GST Framework In India

Hello friends, Today I’m going to explain a topic "GST Framework In India"

You can read "GST in India - An Introduction"

1. DUAL GST

The Dual GST (Goods and Services Tax), was launched in India to clarify the entire GST process system. GST was launched so that the whole taxation system would become less complicated therefore delivering the economy rise. The Dual GST system was introduced so that the whole process could become less complicated. This also helped in obtaining the quote ‘One Nation One Tax’ true. So let us understand Dual GST.

Dual GST is a type of GST in which both SGs and CGs will levy GST individually, rather than center alone levying taxes and sharing their revenues with the states. They will have various rates and possibly different commodities and services in which they are levied.

Diagram:

The Components of Dual GST are:

1.CGST (Central GST)

2.SGST (State GST)

3.UTGST (Union Territory GST)

4.IGST (Integrated GST)

2. CGST/SGST/UTGST/IGST

CGST

Central Goods and Services Tax or CGST is the indirect tax levied by the Central Government (CG). It is levied on the transaction of goods and services which are initiated within the state i.e. intrastate. 

SGST

State Goods and Services Tax or SGST represents the tax imposed by the State Government(SG). SGST is levied on the transaction of intra-state sales of goods and services, i.e. sales made within a state.

UTGST

UTGST is exactly the way linked to SGST. The only variance is that the tax revenue goes to the treasury for the particular direction of union territory where the goods or services have certainly been used. There is a key differentiation between union territory and states. The Union Territory immediately comes under the direction of the Central Government and does not have its own elected legislature as in the case of States.

IGST

IGST is levied on all inter-state supply of goods and services by the Central Government. CGST, SGST & UTGST which are levied upon the supply of goods or services within a state.

IGST has given a uniformity to taxation on the supply of goods and services made outside the state. These practices both at a supply made outside the state and those made outside the country.

3. LEGISLATIVE FRAMEWORK

There is single legislation – GGST Act, 2017 for levy GST similarly,

• Union Territories without Legislatures:
• Andaman and Nicobar Islands
• Chandigarh
• Daman and Diu
• Dadra and Nagar Haveli
• Lakshadweep
• Ladakh
• Jammu & Kashmir

Union Territories with their own legislatures:

• Ponducherry
• Delhi

There are 35 GST Act in India:

4. CLASSIFICATION OF GOODS & SERVICES

Harmonised System of Nomenclature (HSN) is used for classification of Goods:

HSN codes to be declared:

- In the case of Imports/Exports, the HSN code of 8 digits shall be compulsory.

Definition HSN Code?

HSN code stands for “Harmonized System of Nomenclature”. This system has been entered for the methodical classification of goods all over the world. HSN code is a 6-digit uniform code that classifies 5000+ products and is accepted globally. It was developed by the World Customs Organization (WCO) and it came into force from 1988.

Work of HSN code?

It has about 5,000 product groups, each named by a six-digit code, designed in a legal and logical arrangement. It is recommended by well-defined rules to perform consistent classification.

Importance of HSN? 

The main objective of HSN is to categorize goods from all over the World in a precise and relevant way. This draws in an identical classification of goods and facilitates worldwide commerce.

HSN Worldwide

The HSN scheme is accepted by more than 200 countries and economies for purposes such as:

• Uniform classification
• Base for their Customs tariffs
• Collection of international trade statistics

Over 98% of the commodities in worldwide trade is analyzed in phases of the HSN.

HSN number for each product is affirmed by most of the countries. The HSN number remains the same for almost all goods. Though, HSN number used in some of the countries varies little, based upon the kind of goods listed.

HSN in India

India is a member of the World Customs Organization (WCO) since 1971. It was basically using 6-digit HSN codes to analyze commodities for Customs and Central Excise. Succeeding Customs and Central Excise added two more digits to make the codes more accurate, appearing in an 8 digit analysis.

HSN importance under GST?

The purpose of HSN codes is to make GST precise and globally accepted.

HSN codes will remove the need to upload a detailed interpretation of the goods. This will save time and make filing easier since GST returns are automatic.

A dealer or a service provider must provide an HSN/SAC wise report of sales in his GSTR-1 if his turnover falls in the above slabs.

HSN - wise summary of outward supplies

Sections	HSN Code List for
Section 1	Live Animals, Animal Products
Section 2	Vegetable Products
Section 3	Animal or Vegetable Fats and Oils and their cleavage stocks, made nutritious fats, Animal or Vegetable waxes
Section 4	Prepared Foodstuffs, Alcohols, Spirits and Vinegar, Tobacco and Manufactured Tobacco Substitutes
Section 5	Mineral Products
Section 6	Product of the chemicals or allied Industries
Section 7	Plastics and articles thereof, Rubber and articles thereof
Section 8	Raw hides, skins, Leather, Furskins and pieces thereof, saddlery, harness, travel goods, handbags, associated containers, articles of animal gut (other than silkworm gut)
Section 9	Wood, articles of wood, Wood charcoal, Cork, articles of cork, Manufacturers of straw, Esparto or other Plaiting Materials, Basketwork, and Wickerwork
Section 10	Pulp of wood or another Fibrous Cellulosic Material, Improved (Waste and scrap) paper or paperboard and articles
Section 11	Textile and textile articles
Section 12	Footwear, Headgear, Umbrellas, Sun Umbrellas, Walking-sticks, seat-sticks, whips, riding-crops, and parts thereof, Prepared feathers and articles formed therewith, Artificial flowers, Articles of human hair
Section 13	Pieces of stone, plaster, cement, asbestos, mica, or related materials, ceramic products, glass and glassware
Section 14	Cultivated pearls, valuable or semi-valuable stones, valuable metals, Metal clad with valuable metal, and pieces thereof, Imitation Jewellery, Coins
Section 15	Base Metals and Articles of Base Metal
Section 16	Machinery and mechanical devices, electrical devices, parts thereof, sound recorders and reproducers, television picture and such recorders and reproducers, and Components and Accessories of such article
Section 17	Vehicles, Aircraft, Vessels and Associated Transport Equipment
Section 18	Optical, Photographic, Cinematographic, measuring, checking, precision, medical or surgical devices and equipment, clocks, musical devices, and accessories thereof
Section 19	Arms and ammunition, parts and accessories thereof
Section 20	Miscellaneous Manufactured Articles
Section 21	Works of art, Collectors' Pieces, and antiques

Services Accounting Code (SAC) is used for classification of Services:

- 8 digit code of which first 2 digits is zero

Definition of SAC?

Service Accounting Code is related to the International HSN codes selected by other countries across the world. Similarly in GST the applicability of Service Accounting Codes has been determined for distinguishing the applicability of the individual tax rates to the services.

Importance of SAC?

SAC is the nomenclature adopted by the Goods and Services Tax Council for identifying services delivered under GST. These codes have been issued by the Central Board of Excise and Customs (CBEC) for the Identical classification of all the services as each service has been named a distinct SAC.

Work of SAC?

SAC Code is a labeling system for services formed by the Service Tax Department of India. Using GST SAC code, the GST rates for services are set in five slabs namely 0%, 5%, 12%, 18%, and 28%.

https://cbic-gst.gov.in/gst-goods-services-rates.html

Thanks for reading friends, I will bring more such interesting topics related to taxation. 

If you have any queries, suggestions, and please comment below the blog.

You can follow me on the right side subscribe to me button by just entering your email id. 

Take care and stay home.😊😊

GST in India - An Introduction

Hello friends, Today I’m going to explain a topic “GST in India - An Introduction”.
Below is the summary of the blog.

Summary of the Blog:

• The Genesis of GST in India 
• Concept of GST
• Need for GST in India 
• Framework for GST as introduced in India 
• Benefits of GST 
• Constitutional Provisions

 The Genesis of GST in India 

Concept of GST

• VALUE ADDED TAX: GST is a value-added tax levied on the manufacture, sale, and consumption of goods and services. 
• CONTINUOUS and COMPREHENSIVE CHAIN OF TAX CREDITS: GST allows a complete and comprehensive continuous chain of tax credits from the producer’s point or service provider’s point up to the retailer level or consumer’s level through taxing only the value-added at an individual stage of the supply chain
• BURDEN BORNE BY FINAL CONSUMER: Only the final consumer bears the GST charged by the last supplier in the supply chain, with set-off benefits at all the previous stages.
• NO CASCADING OF TAXES: GST does not differentiate between goods and services and thus, the two are taxed at a single rate.

Need for GST in India 

The Amalgamation of different Central and State taxes into a single tax would assist

• Mitigate the double taxation,
• Cascading,
• The multiplicity of taxes,
• Classification issues,
• The taxable event, and etc.
• Leading to a common national market.
• Value Added Tax(VAT) standards and regulations change from state to state.

Framework for GST as introduced in India 

1. Dual GST
2. CGST/SGST/UTGST/IGST
3. Legislative Framework
4. Classification of Goods & Services
5. Composition scheme
6. Registration
7. Exemptions
8. Seamless flow of credit
9. GST common portal
10. GSPs (GST Suvidha Providers) /ASPs (Application Service Providers)
11. Compensation cess
12. GST - A tax on goods & services

 Benefits of GST 

• Removal of a group of indirect taxes such as CST(Central Sales Tax), VAT(Value Added Tax), Service tax, CAD(Current Account Deficit, SAD(Special Additional Duty), and Excise.
• Less tax agreement and a simplified tax policy related to the current tax formation.
• Removal of cascading effect of taxes i.e. removes tax on tax.
• Reduction of manufacturing costs due to the lower burden of taxes on the manufacturing sector. Therefore the prices of buyer goods will be expected to come down.
• Lower the burden on the common man i.e. public will have to discard less money to purchase the same products so were expensive earlier.

Constitutional Provisions

Thanks for reading friends, I will bring more such interesting topics related to taxation.

If you have any queries, suggestions, and please comment below the blog.

You can follow me on the right side subscribe to me button by just entering your email id. 

Take care and stay home.😊😊