GST- Goods and Service Tax is an all-inclusive taxation on the sale, production, and intake of commodities and service at a countrywide level. It is a levy on the merchandises and services with value added at every phase. GST is inclusive of numerous state and central level secondary taxes. It overpowers the negative aspects of the existing tax method. Let’s know more about GST. It will substitute in the following taxes:
1. Taxes presently imposed and collected by the Central Government(CGST)
- Excise duty
- Surplus Excise duty
- Excise duty under medicinal and toilet preparation Act
- Service Tax
- Added Custom duty generally is known as a countervailing duty (CVD).
- Special additional duty (SAD)
- Education Cess
2. Taxes presently imposed and collected by the State Government (SGST)
- State VAT
- Central Sales Tax
- Entertainment and Amusement Tax levied by states
- Luxury Tax
- Tax on lottery, betting, and gambling
- Entry tax other than for local bodies(Octroi)
Why GST in India?
Worldwide, GST is followed in almost 150 countries. Maximum countries have a unified GST system. Some countries have a dual system which India is going to implement from 1st of July this year. GST is being presented in India mainly because of 2 reasons:
- The present unintended tax arrangement is alive with insecurities because of numerous rates.
- Because of manifold rates, there are numerous forms.
- GST the tax difficulty in the fundamental tax scheme.
Advantages of GST
- Transparency in the Taxation system.
- Standardized Tax system throughout India.
- Reduces regular tax worries.
- Reduces the corruption.
Disadvantages of GST
- It is believed that GST is single tax system but in actual it is dual tax system in which state and central jointly collect the separate
- Most of the dealers have not been covered under central excise tax but only pay VAT within the state. After the implementation of GST, each and every dealer will need to pay “Central Goods and Service Tax”.
Goods and Service Tax explained with an example:
As shown in the example above, the tax which is paid on the selling inside the state has the right compared to the payable tax on the outer side of the state in the GST, which currently is not there in the tax regime.
The credit of CGST can’t be taken in comparison to SGST and the credit of SGST can’t be taken in comparison to the CGST. Both the credits can be taken against IGST.