GST – Goods and Services Tax

GST – Goods and Services Tax

GST is a huge reform for indirect taxation in India, the likes of which the country has not seen post
Independence. GST will simplify indirect taxation, reduce complexities, and remove the cascading
effect. Experts believe that it will have a huge impact on businesses both big and small, and change
the way the economy functions.

Theebook will help you understand the basics of GST, important terminologies and concepts, and
how this might affect your business in the long run. Students of finance, business professionals,
entrepreneurs, tax practitioners and accountants will find this e-book comprehensive and helpful in
understanding GST.


GST will subsume all of the current indirect taxes. Plus, by bringing in a unified taxation system,
across the country, it will ensure that there is no more arbitrariness in tax rates.


GST is levied each stage in the supply chain, where a transaction takes place.


This is the process of addition to the value of a product/ service at each stage of its production,
exclusive of initial costs. Under GST, the tax is levied only on the value added.

Destination-based consumption:

Unlike the current indirect taxes, GST will be collected at the point of consumption. The taxing
authority with appropriate jurisdiction in the place where the goods/ services are finally consumed
will collect the tax.

For example: Let’s say that cotton garments are being shipped from Tamilnadu to Kerala. Tamilnadu
is the producer state and Kerala is the consumer state. Tax revenue under GST will go to Kerala
Let’s understand how this will impact imports and exports. Exports are not taxable, because the
place of consumption is outside India. Imports are taxable, because the place of consumption is in

The tax on imported goods will therefore be just the same as domestically-produced goods. Thus,
the export industry will become more competitive when compared to its international peers. Also,
domestic goods will be protected by making imports at par with domestic goods.

What is SGST, CGST and IGST?

SGST  – State Goods and Service Tax
CGST  – Central Goods and Service Tax
IGST    – Integrated Goods and Service Tax

Suppose goods worth INR 10,000 are sold by manufacturer A in Tamilnadu to Dealer B in
Tamilnadu. B resells them to trader C in Rajasthan for INR 17,500. Trader C finally sells to end user
D in Rajasthan for INR 30,000.

Suppose CGST= 9%, SGST=9%. Then, IGST= 9+9=18%

Since A is selling this to B in Tamilnadu itself, it is an intra-state sale and both CGST and SGST will
apply, at the rate of 9% each.

B (Tamilnadu) is selling to C (Rajasthan). Since it is an inter- state sale, IGST at the rate of 18% will

C (Rajasthan) is selling to D also in Rajasthan. Once again it is an intra-state sale and both CGST
and SGST will apply, at the rate of 9% each.

*** Any IGST credit will first be applied to set off IGST then CGST. Balance will be applied to setoff

Since, GST is a consumption based tax, i.e., the state where the goods were consumed will collect
GST. By that logic, Tamilnadu (where goods were sold) should not get any taxes.

Rajasthan and Central both should have got (30,000 * 9%) = 2,700 each instead of only 2,250.

Tamilnadu (exporting state) will transfer to the Centre the credit of SGST of INR 900 used in
payment of IGST.

The Centre will transfer to Rajasthan (importing state) INR 450 as IGST credit used.

**Note: Custom duties are not part of this tax structure.

When is Tax Levied?

A taxable event such as manufacture, sale and provision of a good has to occur for tax to be
collected. Under the current system, each taxable event is subject to multiple taxes such as excise,
VAT/ CST and service tax. But under GST, products will no longer have multiple taxes, and will not
incur excise duty as well as VAT at different points of time. There will no longer be any difference
between goods and services in terms of taxation.

An example of this is when we go out to eat at a restaurant. Earlier, the customer paid both VAT and
service tax on a single bill, but after GST there is single tax charged on the bill amount.

This leads us to an important concept in GST – Time, Place, and Value of Supply of goods and





Who are Investment advisors?

Investment advisers provide professional advice to their clients regarding investments in securities. Investment advisers typically have the authority to make investment decisions on behalf of their clients, including which securities to buy or sell (referred to as “discretionary authority”) consistent with each client’s objectives and guidelines. The adviser’s authority may also extend to deciding which additional investment advisers to retain on behalf of its client to manage all or a portion of the client’s investments.

Importance of financial advisors

The financial advisors are very important to carry out a business. They provide us with necessary expert advice on when and where to invest our valuable capital. They help a business by directing the proprietors  in correct way of making investments.

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What is company law service?

The Indian Corporate Law Service abbreviated as ICLS is the regulatory service for corporate sector in India. It is one of the Central Civil Services (Group A) and it functions under the Ministry of Corporate Affairs of the Government of India. The purpose of the service is to empower and regulate the corporate sector for our country and to protect the rights of the investors, especially small investors.

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We are one of the leading Tax Consultants in Chennai, providing consultations and services in Company Law Matters. Our services are customized in accordance to your specific requirements. We assist you from the very initial processes of company establishment to company maintenance.



What is accounting?

Accounting, called the “language of business” is used to measure the results of an organization’s economic activities and conveys this information to investors, creditors, management, and regulators. The persons who deals with accounting are known as accountants. Accounting can be divided into several fields including financial accounting, management accounting, auditing, and tax accounting.

Importance of Accounting

When the accounting is done properly, the exposure to risks such as fraud are significantly minimized and should the government ever conduct an audit on your company, your accounting history is going to be your best friend. In a way, accounting is the quantifiable conscience of the business world.

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What is Income tax?

An income tax is the charge levied on individuals or entities (E.g., Corporates) that varies with the income or profits (taxable income) of the taxpayer. Taxes vary widely by jurisdiction. Many jurisdictions refer to income tax on business entities as companies tax or corporate tax. It is of two types as personal tax and corporation tax. The personal taxes are imposed on the incomes of individual persons. The corporation taxes are imposed on income of incorporated firms.

Purpose of income tax

In order for the government to provide the public with the necessary goods and services, revenue must be raised through taxation. This revenue is generated through direct and indirect forms of taxation. Direct taxes are paid on income. This effectively means that the more income you earn the greater your contribution is expected to be to the state.

Why do we pay income tax?

The government uses taxes to pay for things that most people use, such as roads, schools, libraries, police and fire protection.  Taxes also pay for special programs like welfare and social security.  There is sales tax on the things you buy, income tax on the money you make, property tax and other kinds of tax.

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