1st April 2017
As we all know taxation is the most important source of revenue for modern governments. The main purpose is to raise money from people by charging different taxes like direct tax indirect tax Government use this revenue for many different purposes like for welfare of the country. Taxes are levied by both central state government.
Following are some of the indirect taxes levied by central government
Direct taxes are levied by central government directly on the income of individuals business entities as well as non business entities. It wholly depends on the residential status of the individuals.
One of the prime goals of taxation in India is to avoid taxation over taxes or we can say cascading effect of taxes. This is ultimately borne by the consumer. To remove this cascading effect the bill was passed by parliament in April, 2016 known as GST bill (Goods & service Tax)
GST is a tax levied when a consumer buys a goods or services. The main aim of introducing GST is to bring all the taxes in a single umbrella.
It leads to the great step for the development of our country towards the right path. This bill helps to eliminate the cascading effect of taxes on production, distribution prices on goods & services. Goods & service tax refers to indirect tax which replaces taxes levied by the central & state government. This bill results in simplicity of tax which leads to easier administration. Moreover, GST ultimately more beneficial to consumer as it reduces the tax burden on goods.
GST bill will functional by this year and passed in Rajyasabha & Loksabha. Now there will be only one centralized tax. GST bill abolish indirect taxes like VAT, Service tax, excise, octroi.
GST is nothing but a combination of three taxable events i.e.
The main difference between these three taxable events and GST is that GST makes the base of tax common for manufacture, sale of goods and providing of services.
GST (goods & service tax) in India has cleared by Rajyasabha to bring the biggest economy reform in India which affects all of us.GST is also known as simplified Tax system. Through this the whole tax system gets simplified and consolidates into a single market to make the economy more stronger and powerful. It combines the central excise duty, additional excise duty, service tax, state VAT, entertainment tax etc.
Introducing GST is one of the essential concepts for this emerging environment and it can be very well explained through these points which are as follows:-
Read More on Benefits of GST (Goods and Service Tax)
We can understand the answer of this question through the following example-
Mr. X sells goods to Mr. Y and charges sales tax, then Mr. Y again re-sells such goods to Mr. Z after charging sales tax. When Mr. Y was computing his sales tax liability, he also included the sales tax paid on previous purchase. This results in cascading effect.
After that VAT was introduced in which at every next stage person gets credit of the tax paid at the earlier stage. Like when Mr. Y pays tax of Rs. 31, he deducts Rs. 10 paid earlier.
Similarly, after that the concept of excise duty and service tax was introduced which is called Cenvat Credit. This resolve the problem of cascading effect to some extent. But there are still some problems that have not been solved that is why GST was introduced which help to solve this problem.
Now, GST replaces all the above taxes except Basic Custom duty. Also GST introduced the dual system model which is given below-
SGST- State Goods and Service Tax which is collected by State Government.
CGST- Central Goods and Service Tax which is collected by Central Government.
IGST- Integrated Goods and Service Tax collected by Central Government.
Therefore, GST is a very good type of tax and for the successful implementation of GST, we all must take care of few points like
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