On 1st July the government of India announced new pay of tax payment which is GST which will make the process of tax collection very simple as compared to the previous tax systems. As GST is a newly introduced tax system in India many people still are unaware of What is GST? Why is it good for Businesses? Why is it good for common man? What are the types of GST? What are the rates of GST? How to register or apply for the GST?
Don’t worry we are here to answer your all questions in simple language. In this article, we are going to tell you everything you need to know about GST. So let’s start.
What is GST?-Meaning, Types, Rates & How To Register for GST, Article
What is GST? – Full Form & Meaning
The full form of GST is Goods and Services Tax. GST is a simple, sophisticated and consumer-friendly way how the Government of India will collect the tax from the businesses and individual citizens. GST is implemented in India to replace the previous indirect tax systems which were very complex with a simpler, uniform tax system.
In previous tax system, there were multiple confusing taxes like VAT(Value Added Tax), service tax, cess tax, entertainment tax, sales tax etc making it a very confusing tax system for consumer/ common man and even for the business. So now people and businesses have to pay only one type of Tax which is GST.
GST is a consumption-based tax which means the tax should be received by the state in which the goods or services are consumed and not by the state in which such goods are manufactured. The GST tax system will take the form of “dual GST” which is concurrently levied by central and state government
What Are the Types/Component of GST?
GST is composed of three types of taxes and those are CGST, SGST, IGST. Now let’s see what these types are. These taxes are determined by the movement of the goods and service i.e. IntraState movement or Interstate movement.
CGST is Central GST. The GST to be levied by the Centre on the intra-State supply of goods and/or services is Central GST, means this type of tax is paid to the central government.
SGST is State GST. The GST to be levied by the State on the intra-State supply of goods and/or services is State GST, means this type of tax is paid to the state government.
IGST is Integrated GST. This tax is to be paid to the central government when goods are manufactured in one state and consumed in another state. IGST also applies to the imports made in India and exports sent out of India.
Why is GST Good for India?: Advantages/Benefits/Merits of GST
India is a collective economy where each state has its own set of rules for them. This makes the growth of the country slow, causes difficulties to the businesses and higher possibilities of corruption. To make the tax payment process simpler and create a win-win environment for both, government as well as businesses, and to reduce the corruption, GST bill is introduced in India which is very important. So let’s see why GST is good for India, the businesses in India and the common man/citizens/people of India.
A Simpler Way of Tax Payment
GST is a simple tax system. Now, the taxpayer won’t be confused about the type of taxes he/she should pay. There will be only one tax, which is GST. The agenda of the government behind introducing GST itself is “One Nation, One Tax”.
Healthier Environment for Businesses
GST is going to ease the stress of taxes from Indian businesses and manufacturers. They now have to pay lower taxes, and it will surely increase the scope of a better business environment and flexibility.
Keeping Up with the Global Race
India is economically growing with lightning speed. The developed countries like Sweden, Denmark, Germany, Switzerland, Japan – have moved to a common GST (Goods and Service Tax) to provide one common window for tax collection. So now GST has become a standard for the global business and India being progressing towards the development had to embrace a uniform, sophisticated tax system which is GST.
GST will surely increase the number of taxpayers, which will in turn help to reduce the tax rates as more people are paying taxes.
Removal of the Cascading Tax Effect
In simple words “cascading tax effect” means a tax on tax. In the previous tax system, the tax was levied on goods at each stage of the production process up to the point of being sold to the final consumer. A cascade tax is a type of turnover tax with each successive transfer being taxed inclusive of any previous cascade taxes being levied. This creates a burden of taxes on the end user, hence in GST, there will be no cascading tax.
Why is GST Bad for India?: Disadvantages/Demerits of GST
A Big Change
GST is a newly introduced tax system in India. A common man is unaware of how the GST works moreover citizens are used to the previous direct taxes, so it would take the time to digest the whole big change and also to get familiar with the GST. Also, all the business software, processes like accounting and ERP software need to be updated with the latest tax system which is GST.
Under GST some services will become costlier such as Telecom, Airlines, Banking, Insurance will be costlier under GST bill.
Problems Faced by E-commerce
Many small/medium enterprises(SME) operate through their own online shopping websites or through third party websites to sell to different parts of India. Under GST, they will be required to register for all the states.
You can read our dedicated article about Benefits, advantages, merits, pros and demerits, disadvantages of GST bill.
What Are the Rates of GST? What is Getting Expensive/Cheap under GST?
GST is tax rates are mainly classified into four percentages. 0%, 12%, 5%, 18%,28%. and each percentage of tax will be applied accordingly based on the luxury of the product. Following is a list of GST rates.
No Tax/ 0% Rate Slab
5% Rate Slab
Products like domestic LPG, Kerosene, coal, tea, spectacles, raisins, cashew nuts, milk food for babies, Agarbatti, footwear<500 rs, apparels<1000 rs will have 5% tax on them under GST.
12% Rate Slab
18% Rate Slab
28% Rate Slab
How to Apply for GST in India?
The process of registration for GST is effortless with the latest technology. Any individual or business can apply online to get the GSTIN number. The process for individuals, newly formed companies, and GST practitioners is different. Documents like PAN card, UID card, Company PAN card need to be provided.
https://www.gst.gov.in/ is the official website where a taxpayer or new business can register easily with appropriate credentials. The government has also launched a mobile app where you can register/apply for GST.
Woah, that was a big article. I am pretty sure that this article has satisfied all your queries and questions about GST. If you liked our humble attempt to spread information to you guys, then please motivate us to work more by commenting in the comment section below. We love reading your responses. 🙂
Check out our other articles about the GST bill in India.