Ever since GST was introduced in our taxation system, it created a lot of buzz and chaos. Obviously changing to new structure and adapting to it require time consuming as well as facing too much complexities. Shifting from old structure to new is not at all easy. However the Indian accounts genius made the adaptation to the new system too smoother. They face the challenges in begining but did not took much time in understanding the basics and then building the different calculation upon it.
GST formerly known as Goods and Service Tax in India is an indirect tax.
Indirect tax is a type of tax that is passed on to another individual or entity
It is not directly levied on the income of a person. However it was levied indirectly on the consumption of different goods and services.
Know about GST.
GST was the new indirect tax structure replacing the old model. It is a unified tax system that brings both goods and services under one umbrella. The GST Rates on different goods and services are uniformly applied across the country.
It was introduced in the year 2006 and got implemented in the year 2017. This indirect taxation system went through multiple chain of amendments since its inception.
These form of Goods and Service Tax is levied on the final market price of goods and services manufactured and produced. There are two parties involved in it. The first one the consumers who are making purchases and the sellors who are selling the products
Consumers who are purchasing the goods or availing any services are required to pay this tax at the time of making payment of the final price. The final price includes the GST amount, with separately mentioned on the invoice.
The seller who involved in selling the product make the GST collection and pay it to the government by disclosing through their return filling either quarterly or annually.
Types of GST
Ever Since GST replaced the various old indirect tax, the new taxation system becomes more transparent and efficient. To make it more user friendly, it has broadly divided the taxatiom into 3 different types. The categorization is basically made on the basis on Inter-state transaction and intra-state transaction. The 3 types of GST are;
CGST stands for Central Goods and Service Tax. When the supply of goods or services takes place within a state then this type of tax is applicable. In other words it means that when the supplier and recipient are located within the same state then CGST is charged. The revenue collected from CGST goes to the central government.
SGST stands for State Goods and Service Tax Like CGST, SGST is also applicable for any transactions made within the same state. It is levied by the state government. The revenue collected from SGST goes to the state government.
so when a transaction made within a state, it asks for both CGST as well as SGST.
Rates of GST
With the new taxation system, the Government aims to consolidate all indirect taxes levied under one umbrella. Goods and services are categorized under different slab rates for tax payment and easy identification.
0.25% : It comprises of Jewellery items, stones cut and semi-polished.
5 % : There are various items covered under this rate it includes consumer as well as some industtial goods. Few items includes household necessity like spices, sugar, edible oil, coffee, tea, etc.
Services under this rate cover print media, tour operarion services etc.
12 % : The rate mostly comprises of processed food items along with IT related goods and accessories. Services include rail transportation, restaurant services, accommodation charges etc. .
18 % : This rate is applicable to items of industrial and capital goods. It also include hair oil, toothpaste, soaps, etc. Services include restaurant services decoration and catering services , outdoors events etc.
28 % : The highest rate of all the GST Rates. It comprises items of luxury usage like cars, high-end bikes, consumer durables, etc. It covers services like amusement facilities, entertainment events, services of AC 5-star hotels, sporting events, gambling, services of race clubs, online gaming etc.
Benefits of GST
The initial phases of GST implementation involves a lot of challenges. However with the passage of time it has simplified the taxation process. Ensuring clear tax distribution between State and Centre. It further clarifies the tax collection process. Further it ensures uniform taxation on inter-state transactions.
Every new changes needs some time to settle, and seems after trying and amending, GST has uniformly accepted within the country to make life easier for all the accountants and tax consultants.
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