[ecis2016.org] In this article know about GST, the various types and its advantages
What is GST?
GST full form is Goods and Services Tax. GST is a tax that customers must pay when they buy goods or services such as food, clothing, electronics, and so on. GST is an “Indirect Tax,” which means it is taken by the government at the stage of production or supplying goods or services. The GST is added to the manufacturer’s or supplier’s costs, and so the MRP is also inclusive of it.
You are reading: All about GST
GST is a uniform taxation system that was implemented by the Government of India on July 1, 2017. GST is designed to replace all central and state government taxes in various forms, such as excise, sales tax, VAT, entertainment tax, luxury tax, and so on. The bill for the implementation of the GST law was passed by the nation’s parliament by the ‘142’ constitutional amendment 2017, followed by the passing of the Constitution 122nd Amendment Bill.
All goods and services would be taxed at 5 %, 12 %, 18 % or 28 %. Aside from these, there is a 0.25 % special rate on unpolished and semi-precious gems and a 3 % special tax on gold, as well as an extra cess on items such as cigarettes.
Read also : Finance Act 2016: Helping home buyers, through tax sops for builders
To understand GST, we need to first understand the taxation system prevalent in India
Types of taxes in India
In India, there are several different types of taxes.
Direct taxes
A direct tax is a form of tax imposed on an individual’s or entity’s earnings. In India, there are various forms of direct taxes like Income, Wealth, and Estate Taxes
Indirect taxes
Indirect taxation is a sort of tax which is not levied directly on an individual’s or entity’s income. Indirect taxes are levied on items or services that are included in a product’s MRP. In India, there are several forms of indirect taxes:
- Goods and Services Tax (GST)
- Customs duty
- Stamp duty
- Entertainment tax
- Securities transaction tax
- Excise duty
- Central sales tax
Read also : How to check your PNB account balance?
There are many indirect taxes. Some of these are levied by the Central Government whereas some are levied by the State Government making the indirect tax system an extremely complicated system.
The following is the list of indirect taxes, currently in India:
- Goods and Services Tax (GST)
- Customs duty
- Excise duty (on Petrol, diesel, natural gas, alcohol)
- Stamp duty
- Entertainment tax
- Central Sales tax (relevant for certain goods only)
- Securities Transaction Tax (STT)
Types of GST
- Central Goods and Services Tax (CGST) , as the name implies, is collected by the central government.
- State Goods and Services Tax (SGST) is collected by the state government.
- Union Territory Goods and Services Tax is the amount of tax levied under the UTGST is taken by the authorities of the Union territory in concern.
- Integrated Goods and Services Tax (IGST) is handled by the central government. The tax collected by the central government, on the other hand, is distributed amongst the state governments in accordance with the agreement.
Advantages of GST
GST was India’s biggest tax reform since independence, encompassing several of the indirect taxes. In any regard, the most significant advantage of GST would be that it opened up and homogenized the market. In contrast to the former indirect tax scheme, which made state borders obstacles, this supported unrestricted movement of commodities and/or services. Furthermore, GST has aided in the reduction of tax avoidance in India, as all GST compliance is completed online.
Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org
Source: https://ecis2016.org
Category: Must Knows
