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What is GST Framework?

August 20, 2020

What Is GST Framework

What is GST Framework?

GST framework is a design made by the Indian Government that would eliminate most of the indirect taxes like VAT, customs duty, excise duty, CST, service tax, entertainment tax and bring it all under a single tax structure called GST.

GST will be mainly of 2 forms viz. intra-state level and inter-state level. The former encircles CGST and SGST whereas the latter encircles IGST and imports. Additionally, exports and supplies to SEZ are zero-rated as per the GST framework.

Concept of GST

Goods & Services Tax (GST) is an indirect tax applied on goods and services. Its genesis happened in the historic budget speech of February 28, 2006. GST has changed the way business is conducted and how goods and services are taxed in India. GST has made deep impacts in India’s economic environment. In this article, we intend to share some GST knowledge and all about GST through different GST sections. Let us read through the GST basics and GST framework in this session,

To Whom All is GST Applied to?

  • Supplier of goods and/or services of value exceeding Rs.20 lakh in a FY
  • Supplier of goods and/or services that are inert-state taxable
  • All E-commerce operators and everyone who sells goods and/or services through E-commerce platforms (other than branded items)
  • Aggregators selling items under own brand names
  • Ordinary Taxable person
  • Non-resident taxable person
  • A person who deduct/collect tax
  • Person taxable under Reverse Charge mechanism
  • The person outside India who supplies online information, data access or retrieval services to a person in India who does not fall under the category of a registered taxable person
  • Input Service Distributor
  • A person who on behalf of another taxable person supplying goods

The GST Framework

GST Framework contains the following components:

Dual GST:

India has a unique federal structure that is incorporated with the Dual GST model. Dual GST is the tax imposed by the centre and state on goods or services or both in intra-state or Union Territories.

GST is a destination-based tax applied on all transactions involving supply of goods and services. GST is comprised of:

  1. Central Goods & Services Tax: This GST Basic Tax is collected by Central Government
  2. State Goods & Services Tax (SGST): A collection of GST Basic tax amount by State Government or Union Territories with State Legislatures
  3. Union Territory Goods & Services Tax (UTGST): GST Basic tax collected by UTs without State legislatures on intra-state goods and/or services.
  4. Integrated Goods & Services Tax (IGST) is the basic GST tax which is the sum total of CGST and SGST/UTGST levied by central government on all inter-state supplies.

The Legislative Part of GST Framework

GST Framework has a legislative part on par with CGST Act 2017 for levying CGST. Similarly, the UTGST Act 2017 governs Union Territories without State Legislatures. Andaman & Nicobar Islands, Lakshadweep, Dadra & Nagar Haveli, Daman & Diu and Chandigarh are the UTs without State Legislatures. Delhi & Puducherry have their own legislatures and hence their own SGST levying policies. The principle of dual GST and SGST legislations are preserved through absolute management of,

  • Chargeability
  • Definition of taxable person & event
  • Assessment of goods & services
  • The procedural approach of tax collection and tax levy

Goods & Services Classification

While determining GST on product or service, the item will be subjected to an internationally adopted scheme for commodity description and product taxonomy. According to this system, goods and services in India are classified into two divisions called Harmonized System Nomenclature (HSN) for goods and Service Accounting Code (SAC) for services.
GST knowledge is incomplete if you don’t know all about GST’s rules applied on classification of goods and services coming under.

Items Tax Rates

Edible oil, spices, sugar, tea and coffee and other households except instant food packs, Coal, Indian Sweets, Lifesaving Drugs and medications

Computers and its accessories, processed and instant food products 12%
Toothpaste, hair oils, soaps, cleaners, industrial intermediaries and capital goods 18%
Cars, luxury bikes, ACs, refrigerators, electrical goods, cigarettes, aerated drinks and other such luxury items 28%

All about GST classification of other products:

Item Tax Rates
  • Sanitary napkins
  • Salt
  • Cereal grains like barley, wheat, oat, rye etc.
  • Palmyra Jaggery
  • Picture, colouring and drawing books for children
  • Di-calcium Phosphate animal feed grade with ISO 5470:2002
  • Preserved and brined vegetables unsuitable for immediate consumption
  • Music books and manuscripts
  • Kajal (except kajal pencil sticks)
  • Dressed, bleached, thinned or in any ways worked human hair
  • Bones and horn chores
  • Motor car rented
  • Railway mode of transport of goods and passengers
  • Air transportation
  • Tour operator services
  • Print media
  • Leasing of aircrafts
  • Transportation of goods in containers from 3rd parties
  • Food & beverages from non-AC restaurants or restaurant with no liquor license
  • Chit Fund Services
  • Accommodation with rent >Rs.1000 and <Rs.2500
  • Movies tickets< Rs.100
  • Building constructed for sale
  • Temporary IP rights
  • Food & beverages from AC restaurants or restaurant with liquor license
  • Accommodation with rent >Rs.2500 and <Rs.5000
  • Supply of food and party organizing
  • Movies tickets> Rs.100
  • Circus, theatre, drama, folks etc.
  • Supply for a work contract
  • Outdoor catering
  • Gambling
  • Race club services
  • 5 star or above rent accommodation
  • Amusement facilities, water parks, theme parks, race courses, go-karting, casinos, ballets and sporting events like IPL


Read more on:  

Types of GST - CGST, SGST and IGST

What is GST Return?


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