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Everything you must know about GST

February 14, 2019
In our country, there are many different types of taxes that are levied by the central & state governments on the products or services. Earlier, these types of taxes were known as VAT (value-added tax). But now, after reformation of all taxes, it has merged into a single tax payment method which is known as GST (Goods and Service Tax). GST scheme was launched on 1st July2017 by the central government of India with 76% vote majority of parliament members. GST- Goods and Service Tax, is an indirect taxation, which is levied on the supply of goods and services. GST is charged at every point of sales and services. It has eliminated inefficiencies in the tax system. GST has introduced transparency in levying of taxes. Elimination of multiple taxes and merger of indirect taxes in one tax resulted in GST. GST has improved ease of doing businesses in between states. GST has been subsumed indirect taxes of both central government and state governments and therefore the governments are now dependent on GST for their indirect tax revenue.

GST is divided into three different types,

  • CGST - Central Goods and Service Tax
  • SGST/UTGST- State Goods and Service Tax/Union Territory Goods and Service Tax
  • IGST- Integrated Goods and Service Tax

CGST is levied by Central Govt. of India on transaction of the products, tax taking place within a state. It has replaced all the existing central taxes including custom duty, central excise duty, service tax, etc. Usually CGST rate is equal to the SGST rate. Taxes are charged on the base price of the goods and services.

SGST is levied by the State Govt. where the products are being sold or purchased within state. SGST has two components of taxes charged on every Intrastate transaction. One of these is the component levied by the state government and second one is linked to CGST component. SGST replaces all the state taxes which were existing previously like VAT (value added tax), Entertainment tax, Service tax, Luxury tax, State sales tax, Entry tax, etc.

UTGST is levied only for five Union territory state- Chandigarh, Dadra and Nagar Haveli, Andaman Nicobar Island, Lakshadweep, Daman and Diu. These states levy additional tax component with break up including UTGST and additional CGST for all transactions of goods and services. Two Union Territory (Delhi, Puducherry) are free from additional charge for GST because of their own legislature.

IGST is levied by Central Govt. of India. IGST is Chargeable on Interstate transactions (between two states) of goods and services. It is levied only where the goods or services fall in the domain of state transactions. IGST is the tax that is the exclusive domain of the Union Government.

HDFC Life offers a free online save tax calculator that helps you plan your tax expenditure in a better manner. For further details, click on the following link: https://www.hdfclife.com/financial-tools-calculators/tax-saving-calculator.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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