GST

  Purpose and Scope

- GST aims to streamline the taxation system by replacing multiple indirect taxes like sales tax, service tax, excise duty, etc.

- It applies to the consumption of goods and services at each stage of the supply chain.

  Structure

- GST is typically structured into Central GST (CGST) levied by the central government and State GST (SGST) levied by state governments in India.

- In some countries, it may also include Integrated GST (IGST) for interstate transactions.

  Taxable Events

- GST is levied on:

- Supply of goods or services for consideration.

- Importation of goods and services into the country.

Registration

- Businesses above a specified turnover threshold must register for GST.

- Registration enables businesses to collect GST on behalf of the government and claim input tax credits.

Input Tax Credit (ITC)

- Businesses can claim credit for GST paid on inputs (purchases of goods and services used in business) against GST collected on outputs (sales).

- This reduces the cascading effect of taxes and ensures taxes are paid only on the value added at each stage of production and distribution.

Compliance

- GST compliance includes filing regular returns showing sales, purchases, and GST paid and collected.

- Non-compliance may attract penalties and interest.

Exemptions and Rates

- Some goods and services may be exempted from GST, while others attract different rates (e.g., standard, zero-rated, exempt).

- Rates are decided by the GST Council based on revenue considerations and economic impact.

Impact on Consumers

- Consumers generally bear the ultimate burden of GST, as it is included in the price of goods and services they purchase.

- GST rates can affect consumer prices and inflation.

Global Context

- GST is a widely adopted tax system, implemented in over 160 countries including India, Canada, Australia, and Singapore.

- Each country may have its own variation in terms of rates, exemptions, and administration.

Corporate Law services > GST