As we already mentioned there are 4 types of GST in India. Let’s discuss them one by one.
CGST is a single tax that is levied by the central government on the supply of goods and services. It is collected by the Central Government on behalf of the States.
Here are the CGST rates:
A state goods and services tax (SGST) is in addition to the central goods and services tax (CGST) and the union territory goods and services tax (UTGST). The SGST is collected by the state government and then shared with the central government. The SGST is used to fund state-level infrastructure projects and programs.
Here are the SGST rates:
If you want to know more about the GST Rates read the article: GST Goods and Services Rates in 2022
The Union Territories Goods and Services Tax (UTGST) is a single tax on the supply of goods and services levied by the Union Territories. It is collected by the Union Territories on behalf of the Central Government.
UTGST is levied at 9% on all intra-Union Territory supplies of goods and services. The UTGST rate is uniform throughout each Union Territory.
The Integrated Goods and Services Tax (IGST) is a single tax on the supply of goods and services. It is collected by the Centre on behalf of States/Union Territories.
The IGST is made up of the following:
GST is levied by the government at rates determined by Parliament, not exceeding 20% on goods and 10% on services.
Here are the IGST rates:
These are all the types of gst. Now let’s move on to how to actually calculate them.
To know, how to calculate GST, you need to know the following:
You just need to multiply the taxable value by the applicable GST rate, and that's it.
This calculation is usually done in the form of an invoice. If you come across some article that states that there are several types of invoices in GST, disregard it. GST only recognises Tax Invoice format.
Here’s what the calculation actually looks like on an actual GST invoice format. This GST format is standard.
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The input Tax credit is the backbone of GST. It is the credit that a taxpayer gets against the GST paid on goods and services. It is available for both CGST and SGST. You can use the credit to reduce your tax liability.
Registered taxpayers in India may claim it for GST paid on capital goods, input services, and intermediate goods. The credit may be used to pay the GST due on the final product or service and can be carried forward for up to 20 years.
Taxpayers under GST are broadly classified into 3 types:
To take advantage of the new indirect tax system, traders and businesses must register as GST (Goods and Services Tax) participants. Based on their annual turnover, the GST Council has categorized traders and businesses into four groups.
The 4 categories are:
There are 4 types of GST registration:
Businesses are required to file GST returns on a periodic basis. The due date for filing GST returns is generally the 20th of the month following the month for which returns are filed.
A GST return is a document containing information about your sales, purchases, the tax collected on sales (output tax), and the tax paid on purchases (input tax). In order to get your GST refund, you must pay your tax liabilities (money you owe the government).
The GST system requires all business owners and dealers to file GST returns based on the type of business or transaction they conduct.
If you want to learn more about the types of GST returns see this article: Types of GST Returns | All You Need to Know.
Now that we know what types of GST there are, let's ask a question: why do we even need it?
India's last indirect tax system was a complex web of central and state taxes. These include the Central Sales Tax, the Value-Added Tax, the Octroi and Entry Tax, the Purchase Tax, the Luxury Tax, and the Entertainment Tax.
Then GST came along and replaced them all:
In most cases, these taxes have been replaced by the GST. It's a single tax that's collected at all stages of the supply chain – from manufacture to sale to consumption. This reduces the cost of doing business in India. It will also make Indian products more competitive in the global market.
The advantages of GST include:
As well as other more general benefits like:
For small businesses, these are the benefits it has:
GSTINs are unique identifiers for businesses registered under the Goods and Services Tax (GST) regime in India. The GSTIN number is composed of 15 digits issued by the GST Network (GSTN). It is mostly used to track transactions and taxes.
To obtain a GSTIN, businesses need to register for GST with the GSTN.
The registration process is simple and can be completed online in a few minutes. The GST registration process is entirely online and requires no documents or meetings.
The first step is to visit the GST Website and click on the 'New Registration' tab. This will take you to the registration page, where you need to enter the following details:
After entering all the details, click on 'Submit'.
The system will generate an ARN (Application Reference Number) which will be sent to your registered email ID and mobile number. This ARN can be used to track the progress of your application.
If you want to find the GSTIN of some other company there are two way you can do it.
The first way is to search for it here on the GSTIN website: Find Business GSTIN Number. The second way is to well...to just ask the business for their GSTIN number. It's public information so there's no reason for anyone to hide it.
A GST e-way bill (EWB) is a document that is generated when goods (worth more than Rs. 50,000 within or outside of the State) are transported from one place to another throughout India. The e-way bill contains information about the goods, such as their description, quantity, and value. It also includes the name and contact information of the person transporting the goods.
The e-way bill is used to track goods' movement and helps reduce tax evasion.
E-way bill can only be generated on the GST portal.
To create an e-way bill, you need to log in to the GST Portal.
Once logged in, go to the 'E-Way Bill' section and click on 'Create New'.
You will then need to enter the following details:
Once you have entered all the details, click on 'Create EWB'.
If you want to know more about the GST Portals read the article: Register yourself on the GST portal.
The e-way bill is important because it:
That's all we need to cover on the topic of the GST types. Feel free to reach out if you have any questions about it.
Let's review what the main features of GST are: