Taxes are classified into two categories
1. Direct Taxes (Income Tax)
2. Indirect Taxes (GST & Customs Duty)
1. DIRECT TAX (Income tax)
in case of direct tax the person paying taxes to the government
and bears the incidence of tax that means tax is imposed directly on the
taxpayer.
The burden of tax borne by the person himself.
2. INDIRECT TAX (GST & Customs Duty)
in case of the indirect tax, the person paying the tax to the government
and collect the same from ultimate consumer and therefore the incidence of the
tax is shifted to the other person.
The burden of tax shifted to another person.
In the indirect tax, many taxes existed in the past like excise duty,
service tax, central sales tax (CST), VAT, Luxury tax, Entertainment tax, Entry
tax, Taxes on the advertisement, Tax on lottery, betting, gambling, but now
all the taxes have been merged in one and that is GST.
GST is an Indirect Tax and indirect taxes are the main source of tax
revenue for the government. In India indirect taxes contributes more than 50%
of the total tax revenues of central and state governments. It is levied on
commodities at the time of manufacture or purchase or sale or import-export
thereof.
Most of the time person i.e taxpayer does not know that he is paying the
tax to the government. Because it is included in the price of the goods and
services. It also increases the price of goods and services.
Indirect taxes are regressive in nature. the rich and poor have to pay
the same rate of tax on certain goods and services.
There are three types of GST:-
1. IGST (Integrated Goods and Services)
- When supply is made between two or more states (i.e. interstate supply) like Gujarat to Maharashtra then IGST is applicable and it is a central levy.
2. CGST (Central Goods and Services)
- When supply is made within a state like within Rajasthan, within Tamilnadu then CGST is applicable and it is also a central levy.
3. SGST/UTGST (State Goods and Services/Union territory Goods and
Services)
- When supply is made within a state like within Rajasthan, within Tamilnadu then SGST is applicable and it is a state levy.
From the above, we can understand that if supply is made within the same
state then CGST and SGST / UTGST are applicable. and if supply is made
between two different states then IGST is applicable.
States where UTGST is applicable instead of SGST :
Union Territories without the state legislature
1. Andaman and Nicobar Islands
2. Lakshadweep
3. Dadra and Nagar Haveli
4. Daman and Diu
5. Chandigarh
There are two more union territories in which SGST is applicable
instead of UTGST
1. Delhi
2. Pondicherry
because they have their own legislature.
Tags:
GST