Goods And Service Tax

India's GST system comprises four distinct types. The Central Goods and Services Tax (CGST) is imposed by the central government on intra-state supplies. The State Goods and Services Tax (SGST) is levied by state governments on intra-state transactions. The Integrated Goods and Services Tax (IGST) applies to inter-state supplies and imports, replacing the previous Central Sales Tax (CST), and revenue is shared between the central and state governments. Union Territory Goods and Services Tax (UTGST) is specific to union territories and applies to intra-territory supplies. These various forms of GST streamline the indirect tax structure across India, fostering a unified market and simplifying tax compliance for businesses and individuals.

The liability to register for GST in India arises when certain conditions are met. Firstly, if an individual or business exceeds the prescribed threshold limit for annual turnover, GST registration becomes mandatory. The threshold limits may vary depending on the nature of the business and the state of operation. Secondly, businesses involved in inter-state supply of goods or services are required to register for GST. This ensures compliance and accountability for transactions conducted across state boundaries. Additionally, e-commerce operators, such as online marketplaces, must register for GST, irrespective of their turnover, as they play a crucial role in facilitating transactions between buyers and sellers.

GST calculation involves multiplying the taxable value of goods or services by the applicable GST rate. For example, if the taxable value is Rs. 1,000 and the GST rate is 18%, the GST amount would be Rs. 180 (1,000 x 18%). The GST is divided into two components: CGST and SGST for intra-state transactions, and IGST for inter-state transactions. In intra-state transactions, the GST amount is divided equally between CGST and SGST. In inter-state transactions, the entire GST amount is considered as IGST. It's important to note that specific scenarios like nil GST rates or the composition scheme may have different calculation methods.

The composition scheme under GST is available for small businesses with turnover below the prescribed threshold (Rs. 1.5 crores for most states). It offers reduced tax rates, simplified compliance, and quarterly filing of returns. However, businesses under the scheme cannot claim input tax credit, engage in inter-state supply, or maintain detailed invoices. It is a voluntary scheme aimed at providing relief to small businesses by lowering their tax burden and easing compliance requirements.