What is CGST?
CGST is Central Goods and Services Tax. It is the component of GST which will be levied by the central government on all goods and services. This applies to intra state trade only. A dealer can use input tax credit of CGST against CGST or IGST.
CGST is interstate. CGST is applicable for goods and services and is levied by the central government to be shared between central and state governments.
What does CGST Include?
CGST includes the following:-
1. Central Excise Duty
2. Additional Excise Duty
3. Additional Customs Duty
4. Special Additional Duty of customs
5. Service tax
6. Excise Duty levied under preparation of medicinal and toiletries
Features of CGST :
1. Levied by the Central Government to replace the old taxes such as excise, service tax, income tax and so on.
2. Applicable only within India
3. CGST’s credit is available only against CGST OR IGST
4. Rs 20,00,000 exemption limit is available
5. Dealers can utilize the utility of composition scheme up to the turnover of Rs 50,00,000
Benefits of CGST :
1. Expulsions of Multiple Taxes- Multiple indirect taxes will be eliminated. Taxes like Octroi, CENVAT, sales tax, service tax, excise etc will fall under GST.
2. Cost effective- For the common man, the double charging in the system will be eradicated in GST applicability. This will help common man save money.
3. Comfort of collaboration- One country, one tax system will be bought by GST. This shall curb unhealthy competition among states.
4. Uncomplicated Tax filing and Documentation- The businessman can heave a sigh of relief as there will be no multiple taxes, which means easy compliance and documentation.
5. Reduction of Cascading effect- GST is going to be applicable from all stages from processing to utilization. Tax credit benefit shall be provided at every stage by GST. Cost of the product will be reduced due to the reduction of cascading effect.
6. More employment- It is expected that demand for a product will enlarge as the GST will reduce its cost. Hence, to meet the demand and create more supply, employment opportunities will be created.
7. Increase in Gross Domestic Product- As demand grows, the gross domestic product will grow by 1-2% as estimated. 8. Tax Evasion Reduction- People will readily pay taxes as the rates have reduced due to GST. People will become more honest and pay taxes.
9. Increase in Revenue- All indirect taxes will be replaced with a single tax. When product demand rises, so will tax revenue for state governments and central government.
Updated New GST Rates as from April 1st
| Items | Old Tax Rate | Country |
|---|---|---|
| Second Hand medium and large cars and SUV’s | 28% | 18% |
| LPG supply for household domestic consumers by private LPG distributors | 18% | 5% |
| Bio-fuels powered buses | 28% | 18% |
| Sugar boiled confectionary | 18% | 12% |
| Drinking water packed in 20 Liter bottles | 18% | 12% |
| Drip Irrigation System | 18% | 12% |
| Cigarette filled rods | 12% | 18% |
| Tailoring service | 18% | 5% |
| Admission to Theme parks, Water parks, etc | 28% | 18% |
What will happen if you book your flight from today?
If you're planning to fly away for a vacation, you are likely to pay slightly lesser for economy class flights tickets under the GST regime as the tax incidence comes down to 5 per cent from 6 per cent currently. However, if you travel business class, fares are likely to go up as the tax would increase to 12 per cent from the 9 per cent currently.
However, going forward,it is expected that due to reduced cost because of availability of GST credit on items hitherto not available, the price of services will also come down which will benefit the consumers," says Sandeep Sehgal, director-tax and regulatory at Ashok Maheshwary & Associates LLP.
After GST rollout, many items like footwear below Rs. 500 and garments could become cheaper. On the other hand, items like TV and small cars could become costlier.
Petroleum products such as petrol, diesel and aviation turbine fuel have been kept out of GST as of now. The GST Council will take a decision on it at a later date. Alcohol has also been kept out of GST