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Under the GST umbrella, three taxes for states/UTs and Centre

Goods and Services Tax (GST) Finance and Banking

Under the GST umbrella, three taxes for states/UTs and Centre

Mains Paper 3: Economy | Mobilization of resources

The newscard gives a wholesome understanding of GST. Read it carefully to develop your understanding. Few takeaways are:

Prelims Level: Read about CGST and IGST, implementation, etc.

Mains Level: Understand the working of GST for writing a good Mains answer
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Context

1. Under the GST regime, the Centre and states/Union Territories shall simultaneously levy indirect taxes on a common tax base

Taxes within GST

1. Within the umbrella of GST, the GST levied by the Centre on intra-state supply of goods and/or services will be called Central GST (CGST) and levied by states/UTs, State GST (SGST/UTGST)

2. Integrated GST (IGST) will be levied and administered by the Centre on the inter-state supply of goods and services

Why the state tax?

1. CGST and SGST/UTGST were decided keeping in mind the federal structure of the country

2. Here both the Centre and the states have the powers to levy and collect taxes through appropriate legislation

3. The CGST and SGST will be levied simultaneously on every transaction of supply of goods and services except exempted goods and services

4. They will not be implemented on goods which are outside the purview of GST, and transactions which are below the prescribed thresholds

Some understanding of GST implementation

1. SGST and CGST will be levied on the same price or value

2. This will be unlike state VAT, which is levied on the value of the goods inclusive of CENVAT

3. The location of the supplier and recipient within the country is immaterial for the purpose of CGST

4. SGST will be chargeable only when the supplier and recipient are both located within a state

5. IGST shall be levied and collected by the Government of India, and such tax shall be apportioned between the Centre and the states

How Will GST Work?

1. Under the GST regime, tax liability arises when the taxable person crosses the turnover threshold of Rs 20 lakh

2. For Northeastern and ‘Special Category’ states, it is Rs 10 lakh

3. Cross-utilisation of input credit of one component of tax against the other is allowed except utilisation of credit of CGST for SGST and vice versa