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
In India, we are required to pay certain taxes to the government, classified into direct and indirect taxes. Direct taxes, such as income tax and corporate tax, are paid directly by individuals or entities to the government. Indirect taxes, however, are collected by intermediaries from individuals, who then remit them to the government. Common examples of indirect taxes are the Goods and Services Tax (GST) and, before 2017, the Value Added Tax (VAT).
Before the introduction of GST in 2017, goods and services in India were subject to a range of taxes, including VAT and service tax, which varied across states and sectors. To simplify the tax structure and bring it under a single umbrella, the government introduced the Goods and Services Tax (GST), a uniform tax applicable nationwide.
The GST Council, comprising representatives from both the central and state governments, meets periodically to review and adjust GST rates for various goods and services. Initially, several items were placed in higher tax brackets (18% to 28%), but after feedback from states and industry sectors, the Council has made adjustments to accommodate essential items under lower tax rates.
Types of Goods and Services Tax
- Central Goods and Services Tax (CGST)
- State Goods and Services Tax (SGST)
- Integrated Goods and Services Tax (IGST)
GST Rates
GST rates are divided into four primary categories: 5%, 12%, 18%, and 28%, depending on whether the items are deemed essential, non-essential, necessities, or luxuries.
Common GST Rates and Product Examples
| Tax Rate | Products |
|---|---|
| 0.25% | Cut and semi-polished diamonds and other precious stones. |
| 5% | Essential items like edible oils, sugar, spices, tea, coffee (excluding instant coffee), coal, traditional sweets, and life-saving drugs. |
| 12% | Computers, processed food items. |
| 18% | Household products like soap, toothpaste, hair oil, and cosmetics. |
| 28% | Luxury items like high-end vehicles, ACs, refrigerators, cigarettes, and aerated drinks. |
Certain essential items, like milk, are exempt from GST, ensuring basic commodities are accessible without additional tax.
GST Rates for Common Services
| Tax Rate | Services |
|---|---|
| Nil | Services under the Pradhan Mantri Jan Dhan Yojana (PMJDY), hotel accommodations costing below Rs. 1,000 per day. |
| 5% | Services related to newspaper printing, cab rentals, tour operators, and print media advertising spaces. |
| 12% | Building construction for sale, dining at non-AC restaurants without liquor licenses, movie tickets priced up to Rs. 100. |
| 18% | Dining at AC restaurants with liquor licenses, outdoor catering, and entertainment like circus and theatre shows. |
| 28% | High-end entertainment services such as amusement parks, theme parks, water parks, certain sporting events, casinos, ballet performances, and five-star hotel dining. |
The prior service tax on loans has been replaced by an 18% GST on loan processing charges.
GST on Loans
- Home Loan: 18% GST on processing charges
- Personal Loan: 18% GST on processing charges
- Car Loan: 28% GST on processing charges
GST on Gold
Gold attracts a GST rate of 3% on the metal itself. Additionally, making charges incur a GST of 5% if manufacturing is outsourced to a job worker.
Disclaimer: GST rates are subject to change based on government norms and periodic updates by the GST Council. Please refer to the latest guidelines or consult a tax professional for current rates.