— Kishore V, SME and ACW at Edumarz
GST (Goods and Services Tax) is a consumption-based tax on goods and services.
It is suggested that it be taxed at all phases, from manufacture to final consumption, with possible setoff for taxes paid earlier.
The tax would be collected by the taxing authority that has jurisdiction over the place of consumption, also known as the place of supply, in the case of a destination-based consumption tax.
GST has a dual aspect, with the Centre and States levying on the same tax base at the same time.
CGST is for Central Goods and Services Tax, while SGST stands for State Goods and Services Tax.
The Central Government’s earnings will be derived from the CGST taxes. Central excise duty, additional excise duty, special excise duty, central sales tax, and other existing central taxes would be absorbed into the CGST.
The State Good and Services Tax (SGST) is a tax imposed by the state on goods and services.
The State Government’s revenue comes from the SGST collection.
All state taxes, including VAT, entertainment tax, luxury tax, and entrance tax, would be integrated under GST.
For example, Ramesh, a Punjabi vendor, sold $10,000 worth of products to Seema in Punjab. If the GST rate is 18%, which includes 9% CGST and 9% SGST, 900 will go to the Central Government and 900 to the Punjab Government.
The State Government’s revenue comes from the SGST collection. All state taxes, including VAT, entertainment tax, luxury tax, and entrance tax, would be integrated under GST.
IGST stands for Integrated Goods and Services Tax.
For example, The IGST revenue is split between the Central and State governments according to the rates set by the government.
The IGST is levied when goods and services are transferred from one state to another.
The IGST applies to both goods and services imported. If commodities are transported from Madhya Pradesh to Rajasthan.
For example, the transaction will be subject to IGST. Let’s expand on the previous example to learn about SGST.