What is GST? What taxes are subsumed under GST and what taxes are not a part of GST?

GST stands for Goods & Services Tax. GST is a value added tax (VAT) on goods and services and will be levied at all points in the supply chain. It is one of the most significant reforms under the Modi Government.

GST came into effect from July 1st, 2017, and was implemented to:

  • Create a wider tax base and a more efficient tax system
  • Eliminate the cascading or double effects (tax on tax) of applying taxes
  • Rationalize the tax structure
  • Make offset process convenient
  • Simplify compliance processes in India

GST brought more transparency and simplified the current tax system in India. However, it required a lot of work to implement, at national level, in each state, and in each individual company. Eventually, it will harmonize Centre and State tax administrations.

Taxes subsumed under GST:

Central levies
State levies

  • Central Excise Duty
  • Service Tax
  • Duties of Excise (medicinal and toilet preparations)
  • Additional Duties of Excise (Goods of special importance)
  • Additional Customs Duty (known as CVD)
  • Special Additional Duty of Customs (SAD)
  • Cesses and surcharges relating to the supply of Goods or Services
  • Swachh Bharat Cess
  • Surcharges
  • Value Added Tax (VAT)
  • Central Sales Tax (levied by Centre and collected by States)
  • Purchase Tax
  • Luxury Tax
  • Entry Tax
  • Entertainment Tax (not levied by the local bodies)
  • Advertisement Taxes
  • Lottery, Betting and Gambling Taxes
  • State cesses and surcharges as far as they relate to supply of Goods or Services

Taxes that are not under GST:

Import taxes, such as the Basic Customs Duty, as well as the Research & Development Cess for Technology Imports (under discussion), Stamp Duty and Taxes on specific products and services, such as tobacco, electricity or alcoholic beverages, will remain. Additionally, the necessity of Road Permits for interstate movement of goods is still under discussions.

M+V Financial Experts manage Accounting & Taxation of many foreign companies in different industries in India. We have also successfully integrated their systems to be GST ready.

Have you implemented GST successfully in India? If not, let our experts help you.