Generally, GST consist three prime models:-
1. Central GST-(CGST)
2. States GST-(SGST)
3. Dual GST
CGST: – Under this option, the two levels of government would combine their levies in the form of a single National GST, with appropriate revenue sharing arrangements among them. In the case of a Central GST (where all goods and services are taxed by the Central government only), the Centre will collect most of the country’s total tax revenue, leaving very little for the sub-national Governments.
SGST: – The second model is to have a State GST in which the States alone levy GST and the Centre withdraws from the field of GST or VAT completely. In this case, the State GST will work as the redistributing mechanism. The loss to the Centre from vacating this tax field could be offset by a suitable compensating reduction in fiscal transfers to the States. This would significantly enhance the revenue capacity of the States and reduce their dependence on the Centre.
Dual GST: –
♣ Non-Concurrent Dual GST: –Under this model, GST on goods can be levied by the States only and on services by the Centre only. The States already have the power to levy the tax on the sale and purchase of goods (and also on immovable property), and the Centre for taxation of services. No special effort would be needed for levying a unified Centre tax on interstate services. This model of dual GST would not be acceptable to the Centre as well as the States. Hence, the Government has already announced its intention to follow the Concurrent Dual GST.
♣ Indian Model of GST – Concurrent Dual GST
Indian GST model would be Concurrent Dual GST consisting both the Central GST and State GST levied on same base. Under this model, GST will be levied by both tiers of Governments concurrently. There will be Central GST to be administered by the Central Government and there will be State GST to be administered by State Governments. In this model, both goods and services would be subject to concurrent taxation by the Centre and the States. All types of goods and services will be brought under this proposed GST structure except few exceptions.
For Example, if a product have levy at a base price of Rs. 10,000 and rate of CGST and SGST are 8% then in such case both CGST and SGST will be charged on Rs. 10,000 i.e. CGST will be Rs 800 and SGST will be Rs.800.
Features of Proposed Indian Dual GST:-