It has been 45 days since the GST bill roll out. The move has been considered to be the most awaited one. Additionally, the GST Council has called it a historic move as well. Despite the boasting, GST remains to be a complicated tax system which calls for much understanding and analysis. However, it is time the taxpayers decipher the GST code before the first tax filing date comes knocking on the door. The structure and the process need a lot of digging around for the perfect understanding of GST and its different aspects.
The previous tax system had different layers included in a singular tax event. This is not the case for GST. Under this tax system, everything is incorporated inside one taxation.
Under GST, you would find three main branches CGST, SGST and IGST. To know which branch would be levied to which tax event, you need to understand these three branches in-depth.
This one refers to Central Goods and Service Tax. This branch of tax gets levied at the time of intra-state supply of goods. This tax is governed by the central government and CGST act. Both central government and state government agree on this tax. This tax, according to Section 8, will not exceed 14%.
This tax refers to State Goods and Service Tax. This tax gets levied by the representative state government on intra state supply of goods and services. The tax would go to the state government’s exchequer. Any liability of tax that is levied under SGST can only get put off against IGST.
This stands for Integrated goods and service tax and it is governed by IGST act. IGST is levied only on inter state service and goods. When inter state service of goods takes place, only at the point of time this tax would be levied.