What is GST

What is GST:

what is GST

It’s History, Types and Regstration

Sales Tax Goods and Services Tax is an Indirect Tax Introduced to simplify the Indian tax system. It was first proposed in the budget speech on 28 February 2006 to reform the indirect tax system. The Storting approved the Value Added Tax on 29 March 2017 and came into force on 1 July 2017. 

This new tax replaced old taxes such as income tax, tax value-added and services tax. With GST, all goods and services in India will be taxed under one system, making things easier for businesses and consumers. 

The Central Board of Excise and Taxation(CBIC) monitors the GST and ensures proper implementation of all changes and amendments. 

Timeline of Goods and Services Tax (GST) in India

GST implementation was not one day process, it took numerous meetings, amendments, and recommendations before implementation. Let’s understand its history and timeline.

Goods and Services Tax (GST) is a major tax reform in India. Here is a simple timeline of important events from the inception of GST to its implementation: 

Before Sales Tax1954: France was the first country to implement GST. Later, many countries adopted it.

Evolution of GST

2004: Cabinet committee recommended to implement GST in India

2006: Finance Minister P. Chidambaram announced the implementation of GST in 2010 in his budget speech

2011: The Constitution (115th Amendment) Bill was introduced to introduce GST provisions, but the Bill could not be passed. Due to political oppositionConstitutional Amendments

2014: Prime Minister Narendra Modi's government re-introduced the GST law. A committee of state finance ministers was formed to draft the law

19 December 2014: The Constitution (122nd Amendment) Bill was introduced, a significant step towards GST

6 May 2015: The Lok Sabha passed the Constitution (122nd Amendment) Bill, paving the way for the implementation of GST Final steps

29 March 2017: The Lok Sabha passed four important GST Bills:

The Central Goods and Services Tax (CGST) Bill The Integrated Goods and Services Tax (IGST) Bill The Union Territory Goods and Services Tax (UTGST) Bill The Goods and Services Tax (Compensation to States) Bill.

6 April 2017: The Rajya Sabha passed these Bills, which became law on 12 April 2017Implementation of GST

1 July 2017: GST was implemented across India, replacing several indirect taxes such as VAT, service tax and excise duty. This day is celebrated as GST Diwas after GST implementation.

16 September 2016: The GST Council was formed, which oversees GST, sets tax rates, and resolves issues.

Changes: Since GST was implemented, several changes have been made in the rates and procedures based on various circumstances and suggestions.

Types of GST

type of gst

There are four main types of Goods and Service Tax (GST) in India, designed for different transactions. 

Here is a simple explanation of each type:

Types of Sales Tax

1. Goods and Services Tax (CGST)- 

What it is: CGST is a tax levied by the central government for purchases of Goods and services in the same country.

When necessary: ​​Used when the transaction works in a single mode (in-state transaction).- Who gets the money: The money collected goes directly to the government.

Benefits for Traders: Traders can get credit for the CGST they pay, which reduces their future taxes.

2. State Goods and Services Tax (SGST)

What it is: SGST

is a tax imposed by the state government on the goods and services within the state. 

Where applicable: Like CGST, it applies to national transactions.- Who gets the money: The money goes to the government.

Benefits for Traders: Traders can get credit for paying SGST, which can reduce their tax liability.

3. Integrated Goods and Services Tax (IGST)

What it is: IGST is a tax levied on the supply of goods and services from one state to another (transition within the government).

Where applicable: Applicable when goods and services are sold from one state to another state or imported into India.

Who gets the money: The money collected from IGST is shared between the central and state governments.

How to calculate: IGST is calculated as the sum of CGST and SGST if the transaction is inclusive.

4. Union Goods and Services Tax (UTGST)

What it is: UTGST is a tax levied in Union Territories (like Chandigarh and Puducherry).- Where applicable: Applies to transactions within Union territories, such as SGST in the United States.

To whom the money goes: The money goes to the relevant regional office.

Benefits for traders: Traders can get credit for paying UTGST, which can reduce their tax liability.

Steps in the Sales Tax Registration Process

Step 1: Go to the official portal of Sales Tax at http://www.gst.gov.in and start registration.

Step 2: Select the taxpayer type, such as taxpayer or composition scheme.

Step 3: Details like:- Company Name- Registration Status, Email Address, Mobile Number, PAN Number.

Step 4: Confirm complete with OTP will be sent to mobile phone and e-mail. Once approved, you will receive a temporary reference number (TRN).

Step 5: Log in to TRN, complete CAPTCHA and reconfirm with OTP.

Step 6: Enter other details like:- Business Type (Brand Name, Business Type, Start Date)- Customer Details (PAN, UID)- Business Address (Primary & Other Address )- Bank Account Details (Optional).

Step 7: Submit the required documents such as PAN Card, Company Registration Certificate, Identity Proof (Aadhaar, PAN), Address Proof (Rental Approval, Power Bill) & Bank Account Details.

Step 8: All information must be submitted with a digital or electronic signature.

Step 9: After submission, you will receive an Application Reference Number (ARN) via email or SMS. Use this ARN to track the status of your application.

GST has reduced the complexity of tax collection and simplified the administration of various taxes on goods and services, benefiting the Indian economy. Let’s incorporate the Indian government to make India free from tax corruption.