Goods And Services Tax(GST)

Goods And Services Tax(GST)

The goods and services tax (GST) is a tax on products and services sold for consumption in the United States. GST stands for Goods and Services Tax. It is an indirect tax. The tax is included in the final price and is paid by the customer at the moment of sale, with the seller reporting it to the government.

The Atal Bihari Vajpayee administration in India first proposed the introduction of GST in 2000. 33 people comprise the GST council. The GST is under the direction of Union Finance Minister Nirmala Sitaraman.

TYPES of GST

1. IGST – INTEGRATED GOODS AND SERVICES TAX-The IGST applies to goods and services that cross state borders. The IGST also applies to commodities imported into the nation with the intention of being sent to various states. The IGST is applied when goods and services are transported from one state to another.
2. SGST- STATE GOODS AND SERVICES TAX-SGST is one of the two taxes that every state charges when people buy and sell goods and services. SGST is a tax that every state’s state government charges. It replaces all other state taxes, such as Sales Tax, Entertainment Tax, VAT, Entry Tax, etc. With SGST, the State Government can get the money that was made.
3. CGST- CENTRAL GOODS AND SERVICES TAX-CGST is the Central Tax that is charged on goods and services that are bought and sold within a state. The Central Government makes sure that the CGST takes the place of all other Central taxes, such as State Tax, CST, SAD, etc. Under CGST, the prices of goods and services are based on the basic market price.
4. UTGST- UNION TERRITORY GOODS AND SERVICES TAX- The goal of UTGST, which applies to the sale of goods and services within the UT, is to collect a tax that gives the same benefits as SGST. The UTGST applies to five Union Territories: Lakshadweep, Daman, and Diu, Dadra and Nagar Haveli, the Andaman and Nicobar Islands, and Chandigarh.

Advantages of GST

1. Uniformity in taxation
2. Government revenue
3. Benefits to the economy
4. Benefits to industry and trade
5. Easy-to-use online procedure
6. No more tax on tax
7. Make in India made possible with GST
8. More efficient logistics
9. Easy transportation of goods for an E-Commerce company
10. GST AIMS to reduce corruption
11. GST will positively impact the country’s GDP in the long run.

Disadvantages of GST

1. Expands cost because of programming buy
2. Higher tax burden of SME
3. No GST charge on oil-based commodities
4. Increased cost of operation
5. 5.No GST on petroleum products
6. Need of IT infrastructure
7. Increase in taxes will lead to an increase in prices
8. Problems faced by e-commerce
9. Need for registration in different states
10. Change in business software.

GST Rates in India

The government’s proposal states that there are four slabs based on goods and services:

5%: In this category are things like sweets, sugar, spices, tea, coffee, coal, cooking oil, and so on.

12%:Computers and processed foods like cheese, ghee, ayurvedic medicines, cell phones, fertilizers, etc. fall under this slab. There are also services like work contracts, plane tickets in business class, and hotels without air conditioning.

18%: This slab is good for capital goods and industrial intermediaries, as well as things like toothpaste, soap, hair oil, etc.

28%: This slab includes expensive things like luxury cars, home appliances that last for a long time (AC, refrigerators, etc.), etc.

How will GST works

• Manufacturer: The manufacturer will have to pay GST on the raw materials they buy and the value they add to the product.
• Service Provider: In this case, the service provider will have to pay GST on the amount paid for the product and the added value. But the GST that needs to be paid can be reduced by the tax that the manufacturer has already paid.
• Retailer: The merchant will be responsible for paying GST on both the merchandise purchased from the distributor and the profit earned on top of that.
• But the GST that needs to be paid can be reduced by the tax that the retailer has already paid.
• Consumer: The product you bought needs GST to be paid.

Conclusion

To make paying taxes simpler and lure enterprises into the official sector, the government implemented the GST system. If a company is GST-registered, it may benefit from a unified tax system and simple input credits.

Diesel, crude oil, gasoline, natural gas, and jet fuel are now exempt from the GST. Alcohol is exempt from the GST, and bringing it in would need a constitutional amendment.

For the Council to adopt a decision, both the Union and the State governments must concur. If a 75 percent weighted majority of members who are present and voting vote, a decision may be reached.

If a product or service costs Rs. 100 and the GST rate is 18%, the GST amount is Rs. 18 multiplied by 100. You would be required to pay a total of Rs.118.

The Goods and Services Tax (GST) was implemented in India to replace a number of indirect taxes and reduce revenue for both the central and state governments. Another objective, according to the Ministry of Finance, is to make the tax system more transparent.

Excise, service tax, customs, and countervailing duty are all levies that the central government must eliminate under the GST. VAT, octroi, luxury tax, and entertainment tax must all be destroyed. All of them are now subject to the GST.