Know CGST Full Form and All about CGST Here

GST was introduced in India with full effect on 1st July 2017. GST, which means/stands for Goods and Services Tax, was brought as a successor to the VAT system. The VAT system had some downsides because it required a lot of compliances to be followed by taxpayers and caused a lengthy administration process for the government.

GST was introduced to unify and centralize taxes on all goods and services, which would help overcome the challenges of the VAT system. With the slogan/motto of one nation, one tax, GST was introduced in three distinct parts, CGST, SGST, and IGST. So, what is CGST and its purpose? Let’s find out!

Key Takeaways

• CGST Full Form stands for Central Goods & Services Tax and must be paid on the sale of every goods and service in India.
• The registration process for CGST requires documents such as address proof, Aadhar card, PAN card, and bank details of the applicant
• CGST is levied in the forms of slabs namely 2.5%, 6%, and 9% slabs are the most commonly used ones.

What is the Full form of CGST? What is CGST

The full form of CGST is Central Goods and Services Tax. As you can imagine, CGST is a part of the Goods and Services Tax, and it is also covered under the Goods and Services Act Tax Act 2016. Central taxes such as the Central sales tax, Central excise duty, Additional & special excise duty, and Service taxes are subsumed under one name CGST. To understand CGST full form and CGST as a whole, you need to first learn a little more about GST and how it is implemented.

GST is a destination based tax system. When goods and services are sold within a single state in India, both CGST and SGST are charged. Both governments, the central and the state, share the taxes generated equally, with no more than 14% charged on any sale individually. The maximum share of 14% each for both the central and state government is governed by Section 8 of the GST Act. It should, however, be noted that CGST is charged only in the case of intra-state sale of goods and services. If the sale of goods and services are inter-state, only IGST is levied.

Features and Benefits of CGST

CGST full form, which is Central Goods and Services Tax comes with various features that were implemented to make taxation easier for businesses, taxpayers, and governments. Here are the salient features of CGST.

Features of CGST

• CGST is levied and has to be paid on all intra-state supplies of goods and services.
• To broaden the input tax credit base by making them available in taxes levied and paid on the sale/supply of services and goods.
• CGST full form Central Goods & Services Tax makes it easy to self-assess the taxes payable by registered persons.
• CGST also allows conducting audits to ensure that the registered persons comply with the CGST laws.
• In case of failure to pay taxes on time or tax arrears, CGST allows for the retrieval of the amount of tax by various processes. This includes detaining and sale of immovable, moveable property or goods of the defaulter.
• If there are any contraventions committed by registered persons or taxpayers, CGST can levy GST penalties and fines on the accused.
• CGST full form Central Goods & Services tax allows for the reduction of the tax burden on taxpayers on the supply and purchase of various goods and services by amalgamating six separate central taxes into CGST.

Benefits of CGST

The introduction of a long form of CGST came with a plethora of benefits for everyone, from taxpayers to the government. Let’s explore the various benefits of CGST in detail.

Subsumption Of Various Central Taxes

One of the most prominent benefits of CGST is that it subsumes various indirect central taxes into a singular tax. Taxes like sales tax, service tax, and turnover tax are amalgamated into CGST, which makes taxation and its governance easier.

Helps Taxpayers Save Money

As various taxes are brought together, it reduces the tax burden on consumers. Fast Moving Consumer Goods (FMCG), electrical goods, movie tickets and other small tickets are the items that have seen their prices drop the most because of the introduction of CGST.

Easy Documentation & Filing For Businesses

Given that CGST is levied on the sale of every service or good, businesses need to charge and pay GST to the government. However, the benefit here is that CGST has made it easier for businesses to comply with these government laws. As there is only one tax now that they need to charge and pay, it becomes much easier during the documentation and filing process for businesses.

Same Taxation Across The Country

CGST rates are the same across the country; this makes it easier for businesses to track tax rates. Especially for interstate businesses that function in multiple states of India, CGST allows them the ease of doing business at the same rate across the country.

Generation Of Employment From Reduced Price Of Goods

The reduction in the price of goods by the introduction of CGST triggers an increase in the demand for said goods. This is sure to create more jobs as manufacturers will need to expand their infrastructure to meet the growing consumer demands.

Slab Rates

Central Goods & Services Tax, which is the CGST full form in English, has dedicated slabs for various services and goods that are maintained across the country. Namely, there are six CGST slabs that are used to tax all goods and services available in the market.

0.125% Slab: Precious stones are taxed in this CGST slab. It should be noted that semiprecious stones or unfinished stones are taxed in this CGST slab.

1.5% Slab: The 1.5% slab of CGST is specifically made for taxing coins and jewellery of various precious metals such as gold, silver, and platinum. Imitation jewellery is also taxed in this slab.

2.5% Slab: The 2.5% slab is dedicated to regular household items that are generally used in everyday life. Some of the popular goods that fall under this slab are cream, paneer, yoghurt, raisins, fruits and nuts.

6% Slab: The 6% slab of CGST features a lot of processed food items. Some of the popular goods featured in this slab are geometry boxes, 20l drinking water bottles, pots and jars, wooden toys, citrus fruits, jams, and printer ink.

9% Slab: 9% slab of CGST features goods such as chocolates, fountain pens, bindis, soap, tripods, and toothpaste. Industrial intermediate products are also featured in this CGST full form in Hindi slab.

14% Slab: 14%, which is the highest CGST slab allowed by law, features various luxury goods. Goods such as cigarettes, pan masala, cars, motorcycles, caffeinated beverages, refrigerators, and air conditioners.

Apart from these slabs, there is also a 0% CGST slab for items that are sold as tax-free in our country. This includes sanitary napkins, which have been made tax-free by the government since 2022. Other items include bananas, apples, buttermilk, lassi, fish, and many more.

As you can imagine, these items are not even 1% of all the products that are sold in the Indian market. If you want to find the specific CGST rate of any particular good or service, you can check out this link.

Checklist for CGST Registration

Here is a list of everyone that needs to procure a CGST registration in order to legally do business and trade in India.

• Suppliers from every industry that manage their own business.
• All companies, regardless of size or status, from startups to large corporations.

To put it simply, if you are a businessperson in India with a registered business, you must have GST registration. This is because every goods and services in India have CGST levied on them, so having the GST registration is mandatory.

Did you Know?

For the inter-state sale of goods and services, IGST is charged in India. IGST stands for Integrated Goods and Services Tax.

Documents Required for CGST Registration?

The documents required for CGST registration differ based on the nature of your trade. Here is a detailed explanation of the various types of businesses and the documents they need for CGST registration.

Solo Entrepreneur / Sole Proprietorship Company

• PAN Card of the proprietor
• Aadhar Card of the proprietor
• Residential proof
• Bank Account details
• Passport size photo of the proprietor

Partnerships / Limited Liability Partnerships (LLPs)

• Photographs of the partners
• PAN cards of the partners
• Partnership deed
• Residential proof of partners
• Aadhar card of authorised signatory
• LLP registration proof
• Proof of authorised signatory’s appointment
• Bank account details
• Business’s principal address proof

Private Limited or Limited Companies

• Certificate of incorporation from MCA
• Articles of association
• Company PAN card
• Proof of appointment of authorised signatory
• PAN card of authorised signatory
• Aadhar card of authorised signatory
• Company bank account details
• Residential proof of all directors
• PAN cards of all directors
• Business’s principal address proof

Hindu Undivided Families (HUFs)

• HUF’s PAN card
• Karta (head male family member (patriarch’s)) PAN card.
• Passport-size photo of Karta
• Bank account details
• Business’s principal address proof

Clubs and Societies

• Copy of registration certificate
• Copies of PAN cards of the promoters and associated partners of the club
• The bank account statement, crossed cheque, or first page of the bank passbook of the society or club
• Authorisation signatory signed and approved authorisation letter
• Proof of registered office address

Word to Remember

ITC: ITC, or Input Tax Credit, is one of the primary features of CGST. As a businessperson that manufactures and sells their product, ITC can be crucial in helping them keep taxes in check. When as a business, you purchase any item, the tax paid on that can be deducted from the total payable tax of your final/finished saleable product.

For example, if you purchase raw materials for manufacturing your product and it had taxes worth Rs. 300 attached to them. You can deduct the Rs. 300 from the final tax amount of your finished product because you have already paid it. This mechanism is comprehended as Input Tax Credit.

Conclusion

CGST and GST, in general, have made taxation easier for the entire country. From businesses to the government, CGST has brought ease of doing business and ease of tax governance in India. With this article, now you know CGST full form and all the various slabs of CGST, including the various documents required for the registration of CGST. For more information about CGST, you can visit this link.

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