🖈 Standard / 👨 by Shipyaari / 📅 April 20th, 2017 / 👨 CA Nayan Ratandhayara & Vishal Totla
All You Need to Know About Goods & Service Tax!
If you are confused by all the buzz going around in newspapers and news channels about Goods and Services Tax (GST) then read on as Shipyaari, one of the best ecommerce delivery solutions in India explains you about this complex topic in simple terms.
Goods and Service Tax –
Goods and Service Tax commonly known as GST is a type of indirect tax like VAT or service tax. The sole purpose of its introduction is to improve tax compliances and get rid of the existing collection of indirect taxes that are partial and suffer from infirmities like exemptions and multiple rates.
As soon as GST comes into effect, then all state-level¢ral taxes and duties on complete goods and services will be incorporated within an integrated tax comprised of two components: a central GST and a state GST.
Based on the tagline of GST “One Tax for One Country” its purpose is to unite the Indian market and will act as a common tax nationwide. GST will serve as a comprehensive and constant mechanism of tax credits. All the goods and services supplied by the manufacturer to the consumer will be covered by this tax. Under GST, the tax will only be imposed on value addition at each stage, with facility for the producer/seller at every stage to set off his taxes in contrast to the GST paid on his purchases. The end-consumer will thusbe eligible only for the GST charged by the former dealer in the supply chain, with set-off benefits at all the earlier stages.
List of taxes that will be replaced by GST –
1. Central Taxes –
o Central Excise duty
o Duties of Excise (Medicinal and Toilet Preparations)
o Additional Duties of Excise (Goods of Special Importance)
o Additional Duties of Excise (Textiles and Textile Products)
o Additional Duties of Customs (commonly known as CVD)
o Special Additional Duty of Customs (SAD)
o Service Tax
o Central Surcharges and Cesses so far as they relate to supply of goods and services
2. State Taxes –
o State VAT
o Central Sales Tax
o Luxury Tax
o Entry Tax (all forms)
o Entertainment and Amusement Tax (except when levied by the local bodies)
o Taxes on advertisements
o Purchase Tax
o Taxes on lotteries, betting, and gambling
o State Surcharges and Cesses so far as they relate to supply of goods and services
Benefits of GST to Indian Economy –
1. Beingsupported by an all-inclusive IT system, it will neutralize the business operations across the nation and will make the processes like registration, filing returns and paying taxes easier for the businessmen.
2. The complete burden of hidden taxes on most of the commodities will fall creating a transparency in pricing of goods.
3. Taxpayers with a collective income of up to Rs. 10 lakhs will be exempted from paying tax.
4. The online taxation system will reduce the costs for tax collection by the government thus increasing the revenue generated.
How does the government plan to administer GST?
Since India has a federal structure, GST will be administered in two stages, central level and state level. GST shall be levied on the supply of all goods & services. Cross utilization of input tax credit shall not be allowed and the input tax credit of a respective stage shall be allowed to be set off from that stage itself. So, cross utilization of central GST across goods and services shall be allowed, as shall be allowed for State administered GST.