State Goods and Services Tax – An Introduction

State Goods and Services Tax is an integral part of GST. Earlier, the taxation system in India consisted of various taxes like Central Excise, Service Tax, State VAT, etc. However, with GST implication, a single tax system has been introduced, which comprises SGST, CGST, and IGST. 

The full form of SGST is State Goods and Service Tax under the State Goods and Service Tax Act 2016. SGST is a tax charged on intrastate supplies of goods and services by the state government. It helps in the seamless flow of goods and services across the state. 

Example of how to calculate SGST and CGST

Consider the situation where Rahul, a Delhi dealer, sells goods worth Rs. 20,000 to Pritam in Maharashtra. The GST rate applicable is 18%, which includes a 9% CGST rate and a 9% SGST rate. In this case, the dealer will collect Rs. 3600 as tax; the Central Government will collect Rs. 1800, and the Maharashtra Government will collect Rs.1800.

Features of SGST

The following are the features of the SGST Act:

• SGST charges tax on all intra-state supplies of goods and services
• To enlarge the input tax credit by providing them with taxes paid on the supply of goods or services
• It gives self-assessment for payable taxes.
•  SGST conducts audits for the registered person for verification with the provisions of the Act.
• The SGST Act retrieves various tax arrears by using multiple modes that include detaining and selling goods
• The SGST allows the power of inspection and provides sudden changes.
• SGST makes provision for fines or penalties for the contravention of the proposed legislation.
•  SGST provides the advantage of reduced tax incidence on goods and services.

Benefits of SGST 

● Elimination of Multiple Taxes- One of the benefits of SGST is the elimination of multiple indirect taxes like turnover, sales, service, and others.

● Saves Money- SGST helps increase financial savings and decrease the cost of goods and services.

● Ease of Business- The SGST eliminates the need for separate tax systems for each state. It makes it highly beneficial for interstate businesses.

● Best in Filing Tax and Documentation- SGST benefits companies and small businesses. It makes the paperwork task simple.

● Reduction of Cascading Effect- With SGST, you will benefit from tax credits. As a result, it reduces the cost of items.

SGST Rates 

SGST slabs of some daily use goods are:

• Computers- 6%
• Coffee, tea, edible oil, spices, and sugar- 2.50%
• Luxury products include posh and high-end cars, refrigerators, air conditioners, and luxurious motorcycles- 14%
• Body soaps, toothpaste, hair oil, industrial intermediaries, and capital goods- 9%

How often do SGST rates get revised?

After implementing the State Goods and Services Tax (GST) in India, the GST Council conducts meetings regarding specific rate revisions. You can keep an eye on the details of all types of SGST and the rate revisions by visiting the official website of GST or GST Portal. 

Differences Between CGST and SGST

CGST and SGST are similar since they are part of the Goods and Services Tax, but have some fundamental differences. 

Differences between CGST AND SGST are:

• Tax Collection – The main difference between CGST and SGST is that the Central Government collects the CGST, and the State Government collects the SGST. 
• Revenue – The Central Government can share the revenue collected from CGST with the State Governments. However, the State Government cannot share the revenue collected from SGST with the Central Government.
• Taxes incorporated – The indirect taxes within CGST and SGST are as follows:

1-CGST: Central surcharges & CESS, Central excise duty, other Central indirect taxes.

2-SGST: Value Added Tax, State surcharge, and other State taxes.

SGST Rules

The SGST contains various sections and planning rules and regulations. The following pointers are the standard regulations that SGST must uphold:

• If you have GST registration, issue a tax invoice for all the taxable goods and services.
• If the registration is under a composition scheme, issue a supply bill.
• Make sure that you note all the invoices in sequential order.
• Ensure your GST invoices have your name, address, GSTIN, and supply place.
• Keep records of every document you get and create with correct details.
• Do not buy any products from the unregistered traders.
• Ensure you are filing GST correctly for the same and different states.
• Remember to add a unique serial number for every invoice.
• The sale of chargeable goods and services provides a tax invoice.
• Please take a tax invoice on all purchases of goods. 
•  Submit all your invoices and GST reports promptly to eliminate any penalties.

Conclusion

This blog summarizes all the details of SGST, its benefits, and its rules. Calculation of SGST is hectic and time-consuming, and it may be unknown to new small-business owners. So, you can opt for the services of Eazybills.

Eazybills makes GST invoicing effortless, saves time, helps in GST tracking, clears all the pending bills, and manages the cash flow of your business. You can read our website blogs for further information on GST bills and ITR filing. HAPPY BILLING!