Goods and Services Tax was introduced in India several times by different governments before it was actually implemented from July 1, 2017, onwards. The idea of bringing about GST was to have a ‘One Nation One Tax’. GST subsumed all the taxes that prevailed in the country
What is CGST?
CGST stands for Central Goods and Services Tax. It subsumes all the taxes that were earlier applicable as central indirect taxes. They are levied by the central government for the intrastate movement of goods and services. Intrastate means within one state. The Central Goods and Services Tax Act 2017 states that CGST applies to the whole of India except Jammu and Kashmir.
Actually, on intrastate movement, both Central Goods and Service Tax and State GST are applicable.
CGST revenues go to the central government, and SGST revenues go to the respective state government.
For example, if a manufacturer makes a product in Maharashtra and sells it within the state only, SGST and CGST both will be applicable, wherein SGST will go to the Maharashtra state government’s coffers and Central Goods and Service Tax will go to the central government’s kitty.
Maharashtra has been topping the list of highest GST collections by a state for a long, followed by Karnataka.
In almost all cases, the total tax liability is divided into two equal halves and distributed equally between the state and central government.
These rates are decided by the GST Council. The GST Council meets for a couple of items in a year as and when required however, there is no regular fashion. The last time the GST Council met was in September 2019. These rates are as of October 1, 2019.
There are around six slabs of rates.
Slab Rates | Details |
5% | The most commonly used products that are subjected to a 5% GST rate are cream and yoghurt, paneer, cashew nut, raisins, fruit and nuts and a few others. Now for these products, 2.5% goes to the state government and the rest 2.5% goes to the CGST. Many household items are covered in this section. |
12% | 6% GST rate is the second slab of rates under GST. Citrus fruits, jams, sausages, 20l drinking water, statues, pots and jars, geometry box, cutlery, railway coaches, printer ink, wooden toys and more. Here for every product, 6% goes towards CGST and 6% goes towards SGST. This section covers processed food to a great extent. |
18% | Examples of products being taxed at 18% are bindis, chocolates, fountain pens, tripods, soap, toothpaste, and industrial intermediate products are therein this slab. Here 9% goes towards SGST, and 9% goes towards CGST. The central goods and services tax act 2017 has a full list of items. |
28% | Examples of products being taxed at a GST rate of 28% are cigarettes, caffeinated beverages, pan masala, motor cars and motorcycles, air conditioners, refrigerators etc. Mainly luxury items are covered in this sector. In this, 14% goes towards SGST, and 14% goes towards CGST. |
3% | Coins, gold, silver, platinum, imitation jewellery, etc, are taxed at 3%. Here 1.5% goes towards SGST and 1.5% towards CGST. |
0.25% | Precious stones are taxed at 0.25%, where 0.125% goes towards CGST and 0.125% goes towards SGST. |
0% | There are also some products that are taxed at 0%. Basically, they are tax-free. Mammals, live swine, live bovine mammals, birds, insects, fish, curd, lassi, buttermilk, bananas, apples, grapes, human hair, and sanitary napkins, among others. |
CGST features
CGST has several important features. These have been outlined in the following.
- Levying of the CGST is done by the Central Government for replacing different existing taxes such as excise, service tax, etc.
- The CGST credit is particularly available only against IGST and CGST.
- The CGST is applicable within the state only.
- The composition scheme benefits can be used by the dealer up to a turnover rate of 50 lakh.
- A Rs 20 Lakh exemption limit is applicable.
Features of 2017’s CGST act
The Features of the CGST act have been outlined in the following
The features of the CGST act of 2017 have been outlined in the following.
- Levying of tax should be done on each Intra-State supply of services and goods.
- The broadening of the input tax credits through making it available concerning tax paid on supply of services or goods or both that have been used or it is intended that it will be used, for facilitating the business.
- The CGST Act of 2017 provides opportunities for self-assessment of the taxes which need to be paid by the already registered person.
- It allows imposing of obligations on the operators of electronic commerce for collection of tax at the source, though not exceeding the 1% value of the taxable supplies, out of payment for suppliers supplying services and goods through their portals.
- CGST further allows conducting audits for registered persons for verifying compliance with the Act’s provisions.
- To provide power concerning seizure, inspection, arrest, and search to the officers.
- The CGST Act allows for the recovery of tax through several methods such as the sale and detaining of goods, immovable and movable property of defaulting taxpayers, and so on.
- The act looks after making provisions for contraventions and penalties of the provisions over proposed legislation.
- The Act ensures to provide elaborate provisions of transition for the smooth transition of the present taxpayers who have been paying taxes for goods and services.
- The CGST act strives to give an anti-profiteering clause. It ensures that the business passes on the reduced tax benefits and incidence on services or goods or even both to the respective customers.
Objectives of the CGST Act, 2017
The primary objective of the CGST Act is to curb multiple problems associated with the taxation system.
To overcome issues like double taxation, heavy tax duties (such as octroi, entry tax, and check posts) and introduce a simplified compliance system, the act was introduced in India.
FAQs
CGST Rules?
- A supply bill must be issued if registration falls under the GST composition scheme.
- An invoice of tax must be issued to each of the taxable goods and services (in case you are already registered for GST).
- All the invoices should carry a unique serial no. and be noted in sequential order.
- CGST and SGST are filed in equal amounts. For example, if the GST rate is 18%, the CGST will be 9%, and SGST will also be 9%.
Who collects the CGST?
CGST is collected by the Central Government of India.