GST

What is GST?

GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.

GST is one indirect tax for the entire country.

So, before Goods and Service Tax, the pattern of tax levy was as follows:

GST pattern of tax levy was

Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. Inter-state sales are chargeable to Integrated GST.

Now let us try to understand the definition of Goods and Service Tax – “GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.”

Multi-stage

There are multiple change-of-hands an item goes through along its supply chain: from manufacture to final sale to the consumer.

Let us consider the following case:

    Purchase of raw materials

    Production or manufacture

    Warehousing of finished goods

    Sale to wholesaler

    Sale of the product to the retailer

    Sale to the end consumer

Goods & Services Tax Law The Goods and Services Tax or GST is
scheduled to be launched on the 1st of July, and it is set to revolutionize the way we do our
taxes. But what is GST and how will it reform the current tax structure? And most importantly, why does the country need such a huge overhaul in its taxation policies? We answer these pressing questions in this in-depth article. When Goods and Services Tax is implemented, there will be 3 kinds of applicable Goods and Services Taxes: CGST: where the revenue will be collected by the central government SGST: where the revenue will be collected by the state governments for intra-state sales IGST: where the revenue will be collected by the central government for inter-state sales In most cases, the tax structure under the new regime will be as follows: Every business carrying out a taxable supply of goods or services under GST regime and whose turnover exceeds the threshold limit of Rs. 20 lakh/ 10 Lakh as applicable will be required to register as a normal taxable person. This process is of registration is referred as GST registration