MAP-010-001611

B.B.A. (SEM VI) (CBCS) EXAMINATION

MARCH/APRIL-2018

604: BUSINESS TAXATION-II

(NEW GST)

PREPARED BY KHYATI KAKKAD, LECTURER SLPT BBA COLLEGE AMRELI

QUESTION:1

In the books of Madhav statment showing computation of taxable incom

from house property

Assessee:............................ A.Y.:2018-19

PAN No.:............................. P.Y.2017-18

Particulars Amt AmtHouse 1 Gross annual value

- Unrealised rent - Vacancy period - Municipal tax Net annual value - 30% std. Deduction - Int on loan - Current year - Pre cons. Int House 2 Net annual value - 30% std. Deduction - Int on loan - Current year - Pre cons. Int Loss from house property

48000 2000 8000 5000 33000 9900 2000 3000 - - 15000 5000

18100 (20000) (1900)

QUESTION:1(OR)

In the books of shree krishna statment showing computation of taxable incom from business

Assessee:............................ A.Y.:2018-19

PAN No.:............................. P.Y.2017-18

Particulars amt amt Net profit as per profit and loss a/c 25125 + Add Household expenses Income tax Int on capital Res for bad debts Depri on furniture Adj of clo stock

-less Share dividend Adj of op. Stock Depri. As per income tax Goods withdrawn for personal use Income from business -ded u/s 80c Taxable income

250000 18050 42000 1700 9000

11667

40000 5777 8600

13925

332417

68302

289240 10000

279240

QUESTION:2

In the books of amidhara statment showing computation of taxable incom from capital gain

Assessee:............................ A.Y.:2018-19

PAN No.:............................. P.Y.2017-18

Particular Amt Amt

1. Self occupied house Sales consideration - Transfer chrgs

4071000 23000

Net sales considaration - Indexed cost

2. Shares of relience ltd. Sales consideration - Transfer chrgs Net sales considaration - Indexed cost

3. Shares of arvind ltd. Sales consideration - Transfer chrgs Net sales considaration - Indexed cost 4. Jwellary Sales consideration - Transfer chrgs Net sales considaration - Indexed cost

Total capital gain Newly purchased house Taxable capital gain

4048000 3375000 445920 - 445920 360000 239600 4000 235600 337500 3396100 11000 3385100 3375000 683100 465000

673000 - - 10100 218100

QUESTION:2(OR)

In the books of kiran statment showing computation of taxable incom from other sources

Assessee:............................ A.Y.:2018-19

PAN No.:............................. P.Y.2017-18

Particulars Amt Amt 1. Dividend received on pref. Shares of

indian co. 2. Dividend received on Shares of indian

co. 3. Gross int. On bank deposits 4. Rent of factory and building 5. Ground rent 6. Sitting fee for attending meeting 7. Prize won in hourse race 8. Rent received from sub tenant 9. Income from unexplained source 10. Int. On debentures 11. Int. On capital investment bonds 12. Winning from lottery

Gross income

- Deductions: Depriciation Int. On loan taken Income from other sources

- - 12500 35000 3000 30000 25000 7200 50000 9000 3500 100000 275200 20000 2400

252800

QUESTION:3

In the books of kiran and shivangi statment showing computation of taxable income

Assessee:............................ A.Y.:2018-19

PAN No.:............................. P.Y.:2017-18

Particulars Amt Amt Net profit as per profit and loss A/c+ Add Commission to kiran Int. On loan Salary to kiran Salary to shivangi

20000 20000 210000 26000

52000

Int. On capital 1.kiran 2.Shivangi Res. For bad debt Income tax paid

- Less Int. On investment Long term capital gain Short term capital gain Winning from lottery Book profit

6000 4000 6000 8000 6000 8000 10000 60000

300000 84000 216000

Remunaration to paertners

As per sec 40b: 216000*60%= 1296000

QUESTION:3(a)

In the books of raviraj ltd. statment showing calculation of tax credit under MAT

Assessee:............................ A.Y.:2018-19

PAN No.:............................. P.Y.:2017-18

year MAT Tax credit c/f 2014-15 2015-16 2016-17

4000000-600000 2000000-1400000 2000000

3400000 2000000(1400000-600000) -

So, no credit is available to carry forward.

QUESTION: - 3(b)

Credit of Tax paid under MAT [Section 115JAA(1A)] Where any amount of tax is paid under section 115JB(1) by an assessee, being a company for the assessment year commencing on the 1st day of April, 2006 and any subsequent assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section. [Section 115JAA(1A)].

1. Amount of Tax Credit. The amount of credit to be given shall be the difference between tax paid for any assessment year u/s 1I5JA (1) or u/s 1I5JB (as the case may be) and the amount of tax payable by the assessee on its total income. In other words : Amount of tax credit = MAT — Tax payable on total income computed as per normal

provisions of Income Tax Act.

2. Year in which tax credit shall be available [Section 115JAA(4)] Tax credit shall be allowed to set-off in a year when tax becomes payable on the total income computed in accordance with the normal provisions of the Income Tax Act, 1961. In other words, tax credit is available in the previous year in which tax as per normal provisions of Income Tax Act is more than the tax payable under MAT. Tax credit cannot be set-off against minimum alternate tax payable under section 115JB.

3. Period for which tax Credit is available [Section 115JAA(3A)]. With effect from Assessment Year 2007-08, the amount of tax credit shall be carried forward and set-off Seventh Assessment Year immediately succeeding the assessment year in which tax credit become allowable under section I 15JAA(1A). However up to Assessment year 2006-07, such carry forward and set-off was allowed up to 5th assessment year immediately succeeding the assessment year in which tax credit became allowable. No interest shall be payable on the tax credit allowed under sub-section (1A) of section 115JAA.

4. Increase/Decrease of Tax Credit Where as a result of an order under sub-section (1) or sub-section (3) of section 143, section 144, section 147, section 154, section 155, sub-section (4) of Section 245D, section 250, section 254, section 260, section 262, section 263 or section 264, the amount of tax payable under this Act is reduced or increased, as the case may be, the amount of tax credit allowed under this section shall also be increased or reduced accordingly.

QUESTION: - 4 Distinguish Tax Evasion, Tax Avoidance and Management

Points of difference

Tax Evasion Tax Avoidance Tax management

Objective The Objective of tax evasion is to avoid or reduce tax liability

The Objective of tax avoidance is to reduce tax liability within four corners of law

The Objective of tax management is to comply with the provisions of law

Related Tax Evasion is related to reducing tax liability by unfair means

Tax Avoidance is related to taking benefit from loopholes of law

Tax management is related to past, present and future proceedings to tax planning

Scope Tax Evasion is illegal Tax Avoidance it is legal Tax management has limited scope

Result Tax Evasion results in offence punishable by law

Tax Avoidance is legal right of tax payer

Tax management results in substantial benefit in long run

Legality Tax Evasion is illegal Tax Avoidance is legal Tax management is legal

QUESTION: - 4(OR)

Tax Planning and its Objectives Definition: Tax Planning can be understood as the activity undertaken by the assessee to reduce the tax liability by making optimum use of all permissible allowances, deductions, concessions, exemptions, rebates, exclusions and so forth, available under the statute.

Put simply, it is an arrangement of an assessee’s business or financial dealings, in such a way that complete tax benefit can be availed by legitimate means, i.e. making use of all beneficial provisions and relaxations provided in the tax law, so that the incidence of tax is minimum. This ensures savings of taxes along with conformity to the legal obligations and requirements. Therefore it is permitted by law.

Objectives of tax planning

1. Reduction of Tax Liability: An assesse can save maximum amount of tax, by properly arranging his/her operations as per the requirements of the law, within the framework of the statute.

2. Minimization of Litigation: There is a war like situation between the tax payers and tax collectors as the former wants the tax liability to be maximum while the later attempts to extract the maximum. So a proper tax planning aims at conforming to the provisions of a tax law, in such a way that incidence of litigation is minimized.

3. Productive Investment: One of the major objectives of tax planning is channelization of taxable income to different investment plans. It aims that the optimum utilization of resources for productive causes and relieving the assessee from the tax liability.

4. Healthy Growth of Economy: The growth and development of the economy greatly depend on the growth of its citizens. Tax planning measures involve generating white money that flows freely and results in the sound progress of the economy.

5. Economic Stability: Proper tax planning brings economic stability by various techniques such as mobilizing resources for national projects or availing ways for investments which are productive in nature.

Tax Planning follows an honest approach, to achieve maximum benefits of tax laws, by applying the script and moral of law. Therefore the objectives do not in any way contradict the concept of tax laws.

QUESTION: - 5(1)

COCEPTS OF INPUT TAX CREDIT AND SUPPLY

Enough has been said about what a significant reform GST will be. But if there is one thing that completely stands out about this new tax, it is – the mechanism of input credit under GST.

Here’s a quick check about you can expect from this post –

For beginners – Don’t worry if you have never heard of ‘input credit’ before. We’ll start from scratch.

For businesses – If you are a business, you may have already heard of VAT input credit, and you will soon know how it differs from GST input credit.

Part 1# what is input credit?

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The tax charged on your purchases has been deposited/paid to the government by the supplier in cash or via claiming input credit

Supplier has filed GST returns

Possibly the most path breaking reform of GST is that input credit is ONLY allowed if your supplier has deposited the tax he collected from you. So every input credit you are claiming shall be matched and validated before you can claim it.

Therefore, to allow you to claim input credit on Purchases all your suppliers must be GST compliant as well.

There’s more you should know about input credit –

It is possible to have unclaimed input credit. Due to tax on purchases being higher than tax on sale. In such a case, you are allowed to carry forward or claim a refund.

If tax on inputs > tax on output –> carry forward input tax or claim refund

If tax on output > tax on inputs –> pay balance

No interest is paid on input tax balance by the government

Input tax credit cannot be taken on purchase invoices which are more than one year old. Period is calculated from the date of the tax invoice.

Since GST is charged on both goods and services, input credit can be availed on both goods and services (except those which are on the exempted/negative list).

Input tax credit is allowed on capital goods. Input tax is not allowed for goods and services for personal use. No input tax credit shall be allowed after GST return has been filed for September

following the end of the financial year to which such invoice pertains or filing of relevant annual return, whichever is earlier.

QUESTION: -5(B)

GST Registration

Taxable Person under GST

Taxable person under GST is anyone who is registered under GST or required to be registered under GST. Various criteria’s like turnover, business activity or transaction have been specified in GST Act, which details persons liable to be registered under GST. Further, any person having registration under Service Tax, VAT or Central Excise on the date of GST coming into force will automatically be considered a taxable person under GST.

GST Definition of Taxable Person

The term “person” has been defined in Section 2(73) of the GST Act as follows:

An Individual A Hindu Undivided Family A Company A Partnership Firm A Limited Liability Partnership An Association of Persons or a Body of Individuals, whether incorporated or not, in

India or outside India Any Corporation Established by or under any Central, State or Provincial Act, or a

Government Company Any body corporate incorporated by or under the laws of a country outside India A co-operative society registered under any law relating to cooperative societies A local authority Government Society as defined under the Societies Act, 1860 Trusts Artificial judicial person, not falling within any of the above categories

The definition for taxable person under GST is similar to the definition in the existing Service Tax law. important to note that the definition for taxable person includes all kinds of judicial persons (artificial persons) also and not only natural persons.

Who needs GST Registration?

The criteria for persons who should be registered under GST is provided under Chapter 6 of the GST Act. As per the GST Act, the following persons are required to obtain GST registration:

Aggregate Turnover Criteria

Any supplier of goods and/or services who makes a taxable supply with an aggregate turnover of over Rs.20 lakhs in a financial year is required to obtain GST registration. In special category states, the aggregate turnover criteria is set at Rs.10 lakhs.

Special Category States under GST

Currently, Assam, Nagaland, Jammu & Kashmir, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Uttarakhand, Tripura, Himachal Pradesh, and Sikkim are considered special category states. The National Development Council composed of the Prime Minister, Union Ministers, Chief Ministers and members of the Planning Commission determines the list of special category states in India. Also, the decision to accorded special status to a State is based on factors like: hilly and difficult terrain; low population density and or sizeable share of tribal population; strategic location along borders with neighboring countries; economic and infrastructure backwardness and non-viable nature of state finances.

Mandatory GST Registration Criteria

Some taxable persons who do not qualify for GST registration under the aggregate turnover criteria are required to mandatorily obtain GST registration, if they satisfy any of the following criteria:

Persons making any inter-state taxable supply

Inter-state supply is supplying goods or services from one state to another. Hence, any taxable person who is involved in supplying goods or services to persons outside of the State, is required to mandatorily obtain GST registration.

Casual taxable persons making taxable supply

Casual taxable person is a person who occasionally undertakes supply of goods and/or services and has no fixed place of business. An example of a casual taxable person would be a fireworks shops setup during Diwali festival time, selling fireworks temporarily.

Persons who are required to pay tax under reverse charge

Under GST, for most goods and/or services, the liability for payment of tax rests with the supplier. However, in some cases, the liability to pay tax (GST) would rests with the recipient of the goods or services, instead of the the supplier. Such transactions are called reverse charge. Hence, any person (recipient of goods or service) who is required to pay tax under reverse charge must mandatorily obtain GST registration.

Non-resident taxable persons making taxable supply

Non-resident taxable person is any person who occasionally supplies goods or services to recipients in India, but who has no fixed place of business or residence in India. All non-resident taxable persons are mandatorily required to obtain GST registration, irrespective of aggregate turnover criteria.

Persons who are required to deduct tax under GST

According to Section 51 of the GST Act, the Government may mandate a department or establishment of the Central Government or State Government or local authority or Governmental agencies or a category of persons to deduct tax at the rate of 1% from the payment made or credited to the supplier, where the total value under a contract, exceeds Rs.2.5 lakhs. Such persons are required to mandatorily obtain GST registration and are referred to as “deductor”.

Persons who make taxable supply of goods or services on behalf of other persons

Any person who makes a taxable supply of goods or services on behalf of other persons would include agents, brokers, dealers, etc., Such persons are required to mandatorily obtain GST registration.

Input Service Distributor

Input Service Distributor means a supplier of goods or services which receives tax invoices for the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services.

Electronic Commerce Operator

Electronic commerce is the supply of goods or service, including digital products over digital or electronic network. An electronic commerce operator is any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. All electronic commerce operators are mandatorily required to obtain GST registration, irrespective of turnover.

Person supplying online information and database access or retrieval services (OIDAR)

Any person supplying online information and database access or retrieval services from a place outside India to a person in India is required to obtain GST registration. Online information and database access or retrieval means providing data or information, retrievable or otherwise, to any person, in electric form through a computer network.

Persons who supply goods or services through electronic commerce operators

Some persons who supply goods or services through electronic commerce operators, other than supplies where the electronic commerce operator is required to collect tax at source on behalf of the supplier is mandatorily required to obtain GST registration.

Under GST, The Government has the power to specify categories where the tax would be liable to be paid by the electronic commerce operator if the services are supplied through it.

Persons Having Service Tax or VAT or Central Excise Registration

All person who, on the day immediately preceding the appointed day is having a service tax or VAT or central excise license under an existing law is required to be registered under GST. Hence, migration to GST is mandatory for all taxable persons having an existing registration.

Transferee or Successor of a Business

Any person who is a transferee or a successor of a business, that was carried on by a persons registered under GST is required to be registered under GST with effect from the date of such transfer or succession.

Who is NOT Required to Obtain GST Registration

Any person who is engaged exclusively in the business of supplying goods or services that are not liable to tax under GST or wholly exempt from tax under GST is exempt from obtaining GST registration.

Also, an agriculturist, to the extent of supply of produce out of cultivation of land is exempt from obtaining GST registration. Under GST, agriculturist means an individual or a Hindu Undivided Family who undertakes cultivation of land:

By own labour, or By the labour of family, or By servants on wages payable in cash or kind or by hired labour under personal

supervision or the personal supervision of any member of the family

QUESTION: -5(C)

GST Network and GST Service Providers

The Goods and Service Tax Network (or GSTN) is a non-profit, non-government organization. It will manage the entire IT system of the GST portal, which is the mother database for everything GST. This portal will be used by the government to track every financial transaction, and will provide taxpayers with all services – from registration to filing taxes and maintaining all tax details.

Structure of GSTN

Private players own 51% share in the GSTN, and the rest is owned by the government. The authorized capital of the GSTN is ₹10 crore (US$1.6 million), of which 49% of the shares are divided equally between the Central and State governments, and the remaining is with private banks.

The GSTN has also been approved for a non-recurring grant of Rs. 315 crores. The contract for developing this vast technological backend was awarded to Infosys in September 2015.

The GSTN is chaired by Mr. Navin Kumar, an Indian Administrative Service servant (1975 batch), who has served in many senior positions with the Govt. of Bihar, and the Central Govt.

Shareholder Shareholding

Central Government 24.5%

State Governments & EC 24.5%

HDFC 10%

HDFC Bank 10%

ICICI Bank 10%

NSE Strategic Investment Co 10%

LIC Housing Finance Ltd 11%

Total 100%

Salient Features of the GSTN

The GSTN is a complex IT initiative. It will establish a uniform interface for the taxpayer and also create a common and shared IT infrastructure between the Centre and States.

1. Trusted National Information Utility

The GSTN is a trusted National Information Utility (NIU) providing reliable, efficient and robust IT backbone for the smooth functioning of GST in India.

2. Handles Complex Transactions

GST is a destination based tax. The adjustment of IGST (for inter-state trade) at the government level (Centre & various states) will be extremely complex, considering the sheer volume of transactions all over India. A rapid settlement mechanism amongst the States and the Centre will be possible only when there is a strong IT infrastructure and service backbone which captures, processes and exchanges information.

Please read our article to know more about how the Centre and the States will settle IGST.

3. All Information Will Be Secure

The government will have strategic control over the GSTN, as it is necessary to keep the information of all taxpayers confidential and secure. The Central Government will have control over the composition of the Board, mechanisms of Special Resolution and Shareholders Agreement, and agreements between the GSTN and other state governments. Also, the shareholding pattern is such that the Government shareholding at 49% is far more than that of any single private institution.

4. Expenses Will Be Shared

The user charges will be paid entirely by the Central Government and the State Governments in equal proportion (i.e. 50:50) on behalf of all users. The state share will be then apportioned to individual states, in proportion to the number of taxpayers in the state.

Volume of expenses Type of expenses

Maximum expenses IT system designed by Infosys

2nd part Fraud Analytics Tools, security audit and other security functions(will be outsourced based on tender)

3rd part Operating expenses such as salary, rent, office expenses, internal IT facilities

Functions of GSTN

GSTN is the backbone of the Common Portal which is the interface between the taxpayers and the government. The entire process of GST is online starting from registration to the filing of returns.

It has to support about 3 billion invoices per month and the subsequent return filing for 65 to 70 lakh taxpayers.

The GSTN will handle:

Invoices Various returns Registrations Payments & Refunds

GSP stands for GST Suvidha Provider. A GSP is a service provider who helps the taxpayer to comply with the provisions of the GST law through its web platform. Goods and Service Tax Network (GSTN) will receive the returns filed by companies through GST Suvidha Provider.

Indian Government has appointed 34 GST Suvidha Providers (GSPs) who will be allowed to develop simple applications to be used by taxpayers for interacting with GSTN.

GSTN has selected 34 companies who will be known as GST Suvidha Providers (GSPs). Those GSPs can also develop application softwares which will be used by taxpayers for interacting with the GSTN.

Why do you need services of GSP?

The tax automation will be very critical under GST because it would be very difficult to comply all regulatory requirements under Goods and Service Tax (GST).

The high level of synchronization of data will be required and all such information will be transferred between the taxpayer’s system and the GST Network (GSTN) system.

It would be very difficult to achieve this synchronization without automation. These application service providers will provide innovative and convenient methods of interacting with the GST Systems, from registration, to uploading invoice details, to filing returns.

In other words, GSTN can interact only with GSP, not with tax payers.

When learning about Goods and Service Tax, the first question that comes to the mind of almost every person is: What is IGST, CGST, UTGST, and SGST? On one hand it is stated that almost all indirect taxes are merged into a single tax called Goods and Service Tax, and on the other hand, it is stated that there will be four taxes as IGST, CGST, UTGST, and SGST.

QUESTION: -5(D)

Types of GST and Rates of GST

1. Types of GST 2. What is CGST? 3. What is SGST? 4. What is IGST? 5. What is UTGST (or UGST)? 6. Difference between different types of GST

Types of GST

Since GST subsumed indirect taxes of both central government (excise duty, service tax, custom duty, etc.) and state governments (VAT, Luxury tax, etc.), both the governments now depend on GST for their indirect tax revenue. Therefore, the GST rate is composed of two rates. Intra-state transactions will carry one of CGST and one of SGST (in case of state) or CGST and UTGST (in case of union territory). Therefore, while making an intra-state sale (i.e., sale within the same state), the CGST collected will go to the central government and the SGST collected will go the respective state government in which sale is made. Similarly, SGST or UTGST are replaced with IGST when intra-state transactions are involved. What is CGST?

CGST full form is Central Goods and Service Tax. CGST refers to the Central GST tax that is levied by the Central Government of India

on any transaction of goods and services tax taking place within a state. It is one of the two taxes charged on every intrastate (within one state) transaction, the other one being SGST (or UTGST for Union Territories). CGST replaces all the existing Central taxes including Service Tax, Central Excise Duty, CST, Customs Duty, SAD, etc. The rate of CGST is usually equal to the SGST rate. Both taxes are charged on the base price of the product. See the example below to understand it better.

e.g. – In the example above, when Suresh sales a product to Pradeep in the same state (Rajasthan), he has to pay two taxes. CGST is for the central government while SGST is

for the state. The rate of CGST is 9%, same as SGST. After the application of CGST (9% of Rs 10,000), the final cost of the product will become Rs 11,800.

As you can probably guess, all the taxes in all the conditions above are borne by the end consumer in the final cost, not by the manufacturer or the dealer of the product or service. Since GST is levied on consumption, the state where the product is originally manufactured is not entitled to the tax collected. If the manufacturing state levies a tax, the same will be transferred to the consuming state through the Central government.

What is SGST?

SGST full form is State Goods and Service Tax. SGST (State GST) is one of the two taxes levied on every intrastate (within one state)

transaction of goods and services. The other one is CGST. SGST is levied by the state where the goods are being sold/purchased. It will replace all the existing state taxes including VAT, State Sales Tax, Entertainment Tax, Luxury Tax, Entry Tax, State Cesses and Surcharges on any kind of transaction involving goods and services. The State Government is the sole claimer of the revenue earned under SGST. Let’s understand this with an example.

e.g. – Suresh from Rajasthan wants to sell some goods to Pradeep in Rajasthan. The product, originally priced at Rs 10,000, will attract GST at 18% rate comprising of 9% CGST rate and 9% SGST rate. The SGST tax amount here is Rs 900 (9% of Rs 10,000) which is fully claimed by the Rajasthan State Government. The rate of the product after SGST will be Rs 10,900.

What is IGST?

IGST full form is Integrated Goods and Service Tax. Integrated GST (IGST) is applicable on interstate (between two states) transactions of

goods and services, as well as on imports. This tax will be collected by the Central government and will further be distributed among the respective states. IGST is charged when a product or service is moved from one state to another. IGST is in place to ensure that a state has to deal only with the Union government and not with every state separately to settle the interstate tax amounts. Let’s try to understand IGST with an example.

e.g., – Ramesh is a manufacturer in Rajasthan who sold goods worth Rs 10,000 to Suresh in Rajasthan. Since it is an interstate transaction, IGST will be applicable here. Let’s assume the GST rate is 18% for the particular item. So, the IGST amount charged by the Central Government will be Rs 1800 (18% of Rs 10,000), and the refined rate of the product will be Rs 11,800.

Now, GST is a consumption tax that means only the state where the goods are actually consumed will get the tax benefits, irrespective of the manufacturing state.

What is UTGST (or UGST)?

UTGST full form is Union Territory Goods and Services Tax. The Union Territory Goods and Services Tax, commonly referred to as UTGST, is the

GST applicable on the goods and services supply that takes place in any of the five Union Territories of India, including Andaman and Nicobar Islands, Dadra and Nagar Haveli, Chandigarh, Lakshadweep and Daman and Diu. This UTGST will be charged in addition to the Central GST (CGST) explained above. For any transaction of goods/services within a Union Territory: CGST + UTGST

The reason why a separate GST was implemented for the Union Territories is that the common State GST (SGST) cannot be applied in a Union Territory without legislature. Delhi and Puducherry UTs already have their own legislatures, so SGST is applicable to them.

Difference between Different Types of GST Taxes

Types of Differences

CGST SGST IGST UGST/UTGST

Applicable transactions (Goods & Services)

Intrastate (Within one state)

Intrastate (Within one state)

Inter-state (between two states or one state and one UT) and imports

Within one Union Territory (UT)

Collected by Central Govt. State Govt. Central Govt. UT Govt.

Benefitting Authority

Central Govt. State Govt. Central Govt. & State Govt.

UT Govt.

Tax Credit Use Priority

CGST IGST

SGST IGST

IGSTCGST SGST

UTGST IGST

Similar to every other type of tax, GST also has provisions to give the benefits of tax credits. The credits will be applicable to the subsequent taxes on the same product or service. All three IGST, SGST and CGST credits are usable against each other. Any IGST credit will be first used to deal with IGST tax, then CGST, and then to set off SGST.

You must also by now have understood the need for 3 different taxes; IGST is to ensure a smooth flow of tax credit between states; Dual taxes (CGST & SGCT) are there to ensure that both Centre and states get their deserving revenue.

Rates of GST

The table given below shows GST tax rate on some common items-

Though edible items like sugar, tea and coffee are included in the 5% slab, milk does not attract any tax under the new GST regime. The idea behind this is to ensure that basic food items are available for everyone but instant food is kept out of this category. Other basic household items like toothpaste and hair oil, which currently attract 28% tax, will be taxed at 18% only. Sweets will also be taxable at 5%. Moreover, tax rates on coal has also been reduced from 11.69% to just 5% in order to relieve the pressure on power industries. GST also gives a major push to domestic industries as they will be able to procure seamless input credit for capital goods. Make in India campaign will flourish.

Tax Rates Products

5%

Under this tax slab, household necessities such as edible oil, sugar, spices, tea, coffee (except instant) are included. Coal (instead of current 11.69%), Mishti/Mithai (Indian Sweets) and Life-saving drugs are also covered under this GST tax rate.

12% This includes computers and processed food

18% Hair oil, toothpaste and soaps, Capital goods and industrial intermediaries are covered under this category

28%

Luxury items such as small cars (+1% or 3% cess), consumer durables like AC and Fridge, BMWs, cigarettes and aerated drinks (+15% cess), High-end motorcycles (+15% cess) are included here.