What is Goods and Services Tax (GST) – Goods and Services Tax (GST) is said to be the most revolutionary tax reform that is being undertaken since independence. It has replaced all major indirect taxes applicable in our country.

Before discussing GST Further, let us first understand, the earlier tax system that was applicable in India.

I like to pay taxes. With them, I buy civilization.
― Oliver Wendell Holmes Jr

Taxes can be divided into two broader categories.

First is direct taxes and second is indirect taxes.

Direct taxes are taxes which are imposed on person and are paid to the government directly by taxpayer himself.

For example: income tax.

If there is liability of income tax on any person he has to pay the same, directly to the government

Indirect taxes on the other hand, are imposed on goods and services and are paid indirectly to the government by a third person.

For example: Service tax.

When you go and eat at a Restaurant, you pay service tax which is included in the bill to the owner of the restaurant. That restaurant owner pays service tax portion to the government in this way, you pay the taxes to the government by a third person so it is called as an indirect tax.

This is a question too difficult for a mathematician. It should be asked of a philosopher(when asked about completing his income tax form)”
― Albert Einstein

What is Goods and Services Tax (GST)

In India, indirect taxes are levied by central government as well as state government. Some major indirect taxes levied by central government are excise duty. It is charged on goods produced or Manufactured in India. Service tax it is charged on provision of services. Central sales tax or CSG is charged on the interstate sale of goods that is when goods are sold from one state to another. Custom duty is levied on imports and exports of the goods.

Some major indirect Taxes that were levied by state government is value added tax or VAT. It is charged when goods are sold within the State.

Entertainment tax is imposed on various forms of entertainments. For example, on movie tickets.

Luxury tax is imposed on luxury hotel rooms & High end Luxury Items.

Octroi or entry tax is levied by some state government when goods are transported from different districts and states.

What is Goods and Services Tax (GST)

Let’s get an Overview & Understanding about GST.

As the name suggests, it is an indirect tax levied on goods and services. It is clear that GST is an indirect tax and it is not going to have any impact on rates or structure of direct taxes which simply means that the Income tax rates and its levy has remained the same.

The introduction & Implementation of GST in the Indian Tax system is proved to be a Major game-changer as it has replaced major indirect taxes that are earlier levied by centre and state governments.

What does that mean?

Texas such as excise duty, service tax, VAT, luxury tax, entertainment tax, etc. has all been replaced by a goods & Service Tax.

There are three parts of GST:

First is central GST or (CGST), second is state GST or (SGST) and The Third one is integrated goods and service tax or (IGST).

What are the Benefits of GST?

Economists Suggests that the new Tax system of GST would add around two to three percent to India’s GDP in the coming years and it would help keep, India’s economy growing at a consistent Rate.

The hardest thing in the world to understand is the income tax. ― Albert Einstein

What is Goods and Services Tax (GST)

Some major benefits of GST:

GST has replaced all major indirect taxes by state and centre, that any goods or service dealer had to look at. It has removed the cascading effect. Cascading effect can be understood as a situation where taxes are imposed on previously charged goods or services imposed on previously charged taxes. To explain you in simple terms, it means tax on tax.

For Example, Earlier a product on which an excise duty has been already charged was also liable for VAT in certain cases. Which has now been eliminated. GST Simply Means, Ease of Taxes.

A Manufacturer, Who produces certain item at the Cost of Five Hundred Rupees & charges Excise duty at twelve percent and sells it to Shopkeeper for rupees 560. Further, that shopkeeper sells the same item to the consumer by charging an additional VAT at the rate of 12.5 percent of the Cost of the product Plus 12.5 percent on the excise duty, which was charged by the manufacturer,  which eventually takes up the final cost that the consumer has to pay to approximately 640.60 Rupees.

We must care for each other more, and tax each other less. ― Bill Archer

So this additional burden that is borne by the end user is called cascading effect. GST has removed all of these & all the earlier calculations been eliminated. GST Simply Means, Ease of Taxes, One India, One Market, One Tax.

GST has eliminated cascading effect as there is a single tax rule applicable via GST where things are easier and clearer ever before.

GST is proving to be a Big Reform to tackle & reduce the flow of Black money in the country. Black money refers to funds on which Texas have not been paid. There are individuals & Businesses who understate their income by not reporting each and every transaction that has been done on the actual basis & by doing this they Save indirect taxes and more importantly are able to furnish under reporting of their incomes.

GST is single tax on supply of goods and services right from manufacturer to the consumer. Credits of input tax at each stage are available in subsequent stage of value addition. To get the credit of previously paid Texas everyone can, now, insist upon getting the invoice for the transaction.

No government can exist without taxation. This money must necessarily be levied on the people; and the grand art consists of levying so as not to oppress. ― Frederick the Great

GST has an invoice which is accessed by the income tax department. Users are required to furnish Their PAN and Aadhar Details to be able to Submit & verify each and every purchase and sales transactions that has been executed by them, which is supposed to be informed and updated with the GST Portal.

GST returns is helping the income tax department to track all the transactions.

Check Here, The Latest GST Rates on all the Goods & Services in India.

Thank You

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