All about GST – 10 FAQs about India’s new taxation system

The implementation of GST, has many people scratching their heads. To help them understand this new taxation system better, we have come up with GST frequently asked questions and their answers.

1. What is GST?

Goods and Services Tax (GST) is a destination based tax on the consumption of goods and services. It is levied at all the stages, from manufacture to final consumption.

2. What are GST rate slabs?

The proposed GST rates were to range from 0% to 28%. Currently, there is a four tier tax structure of 5%, 12%, 18% and 28%. Essential items have been kept under lower tax slabs, while luxury and de-merit goods have been kept under higher tax slabs.

3. Which existing taxes are subsumed under GST?

GST has replaced the following taxes which were collected by the states:

1. State VAT
2. Central Sales Tax

• Luxury Tax

1. Entry Tax (all forms)
2. Entertainment and Amusement Tax (except when levied by the local bodies)
3. Taxes on advertisements

• Purchase Tax
• Taxes on lotteries, betting and gambling

1. State Surcharges and cesses so far as they relate to supply of goods and services

4. What type of GST is implemented?

There are two types of GST that have been implemented:

1. SGST – State Goods and Services Tax, to be collected by the states
2. CGST – Central Goods and Services Tax, to be collected by the Union Government

5. Why dual GST?

India has a federal structure of government, meaning that the state governments and the union government collect taxes, independent of each other. SGST and CGST will ensure the implementation of fiscal federalism.

6. Will GST benefit small taxpayers?

Yes, GST will benefit small taxpayers. Those who have an aggregate turnover of up to Rs 10 lakh in a financial year will be exempted from tax.

7. What is the status of imported goods under GST regime?

Imported goods fall under GST regime. Import Goods and Services Tax (IGST) will be levied upon such goods, along with the SGST levied by the state in which the goods are consumed.

8. What is GSTN and how is it important in the GST regime?

Goods and Service Tax Network (GSTN) is a special purpose vehicle. It has been set up to cater to the needs of GST. The GSTN is supposed to provide a shared IT infrastructure and services to Central and state governments, tax payers and other stakeholders for implementation of GST.

9. How will the disputes be resolved under GST?

According to the  Constitution (One Hundred and First Amendment) Act, 2016, Goods and Services Tax Council shall establish a proper mechanism to solve any disputes that arise out of the recommendations of the GST Council or the implementation of the same.

10. What are the benefits of GST?

GST is going to provide a healthier business platform to manufacturers and entrepreneurs in India. A uniform tax all over the country will make the transactions simple and easy. Moreover, since more number of people will fall under the category of ‘taxpayers’, it will help the government generate higher revenues. Subsequently, a cut in tax rates can be well manifested.

Any further queries related to GST? Let us know!