History of GST, GST State Code and its implementation in India

History of GST

France was the first country to introduce and implement the Goods and Service Tax system in the year 1954. Subsequently, around 160 countries carried out this tax reform including countries like Australia, Canada, United Kingdom, Vietnam, Singapore, Nigeria, Brazil, Monaco and India. In the year 2000, the Atal Bihari Vajpayee government first suggested the idea of executing the GST taxation system in India. The aim was to get rid of the existing complicated tax system and compile all kinds of taxes under one roof. 

Later on, the Central Government of India created a task force whose aim was to look after fiscal policy and budget management. This task force suggested that the central level VATs and State level VATs (Value Added Tax) should be replaced by the GST (Goods and Service Tax system). It was proposed that the GST in India would be executed from 1st April 2010. But after much dilly-dallying, the Government of India finally implemented the Goods and Service Tax system.

Some features of GST

Here are some features of GST:

  • The application of GST is only valid on the supply of goods and services not on the manufacture of goods and services.
  • The principle on which the GST is based is consumption on a destination basis.
  • GST is of two types. One is CGST (Central Goods and Service Tax) and the second is SGST (State Goods and Service Tax). This system is applied so that both governments can collect the exact amount of taxes.
  • If there is any kind of inter-state supply, even if it is a stock transfer, an IGST (Integrated Goods and Service Tax) would be imposed upon it.
  • The rates of CSGT, IGST and SGST would be manually agreed upon by both the centre and state.
  • Import of any foreign goods and services would also fall under the IGST in addition to the customs and excise duties levied upon the goods and services.
  • Also, every state will have their own GST state code.

There are many additional features of GST. You can visit the official GST government portal for additional information.

GST state code

Every registered taxpayer has a unique GSTIN (Goods and Service Tax Identification Number). As the state takes GST charges in the form of SGST, it is important to have some state credentials, and here comes the GST state code. State GST codes keep on changing according to the changes in the statuses of the state and union territories. For example, when Dadra and Nagar Haveli merged with Daman and Diu, the state code changed from 25 to 26.

Before GST came into play, the CBIC (Central Board of Excise and Custom) had issued the taxpayers and service providers with TIN (Taxpayer Identification Number). But in the case of GST, the taxpayers are registered under GSTIN which is a unique 15 digit alphanumeric code that has made the whole tax filing and paying process easier than the previously existing taxation system. 

The state GST code is advised by the 2011 Indian Census. The first two digits of GSTIN are the state code. This is followed by the next 10 digits which is the PAN (Permanent Account Number)  of the taxpayer. The next two digits comprise an alphanumeric number that shows the total number of taxpayers in the state itself. Lastly, a 1 digit checksum value is added for specific identification purposes. The GST state code number can vary between 01 to 38.

If you are a responsible taxpayer, you need to be updated with the current GST regime and GST state codes. To know more about GST and State GST codes visit the link.