GST BASICS

For every person, GST means Good and Simple tax. Question is when GST means Good and Simple tax, then why so much hue and cry everywhere whether it is customer, trader, manufacturer, service provider or political person etc?

The one reason is the lack of understanding of knowledge of GST concepts and benefit thereof.

Let us discuss first what is GST??

GST means Goods and Services tax.  It is a tax that is levied on Sale of Goods, Sale of Service or Both. Both means when someone sale the Goods and Services both and Charge the single amount like Builder who do construction work with their own material and labour.

Scenario before 1st July, 2017,

  1. On Good there were many taxes:

Tax on Manufacturing of Goods                     :   Excise Duty and Various Cesses

Tax on Sale of Goods                                        :   VAT

Tax on Import of Goods                                  : Custom Duty and also Excise, VAT     &Various Cess by different names

 

  1. Similarly Services are also subject to various taxes i.e. Service tax, Swach Bharat Cess, Krishi Kalyan Cess.

 

Taxes Subsumed in GST:

Scenario 1st July, 2017 onward,

Whether, it is Goods or Services, only one tax will be levied that is GST.  GST may have different name according to the place of Seller and place of Customer as explained below:

  1. Intra-State Supply (Within a state) : When Seller and buyer both will be in the same state, then it is called intra- state Supply and GST on bill will be by the way of following name:
    1. CGST: Central Goods and Services Tax (Half of total rate of GST)
    2. SGST: State Goods and Services Tax (Half of total rate of GST).
  2. Inter-State Supply : When Seller and buyer are of different state, then it is called inter-state Supply and GST on bill will be by the way of following name :
    1. IGST: Integrated Goods and Services Tax ( Full rate of GST)

Let us understand, what is the benefit of Single Tax in simple term by way of an example:

Earlier, the general public was not aware of any type tax because of multiplicity of taxes in existence, because of this; the seller of goods and Service providers adds many charges in bills in the name of taxes.  Customer had to pay the bills whatever it is, because demand was done on the name of taxes and customer cannot deny to pay the tax.

Eg. Service provider (mostly in case of restaurants services) takes Service Charges in addition to the goods and service provided by them and customer, treating them as a port of Service tax, paid the whole amount demanded.

Now customer will slowly understand that whether it is Goods or Service, bill has only one tax i.e. GST.

Understand the simplicity and Goodness of the GST by the above example; it is just one example to explain that how GST as Good and Simple Tax.

Few words from the speech of Honourable Prime Minister Narendra Modi quoted below:

“You get your eye check-up done by your regular doctor. He gives you power for your eyes. You get the spectacles made. When you get those spectacles, it takes 2-3 days to get adjusted.”

“The crux of the story is that even then the eyes need to adjust to new spectacles. Similarly, if we try to adjust to the new system we will definitely be able to integrate ourselves with it.

It is time to stop the rumour bazaar. It is a time we concentrated on the development and for the betterment of this country.

Let the GST be carried forward till the point it has positive impact on the world’s economy”

The above article drafted for basic understanding of GST. We will discuss more about GST in subsequent series of our Articles.

-CA PARDEEP JAIN