Para 14.2 — CAM
Original Rule Text
14.2 GOODS AND SERVICES TAX (GST)
14.2.1. GST: The Goods and Services Tax (GST) was rolled out with effect from 1st July 2017 across the country (for Jammu and Kashmir w. e. f. 8th July 2017). GST is a tax on supply of goods and services and a single tax on entire value chain of supply, from the manufacturer to the consumer. Credit of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage.
14.2.2. COMPONENTS OF GST
14.2.2.1 There are three components of GST: -
a) Central Goods and Services Tax (CGST): payable to the Central Government on supply of goods and services within the State/Union Territory. b) State/Union Territory Goods and Services Tax (SGST/UTGST): payable to the State/Union Territory Government on supply of goods and services within the State/Union Territory. c) Integrated Goods and Services Tax (IGST): in case of inter-state supply of goods and services, IGST is levied by the Government of India and shall be apportioned between the Union and the States as per the provisions of IGST Act. Equivalent IGST is also levied on imports into India.
14.2.2.2 GST Compensation Cess: In addition to GST, a cess named GST Compensation Cess is levied on notified goods and services in order to compensate the Revenue loss of the States due to the introduction of a destination based GST. The GST Compensation Cess was initially levied for a period of five years but has been extended up to 31.03.2026. Currently, such cess is levied on ‘sin’ items like pan masala, tobacco, and some luxury items.
14.2.3. TAXES SUBSUMED IN GST: GST subsumed the following central and state taxes: -
Central Taxes subsumed State Taxes subsumed • Central Excise Duty (except five Petroleum products viz. Petroleum crude, high speed diesel, motor spirit(petrol), natural gas & aviation turbine fuel and tobacco products) • Additional Excise Duty • Service Tax • Additional Customs Duty commonly known • State Value Added Tax (VAT)/Sales Tax (except five petroleum products and alcohol for human consumption) • Entertainment Tax (other than the tax levied by the local bodies) • Central Sales Tax (levied by the Centre and collected by the States)
as Countervailing Duty • Special Additional Duty of Customs • Octroi and Entry tax • Purchase tax • Luxury tax • Taxes on lottery, betting and gambling
Central / State Excise duty and VAT would continue on five Petroleum products, which would be subject to the levy of GST whenever notified on the recommendation of the GST Council. Tobacco products could be subjected to both Central Excise duty and GST. Alcohol for human consumption has been kept outside the ambit of GST.
What This Means
GST (Goods and Services Tax), rolled out on 1 July 2017, is a single tax on the entire supply chain from manufacturer to consumer. It has three components: CGST (for within-state supplies, paid to Centre), SGST/UTGST (within-state, paid to State/UT), and IGST (for inter-state supplies and imports). A GST Compensation Cess is also levied on items like tobacco and luxury goods to compensate states for revenue loss. GST subsumed most indirect taxes including Central Excise, Service Tax, VAT, and Octroi, though petroleum products and alcohol remain outside its ambit.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1GST is a value-added tax on supply of goods and services — tax only on value addition at each stage via input tax credit
- 2Three components: CGST (Central), SGST/UTGST (State/UT), and IGST (inter-state and imports)
- 3GST Compensation Cess levied on pan masala, tobacco, and luxury items, extended until 31.03.2026
- 4Subsumed Central Excise, Service Tax, VAT, Octroi, Entertainment Tax, Purchase Tax, etc.
- 5Five petroleum products and alcohol for human consumption remain outside GST
Practical Example
A manufacturer in Gujarat sells goods worth Rs 10 lakh to a retailer in Maharashtra. Since this is an inter-state supply, IGST is levied. The retailer can claim input tax credit on the IGST paid when selling to end consumers within Maharashtra (where CGST+SGST would apply). The Government Accounts office (Pr. CCA CBIC) accounts for the CGST, IGST, and Compensation Cess collected, while SGST goes to the respective State Government.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Which taxes were NOT subsumed by GST?▼
What is the GST Compensation Cess?▼
How does the input tax credit work in GST?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.