CGST

CGST

The full form of CGST under GST law is central goods and service tax. It is called as CGST act 2017. The CGST act has been enacted to make a provision for levy and collection of tax on intra-state supply of goods or services or both by the central government and the matters connected therewith or incidental thereto.

When CGST is being introduced, the present central taxes of central excise duty, central sales tax, service tax, additional excise duties, excise duty levied under the medical and toiletries preparation act, CVD (additional customs duty – countervailing duty), sad (special additional duty of customs) surcharges and cesses are subsumed.


CGST is charged on the movement of goods and services of standard commodities and services which can be amended time to time by a separate body. The revenue collected under CGST is for centre. However, input tax credit on CGST is given to states and such input tax could be utilized only against the payment of central GST.

For instance, X, a dealer in Uttar Pradesh sells goods worth Rs. 10,000 to Y in Rajasthan. Thus,CGST would be levied and collected by the centre. Suppose the CGST rate is 8%, thus the dealer would charge Rs. 800 as CGST and this would be collected by the centre.

ORIGIN AND COMMENCEMENT OF CGST ACT

  • CGST act extends to whole of India excluding the states of Jammu and Kashmir.
  • Jammu and Kashmir will need to approve levy of GST in its state assembly, on account of its special powers on taxation under the constitution. Once this is done, GST shall be introduced in the state.
  • The CGST act shall come into force from a date which will be notified by the central government in official gazette, i.e. from the appointed date.
  • Different provisions may be made applicable from different dates as may be notified.

SALIENT FEATURES OF CGST ACT 2017

The features of Central Goods And Services Tax Act, 2017, are as follows:

  • To levy tax on all intra-state supplies of goods or services or both
  • To broaden the base of the input tax credit by making it available in respect of taxes paid on supply of goods or services or both used or intended to be used in the course or furtherance of business;
  • To impose obligation on electronic commerce operators to collect tax at source, at such rate not exceeding one per cent of the value of taxable supplies(net), out of payments to suppliers supplying goods or services through their portals;
  • To provide for self assessment of the taxes payable by the registered person;
  • To provide for conduct of audit of registered persons in order to verify compliance with the provisions of the act;
  • To provide for recovery of arrears of tax using various modes including detaining and sale of goods, movable and immovable property of defaulting taxable person;
  • To provide for powers of inspection, search, seizure and arrest to the officers;
  • To establish the goods and services tax appellate tribunal by the central government for hearing appeals against the orders passed by the appellate authority or the provisional authority;
  • To make provision for penalties for contravention of the provisions of the proposed legislation;
  • To provide for an anti-profiteering clause in order to ensure that business passes on the benefit of reduced tax incidence on goods or services or both to the consumers; and
  • To provide for elaborate transitional provisions for smooth transition of existing taxpayers to goods and services tax regime.

TAXONOMY OF CGST LAW

  • The CGST act, 2017 comprises of 174 sections in 21 chapters and three schedules on supplies without consideration, treatment of activities as to goods or services and activities which shall be considered as neither goods nor services.
  • These schedules are as under :
    • Schedule I:  Activities to be treated as supply even if made without consideration
    • Schedule II: Activities to be treated as supply of goods or supply of services
    • Schedule III: Activities or transactions which shall be treated neither as a supply of goods nor a supply of services.

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Author: commerceiets
Educator (Masters of Commerce, Bachelor of Commerce)

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