In India, there are two types of taxes levied by the government: Direct taxes and indirect taxes. Indirect taxes are levies imposed on goods and services, whereas direct taxes are levied on the income and profits of individuals and organizations. Direct taxes are directly paid to the government by the tax payer.
Income tax is a direct tax, paid on personal income by an individual or a company, to the federal government.
GST (Goods & service tax)
The single tax system subsumed all the previously existing federal and state levies (see table below) with an aim to create a single, uniform market across India.
Below, we provide a glossary on the key concepts and terminologies used in the GST system in India, and a list of goods and services with revised GST rates.
GST is a single value-added tax levied on the manufacture, sale, and consumption of goods and services at the national level.
There are three main components to GST in India:
- CGST – Central Goods and Services Tax, levied on an intra-state sale and collected by the federal government (commonly referred to as “the center” in India).
- SGST – State/Union territory Goods and Services Tax, levied on an intra-state sale and collected by the state or union territory government.
- IGST – Integrated Goods and Services Tax, levied on interstate sales and collected by the federal government.
The IGST is the aggregate of the CGST and SGST; the SGST is appropriated from the state where the supplies are consumed.