What is GST?

GST stands for Goods and Services Tax. It is a comprehensive indirect tax that was introduced in India on July 1, 2017, replacing a complex system of multiple indirect taxes like excise duty, service tax, VAT, and others. The main objective behind implementing GST was to create a unified and simplified taxation structure that would help streamline the tax system, eliminate cascading effects, promote transparency, and boost economic growth.

In India, there are primarily four types of GST that are levied on different types of transactions:

• Central Goods and Services Tax (CGST): This is the portion of GST collected by the central government on intra-state supplies of goods and services. It is governed by the Central Goods and Services Tax Act.
• State Goods and Services Tax (SGST): This is the portion of GST collected by the state government on intra-state supplies of goods and services. Each state has its own SGST Act.
• Integrated Goods and Services Tax (IGST): This is applicable to inter-state supplies of goods and services as well as imports. The central government collects IGST, and it is designed to ensure seamless taxation on transactions that involve movement of goods and services across state borders.
• Union Territory Goods and Services Tax (UTGST): This is similar to SGST but is applicable to the union territories of India. Since union territories do not have a separate state government, the UTGST is collected by the central government.

It's important to note that while there are these different components of GST, they are all integrated into a single tax system. The total GST applicable on a transaction is the sum of CGST and SGST/UTGST or IGST, depending on whether the transaction is intra-state or inter-state.

Additionally, there are different GST rates for different categories of goods and services. These rates are divided into five main categories: 0%, 5%, 12%, 18%, and 28%, with some goods and services attracting a cess on top of the 28% rate. The rates for specific items can change over time based on government decisions and economic considerations.