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GST Act & Rules – Latest Updates 2022

GST came into effect on July 1, 2017. GST is a tax system where the GST Council, a group of ministers from the Finance Ministry, sets tax rates and collects the tax from sellers. The tax is collected by the central government, which shares it with the states.

The GST Act or the Goods & Service Tax Act India 2017 replaced the existing system of multiple taxes with a single tax. The new tax system was introduced to simplify the tax system and bring in greater revenues for the government.

Goods and services are taxed at four different rates: 5%, 12%, 18%, and 28%. However, petroleum products, alcoholic drinks, and electricity are not subject to GST and are now taxed separately by individual state governments, as was the case under the previous tax structure.

The Goods and Services Tax is based on two Parliamentary Acts passed in April 2017: the IGST (Integrated Goods and Services Tax) Act and the CGST (Central Goods and Services Tax) Act. The Central GST Act and the Integrated GST Act comprise the legislation that has enabled GST to become a reality in India. The GST law and its effects must be understood by all enterprises.

GST Act of 2016

The 101st Constitution Amendment Act of 2016 was principally responsible for the establishment of GST. GST is supplemented by CGST, SGST, and IGST.

GST would replace numerous existing taxes across the country, establishing an unified taxation structure that will allow enterprises to conduct business across the country while paying uniform taxes.

There shall be 3 types of taxes under the GST; CGST, SGST and the IGST

CGST – Central GST is levied by the Central Government

SGST – State GST is levied by the State Government

IGST – Integrated GST is levied for the Inter-state supply of goods and services.table-responsive.text-left

Taxpayers having turnover below Rs.1.5 crores90% control with State Government 10% control with Central Government
Taxpayers having turnover over Rs.1.5 crores50% control with State Government 50% control with Central Government
GST in Territorial WatersShall be delegated by the Central Government to the State

CGST Act of 2017

On April 12, 2017, the President signed this Act into law. It authorizes the Central Government to impose and collect taxes on the intra-State provision of products or services, or both, as well as on things related to or incidental to such provision.

  • It applies to the whole country of India, with the exception of the state of Jammu & Kashmir.
  • CGST must be levied on all forms of supply, namely, all forms of supply of commodities or services or both, such as sale, transfer, barter, exchange, license, rental, lease, or disposal agreed to by two parties; and import of services agreed to by two parties.
  • A maximum tax levy of 20% is levied dependent on the item delivered.

Composition levy

1. Notwithstanding anything to the contrary contained in this Act but subject to the provisions of subsections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not exceeding, -

(a) one per cent. of the turnover in State or turnover in Union territory in case of a manufacturer,

(b) two and a half per cent. of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II, and

(c) half per cent. of the turnover in State or turnover in Union territory in case of other suppliers,

subject to such conditions and restrictions as may be prescribed:

Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to a higher amount, not exceeding one crore rupees, as may be recommended by the Council.

2. The registered person shall be eligible to opt under sub-section (1), if,

(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II;

(b) he is not engaged in making any supply of goods which are not eligible to be taxed under this Act;

(c) he is not engaged in making any inter-State outward supplies of goods;

(d) he is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52, and

(e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council:

Provided that where more than one registered person is having the same Permanent Account Number (issued under the Income-tax Act, 1961), the registered person shall not be eligible to opt for the scheme under sub-section (1) unless all such registered persons opt to pay tax under that sub-section.

3. The option availed of by a registered person under sub-section (1) shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds the limit specified under sub-section (1).

4. A taxable person to whom the provisions of sub-section (1) apply shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax.

5. If the proper officer has reasons to believe that a taxable person has paid tax under sub-section (1) despite not being eligible, such person shall, in addition to any tax that may be payable by him under any other provisions of this Act, be liable to a penalty and the provisions of section 73 or section 74 shall, mutatis mutandis, apply for determination of tax and penalty.

The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section.

SGST Act of 2017

The GST Act empowers states to enact their own GST legislation. An Act to provide for the imposition and collection of tax on intra-state supplies of commodities or services, or both.

SGSTs are often divided into chapters that contain various tax-sharing measures.

The following sections are addressed by the SGST Act:

Chapter I - Preliminary

Chapter II - Administration

Chapter III - Levy And Collection Of Tax

Chapter IV - Time And Value Of Supply

Chapter V - Input Tax Credit

Chapter VI - Registration

Chapter VII - Tax Invoice, Credit And Debit Notes

Chapter VIII - Accounts And Records

Chapter IX - Returns

Chapter X - Payment Of Tax

Chapter XI - Refunds

Chapter XII - Assessment

Chapter XIII - Audit

Chapter XIV - Inspection, Search, Seizure And Arrest

Chapter XV - Demands And Recovery

Chapter XVI - Liability To Pay In Certain Cases

Chapter XVII - Advance Ruling

Chapter XVIII - Appeals And Revision

Chapter XIX - Offenses And Penalties

Chapter XX - Transitional Provisions

Chapter XXI – Miscellaneous

IGST

The IGST Act will govern the IGST, which is a tax levied on all supplies of goods and/or services between states under GST. IGST shall pertain to any supply of goods and/or services in both circumstances of import into India and export from India.

Exports would have been zero-rated under IGST. The federal and state governments would levy the tax.

In addition to the Goods and Services Tax Act 2017, as indicated above, it is critical to comprehend the following Acts outlined in the GST Act. Four of these 18 Acts are expressly relevant to GST, while the remaining 14 are not; however, a number of the terminologies used in those Acts have been included into the GST Act.

Sl.No.ActAs defined in the Goods And Services Tax Act 2017.
1Transfer Of Property Act 1882“Actionable Claim” shall have the same meaning as assigned to it in Section three of the Transfer Of Property Act 1882
2Income Tax Act 1961“Associated Enterprises” shall have the same meaning as assigned it in Section 92 A of the Income Tax Act 1961
3Central Boards Of Revenue Act 1963“Board” means the Central Board Of Excise And Customs constituted under the Central Boards Of Revenue Act 1963
4Goods And Services Tax (Compensation To States) Act“Cess” shall have the same meaning as assigned to it in the Goods And Services Tax ( Compensation To States) Act
5Chartered Accountants Act 1949“Chartered Accountant” means a chartered accountant as defined in clause (b) of sub section (1)of section 2 of the Chartered Accountants Act 1949.
6Company Secretaries Act 1980“Company Secretary” means a company secretary as defined in clause ( c ) of sub section (1) of section 2 of the Company Secretaries Act 1980.
7Cost And Works Accountants Act 1959“Cost Accountant” means a cost accountant as defined in clause ( c ) subsection (1) of section 2 of the Cost And Works Accountants Act 1959.
8Information Technology Act 2000“Document” includes a written or printed record of any sort and electronic record as defined in clause (t) of section 2 of the Information Technology Act 2000.
9Indian Constitution and Territorial Waters, Continental Shelf, Exclusive Economic Zone, And Other Maritime Zones Act 1976.“India” means the territory of India as defined in article 1 of the Constitution, its territorial waters, seabed and subsoil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in The Territorial Waters, Continental Shelf, Exclusive Economic Zone, And Other Maritime Zones Act 1976,and the air space above its territory and territorial waters.
10Integrated Goods And Services Tax Act 2017Integrated Goods And Services Tax Act means the Integrated Goods And Services Tax Act 2017
11Cantonments Act 2006Cantonment Board as defined in section 3 of the Cantonment Act 2006.
12Motor Vehicles Act 1988“Motor Vehicle” shall have the same meaning as assigned to it in clause (28) of section 2 of the Motor Vehicles Act 1988.
13Companies Act 2013Any corporation established by or under any Central or State Act or Provincial Act or a Government Company as defined in clause (45) of section2 of the Companies Act 2013.
14Co-operative Societies ActA co-operative society registered under any law relating to co-operative societies.
15Societies Registration Act 1860Society as defined under the Societies Registration Act 1860
16Securities Contracts (Regulation) Act 1956“Securities” shall have the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act 1956.
17State Goods And Services Tax Act 2017The State Goods And Services Tax Act means the respective State Goods And Services Tax Act
18Union Territory Goods And services Tax Act 2017Union Territory Goods And Services Tax act means Union Territory Goods And Services Tax Act 2017.

FAQs

1. Does India still have service tax?

Service tax was replaced by GST in July 2017. A slew of central and state taxes have been brought under the ambit of GST.

2. What are the rules governing GST?

The IGST (Integrated Goods and Services Tax) Act and the CGST (Central Goods and Services Tax) Act, both passed in April 2017, are the foundations of the Goods and Services Tax.

3. Who collects GST, the Center or State?

GST is split into 2 – the Central GST and State GST. The tax is remitted to the Center which then pays the States.

4. What are the tax slab rates under GST?

GST shall have 4 different tax slabs, viz., 5%, 12%, 18% and 28%.

5. What are the 4 types of GST?

As per the newly implemented tax system, there are 4 different types of GST:

  • Integrated Goods and Services Tax (IGST)
  • State Goods and Services Tax (SGST)
  • Central Goods and Services Tax (CGST)
  • Union Territory Goods and Services Tax (UTGST)
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