GST (Goods & Service tax) bill was passed by the PM Narendra Modi, last year in Lok Sabha, and it goes under regulation from next month. Every individual is entitled to register themselves under new act, starting from july, 2017.
For those who don’t know how to file for GST online, don't worry, you have all the time in the world (govt is accepting late registration for two months).
And all those who are still ving deep in sorrow from India’sChampion's trophy debacle, and have heard but have no idea about GST, we’re here for you.
Below are six easy steps that shall help a novice in understanding about GST.
P.S – Most important – For those who spend their weekend in restraints and bars, bills are going to hurt less with the arrival of GST.
6 Easy Steps to Understand GST
1) What is a TAX?
An individual is imposed tax by the government on doing business, income profit, cost of goods, for providing services, and the transactions. This money in form of tax is used by the government in public interest to provide infrastructure, roads, transportation, etc. The money is also used to pay off the national debts.
2) Direct and Indirect Tax
There are two types of taxes a person pays – direct and indirect.
Direct taxes are those taxes whose liability can’t be shifted to different person or entity. You are the sole bearer, i.e – income tax, corporate tax, etc.
Indirect taxes are those taxes whose liability can be shifted to a different entity or person, like for example restaurants charge service charge or VAT on the bill.
3) What is GST?
Goods & Service Tax is the newly passed taxation system that shall replace the existing indirect taxes and merge into a single taxation system. The point of interest for GST is indirect taxes, which it shall replace.
4) Current Indirect Tax Infrastructure
Let’s understand it with an example. A good is first raw material, which is processed by manufacturer. He then adds value to it and collects taxes, and then passes to distributor.
The same cycle continues uptill the product reaches to the public through the retailer. At this stage the cost to customers almost doubles with what it was at the time of manufacturing due to certain duties (taxes) imposed to them.
5) Indirect Tax Infrastructure After GST
Under GST the manufacturer will pay a certain amount of tax on his profit as GST and then at each level the tax is fixed amount under GST. This shall affect the final prices that reaches the consumer, and is expected to go less for few items, and high for a few.
6) What are CGST, SGST, and IGST?
CGST (Central Goods & Service Tax): Areas where the sole power to collect taxes lie to the centre.
SGST (State Goods & Service Tax): For within state trade, taxes are to be paid to the state government.
IGST (Inter-State Goods & Service Tax): Taxes to be paid for interstate trade.
We hope this shall help in knowing GST better. It goes under regulation from 1st of July 2017.