GST stands for Goods and Services Tax which is an indirect tax levied on the supply of goods and services. It is levied at every step of the production process i.e. on raw materials purchased by the manufacturer, on products sold to wholesaler by the manufacturer, on products sold to retailer by the whole seller and finally on the sale of product to the consumer. Goods and Services Tax is meant to be refunded to all the parties except the end consumer.
Below we have provided long and short essay on GST of varying word length, to improve your information about the Government’s new tax regime. The essays will be more useful to the school and college students, as well as the aspirants who are preparing for SSC (Staff Selection Commission), UPSC (Union Public Selection Commission) and other competitive exams.
GST stands for the Goods and Services Tax, which is an indirect tax levied by the Government of India, on all the parties of a supply chain of goods and services. GST came into effect from 1st July 2017, by One Hundred and First Amendment of the Constitution of India.
The most significant aspect of GST is that, it follows a uniform tax rule for specific products, throughout India. The GST is a uniform indirect tax which has replaced all central and state indirect taxes, treating whole of India as a single market. Goods and Services Tax (GST) is also levied on imported goods.
Goods and Services Tax, India is a uniform tax levied on goods and services, treating whole of India as one market. The tax came into effect from 1st July 2017 and replaced the existing multi level central and state taxes. GST divides goods and services into five tax slabs – 0%, 5%, 12%, 18% and 28%. Though, products like petroleum products, alcohol and electricity, still follow the old tax regime.
The GST Council is the governing body which formulates the tax rates, along with the rules and regulations. It consists of the central finance minister as well as the finance minister of the states. GST replaces many indirect taxes levied by both central and state at various stages, resulting in a reduced tax burden, elimination of cascading of taxes and lower time loss. Before the GST, most of the goods were in the tax range of 26.5 %, but after GST, they have mostly fallen under the tax range of 18%.
GST is an abbreviation for Goods and Services Tax, India. It is a uniform indirect tax, replacing various indirect taxes at different stages, levied before by both central and state governments. GST treats India as one big market following a uniform tax regime throughout the country, irrespective of states.
Though GST is charged by all the registered dealers in a supply chain (raw materials supplier, manufacturer, wholesaler, retailer, consumer), from the next customer, the ultimate burden of the tax is on the end customer i.e. the consumer. All the other dealers registered with GST act as intermediaries collecting GST from the consumer and passing it onto the government, getting tax credit in return. This tax credit is called “Input Tax Credit” and is placed against the GST charged by the dealer to the customer, to which he/she is supplying goods.
Any registered dealer is also eligible for tax refund if the input tax credit exceeds the output tax credit, as according to the provisions provided by law in this regard. Moreover, no GST credit could be claimed for the purchase of exempted goods. The GST is not levied on all types of vegetables, organic manure, contraceptives, printed books, stamp papers, agricultural equipments etc.
Introduction
Goods and Services Tax in India, is a tax levied uniformly throughout India on the supply of goods and services as well as on the import of goods from foreign destinations. GST has divided particular goods and services under uniform tax slots, which initially varied from state to state. GST is an indirect Tax i.e. the dealers registered with GST act as intermediaries, collecting the tax from the end customer, which is the consumer, who ultimately bears the final burden of tax.
How GST Works
The basic mechanism of taxation under GST is that it is levied at every stage of the supply process. It is subsequently paid by the manufacturer, wholesaler, retailer and consumer. Though, the registered dealers (manufacturers, wholesalers and retailers) charge GST, they don’t keep the amount, rather pay it back to the government with a tax invoice and claim credit for the tax thus collected.
This leaves the end user i.e. the customer as the one who bears the final burden of tax. The end customer has to pay prescribed GST on the product purchased or on the services availed, without any provision of claiming the return or credit.
Conclusion
An uniform Goods and Services Tax replaces other central and state indirect taxes like – VAT (Value Added Tax), CENVAT (Central Value Added Tax), excise tax, customs tax, state excise tax etc. In a way, the GST has integrated the central and state taxation system into one uniform tax regime. In a layman’s term, the manufactures and suppliers of a particular product, now have to pay a uniform tax throughout India.
Introduction
GST stands for Goods and Services Tax, India. It is a comprehensive tax levied by the government on the supply of goods and services. It is also an indirect tax, replacing other central and state levied indirect taxes. GST has brought the whole India under one tax regime, saving time and resulting in low tax burden.
Types of GST
There are basically four types of Goods and Services Taxes, as described below-
1) Central Goods and Services Tax (CGST)
CGST is the GST levied by the Central Government of India on the transaction of goods and services with a state or Union Territory. CGST replaces other central taxes like – Central Excise Duty, Central Sales Tax, Custom Duty and SAD (Special Additional Duty) Tax.
2) State Goods and Services Tax (SGST)
SGST is the GST levied by state on transactions of goods and services within the state. It is one of the two taxes levied within a state, other being the CGST. State GST replaces the state levied taxes – Value Added Tax, Luxury Tax, Entry Tax, Entertainment Tax etc. The revenue thus collected under the SGST is solely claimed by the respective state government.
3) Integrated Goods and Services Tax (IGST)
While CGST and SGST are the GST levied on intrastate (within the state) transactions of goods and services; IGST stands for the GST levied on the interstate (between two states) transaction of goods and services. However, IGST is collected by the central government and reimbursed later to the respective state.
4) Union Territories Goods and Services Tax (UTGST)
UTGST is the GST levied on the transaction of goods and services in these five Union Territories of India – Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Chandigarh and Lakshadweep. Total GST levied in a Union Territory is the sum of CGST and UTGST. State GST isn’t applicable to UTs, as it would require a legislature. Union Territories of Delhi and Pondicherry rather have SGST, because they have their own legislature.
Conclusion
The main reason for GST is to bring whole India under one uniform tax regime. It has reduced the unnecessary tax burden of different state and central taxes, on the dealers and has made the goods cheaper for both the stakeholders and the consumer.
Introduction
Goods and Services Tax, India abbreviated as GST is a tax based on the consumption of goods or services throughout India. GST is an indirect tax which has replaced the previous indirect taxes. Direct taxes like – income tax, corporate tax etc, are not affected by the GST.
Brief History of GST
Goods and Services Tax (GST) was proposed in 1999, in the government of the then Prime Minister of India, Atal Bihar Vajpayee. Further, a committee was setup by Prime Minister Vajpayee under the then Finance Minister of West Bengal, Asim Dasgupta to formulate a GST model. Since then, the GST could not be implemented, until recently on 1st July 2017 by the NDA (National Democratic Alliance) government led by the BJP (Bhartiya Janata Party).
Significance/Importance of GST in India
Goods and Services Tax is an essential indirect tax reform in India. Before GST, India had many indirect taxes levied respectively by both central and state governments, resulting in high amount of taxes also requiring high amount of resources for their collection and maintaining records.
Integration of both central and state taxes into one, will forego many adversities of previous tax system i.e. multiple taxations, cascading, loss of time and resources etc. Besides, GST considers whole of India as one unified market, consequently promoting foreign investment.
By eliminating the cascading of tax at various levels, GST makes the goods cheaper for the registered dealers as well as the end consumer consequently leading to economic growth of the nation. India is a developing nation, still struggling with the issue of unemployment. GST is expected to create new employment opportunities in the field of taxation and accountancy along with vacancies in the manufacturing sector.
A centralized GST has resulted in elimination of various check posts during the interstate transportation of goods. The travel time of interstate goods transport vehicles, have reduced considerably by 20% due to the absence check posts. Also, the multi party involvement in GST will improve the compliance level.
Conclusion
GST will lead to a more transparent and corruption free taxation system. The GST is formulated in such a way, so that it benefits both the businesses and the consumers. India needed a better tax reform on indirect tax like the Goods and Services Tax. GST places India at a better place to negotiate in international market. Also, by bringing SMEs (Small and Medium Enterprises) and other organized sector, under its gambit, GST leads to a more stable Indian industrial sector and an improved economy.