and GST?
Ans: The key difference between GST and Income tax is, GST is levied on consumption of goods and services and Income tax is levied on income earned in a financial year.
In way of collecting the tax, GST is the indirect tax paid to the government while Income tax is the direct tax paid to the government.
Q: Is GST compulsory?
Ans: Yes GST registration mandatory. You will need to get GST registration once your turnover exceeds the specified threshold limits.
For instance, if an oil company sells in West Bengal and Mumbai, he has to apply for separate GST registration in West Bengal and Mumbai respectively.
Q: What is the income limit for GST 2021?
Ans: The maximum you can receive from the GST credit for the 2021 benefit year is: $451 if you are single. $592 if you are married or have a common-law partner.
Q: Is GST required below 20 lakhs?
Ans: You can avail GST exemption if you earn less than Rs. 20 lakh rupee across all financial products irrespective of your physical location.
Q: How is GST calculated?
Ans: Authority or experts explained the GST calculation as : If any goods or services is sold at Rs. 1,000 and the GST rate applicable is 18%, then the net price calculated will be = 1,000+ (1,000X(18/100)) = 1,000+180 = Rs. 1,180.
Q: What are the rates on Taxable Goods?
Ans: Since launching the GST on July 1, 2017, India has implemented the following tax rates:
- A 0% tax rate applied to certain foods, books, newspapers, homespun cotton cloth, and hotel services.
- A rate of 0.25% applied to cut and semi-polished stones.
- A 5% tax on household necessities, for example, spices, sugar, tea, and coffee.
- A 12% tax on computers and processed food.
- An 18% tax on toothpaste, hair oil, soap, and industrial intermediaries.
- Taxing goods at 28% applies to luxury products, like refrigerators, ceramic tiles, cigarettes, cars, and motorcycles.
Q: What income is not taxable?
Ans: The minimum income amount depends on your filing status and age. In 2020, for example, the minimum for single filing status if under age 65 is $12,400 or Rs. 2.5 lakh (in India). If your income is below that threshold, you generally do not need to file a federal tax return.
Q: Can I do business without GST?
Ans: No business can carry on business without registering under GST guidelines.
Q: Is GST compulsory for small business?
Ans: Any business whose turnover exceeds Rs 40 lakh in a financial year is required to register under GST.
Similarly, a composition scheme has been introduced under GST for small businesses in India. This scheme provides for a lower amount of tax for the businesses having turnover up to Rs 1.5 crore in a year.
Q: What is the GST rate on water and water-based products?
Ans: Four different GST rates are applicable on water and water-based products. These are 5%,12%,18% and 28%. However, no GST is levied on water, when not sold in sealed containers.
Q: What are the different GST rates on hotel accommodation?
Ans: As per the 37th GST Council Meeting, the following are the GST rates on hotel accommodation.
- Rs. 1000 and less- Nil
- Rs. 1001 to Rs. 7500 – 12%
- Rs. 7501 and more – 18%
Q: What is the GST rate on gold?
Ans: GST rate on gold as a good is 3%. Moreover, 5% GST is levied on making charges of the gold ornaments.
Q: What is the GST rate for hospital services?
Ans: Authority included both human health care services and veterinary medicals services in the GST Act.
As per the existing rules, there is no GST on health care services provided by an authorized medical practitioner, licensed medical or paramedical clinic.
Also, there is nil GST on health care services provided to birds/animals at authorized clinics.
Q: What is the full form and meaning of MRP?
Ans: The full form of MRP is Maximum Retail Price (MRP). It is a manufacturer-calculated price that is the highest price that can be charged for a product sold in India and Bangladesh. However, retailers may choose to sell products for less than the MRP.
I hope this article helps you to learn not only the GST full form but also help you to understand what is the actual meaning of GST, its structure, imposer, government rules and regulations of GST, types of GST, Rates of GST on different products and services.
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