GST is abbreviated as Goods and service tax. In order to make Indian market unified the GST is introduced in India. It is an indirect tax imposed on sale, manufacturing, and usage of goods and services. The main purpose behind it to improve total economic growth of India and accumulate revenue for the government. Moreover, it is a value-added tax imposed on various goods and services which is paid by the consumer. This is the replacement of direct tax in India. This act is passed by the parliament in November 2017. Indian Prime Minister Narendra Modi introduced GST by addressing the nation in special parliament assembly. The motto of this Act is also addressed as “one country, one tax, and one market”.
GST not only include central indirect taxes but also the state value-added taxes. According to GST Act the goods and services divided into 5 tax slabs like 0%, 5%, 12%, 18% and 28%. Predominantly, GST is the consumption-based tax. The government is electing for Dual system GST. This system has 2 elements such as central goods and services and state goods and services. Excise duty custom tax and so on comes under central goods services and sales tax, entertainment tax, and other taxes come under state goods and services.
Benefits of GST:
·GST eliminated indirect taxes.
·To help in building transparent and corruption-free tax administration.
·Many tax departments are reduced which lead to less corruption in those departments.
·Unorganised sector companies come under the tax regime.
·It will enable financial inclusion in the economy.
·The process for refunding the taxes and registration of taxpayer is common for all people.
·It will reduce the cascading effect of tax thus reducing the cost of a product.
·It is also predicted that due to this GDP will also increase by 1- 2%.
Types of GST:
1. Central goods and services tax:
It is a centralized part of GST. It includes central sales tax, central excise duty, service tax, excise duty under medical and toiletries preparation act, additional excise duties countervailing duty, additional customs duty and other centralized taxation. The revenue collected under CGST goes to central government.
2. State goods and services tax:
State goods and service tax is imposed on the state level, where the revenue goes to state government. It includes the amalgamation of state sales tax, luxury tax, entertainment tax, entry tax, octroi and further taxes related to the movement of commodities and services.
3. Integrated goods and services tax:
This tax is imposed on the supply of commodities and services from one state to another state. The total revenue from this transaction is collected by the central government of India.
4. Union territory goods and services tax:
The union territories in India are accounted under a specific taxation called Union Territory Goods and Services Tax as per the GST. This includes certain states such as Delhi, Chandigarh, Dadra & Nagar Haveli, Andaman and Nicobar, Daman and Diu, Lakshadweep and Puducherry.
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