India is currently implementing a new GST system in the hopes of unifying the market and helping the economy grow. 

Imported goods and services will be treated as inter-state supplies and will be subject to the Integrated Goods and Services Tax (IGST).  Under the current system, credit of taxes being levied by Central Government is not available offset for payment of taxes levied by State Governments.  One of the most important features of the GST system is that the entire supply chain would be subject to GST, levied by Central and State Government concurrently. Because the tax charged by the Central or State Governments would be part of the same tax regime, the credit of tax paid at every stage would be available as offset tax payments, which will be more beneficial for exporters.

Currently multiple taxes are levied by Central and State Government. GST will replace the following taxes of Central and State Government:

Central Taxes:

  • Central Excise duty
  • Additional duties of excise
  • Excise duty levied under Medicinal & Toilets Preparation Act
  • Additional duties of customs (CVD & SAD)
  • Service Tax
  • Surcharges & Cesses
  • Additional Duties of Excise (Textiles and Textile Products)

State Taxes:

  • State VAT/Sales Tax
  • Central Sales Tax
  • Purchase Tax
  • Entertainment Tax (other than those levied by local bodies)
  • Luxury Tax
  • Entry Tax (All forms)
  • Taxes on advertisements
  • Taxes on lottery, betting & gambling
  • Surcharges & Cesses

The GST council has published 5 tiers (Nil, 5%, 12%, 18%, 28%) for GST rate, while it also exempts a few goods from GST. The majority of goods and services are below the 18% tier.  Other than the main 5 tiers, there are separate rates for jewelry (3%) and to all goods classified in chapter 71, and 0.25% specifically for rough diamonds.  GST compensation cess, levied on certain luxury and sin goods under the Goods and Services Tax Act, varies from 1% to 290%.  GST on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas & aviation turbine fuel will be levied at a later date.

The new GST system will require registration, and payment will be online. Interest will be payable if refunds are not sanctioned in time.  You can check GST in your Integration Point Global Trade Content solution by selecting 1st July as effective under the Other Charges heading of the India Tariff. Please note that all other taxes will be available in Global Trade Content until 1st July after the changes have been finalized by India.