The Goods and Services Tax is an indirect tax

The Goods and Services Tax (GST) is an indirect tax imposed on the supply of goods and services. The Goods and Services Tax Act was passed in Parliament on 29 March 2014 and GST tax came into force on 1 July 2017. GST brings equality in taxation and has replaced many indirect taxes in India (a tax imposed on goods and services rather than income or profits).

What's the GST

The Goods and Services Tax is a comprehensive, destination-based tax that will have a multi-level tax levy on every value addition. (GST) To understand GST, some things need to be simplified.

This tax is destination-based

This means GST tax is collected on the subject of consumption irrespective of the good location related to manufacturing, production, or supply.

It is multi-stage or multi-stage

GST is levied at every stage of the supply chain in India, that is, from raw material purchases to manufacturing, and sales to wholesalers, retailers, and end-users.

Value-added levy

Each monetary value added to the product or service is taxable under GST, at each stage until the final sale to the consumer is completed.

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Why was GST implemented?

GST (Goods and Services Tax) was adopted to improve the collection of taxes at each nodal point and to integrate the country through the same GST tax-rate. By removing the long list of indirect taxes levied individually by the states and the Center, the Indian economy will also get a significant boost. GST was implemented after the government passed these four bills: Goods and Services Tax Bill, Integrated GST Bill, Compensation GST Bill and Union Territory GST Bill.

What tax has to be paid under GST

Being a federal country, both the Central Government and the State Government have powers to levy taxes. Under the GST regime, both the Center and the state have the power to levy GST. Therefore, India has to pay two main taxes under GST:

1. Central GST (CGST)

2. State Level GST (SGST)

Simple Structure of G.S.T in India

These two main parts of GST are divided, one of which is CGST - Central Goods and Services Tax and SGST - State Goods and Services Tax which is levied by the State Government. G. in simple language this. T. has been implemented at two main levels - one at the central level and the other at the state level. The GST is broadly divided into four parts:

I. G. S. T. - Integrated Goods and Services Tax

I. G. this. T. (IGST) is a tax levied by the Central Government on the supply of goods and services outside the state, also known as inter-state tax or inter-state tax. These taxes are collected by the central government.

C. G. S. T. - Central Goods and Services Tax

The full name of CGST is Central Goods and Services Tax (Central Goods and Services Tax) which is levied by the Central Government on the supply of goods and services within the state. This is also called the intrastate tax. These taxes are collected by the central government.

S. G. S. T. - State Goods and Services Tax

SGST is the full name of State Goods and Services Tax (State Goods and Services Tax). These taxes are levied by the state government on the supply of goods and services within the state. This tax is also called intrastate tax and these taxes are collected by the state government.

U. T. G. S. T. - Union Goods and Services Tax

The full name of UT GST is Union Territory Goods and Services Tax (Union Territory Goods and Services Tax). These taxes are taxes levied by the Union Territory Government or Union Territory Government on the supply of goods and services within the state. This tax is also known as state tax. These taxes are collected by the union government. However, there is a possibility that people should not get confused in terms of transactions between two persons from two different states and there is difficulty in determining arrears of taxes between two states, hence the Center will impose IGST. In simple language, now, the Center will link the state's share of GST to state IGST.

C. G. S. T. and I.G. S.T. What are the main differences in GST.

CGST - Central Goods and Services Tax is the coordination of all taxes which are levied by the Central Government. At the same time, SGST - State Goods and Services Tax has replaced all those taxes which are levied and collected by the State Government. IGST - Integrated Goods and Services Tax is the total of CGST and SGST. CGST and SGST are imposed on the supply of goods and services within the state, whereas IGST is imposed only when supplies are made outside the state.

Which main principles is the GST Bill based on

The Goods and Services Tax ([GST](https://www.e-startuprajasthan.com/gst-registration)) was activated to reform the entire taxation system in India. The purpose of the GST bill is to offer a simplified system for taxpayers, both consumers and suppliers. According to the then Finance Minister of India, Mr. Arun Jaitley, this simplified system will also help in keeping inflation under control. In addition, GST addresses the lack of uniformity in various taxes applicable to different goods and services in different states. By deciding the rates of GST on goods and services based on which category they fall into, GST has made taxation more consistent and simple.

GST follows the 4-level tax slab as the government found it unfair to impose uniform tax rates on both essential goods and luxuries. Thus, the GST tax slab applicable to goods and services in India is 5%, 12%, 18%, and 28%. Regular items such as food grains, eggs, jaggery, salt, bread, etc., for mass consumption, do not attract any taxation. Commonly used items such as soap, tea, sugar, spices, and toothpaste are taxed at 12% -14%, which is less than 20% of the earlier rate.

Features of GST: Under GST, stage of goods production and payment of tax:

To understand GST, it is also necessary to understand its different stages.

• Raw material purchase

• Commodity production

• Sales to Warehouse / Wholesaler

• Sale to retailer

• Sale to end-user

GST is levied in these five levels. Think of these five levels as if you are a manufacturer yourself and you have to produce clothes. For this, you will have to buy a thread. This shopping is the first phase in these five levels. This thread will be converted into the fabric after manufacture. So this means, when a fabric is woven, the value of the yarn increases. This is just the second phase. Next, when you sell it to a warehousing agent who adds labels and tags to each fabric. In this third phase, there is a further enhancement of value. The warehouse then sells it to a retailer who packages each clothing separately and invests in marketing. By investing in this way, now in the fourth stage, the value of this fabric increases further. GST will be levied on this value addition.

GST has been called destination-based as GST will be levied on all transactions that occur during this entire production process. Previously, the center levied excise or excise duty on government manufacturing during production and sales. In the next stage, the state would add VAT when the item was sold. There was a VAT at every level of sales. However, at present, GST is levied at every level of sales. Suppose the entire manufacturing process is taking place in one state and the final sale in another state. Why KST is levied at the time of consumption, hence the state of production will get revenue in the production and warehousing stages but when the product goes out for sale from that state and reaches the end consumer in another state the producing state will not get revenue. The government of another state will earn revenue on the final sale, because it is a destination-based tax, so the GST is collected at the final destination of the sale.

Importance, Profit, and Loss of GST

While GST has brought some benefits to India, there have been some losses. The purpose of GST is to reduce the number of indirect taxes and to consolidate the Indian market. If it was implemented for the Middle Way in the last financial year (financial year), but it has its own fair share of supporters and critics.

The significant benefits that India has received from GST:

The GST improves Indian taxation and represents the country as a common national market. It helps in making Indian goods, goods, and services more competitive in global as well as local markets.

In addition, GST helps upgrade the current taxation system by removing a comprehensive list of direct taxes from the system. Simplifies the taxation system with only three parts of the Goods and Services Tax (GST): CGST, SGST, and IGST.

Let us take a detailed look at the profit and loss associated with GST.

GST benefits in India

GST has combined indirect taxes together, simplifying taxation for service and goods trade.

Experts believe that GST reduces the cost of products and services in the long run and eliminates wider tax implications. This is because the cascading effect of a range of VAT and taxes is now erased.

Service provider companies with a turnover of less than Rs 40 lakh are exempted from paying GST. In the case of North-Eastern states, the limit is 20 lakh rupees. This protects small businesses from lengthy taxation processes.

Under the GST taxation process, companies with a turnover of up to Rs. 45 lakh can benefit from composition schemes and pay only 1% tax on their turnover. This will help them to follow the simplified taxation process.

GST also works corruption by reducing sales without receipts.

GST reduces the need for small companies to comply with excise, service tax, and VAT.

GST brings accountability and regulation towards unorganized sectors like the textile industry.

With GST replacing many state and central taxes, the tax collected is likely to be distributed throughout the country, providing funds for development to developing or under-leased pockets in India.

GST has reduced taxes on some goods by 2% and others by 7.5%, such as smartphones and cars.

GST brings uniformity in the taxation process and allows for centralized registration. Small businesses do not have the resources to hire tax experts. This allows them to file their I-tax returns every quarter through easy online technology. This reduces the multiplicity of taxes.

GST reduces logistics costs by eliminating border taxes and resolving check-post 

discrepancies. A 20% drop in logistics costs for non-bulk goods is clearly an expected result.

The coming of GST indicates a positive impact on India's GDP. It is expected to grow at least 40% in the next few years.

The implementation of GST reduces the chances of tax evasion altogether.

Here is a list of earlier direct taxes which are no longer applicable:

- Central Excise (Central Excise Duty)

- Excise (Duties of Excise)

- Additional Duties of Excise (Additional Duties of Excise)

- Additional Duty of Customs (Additional Duties of Customs)

- Special Additional Duty of Customs (Special Additional Duties of Customs)

- Cess

- State VAT

- Central Sales Tax

- Purchase Tax (Purchase Tax)

- luxury tax

- Entertainment tax

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- Taxes on advertisements

- Taxes on lottery, betting, and gambling

Loss from GST in India

The cost of large software purchases that can aid the GST filing process leads to higher operating costs for many businesses.

GST has given rise to complexity for many business owners across the country. SMEs with a total income of Rs 65 lakhs can avail the composition scheme, pay 1% tax on turnover and follow fewer complexes; However, they cannot claim credit for input tax under the agreement.

GST has come under criticism for being called 'Tax Disability Tax' as it now imposes taxes on items like Braille paper, wheelchairs, hearing aids etc.

Complications in taxation for products have seen manufacturers suspend their reward programs, affecting consumers.

Within the financial sector, the GST transaction fee has increased from 15% to 14%.

With GST, insurance premiums have become more expensive.

The petrol rate does not come under GST, which is against the ideals of integration of goods.

Due to the impact of GST on the real estate market, its price increased by 6%, which in June 2016, after the GST application, led to a 12% drop in real estate demand. However, this may be the effect of a short-term trend.

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