
CGST Explained: Central Goods and Services Taxation Simplified
- Juhi Verma
- September 30, 2023
- Informational Blogs, GST, TDS
- Central Goods and Services Taxation, CGST Act 2017, CGST for business in India, GST
- 2 Comments
Central Goods and Services Taxation – An Introduction
The government implemented Goods and Services Tax from 1/7/ 2017 onwards. The aim of bringing GST was to have a ‘One Nation One Tax.’ CGST is regulated by the GST Council. The full form of CGST is the Central Goods and Services Taxation , which includes all the taxes levied by the central government. For example, central excise duty, central surcharges, etc., the revenues of the CGST go to the Central Government. The CGST Act 2017 states that CGST applies to India except Jammu and Kashmir.
Sections of CGST ACT 2017
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- Section 16 of CGST ACT 2017 concerns the Input Tax Credit mechanism, which permits the assesses to offset the GST Input Tax Credit with the GST Output Tax Liability.
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- Section 17(5) of the CGST Act refers to a provision under GST covering blocked credits. This provision lists 11 clauses on which ITC is unavailable for claims.
Objectives of the CGST
The goals of CGST are as follows:
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- The primary purpose of the CGST is to curb various problems associated with the taxation system.
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- To overcome issues like double taxation and heavy tax duties
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- To introduce a simplified compliance system
Features of CGST
CGST has many essential features. Some of the primary features of CGST are as follows:
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- Levying of tax should be done on each Intra-State supply of services and goods.
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- The broadening of the input tax credits through making it available concerning tax paid on the supply of services or goods for facilitating the business.
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- It allows the imposing of obligations on the operators of electronic commerce for the collection of TDS.
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- To provide the officers’ power concerning seizure, inspection, arrest, and search.
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- The CGST Act allows for tax recovery through several methods, such as selling and detaining goods.
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- It ensures that the business passes the reduced tax benefits and incidence on services, goods, or both to the respective customers.
Documents required for the registration of CGST
The essential documents required at the time of registration are as follows:
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- Application Form – You can get the application form from the GST Portal.
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- PAN Card – A photocopy of a PAN Card is essential for registration.
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- Aadhar Card – Businesses will also need to submit a photocopy of their Aadhar card as part of the registration process
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- Address Proof – Address proof like electricity bill, water bill, rent agreement, etc., is necessary for business registration.
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- Canceled Cheque Leaf – This is required to set up direct debit facilities to pay GST taxes.
Benefits of CGST
CGST for business in India benefits the economy, businesses, and individuals. The main advantages of the CGST Act are:
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- Removal of Multiple Taxes– Before GST, the Centre, and States had different tax rates on the same goods and services. The implementation of CGST makes the tax system easy.
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- Cost Reduction- The CGST decreases the prices of goods and services, and it helps the taxpayers save more money by removing the cascading effect of taxes.
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- Ease of Business- The main aim of CGST is to simplify the taxation system. Under GST, the rules have the same concept everywhere in the country, making understanding the process easier and simpler for everyone.
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- Improved Logistics and Distribution- GST shortens the transportation cycle and turnaround time. The e-way bill system under GST removed interstate checkpoints, helping to improve transit and destination productivity. As a result, it helps to reduce unnecessary high logistics and distribution costs.
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- Smooth and Easy Documentation- The government also brought online return filing and input credit certification under GST. It leads to better compliance and promotes transparency in the taxation process.
Impact of CGST on business
The impact of CGST is as follows:
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- The introduction of the CGST has positively impacted businesses in India.
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- Companies can claim input tax credits for the GST paid on their inputs, which reduces their overall tax liability.
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- The CGST has also made it easier for businesses to comply with indirect tax laws, as there is now only one GST Rate instead of multiple VAT rates.
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- Overall, the CGST has positively impacted businesses in India by reducing their indirect tax liability and making compliance easier.
Registration process of CGST
The registration process for Central Goods and Service Tax (CGST) in India is:
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- Businesses need to have a valid PAN number to register for CGST.
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- After registration, the business will receive a temporary registration number valid for 60 days.
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- After receiving the temporary registration number, the business must complete the KYC formalities by submitting documents such as Aadhar number, bank account details, etc.
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- After completing the KYC formalities, the concerned authority will give businesses a permanent registration number.
Conclusion
This blog discussed different aspects of CGST. CGST is vital among the three categories of GST. This blog has adequately discussed the main topic of CGST, its features, objectives, CGST slabs, and its impact.
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Ronit Verma
Highly informative and well-structured.
Swaroop Kamal Srivastava
An essential guide to CGST, clear and easy to grasp.