CGST Act – Central Goods And Service Act

Before the Goods and Service Tax, goods in India would be taxed at different levels such as state tax, Value Added Tax (VAT), Import Tax, Service Charge etc. That was very tedious and involved a lot of paperwork. Not to mention, the mental memory of remembering all the difference taxes involved for a particular good or product.

On July 1, 2017, the goods and service tax was implemented in all of India under the pretext of ‘One Nation, One Tax’. The Goods and Service Tax, aka GST, has been a game-changer in the field for accounting purposes in business. It has cut down on all the overhead various taxes and made everything as one single tax payment under an umbrella known as Goods and Service Tax (GST).

Post its implementation, all businesses must file for their taxes under this new Act. Under the new GST Act, taxes were now divided into these 3 categories:

1. Central Goods and Service Tax: Taxes at this level are charged by the central government. This includes everything from central excise duty, cess, central surcharge. In short, all the taxes that need to be paid at the central level are included in CGST.
2. State Goods and Service Tax: The state GST are taxes that are charged at the state level, usually the state where the registration of the business is done. This includes State VAT, cess, and any other indirect taxes that needs to be paid to the state.
3. Integrated Goods and Service Tax: The IGST or Integrated Goods and Service Tax is charged on all goods and services that move between states or across borders.

What is Central Goods and Service Tax?

All the taxes on goods and services that are collected under the central level comes under the head of CGST. Taxes under this head are usually divided between the state GST and the central GST.

One should ensure that there is a stark difference between interstate and intrastate.

But if the goods and services are supplied within the same state, to different cities and districts, then it comes under the purview of CGST and SGST. 

Nick and Jess clothing supply clothes only in the state of Maharashtra in districts such as Mumbai, Thane, Nagpur etc. For this reason, here Nick and Jess clothing would be required to pay taxes under CGST and SGST.

If goods and services cross borders, between one state to another, it comes under the jurisdiction of interstate and hence IGST would be levied.

For example, Nick and Jess clothing supply clothes to the states of Maharashtra, Jharkhand and Karnataka. Since multiple states are involved, Nick and Jess would pay taxes under IGST.

IGST which is integrated gst is also governed by the central GST body but is charged on goods and services that travel between different state borders.

How are the taxes divided in the 3 categories?

Suppose the GST on a television set of upto 32 inches is 18% and is billed in a single state then it comes under CGST and SGST. Hence,
9% would be paid to CGST and
9% would be paid to SGST.

If the television set is supplied to one state and billed in another state, then it comes under IGST. Here the entire 18% would go to IGST.

What taxes have been eliminated after the introduction of GST?

Before the implementation of GST goods and services were taxed at different levels by different governing bodies. Due to this, paperwork was tedious and it was difficult to keep track of all the taxes that need to be paid. Following are some of the taxes that have been eliminated after the implementation of GST since 2017:

What are the slab rates under GST?

There are different slab rates right from 0% to 28% slabs under GST depending upon the goods/services provided and how essential their purposes are. Most essential goods have the least tax rate and lesser goods such as luxury goods have higher slab rates.

The slab rates keep changing and the goods and services also under each slab rate could possibly change. Ensure you’re always on top of these changes.

The goods are divided into essential goods, fast moving consumer goods and luxury goods along with goods that have additional cess. The table below mentions the slab rate against the types of goods/services.