Explore the detailed breakdown of taxes subsumed under GST and those that remain outside its purview. This guide provides clarity on the GST system for FY 2025-26.
Principles of Taxes Subsumed
List of Taxes Subsumed Under GST
List of Taxes Not Subsumed Under GST
Impact of Taxes Subsumed Under GST
FAQs on GST Taxes
The integration of taxes under GST is based on specific principles aimed at creating a unified tax structure.
Indirect Nature of Taxes
GST subsumes taxes that are indirect in nature, impacting the cost of goods and services.
Covers taxes on manufacturing and sales.
Excludes direct taxes like income tax.
Ensures tax is levied at each supply chain stage.
Inclusion in the Transaction Chain
Taxes included under GST apply throughout the supply chain.
Covers production to final consumption.
Facilitates seamless tax credit flow.
Promotes a comprehensive tax framework.
Uninterrupted Tax Credit Flow
GST allows for seamless input tax credit claims.
Businesses claim credits on inputs.
Reduces cascading tax effect.
Encourages cross-state transactions.
Fair Revenue Sharing
GST ensures equitable revenue distribution between central and state governments.
Balances state and national interests.
Promotes cooperative federalism.
Enhances fiscal stability.
GST has consolidated various central and state taxes into a single tax system.
Central Taxes Subsumed
Several central taxes have been integrated into GST.
Central Excise Duty: Tax on manufacturing.
Service Tax: Tax on services like dining.
Additional Duties of Customs (CVD): Aligns import prices with domestic goods.
State Taxes Subsumed
State-level taxes have also been absorbed into GST.
State VAT: Tax on value addition.
Luxury Tax: Tax on high-end goods.
Entry Tax: Tax on goods entering a state.
Certain taxes remain outside the GST framework.
Basic Customs Duty
A tax on imports not included in GST.
Levied on imported goods.
Protects domestic industries.
Calculated separately from GST.
Stamp Duty
A state-level tax on legal documents.
Applicable on property transactions.
Varies by state.
Not covered under GST.
Property Tax
A local tax on property ownership.
Collected by municipal bodies.
Funds local infrastructure.
Excluded from GST.
Electricity Duty
A tax on electricity consumption.
Levied by state governments.
Supports energy infrastructure.
Not part of GST.
The subsumption of taxes under GST has both positive and negative impacts.
Pros
Benefits of integrating taxes into GST.
Simplifies tax compliance.
Reduces tax cascading.
Enhances ease of doing business.
Cons
Challenges posed by GST implementation.
Initial compliance burden.
Transition issues for businesses.
Complexity in understanding GST rates.
What is the GST rate for services?
The standard GST rate for services is 18%, with some services attracting 5% or 12% based on specific conditions.
Are petroleum products included in GST?
No, petroleum products are currently outside the GST framework and are subject to state and central taxes.
How does GST affect small businesses?
GST simplifies tax compliance for small businesses but may increase initial compliance costs. The Composition Scheme offers relief with a lower tax rate.
What is the Composition Scheme under GST?
The Composition Scheme allows small businesses with a turnover of up to ₹1.5 crore to pay GST at a reduced rate of 1%.
Is GST applicable on export of goods?
Exports are zero-rated under GST, meaning no tax is payable, but input tax credits can be claimed.
What are the penalties for non-compliance with GST?
Penalties for non-compliance can include fines up to ₹10,000 or 10% of the tax due, whichever is higher.
Can GST credits be carried forward?
Yes, input tax credits can be carried forward to offset future GST liabilities, subject to conditions.
How is GST calculated on goods?
GST on goods is calculated by applying the applicable GST rate to the transaction value, which includes the price paid or payable.
Are educational services exempt from GST?
Yes, services provided by educational institutions up to higher secondary level are exempt from GST.
What forms are required for GST filing?
Common forms include GSTR-1 for sales, GSTR-3B for summary returns, and GSTR-9 for annual returns.