It is no secret that the Goods and Services Tax (GST) was introduced in India in 2017. Since its implementation, there have been numerous revisions and updates in GST in India. With the advent of this tax system, goods and services providers can collect tax directly from the customers by pricing their products to accommodate the GST. This has nullified many other taxes that were prevalent under the earlier tax structure like Central Excise Duty, State Value Added Tax (VAT), Cess, Entertainment Tax, and so on.
Who is obligated to pay the Goods and Services Tax?
Aside from not knowing what the Goods and Services Tax is, this is a topic that seems to need constant addressing. The following will explain when you are required to pay GST in India.
- If you are a business owner that provides goods and services, that sees a yearly turnover of Rs. 40 Lakh and above, you will be obligated to pay GST.
- If you are a provider of goods and services and run operations in a special category state, you will be liable to pay GST if your yearly aggregate is Rs. 20 Lakh.
- If you are a business owner in one of the following states: Assam, Sikkim, Arunachal Pradesh, Uttarakhand, Tripura, Nagaland, Manipur, Jammu & Kashmir, Himachal Pradesh, and Meghalaya, you will have to pay GST once your turnover hits Rs. 10 Lakh.
Types of GST
There are mainly three GST types that you ought to be aware of – CGST, IGST, SGST.
Central Goods and Service Tax (CGST)
This is a tax that the Central Government collects when you carry out a transaction within a given state.
State Goods and Service Tax (SGST)
The State Government collects this tax for transactions that occur within the same state.
Integrated Goods and Service Tax (IGST)
The Integrated Goods and Service Tax is collected by the Central Government when there is a transaction between different states.
GST Tax Rates in India
GST Tax rates in India are slotted into different GST slabs. Here they are:
GST Tax Slab of 5%
There are a bunch of items that fall under the 5% GST tax rate slab. Some of them are fish fillet, vegetables, incense sticks, spices, pizza bread, kerosene, cashew nuts, unbranded namkeen, fertilizers, coffee, and coal.
Services such as standalone AC and non-AC restaurants and joints that serve liquor, restaurants in transport service areas, hotels that charge less than Rs. 7500 per night fall in this category.
GST Slab of 12%
The goods that fall in the 12% category are fruit juices, sausages, pickles, ghee, cell phones, wooden frames, photographs, medicine, frozen meat, butter, instant food mixes, and so on. The services that fall in this category include movie tickets that cost less than Rs. 100 and business class flight tickets.
GST Slab of 18%
The goods that fall in the 18% GST tax rate include pasta, glassware, detergents, cornflakes, sheets, flavored refined sugar, pastries, cakes, soups, deodorants, fans, oil powder, chewing gum, shampoo, mineral water, and so forth.
This GST slab also covers electronic items like washing machines, vacuum cleaners, water heaters, refrigerators, televisions, cookers, stoves, monitor screens, tyers, engine parts, and many more. Musical instruments, stationary instruments, and services like restaurants that run inside hotels, movie tickets that cost more than Rs. 100, catering services, telecom services, and so on fit this GST tax rate.
GST Slab of 28%
A variety of goods across a spectrum of categories fit this GST slab. The 28% tax slab includes goods like cigarettes, imported alcohol, aerated beverages, vacuum cleaners, air crafts, dishwashers, weighing machines, yachts, paint, marble, travertine, motorcycles, and many more. As far as services go, five-star hotels and hotels that charge Rs. 7500 for a room per night, and movie tickets that cost more than Rs. 200 fall in this category.
GST Slab of 0%
There are a few products that do not fit any of the above tax slabs. Some of these products are vegetables, sanitary napkins, eggs, newspapers, fruits, and so on. Services that escape all the above tax slabs include hotels and lodges that charge less than Rs. 1000 for a room per night.