What is Goods and Service Tax Act 2017? : CGST – Central GST – Applies to sales within the state : Types of taxes under GST : What is GST / GST /SGST

What is Goods and Service Tax Act 2017?

GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.

Types of taxes under GST

There are currently three types of GST

CGST – Central GST – Applies to sales within the state – goes to Central Government

SGST – State GST – Applies to sales within the state – goes to State Government

IGST – Integrated GST – Applies to sales outside the state – goes to Central Government

For example, if you sell something within the state, 50% of the GST will be CGST and 50% of the GST will be SGST. But when you sell something outside a state, 100% of it will be IGST which will go to the Central Government.

Note : Now that you have a basic understanding of how GST works, we can go ahead to understand the working of GST in Tally along with its accounting and calculation.

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Note All Informations has been taken from Tally Solutions Pvt Ltd.