Goods and Services Tax (GST) | Class 11 Business Studies (Chapter: Internal Trade) | Eduvictors Study Notes

 Goods and Services Tax (GST) 

Class 11 Business Studies (Chapter:  Internal Trade) Study Notes

1. Meaning of Goods and Services Tax (GST)

Goods and Services Tax (GST) is a single indirect tax charged on the supply of goods and services from the manufacturer to the final consumer. It has replaced many earlier indirect taxes such as VAT, service tax and excise duty.

GST is called a destination-based tax because it is collected by the state where goods or services are finally consumed, not where they are produced.

In summary, GST consolidates various indirect taxes into a single system, thereby facilitating the creation of a unified national market in India.

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2. Meaning and Types of GST

GST in India is divided into different types to enable both the Central Government and State Governments to collect revenue.

(a) CGST – Central Goods and Services Tax

• Collected by the Central Government.
• Applied to transactions taking place within the same state (intra-state supply).

(b) SGST – State Goods and Services Tax

• Collected by the State Government.
• Also charged on intra-state supplies along with CGST.

For example, when goods are sold within Delhi, both CGST and SGST are levied.

(c) IGST – Integrated Goods and Services Tax

• Collected by the Central Government on inter-state supplies (between two states).
• Also applicable to imports.

For instance, goods sold from Delhi to Maharashtra are subject to IGST.

(d) UTGST – Union Territory Goods and Services Tax

• Charged in Union Territories without a legislature (like Chandigarh, Lakshadweep).
• Works similarly to SGST.

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3. Features of GST

1. Nationwide Application
   GST applies nationwide, creating a common market (including Jammu and Kashmir).
2. Tax on Supply
   GST is charged on the supply of goods and services rather than only on manufacturing or sale.
3. Destination-Based Consumption Tax
   The tax revenue goes to the state where the goods or services are consumed.
4. Applies to Imports
   Import of goods and services is treated as an inter-state supply and is subject to IGST along with customs duties.
5. Dual Structure
   Taxes such as CGST, SGST and IGST are levied at rates decided jointly by the Centre and States through the GST Council.
6. Different Tax Slabs
   GST has four main tax rates:
7. • 5%
   • 12%
   • 18%
   • 28%
     Essential items are taxed at lower rates, while luxury items may be taxed at higher rates.
   • 40% Slab (Luxury & Sin Goods): Applies to luxury cars, high-end motorcycles (>350cc), yachts, personal aircraft, and aerated beverages.
8. Zero-Rated Exports
   Exports and supplies to Special Economic Zones (SEZs) are zero-rated, which encourages international trade.
9. Easy Online Payment System
   Taxpayers can pay GST through Internet banking, debit/credit cards, NEFT or RTGS, making the process faster and more transparent.
10. Input Tax Credit (ITC)
    Businesses can claim tax credits for taxes already paid on purchases, reducing double taxation.

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Quick Summary

• GST = One tax replacing many indirect taxes.
• It is a destination-based tax on supply.
• Types of GST: CGST, SGST, IGST and UTGST.
• It simplifies taxation and promotes a unified national market.

See Also

Ch4: Business Services (Introduction)
Ch4: Banks and Functions Of Commercial Banks
Ch4: Insurance Services
Ch4: Communication Services
Ch5: Emerging Modes of Business (VSQA)
Ch: International Business-I (NCERT Answers)
Entrepreneurship Development - Questions and Answers