Goods and Services Tax (GST) Law is an indirect taxation law. It is levied on the supply of goods and services in India and is a consumption-based tax. It is a multistage, comprehensive, and destination-based tax.
GST is a multi-stage tax since tax is imposed at every step of the value-addition in the production process. It is comprehensive as it has subsumed many indirect state-level taxes. Also, it is a destination-based tax as it is collected and deposited at the point of consumption by the final consumer.
The body of GST Law in India comprises various Acts, Rules, Notifications, and Circulars issued from time to time on the suggestions and recommendations of the GST Council.
Acts governing GST Law in India
The GST Law is a set of Four Acts:
- Central Goods and Services Tax Act, 2017
- State Goods and Services Tax Act, 2017
- Union Territory Goods and Services Tax Act, 2017
- Integrated Goods and Services Tax Act, 2017
Central Goods and Services Tax Act(CGST), 2017
The abbreviation CGST under GST law stands for Central Goods and Service Tax. The Act governing the supply of goods and services from the Central Government’s point of view of the collection is the CGST Act 2017. The CGST Act had been empowered to draw provisions for levy and collection of tax liabilities in case of the intra-state supplies of goods and services or both by the Central Government.
State Goods and Services Tax Act (SGST), 2017
Another tax component of GST in India is State Goods and Service Tax(SGST). SGST Act, 2017 expands to all 28 States and 3 Union Territories deemed to be States. It works on the concept of ONE NATION ONE TAX. State Goods and Services Tax is governed by the State Goods and Service Tax Act 2017.
After the introduction of GST, the present state-level taxes that are State Sales Tax, Value Added Tax(VAT), Luxury Tax, Entertainment Tax, Taxes on betting, gambling and lottery, Entry tax on entry into different states, State Cesses and Surcharges in so far as they related to supply of goods and services, etc. were subsumed into one tax in GST called State GST.
All the tax proceeds collected under the head SGST are for the State Governments of the respective States. This tax is levied and collected on intra-state supplies of goods and services or both by the Union territories of the country.
Union Territory Goods and Services (UTGST) Tax Act, 2017
A separate Act is implemented for Union Territory status to monitor and impose Goods and Service Tax (GST) in India as The Union Territory Goods and Service Tax Act, 2017 (UTGST). The State concerning the Constitution (101st Amendment) Act, 2016 includes a Union territory with a Legislature
Delhi and Puducherry are Union Territories with legislature, hence considered as States and SGST is applicable. So, as per law, SGST cannot be levied in a Union Territory without a legislature.
UTGST Act applies to the Union territories of Chandigarh, Lakshadweep, Andaman and Nicobar Islands, Daman and Diu, and Dadra and Nagar Haveli. Recently, Ladakh has also been included in the ambit of UTGST Act and will not be governed by J&K GST Act, 2017.
Integrated Goods and Services Tax Act (IGST), 2017
This Act applies to the supply of goods and services or both in the case of Inter-state/ Inter-country supply for business or furtherance of the business. This means any supply where the location of the supplier and the place of supply is not within the same State / Country. IGST shall be levied and collected by the Centre on Inter-state /export of supplies. IGST is the summation of CGST and SGST/UTGST and shall be levied on all inter-state/ export supplies that are chargeable under the IGST Act. 2017. The IGST Act, 2017 consists of 33 sections that are divided into 11 chapters. According to the IGST Act, all imports or exports are considered inter-state supplies for levy IGST.
Rules governing GST Law in India
The GST Rules comprise of
(a) Central Goods and Service Tax Rules, 2017
(b)Integrated Goods and Service Tax Rules, 2017
(c) Union Territories Goods and Service Tax Rules, 2017
(d)State Goods and Service Tax Rules,2017 (for 28 States and 3 Union Territories deemed to be States)
(e) GST (Compensation to States) Rules, 2017
(f) GST Settlement of Funds Rules, 2017
Notifications and Circulars governing GST Law in India
CGST Act, 2017
- Central Tax Notifications (CT) (Non-tariff)
- Central Tax (Rate) Notifications [CT(Rate)Tariff]
IGST Act, 2017
- Intergrated Tax Notifications [IT](Non-Tariff)
- Intergrated Tax (Rate) Notifications [IT]( Rate) Tariff
UTGST Act, 2017
- Union Territory Tax Notifications [UTT][Non- Tariff]
- Union Territory Tax (Rate) Notifications [UTT](Rate) Tariff
- Compensation Cess Notifications(GST Compensation Cess) Non- Tariff
- Compensation Cess (Rate) Notifications [GST Compensation Cess(Rate)] [Tariff]
Circulars related to CGST/ IGST/ UTGST/GST Compensation Cess/ SGST are issued from time to time by the government on recommendations and suggestions made by the GST Council. Click here to view latest circulars and notifications under the GST Act, 2017