Goods & Service Tax (GST) Registration

GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.

Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country.

    GST Registration

      We all know that we’re required to pay certain taxes to the government from time to time. These are broadly classified into direct and indirect taxes. Direct taxes are taxes that we pay directly to the government, like income tax and corporation tax. Indirect taxes, on the other hand, are taxes that are paid by individuals to an intermediary who shall then pay it to the government. Common examples of indirect taxes are Value added Tax (VAT) and Goods and Services Tax (GST).

      Up until 2017, goods and services in India were taxed in varied ways like Value Added Tax (VAT) and service tax. To make the tax structure simpler and bring it under one umbrella, the government implemented the concept of one single tax called the Goods and Services Tax (GST).

      The GST Council meets regularly to decide or modify the GST on various commodities and services. For example, some commodities were initially placed in the higher GST tax bracket (18%-28%). But after inputs from states and industries, these commodities were reconsidered more as necessities than luxuries and their GST rates were reduced.

      Types of Goods and Services Tax:

      • Central Goods and Services Tax (CGST)
      • State Goods and Services Tax (SGST)
      • Integrated GST (IGST)

      GST Rates

      The GST rate is broadly classified into 4 categories: 5%, 12%, 18% and 28%. Goods and services are bracketed under these categories depending on whether the item is essential, non-essential, a necessity or a luxury.

      Let us look at the GST rates of a few common items:

      Tax Rates

      Products

      0.25%

      Cut and semi-polished polished diamonds and other precious stones.

      5%

      Essential household commodities like edible oil, sugar, spices, tea, and coffee (except instant coffee). Coal, Indian Sweets and Life-saving drugs also attract a 5% GST rate.

      12%

      Computers and processed food.

      18%

      Soaps, hair oil, toothpaste and cream are covered in this bracket.

      28%

      Luxury commodities like small cars, consumer durables like AC and Refrigerators, premium cars and high-end motorcycles, cigarettes and aerated drinks.

      Some very essential items like milk attract no GST. This is to ensure that essential commodities that are consumed in almost every home are readily available without tax.

      GST Rates for Common Services

      GST Rates on loans

      Tax Rates

      Services

      Nil

      Services offered under Bank Service Bank Deposit (BSBD) under Pradhan Mantri Jan Dhan Yojana (PMJDY). Hotel accomodation for transactions below Rs. 1000 per day.

      5%

      Working for newspaper printing, Renting cabs, Tour operator services, Print media ad spaces

      12%

      Building construction for sale, Food and drink at restaurants (without AC or Liquor license), Movie tickets costing less than or equal to Rs. 100

      18%

      Food and Drink at AC restaurants with liquor license, Outdoor catering, circus, drama, theatre.

      28%

      Amusement parks, Theme parks, water parks, sporting events like the IPL, casinos, ballet, race course, go-karting, Food and drink in AC 5 star hotels.

      The earlier service tax applicable on loans has now been replaced by GST. The rate of GST is set at 18% and is only levied at the loan processing charges.

      • Home loan: 18% GST
      • Personal Loan: 18% GST
      • Car loan: 28% GST

      GST on Gold

      The gold itself is levied with a GST of 3%, whereas the making charges are taxed at 5% if the manufacturing is outsourced to a job worker.

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