Goods and Service Tax (GST)

What is GST?

GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.

Components of GST

  • CGST Collected by the Central Government on an intra-state sale (Eg: transaction happening within Tamilnadu)
  • SGST Collected by the State Government on an intra-state sale (Eg: transaction happening within Tamil NAdu)
  • IGST Collected by the Central Government for inter-state sale (Eg: sTamil Nadu to Maharashtra)

In India, there are mainly 3 components of GST. The following table explains the 4 types of GST and compares them on various parameters:

# Central GST – CGST State GST – SGST Integrated GST - IGST
Tax Levied By Central Government State Government Combined levy, collected by Central Government
Taxes that it will replace Service tax, excise duty, countervailing duty (CVD), special additional duty (SAD), Additional duties of excise(ADE) effect VAT, sales tax, luxury tax, entry tax, entertainment tax, purchase tax, Octroi, taxes on lottery Central sales tax (CST)
Applicability Supplies within a state Supplies within a state Interstate supplies and import
Input Tax Credit Against CGST and IGST Against SGST and IGST Against CGST, SGST and IGST
Tax Revenue Sharing Central government State government Shared between state and central governments
Exemption Limit Rs 20 lakh annual turnover Rs 20 lakh annual turnover Exemption limit not defined
Composition Scheme The dealer may use the benefit of turnover of Rs 50 lakh The dealer may use the benefit of turnover of Rs 50 lakh Composition Scheme is not available in this regard
Free Supplies CGST is applicable on free supplies SGST is applicable on free supplies IGST is applicable on free supplies
Registration Not applicable till the turnover exceeds Rs 20 lakh Not applicable till the turnover exceeds Rs 20 lakh Registration is necessarily mandatory if supply is made outside the states

Required Documents

  • Require Documents Address & ID proof of all Directors,
    • Mandatory – PAN Card
    • ID Proof – Voters Identity Card / Driving License / Passport / Aadhar Card
    • Address Proof – Bank Statement / Electricity Bill / Telephone Bill / Mobile Bill
  • Address Proof of registered office – Address proof of proposed registered office for registration of company.