Under GST, SGST is a tax levied on Intra State supplies of both goods and services by the State Government and will be governed by the SGST Act. As explained above, CGST will also be levied on the same Intra State supply but will be governed by the Central Government. Note: Any tax liability obtained under SGST can be set off against SGST or IGST input tax credit only. Let’s suppose Ramesh is a dealer in Kerala who sold goods to Mahesh in Kerala worth Rs. 10,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%. In such case, the dealer collects Rs. 1800 of which Rs. 900 will go to the Central Government and Rs. 900 will go to the Kerala Government.
What is State Goods and Services Tax (SGST)
Under GST, IGST is a tax levied on all Inter-State supplies of goods and/or services and will be governed by the IGST Act. IGST will be applicable on any supply of goods and/or services in both cases of import into India and export from India. Note: Under IGST, Exports would be zero-rated. The tax will be shared between the Central and State Government. Consider that a businessman Ramesh from Kerala had sold goods to Mahesh from Haryana worth Rs. 1,00,000. The GST rate is 18% comprised of 18% IGST. In such case, the dealer has to charge Rs. 18,000 as IGST. This IGST will go to the Centre.
Under GST, CGST is a tax levied on Intra State supplies of both goods and services by the Central Government and will be governed by the CGST Act. SGST will also be levied on the same Intra State supply but will be governed by the State Government. This implies that both the Central and the State governments will agree on combining their levies with an appropriate proportion for revenue sharing between them. However, it is clearly mentioned in Section 8 of the GST Act that the taxes be levied on all Intra-State supplies of goods and/or services but the rate of tax shall not be exceeding 14%, each.
A. Supply from an Unregistered dealer to a Registered dealer
If a vendor who is not registered under GST, supplies goods to a person who is registered under GST, then Reverse Charge would apply. This means that the GST will have to be paid directly by the receiver to the Government instead of the supplier. The registered dealer who has to pay GST under reverse charge has to do self-invoicing for the purchases made. For Inter-state purchases, the buyer has to pay IGST. For Intra-state purchased CGST and SGST has to be paid under RCM by the purchaser.B. Services through an e-commerce operator
If an e-commerce operator supplies services then the reverse charge will be applicable to the e-commerce operator. He will be liable to pay GST. For example, UrbanClap provides services of plumbers, electricians, teachers, beauticians etc. UrbanClap is liable to pay GST and collect it from the customers instead of the registered service providers. If the e-commerce operator does not have a physical presence in the taxable territory, then a person representing such electronic commerce operator for any purpose will be liable to pay tax. If there is no representative, the operator will appoint a representative who will be held liable to pay GST.C. Supply of certain goods and services specified by CBEC
CBEC has issued a list of goods and a list of services on which reverse charge is applicable.Normally, the supplier of goods or services pays the tax on supply. In the case of Reverse Charge, the receiver becomes liable to pay the tax, i.e., the chargeability gets reversed.
Imports under GST
Imports of Goods and Services will be treated as inter-state supplies and IGST will be levied on import of goods and services into the country. The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available on the GST paid on import of goods and services.Exports under GST
Exports will be treated as zero-rated supplies. No tax will be payable on exports of goods or services, however, the credit of input tax credit will be available and same will be available as a refund to the exporters. The Exporter will have an option to either pay tax on the output and claim refund of IGST or export under Bond without payment of IGST and claim the refund of Input Tax Credit (ITC).“Goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which is agreed to be severed before supply or under a contract of supply;
Aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess; “Exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;
Any person who is engaged exclusively in the business of supplying goods or services that are not liable to tax under GST or wholly exempt from tax under GST is exempt from obtaining GST registration. Also, an agriculturist, to the extent of supply of produce out of cultivation of land is exempt from obtaining GST registration. Under GST, agriculturist means an individual or a Hindu Undivided Family who undertakes cultivation of land: By own labour, or By the labour of family, or By servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family;
Aggregate Turnover Criteria
Any supplier of goods and/or services who makes a taxable supply with an aggregate turnover of over Rs.20 lakhs in a financial year is required to obtain GST registration. In special category states, the aggregate turnover criteria is set at Rs.10 lakhs. Special Category States under GST: Currently, Assam, Nagaland, Jammu & Kashmir, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Uttarakhand, Tripura, Himachal Pradesh, and Sikkim are considered special category states.Mandatory GST Registration Criteria
Some taxable persons who do not qualify for GST registration under the aggregate turnover criteria are required to mandatorily obtain GST registration if they satisfy any of the following criteria:Persons making any inter-state taxable supply
Inter-state supply is supplying goods or services from one state to another. Hence, any taxable person who is involved in supplying goods or services to persons outside of the State is required to mandatorily obtain GST registration.Casual taxable persons making taxable supply
A casual taxable person is a person who occasionally undertakes supply of goods and/or services and has no fixed place of business. An example of a casual taxable person would be a fireworks shops setup during Diwali festival time, selling fireworks temporarily.Persons who are required to pay tax under reverse charge
Under GST, for most goods and/or services, the liability for payment of tax rests with the supplier. However, in some cases, the liability to pay tax (GST) would rest with the recipient of the goods or services, instead of the supplier. Such transactions are called reverse charge. Hence, any person (recipient of goods or service) who is required to pay tax under reverse charge must mandatorily obtain GST registration.Non-resident taxable persons making taxable supply
A non-resident taxable person is any person who occasionally supplies goods or services to recipients in India, but who has no fixed place of business or residence in India. All non-resident taxable persons are mandatorily required to obtain GST registration, irrespective of aggregate turnover criteria.Persons who are required to deduct tax under GST
According to Section 51 of the GST Act, the Government may mandate a department or establishment of the Central Government or State Government or local authority or Governmental agencies or a category of persons to deduct tax at the rate of 1% from the payment made or credited to the supplier, where the total value of a contract, exceeds Rs.2.5 lakhs. Such persons are required to mandatorily obtain GST registration and are referred to as “deductor”.Persons who make taxable supply of goods or services on behalf of other persons
Any person who makes a taxable supply of goods or services on behalf of other persons would include agents, brokers, dealers, etc., Such persons are required to mandatorily obtain GST registration.Input Service Distributor
Input Service Distributor means a supplier of goods or services which receives tax invoices for the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services.Electronic Commerce Operator
Electronic commerce is the supply of goods or service, including digital products over a digital or electronic network. An electronic commerce operator is any person who owns, operates or manages the digital or electronic facility or platform for electronic commerce. All electronic commerce operators are mandatorily required to obtain GST registration, irrespective of turnover.Person supplying online information and database access or retrieval services (OIDAR)
Any person supplying online information and database access or retrieval services from a place outside India to a person in India is required to obtain GST registration. Online information and database access or retrieval mean providing data or information, retrievable or otherwise, to any person, in electric form through a computer network.Persons who supply goods or services through electronic commerce operators
Some persons who supply goods or services through electronic commerce operators, other than supplies where the electronic commerce operator is required to collect tax at source on behalf of the supplier is mandatorily required to obtain GST registration. Under GST, The Government has the power to specify categories where the tax would be liable to be paid by the electronic commerce operator if the services are supplied through it.Persons Having Service Tax or VAT or Central Excise Registration
All person who, on the day immediately preceding the appointed day is having a service tax or VAT or central excise license under an existing law is required to be registered under GST. Hence, migration to GST is mandatory for all taxable persons having an existing registration.Transferee or Successor of a Business
Any person who is a transferee or a successor of a business, that was carried on by a person registered under GST is required to be registered under GST with effect from the date of such transfer or succession.It came into force on 01/07/2017.