What is IGST?
IGST is a part of Goods and Service Tax(GST). Integrated Goods And Service Tax is a tax levied on all Inter – State supplies of goods and / or services and will be governed by the IGST Act. IGST is a concept of one tax one nation. Under Article 269 A of the Constitution, the inter – state trade and commerce activities that involve the movement of commodities and services shall be levied with an integrated tax (IGST) under the GST regime. The IGST rate would broadly be equal CGST rate plus SGST rate.
Sameer a businessman from Delhi has sold goods to Ashutosh from Uttar Pradesh worth Rs.2,00,000. The GST rate is 18% comprised of 18% IGST. In such a situation, the dealer has to charge Rs. 18,000 as IGST. This IGST will go to the center.
Features of IGST:
1. IGST equals to CGST + SGST.
2. It will lower tax burden by taxing Inter – State transaction only once.
3. It is a destination based tax and will accrue to importing state.
4. B2B transactions – tax will flow to the State where Purchaser claims Input Tax Credit.
5. B2C transactions – tax will flow to the State of Consumer, otherwise tax will remain in the State Of Seller.
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 IGST:
1. It helps in maintaining of uninterrupted ITC chain on inter – State transactions.
2. It helps in non payment of any upfront tax or substantial blockage of funds for the inter – State seller or buyer.
3. No refund can be claimed in exporting State, as ITC is used up while paying the tax.
4. It is a self monitoring model
5. It ensures tax neutrality while keeping the tax regime simple.
6. It requires simple accounting with no additional compliance burden on the taxpayer.
7. It helps in facilitating in ensuring high level of compliance and generate higher collection efficiency.
The 26th GST Council meet, that took place on Saturday approved the introduction of e-way Bill for inter – state movement of goods worth more than 50,000 from April 1, 2018. The Council failed to reach a concensus on the proposed simplification of returns filing process. The ongoing filing returns system of summary return GSTR-3B and sales return GSTR-1 has got extended till June. Finance Minister, Arun Jaitely said, the Group of Ministers entrusted the task of resolving IT related issues finding out ways to simplify the return process.
The Council has decided to implement the e-wallet scheme, which gives refund to exporters under GST, by October 1, 2018. Also merchant exporters can pay 0.1% tax on goods procured for export and a get a refund for the same. The TDS deduction and TCS collection by e-commerce operators has been delayed till June 30, 2018. The decision to bring extra neutral alcohol under GST got deferred as states and Centre failed to reach a consensus on the same.
Let us look upon the UpdatedNew GST Rates from April 1, 2018:
| 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