What is GST| Goods and Services Tax | GST Full Form | India
Nowadays, Some questions are coming in the mind of every Indian.What is GST? What is full form of GST? and many other question are also coming in our mind related to GST. So Today, We are going to know What is GST, Full form of GST, Meaning, Impact of GST on India, Benefits, Negative Impact and many other things about this.
GST(Goods and Services Tax) is a consumption based tax/levy. It is based on the “Destination principle.” It is applied on goods and services at the place where final/actual consumption happens. Goods and Services Tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain.
What is GST?
GST is unified taxation system for the whole nation, which will make India one unified common market.
GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes Goods and Services Tax essentially a tax only on value addition at each stage. The final consumer will thus bear only the Goods and Services Tax charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
France was the first country to introduce Goods and Services Tax in 1954. Nearly 140 countries are following this tax system.
Full Form of GST?
Full form of GST is Goods and Services Tax.
Other Full Forms:
- Central Goods and Services Tax (CGST) which will be levied by Centre
- State Goods and Services Tax (SGST) Which will be levied by State
- Integrated Goods and Services Tax (IGST) – which will be levied by Central Government on inter-State supply of goods and services.
GST (Goods and Services Tax) is a tax that we need to pay on supply of goods and services. Any person, who is providing or supplying goods and services is liable to charge GST.
How is GST applied?
Goods and Services Tax paid on the procurement of goods and services can be set off against that payable on the supply of goods or services.The manufacturer or wholesaler or retailer will pay the applicable Goods and Services Tax rate but will claim back through tax credit mechanism.
But being the last person in the supply chain, the end consumer has to bear this tax and so, in many respects, Goods and Services Tax is like a last-point retail tax. This tax is going to be collected at point of Sale. The Goods and Services Tax is an indirect tax which means that the tax is passed on till the last stage wherein it is the customer of the goods and services who bears the tax.
Supply Chain of GST with Example:
The current tax structure does not allow a business person to take tax credits. There are lot of chances that double taxation takes place at every step of supply chain. This may set to change with the implementation of GST. This system will have two components which will be known as
- Central Goods and Service Tax (CGST)
- State Goods and Service Tax (SGST).
The current taxes like Excise duties, service tax, custom duty etc will be merged under CGST. The taxes like sales tax, entertainment tax, VAT and other state taxes will be included in SGST.
GST will be levied on the place of consumption of Goods and services.
It can be levied on :
- Intra-state supply and consumption of goods and services.
- Inter-state movement of goods.
- Import of Goods and Services.
Benefits of Goods and Services Tax
- The tax structure will be made lean and simple.
- The entire Indian market will be a unified market which may translate into lower business costs. It can facilitate seamless movement of goods across states and reduce the transaction costs of businesses.
- It is good for export oriented businesses because it is not applied for goods/services which are exported out of India.
- In the long run, the lower tax burden could translate into lower prices on goods for consumers.
- The Suppliers, manufacturers, wholesalers and retailers are able to recover GST incurred on input costs as tax credits. This reduces the cost of doing business, thus enabling fairer prices for consumers.
- It can bring more transparency and better compliance.
- Number of departments (tax departments) will reduce which in turn may lead to less corruption
- More business entities will come under the tax system thus widening the tax base. This may lead to better and more tax revenue collections.
- Companies which are under unorganized sector will come under tax regime.
Challenges for implementing GST
- To implement the bill there has to be lot changes at administration level, Information Technology integration has to happen, sound IT infrastructure is needed, the state governments has to be compensated for the loss of revenues.
- Goods and Services Tax, being a consumption-based tax, states with higher consumption of goods and services will have better revenues. So, the co-operation from state governments would be one of the key factors for the successful implementation of this.
- Since GST replaces many cascading taxes, the common man may benefit after implementing it.
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