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Introduction To Goods and Services Tax

Introduction Before moving into the concept of Goods and Services Tax, we need to first understand the two different kinds of taxes, which are: Direct Taxes: This type of tax is levied on the income of an individual. The higher the person earns the more he needs to pay the amount of tax Indirect Taxes: Indirect tax is not imposed directly on the income of the individuals. These are levied on the goods and services, therefore the cost of goods and services are increased. The amount of this tax i

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24 views

Introduction To Goods and Services Tax

Introduction Before moving into the concept of Goods and Services Tax, we need to first understand the two different kinds of taxes, which are: Direct Taxes: This type of tax is levied on the income of an individual. The higher the person earns the more he needs to pay the amount of tax Indirect Taxes: Indirect tax is not imposed directly on the income of the individuals. These are levied on the goods and services, therefore the cost of goods and services are increased. The amount of this tax i

Uploaded by

advocate tanwar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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INTRODUCTION TO GOODS AND SERVICES TAX

Introduction
Before moving into the concept of Goods and Services Tax, we need to first
understand the two different kinds of taxes, which are:

1. Direct Taxes: This type of tax is levied on the income of an individual. The higher
the person earns the more he needs to pay the amount of tax

2. Indirect Taxes: Indirect tax is not imposed directly on the income of the individuals.
These are levied on the goods and services, therefore the cost of goods and
services are increased. The amount of this tax is borne by the end customer, rich
and poor alike. Some of these are imposed by Central Government whereas some
are imposed by different State Government. This, in the end, makes the system of
Indirect Tax complicated.

What is GST?
The Goods and Services Tax was introduced with One Hundred and First
Amendment Act, 2016. It is levied upon the supply of Goods and Services. It has
replaced many Indirect Taxes in India in order to simplify the tax system. GST is
a comprehensive, multi-stage, destination-based tax that is levied on every value
addition. It is one indirect tax for the entire country. There are four major Acts which
are related to Goods and Services Tax, which are:

1. Central Goods & Services Act, 2017 – This Act came with an objective to make a
provision for levy and collection of tax on intra-State supply of goods or services or
both by the Central Government.

2. State Goods & Services Act, 2017 – Under this Act, many states are individually
covered. And all of them have their separate Act for the levy and collection of tax on
intra-State supply of goods and services in that specific state.

3. Integrated Goods and Services Act, 2017 – As per this Act, provisions for levy
and collection of tax on inter-State supply of goods or services or both by the Central
Government will be made.

4. Union Territory Goods and Services Act, 2017 – The aim of this Act is to make
provisions for levy and collection of tax on intra-State supply of goods or services or
both by the Union territories.
Advantage of GST
The main advantage of GST is that it has deducted the various numbers of indirect
taxes which were imposed on the goods and services. In other words, we can say
that the cascading effect (tax on tax) of the tax is removed will the help of GST.

Before the application of GST, the various taxes were charged on different stages of
the making of the Goods. For e.g. for making biscuits the main ingredients that are
needed are flour and sugar. Here, at this stage, the value of the biscuits will be
increased as the manufacturer will pay the VAT. After this stage, when the goods
are sold to the wholesaler, the tax is again added to the goods which ar e already
being taxed in the previous stage. Therefore, all the burden of the taxes is being
borne by the final customers.

There are certain taxes of Central and State Acts which are now the part of the
Goods and Services Tax. Some of these are:

Central Acts:

1. Central Excise Duty

2. Additional Duties Of Excise


3. Excise Duty Levied under Medicinal & Toiletries Preparation Act
4. Additional Duties Of Customs (CVD And SAD – Countervailing Duty and Special
Additional Duty )
5. Service Tax
6. Surcharge And Cess
State Acts:

1. State VAT / Sales Tax


2. Central Sales Tax
3. Purchase Tax
4. Entertainment Tax (Other than those levied by local bodies)
5. Luxury Tax
6. Entry Tax (All Forms)
7. Taxes on lottery, betting and gambling
8. Surcharges and cesses.
Goods and Services Tax Council
The Goods and Service Tax Council (“GSTC”) comprises of the Union Finance
Minister, the Minister of State (Revenue) and the State Finance Ministers to
recommend on the various matters related to GST. One-half of the total number of
members of the Council form quorum in meetings. Decisions of the Council are
taken by a majority of not less than three-fourth of weighted votes cast. Centre has
one-third weightage of the total votes cast and all the states taken together have
two-third of weightage of the total votes cast.

To ensure smooth roll-out of the GST, various Committees and sectoral groups have
been formed comprising of members from both Centre and States.

Various Slabs under the GST


There are 5 slabs under the Goods and Services Act. These slabs are divided as
per the needs of the people of the Country. The products that are basic to the
human needs are in the low tax bracket whereas the luxury products are in the
higher tax brackets. The different brackets are:

1. No GST (Exempted)
2. 5%
3. 12%
4. 18%
5. 28%

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