When it comes to indirect taxation, taxes are important to the government since they are an automated process that occurs when people purchase and sell products and services across the country. As a result, they are simple to collect and beneficial for both taxpayers and tax collectors. In India, we have an indirect tax system called the GST. In this article, we will understand the GST, Types of GST Registration, and GST Tax Rate Slabs.
Understand the GST
GST (Goods and Service Tax) replaced the state taxes like VAT, Octroi, Luxury tax, and Purchase tax. It also replaced several central taxes like custom duty, central excise duty, and service tax. GST was imposed with a view to one Nation One Tax and since the existence of new tax norms, there are several types of GST registration available to opt by the business people. If the supply of goods and services is provided in several states, the GST registration must be acquired in all the states.
Important Note: GST Registration is necessary for business organizations whose turnover is more than 20 lakh per year. However, the businesses in some states such as the northeastern states must obtain GST Registration if their turnover limit is Rs. 10 lakh or more.
4 Types Of GST Registration In India
1] State Goods and Services Tax (SGST)
State Goods and Services Tax is imposed by the state government. The state government collects revenue through the people who are running the businesses within the state boundary. Earlier, the applied taxes inside the state were Vat, Entertainment Tax, Luxury Tax, Octroi, Tax on lottery, and purchase tax. But now all these taxes have been replaced by SGST (State Goods and Services tax).
2] Central Goods and Services Tax (CGST)
CGST is applied by the central government for inter-state goods and service transactions. The central government earns revenue through the business people who are dealing with in the several states of the country. goods and service tax.
It is charged along with SGST or UGST, where the center and state share the revenue.
3] Integrated Goods and Services Tax (IGST)
Integrated Goods and Services Tax is imposed on inter-state goods and service transactions and it is applicable on imports and exports businesses. The Integrated Taxes are shared by both the state and central government. IGST also helps to claim tax input credit. In addition, It checks to cascade tax and helps business owners to save at every stage of the supply chain. Therefore, Importers and Exporters can obtain GST Registration to avail of its benefits.
4] Union Territory Goods and Services Tax (UGST)
UGST is imposed on the goods and services supplied within the 5 territories of India which are; Andaman and Nicobar Islands, Dadra and Nagar Haveli, Chandigarh, Lakshadweep, and Daman and Diu.
GST Tax Rate Slabs in India
As far as GST rates are concerned, there are 4 slabs. However, the government is planning to implement higher and fewer GST Rates to simplify the process and reduce tax evasion. The GST Tax Rates on common items that you should know are as follows.
- 5%- Household items come under these slab-like sweets, sugar, spices, tea, coffee, cola, edible oil, etc.
- 12%- Computers and Processed food come under this slab-like cheese, ghee, ayurvedic medicines, cell phones, and fertilizers, etc. Business-class air tickets and non-ac hotels are also included under the 12% of GST slab.
- 18%- Toothpaste, soaps, hair oil, capital goods, and industrial intermediaries come under this 18% GST slab.
- 28%- Luxurious items such as premium cars, consumer durables – AC, Refrigerators, etc. come under this slab.
Kinds Of GST Tax Payers
- Normal Taxpayers are the people who are doing business in India. Maximum businesses come under this category.
- A Casual Taxpayer is a person who sets up a seasonal shop. Another relevant business establishment also comes under this category.
- Non-Resident Taxable Persons are the people who are living outside India but supplying goods to individuals who are residing in India. This is Similar to the Casual Taxable Person, where you must deposit the required amount for GST.
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