What is Goods and Service Tax – What is GST?
GST is a major step towards improving the tax structure of India. Goods and Service Tax is an indirect tax law. GST is an integrated tax that will look at both goods and services. Besides the introduction of GST, the entire country will be transformed into a unified market and mostly indirect taxes such as central excise, service tax, VAT, entertainment, luxury, lottery tax etc. will be subsumed in GST. This will take the same type of indirect taxes across India.
Why GST – Why GST Bill
India’s current tax structure is very complex. According to the Indian Constitution, the Central Government has the right to impose taxes on the production of the state government and the goods and services, mainly for the sale of commodities. Due to this, different types of tax is applicable in the country, making the current tax system of the country very complex. It is difficult for companies and small businesses to follow different tax laws.
Tax on tax will be over – GST Calculator will eliminate Cascading Effect
In the indirect taxation system, the tax liability has to be borne by the final consumer, but the collection of tax is done by the businessmen. The businessman gets a credit of Input Credit paid on the goods purchased, which he can use to pay his tax. From this arrangement, tax only takes place on value addition (sales – purchase) or (Value Addition). The businessman collects tax from the consumer and reduces his input credit (tax paid on purchased goods) and deposits it to the government.
But in the present system, in India, the excise duty and service tax by the central government and sales tax by the state government (VAT or Sales Tax) is levied. For this reason, the practitioner can not use the input tax of the sales tax (tax paid on purchased goods) in the payment of excise duty and service tax, and the payment of sales tax (service tax paid on services) and excise duties Excise duty on purchased goods) cannot use the credit Due to this, tax is taxed in the current system, which increases the price of goods and services.
Among the introduction of GST, the same type of indirect tax will be made in the entire country, so that businessmen will get the full credit of the GST paid on the goods and services purchased, which they can use to pay GST on the goods and services sold. This will only tax on value enhancement and the tax on tax will be eliminated, which will reduce the cost.
Key points of GST – Benefits / Features of GST
- ST will only integrate indirect taxes, direct taxes such as income-tax etc. will be applicable only according to the present system.
- Among the introduction of GST, there will be only one type of indirect tax in India, which will lead to stability in the cost of goods and services.
- To maintain the federal structure, GST will be at two levels – CGST (central commodity and service tax) and SGST (state goods and services tax). The share of CGST will be given to the Center and the share of SGST will be received by the state government. In the case of sale of goods and services from one state to another, IGST (integrated goods and services) will be located. A part of IGST will be received by the Central Government and the second part consuming the goods or services.
- Businessmen will be able to take the input credit of GST on the goods and services purchased, which they can use in the payment of GST on the goods and services sold. The input credit of SGST will be used to pay the output tax of IGST and CGST, SGST Use of credit for the payment of Output Tax of SGST and and the use of IGST’s credit for IGST, CGS Mr, and SGST output will be paying tax.
- Under GST, all those businessmen, producers or service providers have to be registered, whose total sale price is more than a certain value throughout the year.
- In the proposed GST, businessmen will have to fill three different types of tax returns, which include input tax, output tax, and integrated returns.
Impact of GST on common people – Impact of GST on General Public
- The 2nd common important exhibition would happen that the related rate would equal reproved transversely India, from which payments of goods and services would be the same in all the states.
- Among the introduction of Goods and Service Tax Law (GST), Central Sales Tax (CST) will be included in GST India, which will disgrace the demands of commodities.
Impact on GST businesses – Impact of GST on Businesses
- Presently, in the payment of business tax, excise duty and service tax payment cannot use input credit of tax (paid tax on purchased goods) and service tax (tax paid on services) and excise duty (Excise duty on purchased goods) cannot use the credit. Due to this the cost of goods & services increases. But borrow to the implementation of GST, the traders will get the full credit of GST paid on all types of goods & services which they can use to pay for GST on the goods & services sold. This will reduce costs
It is said that business will be easy to get started with GST but in the initial years, businesses may have to face difficulties. For example, GST will have to file three different types of returns each month.
- Threshold limit (exemption limit) is different in different types of indirect taxes currently. Mainly, Threshold Limit 5 lakhs in sales tax, 10 lakh in service tax and 1.5 crores in excise duty. Among the introduction of GST, it is proposed to have the same type of Threshold Limit for all types of businesses (trading, producer or service provider). This threshold limit will be created keeping in mind the current limit of all three laws (sales tax, service tax, and excise duty). The main impact would remain that the exemption limit will be kept less than 50 lakhs, which will be brought under the GST calculator by small producers who are currently availing the limit of 1.5 crores limit.
- At present, selling of goods from one state to another in the state has a central sales tax of 2%, which does not get input credit. Since the implementation of GST Calculator, necessary closeouts tax will not be commanded, which will humble the damage of goods.