Wednesday, 21 March 2018

A Brief Introduction to Goods and Services Tax in India

On July first, 2017, India moved to another tax framework – one that goes for changing the whole country into a single market. On the off chance that you are new to GST and quick to know how this new expense will influence you and your business, this section will help you to comprehend the basis of the 'Good and Simple Tax'.

What is Goods and Services Tax (GST) in India? 

GST is an Indirect Tax which has replaced numerous Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act happened on first July 2017.

GST is one indirect tax for the whole country.

The journey of GST in India 

The GST Journey started in the year 2000 when an advisory group was set up to draft GST Law. It took quite a while after that for the Law to develop. In 2017 the GST Bill was passed in the Lok Sabha and Rajya Sabha. On first July 2017 the GST Law came into drive.

Benefits Of GST 

GST will essentially expel the Cascading impact on the sale of Goods and Services. Expulsion of falling impact will specifically affect the cost of products. The cost of products should diminish since the charge of assessing is wiped out in the GST administration.

GST is additionally predominantly innovatively determined. All exercises like enrollment, return recording, application for discount and reaction to seeing should be done online on the GST Portal. This will accelerate the procedures.

What are the components of GST? 

There are 3 charges appropriate under GST: CGST, SGST and IGST.

CGST: Collected by the Central Government on an intra-state deal (Eg: Within Maharashtra)

SGST: Collected by the State Government on an intra-state deal (Eg: Within Maharashtra)

IGST: Collected by the Central Government for between state deal (Eg: Maharashtra to Tamil Nadu)

In most cases, the tax structure under the new regime will be as follows:
TransactionNew RegimeOld Regime
Sale within the StateCGST + SGSTVAT + Central Excise/Service taxRevenue will be shared equally between the Centre and the State
Sale to another StateIGSTCentral Sales Tax + Excise/Service TaxThere will only be one type of tax (central) in case of inter-state sales. The Center will then share the IGST revenue based on the destination of goods.

Tax Laws before GST 

In the pre-GST administration, there were numerous roundabout duties collected by both state and center. States primarily gathered charges as Value Added Tax (VAT). Each state had an alternate arrangement of guidelines and directions.

Interstate sale of goods was taxed by the Center. CST (Central State Tax) was material if there should be an occurrence of an interstate offer of products. Other than above there were numerous backhanded duties like excitement assessment, octroi and nearby duty that was exacted by state and center.

This prompt a great deal of overlapping of tax imposed by both state and center.

For instance, when products were made and sold Excise Duty charged by the inside was charged by the middle. Far beyond Excise Duty, VAT was likewise charged by the State. This prompt an expense on imposing otherwise called falling impact of duties.

The following is the list of indirect taxes in the pre-GST regime:

  • Central Excise Duty
  • Duties of Excise
  • Additional Duties of Excise
  • Additional Duties of Customs
  • Special Additional Duty of Customs
  • Cess
  • State VAT
  • Central Sales Tax
  • Purchase Tax
  • Luxury Tax
  • Entertainment Tax
  • Entry Tax
  • Taxes on advertisements
  • Taxes on lotteries, betting, and gambling

What changes has GST gotten? 

In the pre-GST administration, tax on tax was calculated and paid by every purchaser including the final customer. This expense of imposing is called Cascading Effect of Taxes.

GST keeps away from this falling impact as the tax is computed just on the esteem include at each phase of exchange of proprietorship.

GST will enhance the accumulation of assessments and also help the advancement of Indian economy by evacuating the backhanded duty hindrances amongst states and incorporating the nation through a uniform expense rate.

If you want to know more about GST news and updates then keep reading our blog and share with your friends.

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