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Why is GST divided into 2 categories - CGST and SGST?
Posted on: 03/Jul/2017 3:02:09 PM
GST - Goods and Services Tax has come into effect from 1st July throughout the country.
Earlier, a variety of taxes Kalal Tax, the Customs Tax, Value Added Tax, and Service taxes were being collected for goods items and services.
Now, this multiple tax system has been eliminated and GST has been implemented for a single uniform taxation throughout the country.
A special GST council was set up to finalise the GST slabs for different items and the smooth implementation. GST slabs right from 5% to 28% are collected for different items.
The State government tax system has been completely eliminated and the entire tax goes to the central government.
There are 2 categories in GST CGST (Central GST) and SGST (State GST). Both CGST and SGST are charged for all the items – for example, if an item has 18% GST slab, 9% will be for CGST and the balance 9% will be for SGST.
In case the goods are transported to another state, IGST is charged.
An official from the Department of Commercial Tax explained that though there are 3 categories as mentioned above CGST, SGST, and IGST the entire GST goes to the central government. Subsequently, the central government will pay the shares of GST due to the state governments based on the formula devised by them.
Only after the implementation, the exact share of the state governments will be known. As of now, it has been advised that GST will be shared on 50-50% basis between the central and the state governments.
Is there any GST for resales?
The tax department personnel confirm that Tax will have to be paid even after buying an item with the requisite GST and then reselling it.
An official explained that presently, there is no difference between GST and the VAT – Value Added Tax. During the 1st sales, the seller will sell an item worth Rs. 100 at Rs. 1280 including the GST slab of 28%. The buyer, when reselling the same item, may fix the price at Rs.1100 and add the 28% GST slab while reselling. However, as he/she has bought the item, including the GST payment, he/she will pay an additional resale tax of Rs. 28 only.
