The structure of GST in India: Detailed summary about GST System including GST Meaning, Vat rates, GSTN format
GST – Goods and service tax:
The GST system in India is a comprehensive tax levied on the supply of goods and services across the country. The GST system in India replaced many indirect taxes like Excise Service Tax, VAT and others, Streamlined the taxation structure and created a single market across the country.
It is included among the salient features of the GST system in India:
What is Dual GST structure?: The GST system in India follows a dual GST model with both central and state components. The GST levied by the central government is CGST, while the GST levied by the state governments is SGST. As far as inter-state transactions are concerned, integrated IGST is levied by the Central Government, which is distributed between the Central Government and the State Governments. The term UTGST signifies "Union Territory Goods and Services Tax." , the Indian government sanctioned the introduction of the Goods and Services Tax (GST). The Union Territory State Government's Architecture and Services Scheme, administered by the Government of India, is in the process of registering for the Goods and Services Tax (GST), The Union Territory government is set to introduce the UTGST credit scheme.
Let’s see The full form of CGST, SGST, IGST, UTGST.
CGST known as - Central Goods and Services Tax,
SGST Known as - State
Goods and Services Tax,
IGST Known as - Integrated Goods and Services Tax.
UTGST Known as - Union Territory Goods and Services Tax.
Destination based tax system : GST is levied on the basis of destination based consumption which means that the tax revenue is collected by the states where the goods are supplied or the services are rendered. Taxes are not levied where they are produced,
Major work of GST Council / GST Council Structure : The GST Council is a very important constitutional body, which is a body comprising the Finance Ministers of the Central Government and the State Governments, This body is responsible for making various recommendations on GST, including rate exemptions and amendments to the law. Legislative changes are implemented as necessary after the recommendations of the GST Council.
How is the tax slab? : We find that GST in India is designed in several tax labs, GST in India is structured in several tax slabs including 0%, 5%, 12%, 18%, 28%, 0.25%, 1.5% and 3%, The Government of India exempts certain goods and services from GST or taxed at zero rate.
Input Tax Credit- ITC feature : Availability of input tax credit is one of the important features of GST which enables businesses to claim credit for GST paid on inputs (such as raw materials, services) against GST liability on outputs (such as final products and services).
Functioning of GST Network (GSTN) : GSTN is an important IT component in the Indian GST system, It provides technical infrastructure for registration return filing payment process, helps in many processes and other related activities under GST network.
What is Threshold Exemption ?
Small businesses
whose turnover is below a certain threshold are exempted from GST registration
and taxation, This limit for small businesses varies from state to state and
may also be decided by the GST Council.
Thus, the objective of GST system in India is to simplify the tax system, increase compliance, reduce tax evasion, promote economic integration and financial strength across the country. Every citizen of India has a duty to follow GST system.
What is the format of GST number in India?
Every registered taxpayer in India is assigned a Goods and Services Tax Identification Number – GSTIN, This unique number is a 15 digit alphanumeric code.
The format of GST number in India is as follows:
1. First two digits represent the state code of India For example Maharashtra code is 27, Gujarat Code is 24 etc.
2. The next ten digits represent the taxpayer's Pan Account number.
3. The 13th digit is based on the number of registrations in the state for the same PAN. These are assigned alphabetically from one to nine, then A to Z, for example, numbers first and then alphabets. 123456789... and A to Z etc.
4. The 14th digit is a entity code that represents the compassionate number of a business in an entity, The same can be assigned in alphabetical order according to their business vertical.
5. The fifteenth digit is given as a check code which is used for error detection.
I am giving an example of GSTIN format here suppose state
code of Maharashtra is 27 PAN number is MNOPQ1234R and assuming there is only
one registration under this plan GSTN will look like 27MNOPQ1234R9Z1.
This format can be modified to some extent depending on the particular circumstances of the taxpayer
What are the GST rates in India? GST rates structure.
As per my update GST rate in India is structured in several tax slabs including zero percent 5% 12% 18% and 28%, also 0.25% 1.5% 3% has been added to it. Additionally, I have provided a brief overview of GST rates where certain goods and services are exempted from GST or taxed at zero rate.
0% GST: Zero percent GST covers a wide range of essential
goods including fresh fruits, vegetables, milk, grains, newspapers, eggs, books
and healthcare, GST is not levied on many such essential items.
5% GST: 5 % GST is levied on goods such as packaged food, some
household goods, hotels, transport services and lodging, coal, Indian sweets
and some healthcare services,
12% GST: Processed food are subject to 12% tax, as well as
many types of services such as Hotels with rates above a specified threshold,
clothing below a certain threshold, industrial centers, commercial/ business
class air travel and so on.
18% GST: Goods such as cosmetics, detergents, smartphones,
electrical appliances, restaurant services, Capital goods, Industrial
components soaps, detergents and financial services are taxed at 18% and many
related services are taxed.
28% GST: Some services like luxury goods, sin goods, high quality goods, automobiles, aerated drinks
and five star hotels services come under the tax slab of 28%.
0.25% GST: Roughly Diamond under the tax slab of 0.25%
1.5% GST: cut or polished diamond under the tax slab of 1.5%
3% GST: Gold, Gold items comes under the tax slab of 3%
You should note that the GST rates are subject to change or
modification as per the decision of the GST Council which reviews and revises
the rates from time to time based on various factors such as economic
conditions, revenue requirements and considerations. So it is better to check
the new GST rates and exemptions from official auditors or consult a tax expert
about specific details. I would advise you to consult a tax expert from time to
time as needed.
If you want to know the currency, VAT number format and VAT rate for countries in the world, you can read by clicking here. worldwide vat details
