Learn Goods and Service Tax Law ( GST ) Basics in a very simple Q&A manner..

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I was wondering,
What does GST
stand for?
It stands for
Goods and Service
Tax
Ohh!! Again one
more tax
No!! Now there will be only one
indirect tax i.e. GST. Other
taxes such as Excise Duty, VAT,
Service Tax, Entertainment Tax,
Entry tax etc shall be replaced
by GST.

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So, when do we need
to pay GST???
GST would be applicable
on “SUPPLY” of goods or
services.
Supply includes - Sale, transfer, barter,
exchange, license, rental, lease or
disposal
made for a consideration
in the course or furtherance of
business

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Who will be liable to
pay GST??
GST will be charged by the
supplier on the value of goods
and services. The supplier will
be required to collect the GST
from the Customer and pay to
the Government.
Government
Pay
GST by
Challan
Suppli
er
Charge
GST on the
Bill
Customer

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But I heard that there
are three taxes and
not one?? Is there
only one GST???
You are partially correct. There
is only one GST. However,
there are three types of GST –
Central GST (CGST), State
GST (SGST) and Integrated
GST (IGST).
GST
Intrastate Supply
(within the state)
CGST SGST
Interstate Supply
(outside the state)
IGST

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Ohh!! So there
are 3 types of
GST. But I am not
sure how will it
work.
Ok!! I will explain you
with a simple
example.
Example – A : Intrastate Supply (Supply within the state)
Supply of Goods/Services Rs. 100
CGST @10% Rs. 10*
SGST @ 10% Rs. 10*
Example – B : Interstate Supply (Supply outside the state)
Supply of Goods/Services Rs. 100
IGST @ 20% Rs. 20*
. *rates are taken for example

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At what rate GST
will be levied??
There are broadly 4
rates of GST – 5%,
12%, 18% and 28%
• Rate for Common Use Items5%
• Standard Rate for goods and
services12% & 18%
• Rate for Luxury Items28%

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Hmm!!! Can we take the
credit of the tax paid on
inputs and utilize the
same for payment of
output GST??
Yes, a registered person can
take the credit of the tax paid on
inputs purchased by it and
further, it can utilize the credit for
the payment of output GST. I will
explain it with a simple example.
Example – B has purchased the goods from A and paid GST of Rs. 20. B
will take the credit of Rs. 20. When B will sell the goods further, he will
charge Rs. 28 from its customer but remit Rs. 8 (Rs.28 minus Rs.20) to
Govt. by utilizing input tax credit of Rs. 20.
A - Seller
• Cost of Goods
Rs.100
• CGST @10% Rs.
10
• SGST @ 10% Rs.
10
B - Purchaser
• Cost of Goods Rs
120
• Profit Rs.
20
• CGST @10% Rs.
14
• SGST @ 10% Rs.
14
• Input Tax Credit (Rs.

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So, This means GST paid
on inputs can be utilized
for payment of output
GST, without any
restrictions??
No, There are conditions for
utilization of GST. As I told you
earlier, there are three types of
GST. So there are certain
restrictions on utilization of
credit, which is explained in the
below chart.
IGST
IGST
CGST
SGST
CGST
CGST
IGST
SGST
SGST
IGST
>
• First
with
>
• Then
With
>
• Then With
Order of
Utilization

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But what is the
threshold limit for
registration in GST??
For those with an aggregate
turnover below Rs.20 lakhs
annually will be exempted from
GST.
Where as for the north-eastern
States, the exemption threshold
is Rs.10 lakhs
Aggrega
te
Turnove
r
20
Lakhs
Mandator
y
Registrati
on in GST

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THANK
YOU
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