Everything That You Need To Know About GST
Goods and Services Tax (GST) is a form of indirect tax. It is proposed to come into force from 1st of April 2017. The main intention of introducing the GST is to remove the cascading effect of taxes which basically means taxes on taxes. Cascading effect wasprevalentin VAT (Value Added Tax), Central Sales Tax(CST) and excise duty. Once the GST comes in effect all other forms of indirect taxes like VAT, CST, excise duty will be removed from the picture.
Who levies it?
The GST is levied by both central and the state government depending upon the different wings as explained below.
There are 3 wings of GST :
- CGST – Central Goods and Services Tax
CGST is imposed and collected by the central government. The goods which are sold between 2 different states comes under this. This effectively replaces CST.
- SGST – State Goods and Services Tax
SGST is imposed by the state government. The local sales happening within the state comes under this wing. This can be seen as a replacement of state VAT.
- IGST – Integrated Goods and Services Tax
Other sales which are outside the ambit of CGST and SGST come under the IGST. This can be referred to as a residual list.
What benefits can we expect from GST?
- No room for confusions
The whole of India would unanimously come under GST. GST rate is fixed at 18% for all goods and services. This uniform rate will remove all the confusions which are currently happening because of variable rates, especially in VAT.
- Ease of calculations
For businesses which undergo a lot of transactions and sales in just one day in awide range of products, theapplicability of a single uniform leads to easier tax calculations.
- Price reduction in various goods and services
We can expect a fall in the prices of many goods and services. The GST will have a positive impact on many goods and services. To put in simpler terms, the goods which are in a higher tax bracket now will be reduced to18%. The electronic goods can expect a lot more benefits in particular.
- Less time-consuming
Unlike service tax which is complicated to understand due to its negative list or mega exemption list, the GST has lesser complications making it a quick process. We no longer need to check if the service is a taxable service or not like in service tax. Thus, half the time is reduced.
- Boom in government revenues
There is no escapism from GST. It is a compulsory tax and no one can escape it due to the system in force. The government revenue is thus bound to increase once GST comes in force.
- Fewer documentations and statutory formalities
Unlike the service tax or CST, the GST will involve very fewer documentations and legal formalities. The process of paying indirect taxes is made much easier and quicker with the advent of GST. This will also lessen the burden of paying heavy fees to expertise professionals.
Thus the introduction of Goods and Services Tax is no less than a boon to the world of indirect taxes making all confusions and complications vanish!
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