End-users are ultimately responsible for paying GST, even though suppliers pay it theoretically. Neither the central nor state governments have the authority to collect taxes in India, which is a quasi-federal country.
In addition to replacing state and central taxes, GST has also replaced a number of other taxes. In addition to the above levies, the following levies have been replaced:
- Value-added tax (vat) or sales tax
- Entertainment tax
- Tax on lottery or betting or gambling
- Purchase tax
- Luxury tax
- Service tax
- Additional excise duty
- Central excise duty and so on
The registration of indirect taxpayers under GST makes it easier for the state to identify them and ensure that tax compliance is maintained throughout the economy. Under the GST Law, any business organization must register with the relevant tax authorities in order to collect taxes on behalf of the government and claim Input Tax Credits.
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GST Applicability: Tax Slabs
There are five slabs of GST rates in India for various products and services: 0% GST, 5% GST, 12% GST, 18% GST, and 28% GST. In order to ensure that GST Council rates remain relevant to the demands of industry and market development, each slab rate is reviewed regularly.
A lower tax rate applies to basic commodities, while a higher tax rate applies to luxury goods and services.
Types of GST and its Applicability
IGT stands for Integrated Goods & Services Tax, and it is a tax on goods, services, imports, and exports that are traded between states. A Central Government agency collects IGST, governed by the IGST Act. Once the taxes have been collected, the Federal Government divides them among the states.
State Goods and Services Tax, or SGST, applies to intrastate transactions (within the same state). Goods and/or services supplied intrastate are subject to both State GST and Central GST. A State GST is a tax collected by the state on the purchase or sale of goods and services inside a state. Only the state government can claim the tax generated by the SGST.
GST-based taxes, such as the Central Goods and Services Tax (CGST), are prevalent in various states. Intrastate transactions (within the same state) fall under this rule. CGST treatment and levy are regulated by the CGST Act. It is the responsibility of the Central Government to collect the CGST income.
As an alternative to the State Goods and Services Tax (SGST), the Union Territory Goods and Services Tax (UTGST) has been introduced in the UTs of India. In the Andaman and Nicobar Islands, Chandigarh, Daman Diu, Dadra and Nagar Haveli, and Lakshadweep, the UTGST Act governs the sale of goods and services. Furthermore, UTGST revenue is collected by the Union Territory government.