What is the meaning of CGST?
Central Goods and Services Tax (CGST) is a system under the present GST system of India that was started in 2017 as the CGST Act. Primarily, CGST has been implemented to allow tax collection on intra-state transactions of goods and services. The Central Government is responsible for this tax collection and for any matter that is related to these lines. The CGST extends and applies all across the Indian subcontinent.
Which authorities are responsible for CGST?
The GST council is responsible for every rule and regulation laid down regarding the implementation of GST. Thus, if any new decision has to be made, it must be approved by the Union Finance Minister, who is the head of the GST council. Please note that no decision in the GST council can be taken individually. Every decision is a result of majority voting, and only collective decisions are approved.
National Anti-Profiteering Authority
The National Anti-Profiteering Authority, also referred to as NAA, was established in 2017 as part of Section 171 of the CGST Act, 2017. The main reason why it was established was to deal with matters that concerned the reduction of tax payments. It also took into account the benefit that was obtained from tax input credit. Please note that according to the Input Tax Credit (ITC) system under the GST scheme, ITC refers to the tax that a business owner has to pay when he purchases anything and can later reduce his tax liability at the time of sale.
Under the new scheme of GST, every individual has to carry an e-Way bill for every good that is priced at more than INR 50,000 that is being transported for inter and intra-state sales. There is no way that you can escape this because it is generated online via the e-Way bill portal. Thus, the automatic generation ensures that there is the least possible chance for any fraud.
Goods and Services Tax Network
Last but not least, GSTN refers to the Goods and Services Tax Network. The GST portal in India provides all the necessary GST services to individuals registered on the GST Network. GSTN is a non-profit company that is registered under the Companies Act and provides all the IT services to the Government needed for the proper administration of CGST across the country. Recently, a cabinet decision was passed to make GSTN a company owned 100% by the Government. Moreover, a contract has been signed between Infosys and GSTN to manufacture all the hardware and software needed for GST implementation.
Everything an Indian citizen needs to know about the CGST Act in 2020
What are the Advantages of the CGST Act?
Reduced prices of commodities
Since the Government removed the payment of taxes at each step of the production process, the final prices have reduced massively. This has improved the buying capacity of the country that has consequently worked wonders for the GDP. Earlier, the final brunt was left on the shoulders of the consumer, that is, the common man who had little to no option of either paying a high price or letting go of the item.
Increased chances of inter-state business
Since the implementation of CGST, there has been a significant reduction in the multiple taxes that business owners had to pay state-wise. Thus, they can easily engage in inter-state transactions and deals. This has also relieved the logistic companies that would earlier have to set up multiple warehouses across states. In a nutshell, the Government has left no stone unturned to facilitate better business deals in the country. No segment has been ignored under the CGST act.
Abolition of multiple taxes
Previously, taxes were levied state-wise. Thus, there was a lot of corruption at several unidentified levels. Now that it has become a central affair and a centralized system of tax payment is followed, there is minimal scope for any corruption or tax leakages. Multiple taxes such as customs, VAT, and excise duties have been abolished. Only one tax is implemented, and that is GST. It has also helped the Government to regularize every business segment of the nation.
What are the Disadvantages of the CGST Act?
Increased paperwork in some cases
CGST has become a hassle for some businessmen who work across states because they have to engage in a lot of paperwork in every state they have operations in. Though this is a short-term problem and will yield more benefits than issues, in the long run, it cannot be overlooked.
What about petrol?
Indian citizens are always worried about the consistent rise in petrol prices. Since it is a state affair, the prices of petrol vary across states. While the masses want its prices to be regulated and lowered, no such initiative has been seen from the Government’s side. The fuel prices in India continue to soar high and touch the sky with each passing day. Since it is the biggest way to earn revenue, no measures have been taken to include petrol and petroleum products under the broad banner of the CGST act.
Thus, CGST is a very technical term that has several aspects to it. Just like two sides of a coin, CGST has its pros and cons. Since CGST is a Central affair, you must be updated with the latest news to know what more is going to change in GST 2020.