What is GST Tax in India this is what I am going to explain you with all the basics in Hindi
GST or Goods and Services Tax is a multistage destination based tax system which is applicable when any value addition to the goods or service is done.
Here multistage means starting from when raw material is procured till the time the product is delivered to customer.
Currently Indian tax structure is divided in two types
Where liability cannot be passed to somebody else.(Example – Income Tax)
where liability can be passed to someone else. Example VAT(Value Added Tax), Service Tax etc
When GST will be implemented three types of taxes will be applicable
- CGST : Revenue collected by central government
- SGST : Revenue collected by state government for Within state sales
- IGST : Revenue collected by central government for outside state sales
What is Input Tax Credit
To make sure that tax is levied only on the amount of value addition at each stage of the supply chain, credit for the taxes paid at the previous stage is granted.
Who is liable to pay GST
Businesses and traders with annual sales above Rs20 lakh are liable to pay GST. The threshold for paying GST is Rs10 lakh in the case of northeastern and special category states. GST is applicable on inter-state trade irrespective of this threshold.
Products not covering under GST
Crude oil, diesel, petrol, natural gas and jet fuel are temporarily kept out of GST. Liquor is kept out of GST as a constitutional provision and hence it would require an amendment to Constitution if it is to be brought into GST net.
What is the anti-profiteering mechanism : To prevent the possibility of prices going up and to make sure that the reduced tax burden on products and services are passed on to consumers.
Authority to be set up by the government will act on complaints of profiteering and direct a profiteering supplier to cut price, return the benefit of reduced tax burden to the buyer with 18% interest, or recover such amount if the buyer cannot be identified or doesn’t make a claim. A profiteering business could lose its GST registration, too.
Link to the GST Presentation
Benefits of GST
- Brings transparency on the taxes levied
- Improve the ease of doing business
- Improve tax compliance
- Boost revenue (Central as well state governments)
- Eliminate tax cascading effect as shown earlier
- Accelerate GDP growth rate
- Exports would be zero-rated only tax on Imports as per GST norms
Please watch the complete video for proper understanding. If you like my video please make me happy by sharing it on social media and subscribing my YouTube channel