In July 2017, the Goods & Services Tax (GST) was implemented in India in a bid to create a uniform taxation system that can be used countrywide, aka ‘one nation, one tax’. One major change witnessed with GST is that unlike its predecessor VAT (Value Added Tax), GST is collected at the point of consumption rather than the point of origin.
This simplification of the taxation system in India has played a key role in consolidating indirect taxes at the central and state levels, i.e., CGST and SGST. Let us learn more about GST, CGST & SGST, their meanings, and their differences.
The Goods and Services Tax (GST) is a comprehensive tax that is levied on the supply of goods and services. It is a dual-level tax system, comprising the Central GST (CGST) and State GST (SGST). It has replaced the multiple taxes previously levied by the Central and State Governments of India.
Some of the biggest benefits of GST for all kinds of industries and businesses have been:
- As previously stated, the GST reform has allowed the Central and State government to create a uniform taxation system.
- Under the Composition scheme, any small business owner with a turnover of less than ?1.5 Crore can pay the GST at a set rate of turnover.
- The process for GST registration is quite simple and straightforward for businesses.
The full form of CGST stands for Central Goods and Services Tax. It is a type of tax imposed by the Central Government on the supply of goods and services within a state. It is levied on the value of the goods and services supplied.
The CGST is collected by the Central Government and the revenue is used to finance various activities.
The full form of SGST stands for State Goods and Services Tax. Just like CGST, it is imposed by the State Government on the intrastate supply of goods and services. It is levied on the value of the goods and services supplied for end consumption.
While both CGST and SGST are quite similar since they are part of the Goods and Services Tax, there are some basic differences. Let’s take a look:
Here are some key considerations that business owners in India should keep in mind:
To summarize, the CGST and SGST are two different types of taxes imposed by the Central and State Governments, respectively. They are both levied on the value of goods and services supplied within a state. The Central Government collects the CGST, and the State Government collects the SGST. The Central Government has the power to make laws and regulations related to CGST, while the State Governments have the power to make laws and regulations related to SGST. Businesses should know all aspects of GST and adhere to the rules when filing GST returns.
Q.1: What is the full form of SGST?
• The full form of SGST is State Goods & Services Tax. It is imposed by the State Government in India on the intrastate supply of goods and services.
Q.2: What is the full form of CGST?
• The full form of CGST is Central Goods & Services Tax. It is imposed by the Central Government in India on the supply of goods and services.
Q.3: Who collects the CGST amount?
• The CGST amount is collected by the Central Government on the value of goods and services supplied to a buyer.
Q.4: Who collects the SGST amount?
• The SGST amount is collected by the State Government on the value of goods and services supplied to a buyer.
Q.5: How is GST calculated?
• The Goods & Services Tax (GST) can be calculated as per the different tax slabs as specified by the Government. The basic formula for calculating GST is as follows:
o GST Amount = (The original cost x % of GST)/100.
o To calculate the net price, add the GST amount to the original cost.
Every business person has faced a situation in which they have sold their goods or services but haven’t received the payment yet. The time gap between the sale and the receipt can stretch for months.
Standardisation of taxation was introduced by the government for the welfare and economic development of the country.
Most types of loans offered by banks and financial institutions are designated for a specific end-use, such as a home loan, education loan, or car loan. A personal loan is more ubiquitous because you need not provide a reason to apply, leaving you free to use it for a variety of purposes.
All goods and services sold in India are subject to taxation. Loans of all kinds, including Personal Loans, are no different.
Even though financial planning for doctors is a time-consuming procedure, today we simplify it into a straightforward five-step approach to set you on the proper course.
Leave a Comment