GST Full Form
GST Full Form – What is GST ? It is an indirect tax that has to be given on the supply of goods and services. GST tax is collected at the point of consumption and not at the point of origin.
|Goods and Services Tax|
GST Tax : A Comprehensive Guide for You and Your Business
GST stands for Goods and Services Tax. It is an indirect tax that has to be given on the supply of goods and services. GST tax is collected at the point of consumption and not at the point of origin.
What is GST?
GST is a new tax regime, that has not been in place for last almost a decade. The law was approved on August 2nd, 2017. GST is being implemented in India from July 1st, 2017. A majority of businesses will be exempted from paying GST from the time they start doing business. GST will provide for a single tax on goods and services. It will replace a plethora of central and state taxes levied on goods and services at different stages of their journey from producers to the consumers. GST will replace Central excise duty, sales tax, Value Added Tax and service tax. This is the most important tax regime since Independence. Also Read: GST Day: Here are the highlights you should know about Read this for more information Why GST is so Important?
How GST is collected :
The tax is collected at the time of supply of goods and services. The seller of the goods and services pays tax at the time of supply, but the purchaser of the goods and services cannot evade this tax. GST is collected in the nature of tax credits. So, to take the tax credit, the buyer has to pay tax to the government. What are the main taxes applicable under GST? GST rate on commodities: All the commodities or goods or service are taxed under GST. Under GST, the tax rate for a commodity is on the basis of its composition and its class. An example would be: Cloth: There is a five percent GST on clothes of fabric woven yarn and sewn textile materials. Organic food: There is a 12 percent GST on organic food.
GST Tax Rates :
GST tax is levied on a supply of goods or services or both in equal parts and comprises of tax levied at various rates depending on the type of good and service supplied and the source of supply. Below are some of the GST tax rates you should know: 5% tax levied on account for taxable supplies made from a registered place of business. In addition to this, there is 5% central excise duty plus a state GST. These taxes are levied at the time of supply. At the same time, there is a service tax of 18% which is levied on inter-state supplies of services and intra-state supplies of goods. GST Vs Customs Duty The Goods and Services Tax (GST) differs from excise duty and custom duties.
GST paid by Businesses :
GST tax collected by Businesses is generally in the form of excise duty. An excise duty levied is normally levied for buying or producing goods. The difference between excise duty levied and the purchased good is called the exemption amount. When the excise duty is levied, a mark-up is added for the tax paid on the original goods. The entire mark-up of excise duty is called compensation cess. The amount for purchase of purchased good is always less than the compensation cess amount. Therefore, the GST paid on purchase of goods or services always less than the purchase cost of the goods. The compensation cess is paid to the government by Businesses as GST. This compensation cess is equal to the tax that will be levied by the government on the supply of goods and services.
GST paid by Consumers :
GST is paid on the output, while the input GST is paid by the retailer. This is the most common tax. Goods that are not manufactured are manufactured out of Finished Goods and Fitted Parts. Fitted Parts are manufactured goods that are intended for sale to the final consumer. Services that are not supplied with goods GST is paid by the retailer when the product is sold. There are no taxes levied on the services provided to the end customer. A telecom service is a good example of an indirect service that is not manufactured by the operator. GST is not levied on a home cleaning service Services provided by a carpenter for the construction of a house are exempt from GST. As is the case with a dentist providing a service to the end customer.
FAQs about GST :
1.GST came into effect from 1 July 2017.
2.Every business that has turnover over INR 20 lakhs has to be registered for GST.
3.Post-GST, most goods are expected to be in the 18% tax range.
4.The tax was strongly opposed by the opposition party.
5.India adopted a dual GST model, meaning that taxation is administered by both the Union and state governments.
6.The GST is imposed at variable rates on variable items.
- State VAT
- State Cess
- Purchase Tax
- Central Excise Duty
- Additional Duties of Excise (Goods of Special Importance)
- Service Tax
- Central Sales Tax
- Entertainment Tax
GST is a common man’s tax and one of the largest tax reform in India. The law was enacted in the year 2006 and went into effect from 1st April, 2017. GST will add a layer of flexibility to India’s tax system and ensure that everything gets tax paid. GST is expected to be one of the biggest tax reforms India has seen.