What is GST

After, 'why kattappa killed bahubali'

It's, what is GST ☺

Basic understanding of GST workflow

3 Things about GST

a. Central GST (CGST) which will be levied by Centre

b. State GST (SGST) Which will be levied by State

c. Integrated GST (IGST) – which will be levied by Central Government on inter-State supply of goods and services.

In the below example, you can note that the tax paid on sale within state can be claim against tax paid on sale outside state in GST system, which is not in present tax system.

The credit of CGST cannot be taken against SGST and credit of SGST cannot be taken against CGST but both credits can be taken against IGST.

Who will pocket taxes?

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For Intra State Transactions:

In case of Intra State transactions, Seller collects both CGST & SGST from the buyer and CGST needs to be deposited with Central Govt. and SGST with State Govt.

For Inter State Transactions:

Integrated Goods and Service Tax (IGST) shall be levied on Inter State transactions of goods and services which are based on destination principle. Tax gets transferred to Importing state.

More over it is proposed to levy an additional tax on supply of goods, not exceeding one percent, in the course of inter-state trade or commerce, to be collected by the Central Govt. for a period of two years, and assign to the States where the supply originates. Valuation of stock transfers to be determined. Exports and Supplies to SEZ units will be zero rated.

How to adjust the Credit?

Setoff of IGST, CGST & SGST will be as follows in the below mentioned chronological order only.

Credit of

a. IGST - To be Adjusted with

1) IGST

2) CGST

3) SGST

b. CGST - To be Adjusted with

1) CGST

2) IGST

c. SGST - To be Adjusted with

1) SGST

2) IGST