This document provides an overview of goods and services tax (GST) in India, including: 1) It discusses the historical context and origins of taxation in India from ancient texts like the Arthashastra. 2) It outlines the key features and types of GST including CGST, SGST, and IGST. 3) It provides examples of GST rates applied to common goods and services in India.

1. CHAPTER 1
GOODS & SERVICE TAX

2. Taxation in India is rooted from the period of Manu Smriti and Arthasastra.
Arthashasthra (by Kautilya aka Chanakya) teaches the way for successful
economic and political well-being for a state. It’s a collection of Kautilya's
views on how to run a state.
Sales tax: A sales tax is a consumption tax imposed by the government on
the sale of goods and services. A conventional sales tax is levied at the point
of sale, collected by the retailer, and passed on to the government

3. Arthashastra & GST
5 types of Taxes:
(A) Vahya - Charged on the commodities produced domestically,
(B) Abhyantar - to be collected in the Capital of the state,
(C) Atithya - On commodities produced outside (the state),
(D) Nishkramya - export duty,
(E) Praveshya - Import duty

4. • Idea of GST was first conceptualized in 1920s by Wilhelm von Siemens, a German businessman
• France – first country to introduce GST in 1954
Canada & Brazil – only countries which have dual GST model like India (CGST & SGST)
• Currently 160 countries have in place the GST law in different forms
Purpose of GST
• to stop tax evasion which was prevalent in France due to high tax rates
In India
• 1947-1986 – Single point tax collection system (at the point of transfer of products)

5. TYPES OF GST

8. PRESENT SYSTEM OF INDIRECT TAXES

9. https://www.paisabazaar.com/tax/gst-rates/
Refer to the link for more information:

12. GOODS
5% Tax slab 12% Tax slab 18% Tax slab 28% Tax slab
Ice
Snow
Cashew nuts (with or without
shell)
Kites
Insulin
Biogas
Numismatic coins
Appliances like braille paper
that compensate for a
disability or defect
Aggarbatti
Wind-based Atta Chakki
Coir mats, matting, and floor
covering
Pickle, jam, chutney,
murabba, jelly and other such
preparations of nuts,
vegetables, and fruits.
Mustard sauce, ketchup, and
specific sauces
Bari made of pulses
Plastic beads
Diagnostic kits and reagents
Menthol, peppermint,
Mentha oils and crystals
Fly ash blocks
Notebooks and exercise
books
Corrective spectacles
Intraocular lens
Walkie Talkies used by the
law enforcement authorities
Flint buttons
Spoons, knives, forks, tongs,
etc.
Dental Wax
Kajal pencil sticks
Several schools and handbags
Plastic Tarpaulin
Aluminum foil
Non-electronic weighing
machinery
Simple printers
Electrical Transformers
UPS
TV Set-top box
CCTV
Baby carriages
Bamboo furniture
Swimming and paddling pools
Cocoa powder
Chewing or bubble gum
Malt extracts
Pan masala
Non-alcoholic drinks
Granite
Marble
Paints and varnishes
Perfumes
Articles of artificial fur
Razors and blades
Fire extinguishers
GST Rates on Services

13. SERVICES
5% Tax slab 12% Tax slab 18% Tax slab 28% Tax slab
Air Transport
Print media ad space
Goods transported in a vessel
from out of India
Railways
Renting a motor cab (not the
fuel cost)
Leasing aircrafts
Transport of goods not using
Indian Railways
Renting accommodation
space costing more than INR
1000 and less than INR 2500
Constructing a building for
selling it
IP rights (temporary)
Drinks or foods at restaurants
that don’t have a liquor
license or AC/Heating
Drinks or food at restaurants
that have a liquor license or
AC/ Heating
Drama
Circus
Supply of food at a
party/shamiana
Renting an accommodation
space that costs over INR
2500 but less than INR 5000 a
day.
Personal loans, home loans,
and car loans are taxed at 18
percent.
Gambling
Films
Water parks
Casinos
Sporting events
Racecourse

14. NO GST GOODS
Some of the vital goods that attract no tax include essentials like the
following:
•All types of salt
•Hulled cereal grains like wheat, oat, rye, barley, etc.
•Palmyra jaggery
•Bones and horn cores
•Kajal (not Kajal sticks)
•Coloring, drawing and picture books for children
•DCP or Dicalcium Phosphate of animal feed grade that conforms with IS
specification No. 5470: 2002
•Sanitary napkins
•Human hair

15. HOW GST OPERATES?
Case 1: Sale in one state, resale in the same state

16. Case 2: Sale in one state, resale in another state

17. Case 3: Sale outside the state, resale in that state

18. Input Tax Credit and GST
Let’s assume, you are a producer and GST payable on the final product is Rs. 500.
However, you had already paid Rs. 300 on the purchase of raw materials, you can claim
Rs. 300 as input tax credit and only pay Rs. 200 as GST at the time of supply.
Now let’s understand how input tax credit works in terms of SGST, CGST and IGST
credit. It should be noted that as per the GST Act, GST Credit should be applied in the
following order:
1.To set off IGST liability
2.To set off CGST liability
3.To set off SGST liability

19. Suppose a manufacturer, Raj from UP sold goods worth Rs. 1 lakh to a dealer, Sumit located in UP. The dealer in turn
sold the goods at Rs. 1.2 lakh to a trader, Manav in Haryana. The trader finally sold it to the end consumer, Mehak at
Rs. 1.5 lakh.
The applicable GST rates on this good are SGST= 6%, CGST=6% and IGST=12%.
Transaction 1–
Raj sold the goods at Rs. 1 lakh to Sumit
in the same state. So, this is an intra-state
transaction.
SGST and CGST at the rate of 6% each will
be charged.
SGST = 6% of Rs. 1 lakh = Rs. 6000 (to the
state of consumption, UP)
CGST = 6% of Rs. 1 lakh = Rs. 6000 (to the
centre)
Total GST payable by Raj = Rs. 12,000
Transaction 2-
Sumit from UP sold the goods at Rs. 1.2
lakh to Manav from Haryana. So, this is
an inter-state transaction.
IGST at the rate of 12% will be charged.
IGST = 12% of Rs. 1.2 lakh = Rs. 14,400 (to
the centre)
IGST Credit = Rs. 12,000
Net IGST liability for Sumit = Rs. 14,400-
Rs. 12,000 = Rs. 2,400 (to the centre)
Transaction 3-
Manav sold the goods at Rs. 1.5 lakh to
Mehak in the same state. So, this is an
intra-state transaction.
SGST and CGST at the rate of 6% will be
charged.
SGST= 6% of Rs. 1.5 lakh= Rs. 9000 (to
the state of consumption, Haryana)
CGST= 6% of Rs. 1.5 lakh= Rs. 9000 (to
the centre)
Total IGST Credit = Rs. 14,400 (as per the previous transaction)
IGST Credit to set off the IGST liability = Rs. 2400 (IGST credit balance= 14400 – 2400 = Rs. 12000)
IGST credit to set off CGST = Rs. 9000 (IGST credit balance = 12000- 9000 = Rs. 3000)
Finally, IGST credit used to set off SGST= Rs. 3000 (IGST Credit balance = 0)
Net SGST in this transaction= Rs. Rs. 9000- Rs. 3000= Rs. 6000 (to Haryana)

20. Selling Price
Particulars
Uttar Pradesh
(UP)
Haryana Centre
Transaction 1 Rs. 1 lakh Income (+)
(+) Rs. 6000
(SGST)
– (+) Rs. 6000 (CGST)
Transaction 2 Rs. 1.2 lakh
Income (+) – – (+)Rs. 14,400 (IGST)
SGST Credit (-)
CGST Credit (-)
– –
(-) Rs. 6000
(-) Rs. 6000
Net IGST liability – – (+) Rs. 2400
Transaction 3 Rs. 1.5 lakh Income (+) – (+) Rs. 9000 (SGST) (+) Rs. 9000 (CGST)
IGST Credit (-) – (-) Rs. 3000 (for SGST)
(-) Rs. 2400 (for IGST
liability)
(-) Rs. 9000 (for CGST)
Total Rs. 6000 Rs. 6000 Rs. Rs. 6000
Adjustment
(-) Rs. 6000
(towards the
centre)
(+) Rs.3000
(from the centre)
(+) Rs. 3000
(from UP)

21. Goods SGST CGST IGST
Household necessities like tea, coffee (except instant), edible
oil, spices, and sugar. Coal, life-saving drugs and Indian Sweets are
also covered under this GST slab.
2.5% 2.5% 5%
Processed food and computers 6% 6% 12%
Hair oil, soaps and toothpaste, capital goods and industrial
intermediaries.
9% 9% 18%
Luxury items, including premium cars consumer durables like AC
and refrigerators, cigarettes, aerated drinks, and high-end
motorcycles
14% 14% 28%
SGST, CGST and IGST rates of some common items

22. ADVANTAGES OF GST
• Possible reduction in prices
• Increase in government revenues
• Less compliance and procedural cost

23. Increase in Competition: After the GST
has been imposed, there has been seen a
fall in prices of goods and services which
ultimately has brought the final consumer
to have less tax burden on the goods and
services. There is seen a great scope of
increased production, thus, increase in
competition.

24. Simple Tax Structure: GST has simplified the
calculation of tax with the adoption of single
taxation system. Under this, multiple taxation
has been aborted which ultimately saves
time and money

25. Uniform Tax Regime: Previously, there used to
be multiple tax at every stage of supply chain,
where the taxpayer got confused. But now, with
GST, it is easier for the taxpayer to pay uniform
tax.

26. Increase in Exports: There has been
seen a fall in the cost of production after
the GST got imposed. This in return has
brought competitiveness towards the
international market resulting in rise in
exports.

27. • With the implementation of GST, various traders, cloth merchants, private security
agencies and many others went on protest against GST rates.
• Cloth merchants protested against the imposition of 5% sales tax on textiles under
the GST regime.
• The newly added tax system in the country also made the iron, wire dying and
steel traders to held a protest against high rates of GST.
• Steel traders were of opinion that the new tax system has nosedived 40% trade
due to high rates and elaborated paper works under the new system.
• Owners and employees of private security agencies also went on a silent protest
against the levy of 18% GST on security services because the GST rate took away
the major share of wage and benefits from the security personnel.
Protest against GST rates

28. POINTS TO PONDER: FOOD FOR THOUGHT
Some of the factors that must be kept in mind about GST:
• GST will be very advantageous if the rates are same, because in that case taxes will not be a factor in
investment location decisions, and people will be able to focus on profitability.
• For smooth functioning, it is important that the GST clearly sets out the taxable event.
• The GST is a destination based tax, not the origin one. In such circumstances, it should be clearly identifiable
as to where the goods are going. This shall be difficult in case of services, because it is not easy to identify
where a service is provided, thus this should be properly dealt with.
• More awareness about GST and its advantages have to be made, and professionals like us really have to take
the onus to assume this responsibility.