Question

The rate of GST on stainless steel is \[18%\]of which the share of a state government is

(A). \[18%\]
(B). \[9%\]
(C). \[36%\]
(D). None of these.

Answer 1

Hint: Components of GST: CGST, SGST and IGST
When the centre and states are merging their prominent indirect taxes under GST, both should get their own share in the GST. For this, the GST Council has adopted a dual GST with two components – the Central GST (CGST) and the State GST (SGST).
Objective of this division is sharing the revenue from the unified GST between the centre and states.

Complete step-by-step answer:
Let us see some definition of GST for a better understanding:
As per Article 366(12A); “Goods and Service tax” means any tax on supply of goods, or services or both except taxes on the supply of alcoholic liquor for human consumption.

 GST stands for "Goods and Services Tax", and is proposed to be a comprehensive indirect tax levy on the manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments.

GST is one indirect tax for the whole nation, which will make India one unified common market.

GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

As there is equal sharing between centre and state, we get

\[GST\text{ }=\text{ }CGST\text{ }+\text{ }SGST\] in the ratio of \[50:50\]

\[\therefore SGST=GST-CGST\]

\[=18%-9%\]

\[=9%\]

Thus the GST component of state (SGST) is 9%.

The answer is B. 9%.


Note: As per the Model GST law and various recommendations, it is proposed to have dual GST model; Central GST and state GST. Both shall be applicable on goods and services within the state. CGST and SGST shall not be applicable in the case of interstate supply of goods or services.