CGST stands for Central Goods and Services Tax. It’s a tax collected by the Central Government on the supply of goods and services within the same state (intra-state transactions). Introduced under the CGST Act of 2017, it replaced several previous central taxes like excise duty and service tax. For intra-state sales, both CGST and SGST (State GST) are levied equally. For example, if the GST rate is 18%, 9% goes to CGST and 9% to SGST.
CGST Rate Slabs
CGST rates are divided into multiple slabs, each corresponding to different categories of goods and services:
1. 0% (Exempted Items)
- Examples: Fresh fruits and vegetables, milk, curd, lassi, buttermilk, sanitary napkins, books, and educational services.
2. 5% (Basic Necessities)
- Examples: Edible oils, sugar, tea, coffee (except instant), coal, and domestic LPG.
3. 12% (Standard Goods)
- Examples: Processed food items, butter, ghee, mobile phones, fruit juices, and packed coconut water.
4. 18% (General Goods and Services)
- Examples: Hair oil, toothpaste, soaps, ice cream, pasta, computers, printers, and restaurant services.
5. 28% (Luxury and Sin Goods)
- Examples: Cigarettes, pan masala, caffeinated beverages, motor cars, air conditioners, and refrigerators.
6. 3% (Precious Metals)
- Examples: Gold, silver, platinum, and imitation jewellery.
7. 0.25% (Precious Stones)
- Examples: Rough diamonds and precious stones.
Note: The above rates are subject to periodic revisions by the GST Council.
How is CGST Calculated?
To calculate CGST:
- Determine the applicable GST rate for the product or service.
- Divide the GST rate equally between CGST and SGST.
- Apply the CGST rate to the taxable value of the goods or services.
Example:
- If a product is sold for ₹1,000 and falls under the 18% GST slab:
- CGST = 9% of ₹1,000 = ₹90
- SGST = 9% of ₹1,000 = ₹90
- Total Price = ₹1,000 + ₹90 + ₹90 = ₹1,180
Key Features of CGST
- Applicability: Levied on intra-state transactions of goods and services.
- Revenue Distribution: Collected by the Central Government.
- Input Tax Credit (ITC): Businesses can claim credit for the CGST paid on purchases, reducing their overall tax liability.
- Uniformity: Ensures a consistent tax structure across all states in India.
- Compliance: Simplifies tax compliance by consolidating multiple central taxes into one.
Documents Required for CGST Registration
Businesses seeking CGST registration need to provide:
- PAN Card of the business or applicant.
- Aadhaar Card of the applicant.
- Proof of business address (e.g., utility bill, rent agreement).
- Bank account details (cancelled cheque or bank statement).
- Photograph of the applicant.
Conclusion
Understanding CGST is crucial for businesses and consumers alike. It not only simplifies the tax structure but also ensures transparency and uniformity in the taxation system across India. Staying informed about the applicable rates and compliance requirements can help in effective financial planning and adherence to tax regulations.
