The Goods and Services Tax (GST) is a tax on goods and services. It is an indirect tax that has mostly superseded many other indirect taxes in India, such as excise duty, VAT, and services tax. The Goods and Service Tax Act was passed by Parliament on March 29, 2017 and into effect on July 1, 2017. To put it another way, the Products and Service Tax (GST) is a tax that is levied on the provision of goods and services. In India, the Goods and Services Tax (GST) is a multi-stage, destination-based tax that is levied on every value addition. GST (Goods and Services Tax) is a single domestic indirect tax law that applies to the entire country.
How GST works:
- Manufacturer: The manufacturer is responsible for paying GST on the raw materials acquired as well as the value added to the product.
- Service Provider: In this case, the service provider must pay GST on both the price paid for the product and the value added to it. The manufacturer’s tax, on the other hand, can be deducted from the total GST that must be paid.
- Retailer: The retailer will be responsible for paying GST on both the product acquired from the distributor and the margin added. The retailer’s tax, on the other hand, can be deducted from the total GST that must be paid.
- Consumer: GST must be paid on the product that has been purchased.
Types of GST
The following are the four different forms of GST:
a) The Central Goods and Services Tax (CGST) is levied on intra-state product and service sales.
b) SGST (State Goods and Services Tax) is a tax levied on the sale of goods and services within a state, similar to CGST.
c) The Integrated Goods and Services Tax (IGST) is levied on interstate goods and service transactions.
d) Union Territory Goods and Services Tax (UTGST) is levied on goods and services supplied in any of the country’s Union Territories, including the Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. The UTGST is levied in addition to the CGST.
What are the advantages of the GST?
GST makes the taxes levied on the supply of goods and services more transparent. When a person buys something, they only see the state taxes on the product label, not the various embedded tax components. The removal of entrance obstacles along state borders will make it easier to do business under the GST. This new indirect tax system is intended to enhance tax compliance, increase revenue receipts for both the federal and state governments, and promote GDP growth by 1.5-2 percentage points. The elimination of tax cascading will result in lower tax burdens on a variety of items.
Who is Eligible for GST?
- The entities and persons listed below must register for the Goods and Services Tax:
- Aggregators of e-commerce
- People who sell through e-commerce aggregators.
- Taxpayers who use the reverse charge mechanism to pay their taxes
- Input service distributors and suppliers’ agents
- Taxpaying non-resident individuals
- Companies with a higher-than-the-minimum-turnover threshold
- Individuals who registered prior to the implementation of the GST law1)
