WHAT IS GST?
GST is called as Goods and Service Tax which is an indirect tax and passed in the parliament on 29th March 2017 and came into force on 1st July 2017. This is an indirect tax which has replaced many indirect taxes such as VAT, excise duty etc.
As the name suggest the GST is imposed on supply of goods and services. It is the destination based tax. It was introduced to reduce the cascading effect on tax. It is the single domestic indirect tax law in India. The tax is imposed at every stage of supply.
Let us understand the meaning of destination based tax by giving one example: so let’s consider that the goods are being manufacture in Maharashtra and is going to supply in Gujarat, so basically the consumption is in the Gujarat the tax will be levied in Gujarat and not in Maharashtra.
JOURNEY OF GST:
It took 17 years to pass the GST law in India. The journey of GST started in the year of 2000 when a committee drafted law. Lok Sabha and Rajya Sabha passed the GST Bill in the year of 2017. And finally on 1st July 2017 the GST was came into force.
OBJECTIVE OF GST:
GST has replaced many indirect taxes and now the GST is only tax which is being followed by all the states and it is the advantage as all the state follows the same rate of tax. It became easier for the Central Government to decide the rate and policies.
It is the very first objective of GST that is to reduce the cascading effect. Before GST there was many indirect taxes in which the taxpayer was not able to set off the credits. If we understand this by giving an example then, the excise duties paid during the manufacturing of goods will not be set off against the VAT payable during sale.
Before GST there was different limits for registration based on turnover. As GST is imposed on both goods and services, it has risen the registered businesses. So the GST is helped in extended the tax in India.
ADVANTAGE OF GST:
COMPONENTS OF GST:
There are three taxes which is applicable under GST which is:
Author- Adv.Shivam Kumar | Legel and content Executive, Taxblock India Pvt. Ltd