Question

Define Input GST & its components.​

Answer 1

Answer:

Explanation:

GST is a major tax reform in India’s indirect tax structure. It is a consumption-based tax levied on the supply of goods and services.

The essence of such a tax is to integrate a host of indirect taxes into a comprehensive single tax both at the Central and State level. Accordingly, GST has subsumed an array of indirect tax levies that resulted in a cascading effect in the previous indirect tax regime. Moreover, the implementation of such a tax was introduced as a set-off relief mechanism for the seamless flow of input credit across the chain.

But, to administer GST in a country like India, a model had to be designed involving both Centre and States in its implementation. This is because India is a federal country. Here, both Centre and States have powers to levy and collect taxes through their respective legislations.

Accordingly, a Dual GST Model has implemented that distributed powers to both Centre and States to levy the tax concurrently.

The following are the Main components of GST:

1) Central GST (CGST)

2) State GST (SGST)

3) Union Territory GST (UTGST)

4) Integrated GST (IGST)

Answer 2

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Input tax credit (ITC) is the tax paid by the buyer on purchase of goods or services. Such tax which is paid at the purchase when reduced from liability payable on outward supplies is known as input tax credit. In other words, input tax credit is tax reduced from output tax payable on account of sales.

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There are three components of GST- IGST, CGST, and SGST. In case if the sale of goods or service is between two states or inter-state, IGST or Integrated GST is applicable. If the sale is within a state or intra-state, CGST or Central GST and SGST or State GST are applicable.