GST – Basics in India

GST, which stands for Goods and Services Tax, is a comprehensive indirect tax implemented in India on July 1, 2017. It replaced multiple indirect taxes like Central Excise Duty, Service Tax, Value Added Tax (VAT), and others. Here are some basics about GST in India:

1. Dual Structure: GST in India follows a dual structure, comprising of Central GST (CGST) levied by the central government and State GST (SGST) levied by the state governments. Both CGST and SGST are applicable on the supply of goods and services within a state.
2. Integrated GST (IGST): IGST is applicable on the supply of goods and services between states or Union territories. It is levied and collected by the central government and is used for inter-state transactions.
3. Tax Slabs: GST in India has multiple tax slabs, classified as 0%, 5%, 12%, 18%, and 28%. Goods and services are categorized under different slabs based on their nature and importance. Some essential items like basic food items, healthcare, and education are exempted or taxed at lower rates.
4. Input Tax Credit (ITC): Registered businesses can claim input tax credit, which allows them to set off the tax paid on inputs (purchases) against the tax liability on outputs (sales). This helps in avoiding cascading tax effects and reduces the tax burden.
5. GST Registration: Businesses with an annual turnover exceeding a specified threshold (currently ₹40 lakh for most states) are required to register under GST. However, certain businesses, like those engaged in inter-state supply or e-commerce, need to register regardless of turnover.
6. GST Returns: Registered businesses are required to file regular GST returns, including details of their sales and purchases. These returns need to be filed online through the GST portal.
7. Composition Scheme: Small businesses with a turnover up to a specified limit (currently ₹1.5 crore for most states) can opt for the composition scheme. It offers certain relaxations in compliance and allows them to pay GST at a lower rate.
8. E-way Bill: For the movement of goods exceeding a specified value, an e-way bill needs to be generated. It ensures proper documentation and monitoring of inter-state movement of goods.

It’s important to note that the GST framework and rates are subject to change as per the decisions of the GST Council, which comprises representatives from the central and state governments. For detailed and up-to-date information, it is recommended to refer to official government sources or consult a tax professional.