What is Goods And Services Tax - GST

On eighth September, 2016, President Pranab Mukherjee offered consent to this Bill, making it an Act.

Keeping in mind the end goal to comprehend the features of GST Act, first we have to investigate the past taxation system.

Beforehand taxes were charged on each stage viz. extract on fabricate, VAT/CST on deals, entry tax on entry of goods in local area etc.

These taxes get gathered with the original cost as the information credit for the tax officially paid isn't accessible to the customers. This falling impact of tax i.e. tax on tax brings about climbing the costs of goods or services.

These duties were forced by the Center and state contrastingly as per the Lists in The Constitution of India.

Presently the new idea of GST is that the GST would be a single tax system which would be exacted on 'supply' of goods and services and this tax will be together forced by the Center and the state with the suggestion of a Federal Institution made which is the GST Council.

GST: Explained in Numbers

For instance, assume a man needs to purchase a shirt. Presently with a specific end goal to decide the cost of the shirt, we have to begin from the initial step i.e. buying raw material.

NON-GST PROCEDURE:

Raw material was obtained for say Rupees. 100 (comprehensive of Rs. 10 as tax). An estimation of Rs. 50 is added to it by the manufacturer.

This good is sold to distributer at Rupees. 165 (comprehensive of 10% tax). Presently the distributer includes his edge of ₹20 to it and pitches it to the retailer at Rs. 203.5 (comprehensive of 10% tax).

Retailer at that point includes his edge of Rs. 20 increasingly and pitches this good to the shopper at Rs. 245.85 (comprehensive of 10% tax).

Thus the good costs ₹245.85 to the customer which incorporates ₹65.85 paid as tax.

GST PROCEDURE:

Raw material was obtained for say Rupees. 100 (comprehensive of ₹10 as tax). An estimation of Rupees. 50 is added to it by the manufacturer.

This good is sold to distributer at ₹150 (10% Tax on 150 is 15 however Rs. 10 is as of now computed on raw material ,so successful tax put aside at this stage is just ₹5(Rs. 15-10).

Presently the distributer adds his edge of ₹20 to it and pitches it to the retailer at ₹170(10% tax on Rs. 170 is 17 yet 15 is as of now put aside, so successful tax put aside at this stage us ₹2).

Retailer at that point includes his edge of Rs. 20 increasingly and pitches this good to the customer at Rs. 209 (comprehensive of all prior taxes viz. Rs. 10+5+2+2 {10%tax put aside on retailer stage}).

Thus the good costs Rs. 209 to the customer which incorporates Rs. 19 paid as tax.

Hence, if we take the GST concept this way, the product is comparatively less expensive as there is no cascading effect.