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Everything you must know about GST

The taxation system in India is often perceived as a complex puzzle. There are various taxes levied on different stages of production that can often make it difficult to decode. However, with the coming of GST, the taxation system has become easier, as it has replaced the various taxes with one single tax, that is, the goods and services tax.Read More

Now, it's also quite easy to understand ‘what is GST’. This modern system aims at simplifying taxation in India. Let's dig deeper to understand all about GST.Read Less

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Written ByShruti gujarathi
AboutShruti gujarathi
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Shruti gujarathi has 5 years of experience in the BFSI sector, and as Manager- Digital Marketing at Bajaj Allianz Life Insurance, manages digital and content marketing. She has had hands-on experience in content strategy, performance marketing and Strategic Alliances over a career spanning 10 years.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 17th Jan 2025
Modified on: 18th Jan 2025
Reading Time: 15 Mins
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Understanding GST: One nation, one tax!
 

Although GST has been introduced recently, the idea dates back to the year 2000. A committee was set up in 2000 to draft the GST law. However, it took around 17 years for GST to finally come into force. After being passed in the Rajya Sabha and Lok Sabha in 2017  the GST Law came into force on 1st July 2017.1

Goods and services tax is the indirect tax that has replaced various erstwhile indirect taxes in India. Earlier, there were VAT, service tax, excise duty, etc. Now, all these are covered under a single tax, GST. It can also be seen as a multi-stage, comprehensive, and destination-based tax. Goods and services tax is benefitting both taxpayers and the government in multiple ways. The loopholes of multiple indirect taxes have also been removed to a great extent with GST.

Note: GST is a destination-based tax. That means the state where goods are being consumed will receive the tax and not the state that manufactures the goods. 2
 

What is goods and service tax? Types of GST
 

Depending on the transaction of goods & services and the tax collecting authority, GST can be of four types:
 

● CGST
 

Central Goods and Services Tax. The central government governs the CGST.
 

● SGST
 

State Goods and Services Tax. The state government is responsible for the collection and governance of SGST.
 

● UTGST
 

Union Territory Goods and Services Tax. Union territories are the governing authorities for UTGST. It works similarly to SGST.
 

● IGST
 

Integrated Goods and Services Tax. The center collects IGST, which is later split between the state(s) or UT(s) and the central government.
 

How are taxes implemented and collected?
 

Broadly, two types of purchase and sale happen. Taxes are levied based on the nature of the purchase and sale of goods and services. To understand GST meaning, let's have a look at how taxes are levied, collected, and shared:
 

● Intra-state supply
 

Goods and services that are produced and consumed within a state or union territory are referred to as intra-state transactions. CGST and SGST/UTGST are levied on these transactions.

As per Section 8 of the CGST Act, the tax collected is shared between the state/UT and the central government. The section also specifies that the tax rate cannot exceed 14% for each CGST and SGST. The CGST goes to the central government, and the SGST goes to the state government.2
 

● Inter-state supply
 

On the other hand, goods and services that happen between two or more states are referred to as inter-state transactions. Only IGST is levied on these transactions. Exports and imports in India also attract IGST. The center collects IGST, and according to the IGST Act, the tax is shared with the participating states and union territories.
 

GST tax structure for various goods & services
 

For regular taxpayers, the GST structure ranges between 0%, 5%, 12%, 18%, and 28%. On some goods, GST of 3% and 0.25% is also levied. Apart from GST, some products also attract cess that may range from 1% to 204%. Usually, products like cigarettes, petrol, aerated water, tobacco, motor vehicles, etc. include cess.3
 

● List of items with 0% GST7
 

Various basic edibles and health services charge no GST rate. There are 1494 sections of goods and services in this list. Some of these include:

  • Milk
  • Salt
  • Eggs
  • Curd and lassi, other than pre-packaged and labelled
  • Gur,  other than pre-packaged and labelled
  • Besan, etc.
     

● List of items with 5% GST7
 

There are multiple products and services that attract 5% GST. Some of these are:

  • Pre-packaged and labelled goods
  • Tea, other than unprocessed green leaves of tea
  • Coal
  • Packed products like milk, curd, paneer, etc.
  • Raisin
  • Edible oils
  • Woven Fabric of manmade textile materials
  • Life-saving drugs
  • Agarbatti
  • Domestic LPG
  • Coffee roasted , etc.
     

● List of items with 12% GST 7
 

Some items attract 12% GST. Some of these items are:

● Processed food

● Butter

● Ghee

● Fruit juice

● Fruits

● Jam

● Jelly

● Umbrella

● Almonds

● Pasta, etc.

 

● List of items with 18% GST7
 

18% GST is levied on multiple products. These include:

  • Hair oil
  • Ice-cream
  • Toothpaste
  • Cornflakes
  • Soap
  • Perfumes
  • Soup, etc.
     

● List of items with 28% GST7
 

Luxury items attract 28% GST. These are:

  • Small cars (1- 3% cess)
  • Caffeinated or carbonated beverages
  • Products containing tobacco or nicotine and their substitutes which are intended for being inhaled without consumption
  • Luxury motorcycles and bikes exceeding capacity of 350 cc have a 3% cess5
  • Consumer durables, etc.
     

Conclusion
 

GST has removed the cascading effects of tax to a great extent. It has now become easier for  the centre, the state, and the consumers to benefit from the new taxation system. Tax evasion has also been curbed, and the taxpayer base has also increased. With GST, the problem of different taxes has been erased. Unlike earlier, particular goods and services now have similar prices across all the states.

The GST process is mostly electronic, which makes the collection process transparent. GST registration, return filing, application for refund, etc., can now be done via the GST portal. Hence, it has also increased the pace of the process!
 

FAQs
 

1. What is the maximum IGST that can be levied?
 

The highest limit of 28% of IGST can be levied on certain luxury goods2 by the GST Council of India6.

2. Who has jurisdiction over IGST?
 

The IGST falls under the jurisdiction of the central government. The collected tax is later split between the state/UT and the central government.2

 

3. When was GST introduced?
 

Goods and Services Tax or GST was introduced in 2017. It has replaced the multiple indirect taxes in India with a single tax.
 

4. What is the range of GST that can be applicable in India? 7
 

The GST rates range from 0% to 28%, depending on the type of good.
 

Sources:

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The views stated in this article are not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. Bajaj Allianz Life Insurance Company Ltd., Regd. office Address: Bajaj Allianz House, Airport Road, Yerawada, Pune - 411006, Reg. No.: 116, CIN: U66010PN2001PLC015959, Call us on toll free No.: 1800 209 7272, Mail us: customercare@bajajallianz.co.in

Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility

BJAZ-WEB-ECNF-12451/25

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*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any call made, SMS or WhatsApp sent in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

 

Please refer to BALIC Privacy Policy

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


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^Subject to Section 10 (10D) conditions i.e. aggregate annual premium for ULIP policies issued on or after 1st February 2021 does not exceed Rs. 2.5 Lakhs.

1Minimum premium mentioned is applicable for Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01) and is subject to policy terms and conditions.

#Source: https://economictimes.indiatimes.com/investments-marts/eight-crucial-numbers-to-ensure-financial-success/10-times-the-annual-income-is-your-life-insurance/slideshow/16699748.cms . Subject to availability in Bajaj Allianz Life ULIP Plans. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com ) carefully before concluding a sale.

*Benchmark: Nifty 500 Multicap Momentum Quality 50 Index past 5 CAGR Returns, as on 31st December 2024. Past returns of a fund are not necessarily indicative of the future performance of the fund. | Please consult the financial advisor before investing.

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Bajaj Allianz Life Insurance Company Limited is only the name of the Life Insurance Company and Bajaj Allianz Life Future Wealth Gain IV - A Unit- linked Non- Participating Individual Life Savings Insurance Plan (UIN:116L202V01), Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01), Bajaj Allianz Life LongLife Goal III is A Unit-linked Non-Participating Whole Life Insurance Plan (UIN:116L203V01), Bajaj Allianz Life Invest Protect Goal III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L205V01), Bajaj Allianz Life Magnum Fortune Plus III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L207V01), Bajaj Allianz Life Goal Based Saving III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN:116L206V01) and Bajaj Allianz Life Smart Wealth Goal V - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L201V01) are only the name of the unit linked insurance contracts and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com ) carefully before concluding a sale.

Nifty 500 Multicap Momentum Quality 50 Index Fund is available Bajaj Allianz Life Future Wealth Gain IV - A Unit- linked Non- Participating Individual Life Savings Insurance Plan (UIN:116L202V01), Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01), Bajaj Allianz Life LongLife Goal III is A Unit-linked Non-Participating Whole Life Insurance Plan (UIN:116L203V01), Bajaj Allianz Life Invest Protect Goal III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L205V01), Bajaj Allianz Life Magnum Fortune Plus III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L207V01), Bajaj Allianz Life Goal Based Saving III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN:116L206V01) and Bajaj Allianz Life Smart Wealth Goal V - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L201V01)

In addition to the already existing funds, Nifty 500 Multicap Momentum Quality 50 Index Fund is now available with the above mentioned products. Customer has an option to choose from other available funds apart from Nifty 500 Multicap Momentum Quality 50 Index Fund.

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I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any Call made, including via Voice over Internet Protocol & WhatsApp, SMS or WhatsApp messages, in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

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