What is GST(Goods And Service Tax)?Its benefits,Doubts cleared 2017-18

What is GST

GST (Goods And Service Tax) is one of the major tax reforms that happened in India to create single Taxation system in india .GST is an indirect tax which has implemented in India from 1st of July 2017.Previously a variety of taxes namely VAT, sale tax ,excise duty etc were prevalent in India;But after implementation of GST all Taxes like VAT,Sale taxes etc have been abolished And Single tax in the form of GST has been implemented in all states of India excluding Jammu and Kashmir.

DIFFERENCE BETWEEN GOOD AND SERVICES: SUPPOSE you have a coffee  machine and you supply coffee to the customers.Here coffee machine will be  GOOD and supply of coffee to the customers will be SERVICE.

SIMPLICITY OF GST: If you believe or not GST has made some things very simple  for the common people.Firstly it has speed up the process of transportation.As all you know before implementation of GST  transportation of goods used to take many days  to reach from one state to other state due to tax paying process at the border of each state.

For example trucks carrying goods from Uttar Pardesh to Bihar had to pay state tax to Bihar govt. while waiting for long hours in lines.It drastically slowed down the process of quick transportation of goods.

So GST has made it very simple. Now all transporters will pay single GST tax and thus Goods will be in hands of people within prescribed time.

Complications of GST: IT is pertinent to note here that Despite the fact that GST has made tax system quite simple and clear but due to some of its complications small traders,small business men,Shopkeepers have started agitating across India.They think that they have to file three GST  returns for the transactions they will make in single month.Thus in whole year they will have to file 37 GST returns including Annual GST return.Which is the toughest task to do.

Benefits of GST

  • increase the income of state as well as center govts. and hence increase india’s GDP rate.
  • make india a nation where a single tax system will prevail.
  • destroy complicated tax collecting system.
  • less tax will be levied on manufactured things as compared to old tax system where vat,excise duty etc. were collected and hence increases the price of a commodity.
  • Fast transportation of goods like vegetables,fruits which are prone to perish.

Drawbacks of GST:

  • Multiple returns have to be filed for the whole year.That is 37 return have to be filed by all business men.
  • uncertain and fluctuating prices of things.
  • small industries will not bear the burden of GST,due to its complex tax system.
  • Services of goods will increase at an alarming rate.

TYPES OF GST:

  1. CGST(Center Goods And Services Taxes): This GST will be collected by center govt.for transaction within states
  2. SGST(State Goods And Services Taxes): This GST will be collected by state govt. for transaction within states
  3. IGST(Integrate Goods And Services Taxes): For inter state GST transaction.

CHEAPER THINGS UNDER GST:

  • SUVS,SMALL CARS,two- wheelers  will be cheaper.
  • cost of paints,cement will diminish.
  • Wood furniture,ply-board.
  • computer, refrigerator.
  • price of movie tickets.
  • DTH satellite TVs.

WHAT WILL BE COSTLIER:

  • Sin goods like tobacco,cigarettes etc.
  • Rate of eating in restaurants,staying in hotels.
  • Buying things especially shoes,bags,electronics online on e-commerce sites will be costlier under GST system.
  • Mobile phone calls.
  • Airlines and Railways Tickets rate will increase.
  • Textiles and Branded jewellery.

TAX SLAB RATES UNDER GST: 5%,12%,18% and 28% slab rates will be levied as prescribed by Govt of India.

EXAMPLES TO EXPLAIN CGST,SGST and IGST:

FIRST EXAMPLE for CGST AND SGST:

Suppose AMAN has a Restaurant in state PUNJAB and a customer orders lunch.The customer, suppose  eats food of price RS 2000.Now how  GST will be levied?

Now as you know if  transaction is made within state then two types of GSTs will be levied,one is CGST and other is SGST.

Further CGST will be transferred to center govt. and SGST will be transferred to the  state in which transaction is made.

Suppose in this particular case SGST rate in PUNJAB is 16%  and similarly CGST rate is 16% also.Now AMAN owner of this particular Restaurant in PUNJAB will collect both SGST @ 16% and CGST @ 16% FROM THE CUSTOMER.

Now 16% of 2000 for CGST is RS 320 and 16% of 2000 for SGST is also Rs 320.So customer wil have to pay  Rs 2000+320+320=2640. Now Aman will deposit RS 320 to center govt. and Rs 320 to  state govt PUNJAB.

SECOND EXAMPLE for IGST: Suppose a manufacturer from UTTAR PARDESH sells his goods to some trader in WEST BENGAL.As you know IGST will be levied for transaction made from one state to other state and such IGST collected is transferred directly to center govt.

Suppose manufacturer from UTTAR PARDESH sells goods of rs 1 lakh to  some trader in WEST BENGAL.Also suppose IGST([email protected] 9%+CGST @ 9%) rate is 18%.

So 18% of rs 1 lakh is rs 18000.Thus manufacturer from UTTAR PARDESH will collect rs 100000+18,000=1180000 from some trader in WEST BENGAL and will deposit IGST rs 18000 to the center govt.

ALSO READ    HOW TO REGISTER FOR GST

Kuldeep Singh
 

is a professional blogger,teacher and income tax expert

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