Goods And Services Tax: What Is It?
The Goods and Services Tax (GST) is a massive indirect tax modification/reform implemented in India to carry forth the substantial modifications in the tax framework. GST was implemented for its capacity to streamline tax enforcing structures and eliminate the many complexities generally linked with other pre-GST indirect taxes, like Excise Duty and VAT. GST is expected to eliminate all the instabilities and anomalies from the nation’s economic system, trying to bring in high stability in India ‘s financial hierarchy as per analysts and critics.
Benefits Of GST
Speaking of the advantages of GST which fuelled the growth of the economy, we have seen significant changes and significant progress by India in multiple areas upon its amendment. Listed Below are some of the most important benefits of GST implementation
- GST has helped bring harmonious relationships and regulatory oversight to unorganized industries such as manufacturing and textiles.
- Takes away the cascading structure that came into existence before when a customer would have to pay taxes on a tax that has already been paid.
- It is also anticipated that due to the enormous demand for products, the supply and substantial manufacturing will soar significantly high.
- Prevents fraudulent acts
- Removes multiple taxes as everything is absorbed into one.
- Simplification of tax policies
- The cost of manufacturing goods is lowered significantly because of the tax burdens being reduced.
What Are The Different Types Of GST?
The nation has managed to bring forth with three main types of the very same after the introduction of the Goods and Services Tax systemic change. We have SGST or State Goods and Service Tax, IGST or Integrated Goods and Service Tax, and CGST or Central Goods and Service Tax, among others. However, apart from these three primary types of GST there also UTGST or the Union Territory Goods and Service Tax, only meant for Union Territories.
State Goods And Service Tax
Under this case, the state authority alone charges and takes the taxes from their individual states while the Center retracts from doing it entirely. All state and local taxes levied during the pre-GST period, like Luxury Tax, State Sales Tax, Entertainment Tax, etc., have all been absorbed into the States Goods And Services Tax (SGST) Act 2017. In the event of an intra-state (in-state) purchasing of products and services, the consumer is charged equivalent percentages of both SGST and CGST. Although the government receives the first, the latter is transferred to the corresponding Authority of the State.
Central Goods And Service Tax
The CGST Act 2017, is implemented to enable the central government levy tax and collect tax on the procurement of products and services inside the state itself. With the exception of Jammu and Kashmir, the act applies to the country at large. The Act consists of 174 sections and 21 chapters, and 3 schedules that are specified as follows –
The classification of tasks as supplies without consideration
Activities/tasks to be regarded as supplies of products and services
Activities or transactions not regarded as supplies of both products or services.
Integrated Goods And Services Tax
IGST full form is Integrated Goods And Services Tax, which will be imposed on the consumer in the event of interstate distribution of products and services, i.e. when a trade takes place among two States or outside of the State. In other terms, if the position of the manufacturer and the location of distribution are in two separate places, the vendor will receive IGST from the purchaser. The IGST is also relevant in many other situations of interstate exchanges, like the export or imports of products and services, or even when the distribution of products and services are being handled by the Special Economic Zone (SEZ) unit. The revenue raised by the IGST will be shared among the state and central governments in negotiated percentages on the basis of a variety of factors.
Union Territory Goods And Services Tax
In corresponding to the major types of GST, there is a fourth type classified as UTGST. The UTGST Act is enacted in only certain areas of India, like the Union Territories, namely Delhi, the Andaman and Nicobar Islands, Daman and Diu, Chandigarh, Dadra and Nagar Haveli, Puducherry and Lakshadweep. The UTGST has characteristics similar to those of SGST and has been implemented to levy taxes on all transactions of products and services in Union Territories.