The Government of India brought Goods and Services Tax to simplify indirect taxation. Before its implementation, there were numerous taxes on the supply of goods and services, including:
The multitude of taxes made the process increasingly challenging to comply with. However, the new multi-stage and destination-based tax has resolved this issue. Read on to learn more about what GST is and other details about GST.
In 2000, the Kelkar Task Force on Indirect Taxes proposed replacing the contemporary fragmented indirect tax structure with a unified GST regime. However, it was not until 2011 that a Constitution Amendment Bill was introduced in the Parliament for discussion. It could not be implemented then because of certain challenges flagged by states regarding compensation and other issues.
After further deliberations between the States and the Central Government, the latter presented a re-drafted bill in the Parliament in 2014. Here’s how the Constitution (122nd Amendment) Bill of 2014 was passed in the following years:
The Central Government introduced the new system with the following objectives:
Also Read: Impact of GST on Personal Loans
It is a multi-stage and destination-based tax. This means that it is applicable at every stage of the sale and paid by the consumer/buyer of the product. Here is an example to help you understand working of GST in India:
There are four types of goods and service tax in India and their applicability depends on the place of supply, transaction and sale. The four types of taxes are:
This is applicable when the supply takes place within a state and the portion goes to the State government.
This is applicable when there is an intra-state supply of goods and services. This portion goes to the Central Government.
This tax applies when the supply is interstate, i.e., between two states and this tax component goes to the states involved in the transaction.
This tax is applicable when the supply takes place within the Union Territories of India. The tax component is in addition to the CGST and SGST levied on the product.
The following tax-paying entities should register for GST:
Armed with this information, ensure that you pay the right taxes and file your returns as per the regulations to avoid penalties that can put your finances and business at risk.
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The following are the four types of taxes on goods and services:
The main purpose of this tax includes the following:
The buyer or consumer is liable to pay taxes on goods and services to the seller. The seller, in turn, remits the same to the government by filing a GST return.
The implementation of this taxation happened on July 1, 2017. It took nearly two decades for the law to evolve and come into force across the nation.
Check the registration limit for goods and services tax below:
Some of the main benefits include the following:
It is a document used in the process of paying the appropriate tax to the government. You will find the following information on it:
Since its implementation, it has resulted in a significant positive impact on the Indian tax structure and economy. With a simplified structure, compliance has become easier, and the tax burden has been reduced for the consumer. This has ultimately helped boost the nation’s economy.
It refers to the event wherein a supply of goods and services takes place. There are several conditions that a transaction has to meet for it to be considered as a supply.
There is no fee for registration. However, if there is a delay in filing the return, you are liable to pay a fine of up to ₹10,000. The amount may change as per the amendments to the law.
The full form of GST is Goods and Services Tax. As such, it refers to the tax levied on goods and services sold within the country.
References:
https://gstcouncil.gov.in