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Tuesday, 26 June 2018

What is GST in India? Goods And Services Tax Explained.

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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. This Law replaced many indirect taxes in India.

History of GST

The goods and services tax is a comprehensive value-added tax (VAT) on goods and services. France was the first country to introduce this system in 1954. Today, it has spread to over 160 countries.
In India the GST was launched at midnight on 1 July 2017 by the President of India, Pranab Mukherjee, and the Prime Minister of India Narendra Modi. The launch was marked by a historic midnight (30 June – 1 July) session of both the houses of parliament convened at the Central Hall of the Parliament. Introduction of GST is considered to be a significant step in the reform of indirect taxation in India.

Advantages of GST

Goods and Services Tax will mainly remove the Cascading effect on the sale of goods and services. Removal of cascading effect will directly impact the cost of goods. Since Indirect Taxes is eliminated in this regime, the cost of goods decreases while some got increases. It is an technology driven where all activities like registration, return filing, application for refund and response to notice needs to be done online on the GST Portal. This will speed up the processes.

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Components of GST

Goods And Services Tax is also mainly technologically driven. All activities like registration, return filing, application for refund and response to notice needs to be done online on the
There are 3 taxes applicable under this system: CGST, SGST & IGST.
  • CGST: Collected by the Central Government on an intra-state sale
  • SGST: Collected by the State Government on an intra-state sale
  • IGST: Collected by the Central Government for inter-state sale
  • UTGST : Union territory GST, collected by union territory government
The list of Indirect taxes which was in action before GST:
  • Central Excise Duty
  • Duties of Excise
  • Additional Duties of Excise
  • Additional Duties of Customs
  • Special Additional Duty of Customs
  • Cess
  • State VAT
  • Central Sales Tax
  • Purchase Tax
  • Luxury Tax
  • Entertainment Tax
  • Entry Tax
  • Taxes on lotteries, betting, and gambling
  • Taxes on advertisement