Goods and Service tax (GST) is an indirect form of tax which replaced many Central and State taxes in India like VAT, Service tax, Excise duty, Entry tax, Octroi, etc and was the biggest tax reform in India in recent times. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

GST is multi-stage as goods generally go through many stages and change hands from Manufacturer to wholesaler to retailer to consumer. There is a value addition at each stage hence GST is levied at each stage.

GST is destination-based tax, which means as the tax is collected by the state where the goods/service is consumed. For e.g, An equipment is manufactured in Tamilnadu and consumed in Karnataka, GST is levied at the point of consumption so tax revenue goes to Karnataka.

CGST, SGST, and IGST

CGST is a tax levied on Intra State supplies of goods and services by the Central Government and is governed by the CGST Act.

SGST is a tax levied on Intra State supplies of goods and services by the State Government and is governed by the SGST Act.

For e.g, The Startup Zone provides GST registration service to a business registered in Karnataka for Rs.2000, GST levied is 18% which is Rs.360 in which CGST is Rs.180 and SGST is Rs.180

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 also applicable on any supply of goods and/or services in case of import into India or export from India.

For e.g, The Startup Zone provides GST registration service to a business registered in Outside Karnataka for Rs.2000, GST levied is 18% which is Rs.360 in which IGST is Rs.360.