GST is value added tax charged on the most goods and services sold for domestic expenditure. The Goods and Services tax (GST) is paid by consumers but remitted to government by businesses selling goods and services. The business adds the GST to the price of the product, the customer who purchases the product pays the selling price plus the GST. The GST is collected by the seller and forwarded to the government. In some countries it refers to Value added tax.
Most countries with a GST have one unified GST system, which implies that one rate is applied throughout the country. A country with a unified GST platform joins the central tax (such as sales tax, excise tax, duty tax and service tax) with state level taxes like entry tax, entertainment tax, transfer tax , etc and collects them as one single tax. GST brings economies together and improve overall economic growth of the nation.
Types of GST
- Integrated Goods and Services Tax (IGST): This tax is under GST Regime that is applied between 2 states (Interstate) which supply goods and services as well as on imports and exports. IGST is governed by the IGST act, under this act the taxes are collected and divided among the respective states by the central government.
- State Goods and Services Tax (SGST): This tax is applicable on Intrastate (within the same state) transactions. SGST is a tax under GST regime that supplies goods and services levied on both state GST and central GST. It is governed by SGST act where the State GST or SGST is levied by the goods and services that are purchased or sold within the state. SGST can solely claim the revenue earned by the respective state government.
- Central goods and Services Tax (CGST): CGST is just like State GST, where the tax is under GST regime which is again applicable within the same state (intrastate) transactions. It is governed by the CGST Act. And the revenue earned is collected by the central government. For eg if the GST rate charged is 18% it will be divided equally in the form of 9% CGST and 9% SGST.
- Union Territory Goods and Services Tax (UTGST): UTGST is applicable for the supply of goods or services in Union Territories like Andaman and Nicobar Islands, Chandigarh, Nagar Haveli, Lakshadweep, etc. It is the counterpart of state goods and services tax which is levied on the supply of goods or services in the Union Territories of India. It is governed by UTGST act and Union Territory Government collects the revenue earned from UTGST. Also UTGST is replaceable for the SGST in union Territories. In addition to CGST, UTGST will be levied in Union Territories.
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