Chapter 2. Taxes and Duties merged under GST

Goods and Services Tax (GST), is an indirect tax that will replace the entire taxes levy at Central and State level and it will unified into one national market across India. If we see at present taxation system, it is more complex as, tax is being collected by central and state and on different basis and according to that businessmen has to maintain their accounts suitable to laws.

Following are the duties and taxes, which will merge under GST (at Central Level):-

  1.      Central Excise Duty (including Additional Excise Duty):- Central Excise Duty is basically imposed on manufacturing of goods in India and the collection for this duty is done by Central Board of Excise and Customs. The tax rate 12.5% with input tax credit is being imposed on Jewelers (except Silver ornaments).
  2.     Service Tax: – Service Tax is a tax that is levy by the government on the services provided and it actually bear by the customers. It is an indirect tax, wherein the service provider collects the tax from service receiver and pays to the Government. Currently, Service Tax rate is 15% of value of services provided, Education cess and Secondary Education cess is 2% of Swachh Bharat cess (i.e. 0.50%)
  3. Additional Customs Duty: – Commonly referred to Countervailing Duty, equivalent to Central Excise Duty which is imposed on Manufacturing. It is calculated on value base of goods including landing charges and basic customs duty (excluding anti-dumping duty, safeguarding duty, etc).
  4.      Special Additional Duty of Customs: – it is payable 4% on good imported and this is in instead of VAT/ Sales Tax.
  5.      Central Surcharges and Cess: – Surcharge is a charge on tax and as a name suggest, it is an additional charge and it is basically on personal income tax (on high income slabs) and on corporate income tax. Cess is imposed by central government and is levied for specific purpose.


Following are the duties and taxes, which will merge under GST (at State Level):

  1.     Value Added Tax (VAT):- VAT is an indirect tax on the goods and services that are provided at state level or domestic. It is imposed at each stage in the chain of distribution and production from the raw materials till the valuation of the product and it is borne by the end users (customers) in Distribution channel.  
  2.     Central Sales Tax: – CST, is levy on sales, which is affected by inter-state trade. CST is an indirect tax on consumers. As it is centrally levy, so it is administered by the concerned state where the sales originated.
  3.     Octroi & Entry Tax: – Octroi is a tax which is charged by local authority say, Municipality and Entry Tax is charged by State.
  4.      Purchase Tax:– Purchase tax is a tax that is imposed on the purchase of goods by the state government, and it is applied to wide range of goods.
  5.      Luxury Tax:- A Luxury Tax is levy on articles that are either expensive or optional
  6.      Taxes on lottery, betting and gambling:- Tax which is imposed on Lottery winnings, Gambling and Betting calculated as Tax Deduction at Source and it is deducted from Income,

7.      Entertainment Tax:– Entertainment Tax is a tax levied by the government on things related to entertainment like : movie tickets, commercial shows, etc.