GST or The Goods and Services Tax took effect on the 1st of July 2017. The objective of the implementation of this particular levy is to substitute all current indirect taxes with a new, systematic tax. Every indirect taxes, like central excise tax, utility tax, VAT, and advertising tax, have been integrated by GST. This big move has allowed the people of India to register their taxes conveniently with little difficulties.
What Does The Goods And Services Tax Act Refer To?
A simple and straightforward answer for “What is GST?” is, Goods and Services Tax is a tax charged on the production and selling of commodities and services around the nation. The tax shall be levied at each juncture of the production procedure. The GST applies doesn’t just apply to one party instead it is applicable to both the consumer and the producer. It’s a destination-based tax. It implies that the GST will be paid at the point of sale.
Listed below are the different types of GST that you should be aware of
- CGST or TheCentral Goods and Services Tax
This tax is imposed on intrastate purchases of services and items by the national government.
- SGST or The State Goods and Services Tax
The government of the state collects this particular tax depending on the intrastate supply of commodities and services.
- IGST or The Integrated Goods and Services Tax
This tax is levied on the sale of products and services among two different states. Taxes obtained from this tax is divided among both, the state government and the national government.
Impact Of The GST Act In India
As we all know, GST is one of the biggest tax reforms in India and it brings along with it a lot advantages and disadvantages that have a major impact on the Indian economy in a good and bad way. Here are a few points discussing the impact of the goods and services tax on the Indian economy.
According to the market in India, the overall tax portion is approximately 30% of the value of the commodity. Thanks to the effect of the GST, taxes have been reduced. Therefore the final user gets to pay taxes at reduced rates. The lowered tax responsibility has increased the development and productivity of retail as well as many other business sectors.
The excise tax on selling goods has been lowered under GST. Manufacturing costs in localized markets have also declined as a result of GST. Both of these aspects have improved the nation’s export output. Businesses are becoming more competitive in nature with regard to growing their business globally.
Simplifying The Taxation System
The taxation system of the nation has been streamlined by GST. As GST is a unified levy, it’s become simpler to measure taxes at different levels of the distribution chain. This offers both consumers and suppliers a good picture of the sum of tax they owe and the reason for it. In fact, problems in approaching tax officers and regulators could also be minimized as a result of this
Aid For Small And Medium-Sized Businesses
Small and medium-sized businesses now can enroll within the GST Composition Scheme. In this system, they pay their taxes on the basis of their yearly revenue. Companies with yearly revenue of rs. 1.5 crores, therefore, are only required to pay 1% GST. In addition, all firms with a revenue of Rs. 50 lakh are expected to pay 6% as GST.
GST implementation has helped to integrate central and state government taxes. It managed to decrease the cascading impact of numerous taxes. For businesses and consumers, thus, the tax obligation has been lowered. Not just that, but the amount of taxes has grown, and thus the tax collection has also risen dramatically. The total tax structure is now simpler to handle. In addition, small and medium-sized businesses can enhance their business operations. GST is believed to assist many Indian organizations to compete in foreign markets.