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WHAT IS GOODS and SERVICE TAX (GST)?

 

GST is integration of various central and state level taxes thus removing fiscal barriers between the states and giving Indian Business owners and new regime for smooth working. Goods and Services Tax (GST) will be tax levied on goods and services at the point of sale or rendering of service. GST will be applicable for all goods and services, expect the exempted class of goods and service. The GST regime in India is now set to roll out from July 1st, 2017.

FEATURES OF GOODS and SERVICE TAX (GST)?

Dual Tax in Single System

A dual tax (CGST & SGST) will be levied on the same taxable event by both the Central and the State Government

One Tree, Three Branches

The tree of GST has been divided into 3 branches: CGST, SGST (UTGST for Union Territories)  & IGST

The Taxable Event

The taxable event under GST will be 'SUPPLY' of goods/services

Destination Based Tax

GST will be a destination base tax and burden of it will fall on ultimate consumer 

SCOPE OF GOODS and SERVICE TAX (GST)?

Central Goods and Services Tax (CGST)

The part of GST to be levied by the Centre on intra-State supply of goods or/and services is Central Goods and Services Tax (CGST)

State Goods and Services Tax (SGST)

The part of GST to be levied by the State on intra-State supply of goods or/and services is State Goods and Services Tax (SGST)

Integrated Goods and Services Tax (IGST)

Integrated GST (IGST) will be collected by Center on inter-state supply of goods or/and services and on imports

ADVANTAGES OF GOODS and SERVICE TAX (GST)?

One Nation, One Tax Concept

Single tax system on place multiple Indirect taxes.

Lesser Compliance

There will be less compliance in GST as compared to previous multiple indirect taxes combined together.

Improve Efficiency in Logistics

Removing state tax barriers, GST will bring big benefits for logistics - decreasing operational costs and transit time.

Higher Threshold for Registration 

Higher threshold limit for registration so small business do not need GST registration.

Composition Scheme

Composition Scheme for small dealers - LESS TAX, LESS COMPLIANCE.

Input Tax Credit

Input Tax Credit can be availed for taxes collected on Inter State Sales under GST.

WHAT IS HARMONIZED SYSTEM OF NOMENCLATURE (HSN) UNDER GOODS and SERVICE TAX (GST)?

 

HARMONIZED SYSTEM of NOMENCLATURE (popularly known as HSN) is a multipurpose international product nomenclature, simply a product coding system, developed by the World Customs Organization (WCO), which is used to classify products from all over the world in a logical and systematic manner.

In order to check rate of a product under GST, one has to refer schedule of rates which shall be HSN based.

SAC (Service Accounting Codes) is same as HSN  but is dedicated for classification of services.

Download list of HSN click here

ADVANTAGES OF GOODS and SERVICE TAX (GST)?

For Citizen 

(i) Simpler tax system

(ii) Reduction in prices of goods and services due to elimination of cascading

(iii) Uniform prices throughout the country

(iv) Transparency in taxation system

(v) Increase in employment opportunities 

For Businessman

(i) Reduction in multiplicity of taxes

(ii) Mitigation of cascading/double taxation

(iii) More efficient neutralization of taxes especially for exports

(iv) Development of common national market

(v) Simpler tax regime-fewer rates and exemptions 

For Government

(i) A unified common national market to boost Foreign Investment and "Make in India" campaign

(ii) Boost to export/manufacturing activity, generation of more employment, leading to reduced poverty and increased GDP growth

(iii) Improving the overall investment climate in the country which will benefit the development of states

(iv) Uniform SGST and IGST rates to reduce the incentive for tax evasion.

COMPOSITION SCHEME UNDER GOODS and SERVICE TAX (GST)?

 

"Composition Scheme under GST will exclude small traders from the bunch of other traders and will be taxed at less percentage with lesser compliance."

"Alone they are little drops, together they are OCEAN."

Small Traders/ Businesses are back-bone of any countries economy and GST will directly affect these small traders/ businesses and therefore for to make GST easy for them, Government has introduced COMPOSITION SCHEME UNDER GST ACT & Rules made there-under.

A registered person, whose aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees, may opt to  pay, in place of tax payable by him a amount calculated at a prescribed rate, by opting Composition Scheme.

There are some advantages to this scheme like: lesser tax payable, less compliance and also there are some disadvantages like: no ITC available, tax has to be paid from own pocket as person under this scheme can not issue tax invoice and hence can not collect tax from consumer. 

 

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