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in Goods and Service Tax (GST) by (53.6k points)

Explain briefly the GST law along with its features.

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GST is a value added tax levied on manufacture, sale and consumption of goods and services. Presently tax system has 3 types of taxes – Excise Duty, Service Tax and VAT. GST is a single tax replacing all these indirect taxes.

GST = One Country, One Tax, One Market

GST is a destination, based tax applicable on all transactions involving supply of goods and services. GST in India comprises of Central Goods and Services Tax (CGST)-levied and collected by the Central Government, State Goods and Service Tax (SGST)-levied and collected by the state government, Union Territory Goods and Service Tax (UTGST)-levied and collected by the Union Territories and Integrated Goods and Service Tax (IGST) on inter-state supplies of taxable goods and services. IGST will approximately be a sum total of CGST and SGST/UTGST and will be levied by the centre on all inter-state supplies.

GST is a tax on goods and services under which every person is liable to pay tax on his output and is entitled to get input tax credit on the tax paid on its inputs (therefore tax on value addition only), and ultimately the final consumer shall bear the tax.

Salient Features of GST : 

1. GST would be applicable on supply of goods or services. 

2. It will be imposed on each stage of sales. 

3. GST would be based on the principle of destination – based consumption taxation. 

4. Taxable event in case of goods would be sale instead of manufacture. 

5. It would be a dual GST, with the centre and the states simultaneously levying it on a common base. 

6. The administration of central GST would be with the centre, and of the state GST, with the state. 

7. For Interstate transactions, IGST is levied by the Central government. 

8. Import of services would be treated as inter-state transactions and would be subject to IGST. 

9. The tax payers would need to submit periodic returns to the central and the state GST authority. 

10.GST would replace the following taxes currently levied and collected by the centre: 

  •  Central Excise Duty. 
  •  Duties of Excise (Medicinal and Toilet Preparations). 
  •  Additions Duties of Excise (Goods of Special Importance). 
  •  Additional Duties of Excise (Textile and Textile Products). 
  •  Additional Duties of Customs (CVD). 
  •  Special Additional Duties of Customs (SAD). 
  •  Service Tax. 
  •  Cesses and surcharge related to supply of goods or services. 

11.State taxes that would be subsumed within the GST are : 

  •  State VAT. 
  •  Central Sales Tax. 
  •  Purchase Tax. 
  •  Luxury Tax. 
  • Entry Tax (all forms). 
  •  Entertainment Tax (except that levied by the Local bodies). 
  •  Taxes on advertisements. 
  •  Taxes on lotteries, betting and gambling. 
  •  State cesses and surcharges related to supply of goods or services. 

12.GST would apply to all goods and services except alcohol for human consumption. 

13.GST on five specified petroleum products (crude, petrol, diesel, ATF & natural gas) would be applicable from a date to be recommended by the GSTC. 

14.Tobacco and tobacco products would be subject to GST. In addition, the centre would continue to levy Central Excise Duty. 

15.All exports and supplies to SEZs and SEZ units would be zero-rated. 

16.For categorisation of goods, Harmonised System of Nomenclature Code will be used. 

17.The GST council has decided that threshold exemption would be an annual turnover of ₹ 20 lakh for both GST and SGST. 

18.For services, the present coding system will be used.

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