GST has been a major reformation in the Indian economy. It stands for Goods and Services Tax and its liabilities must be computed every month. The concept of GST payment revolves around removal of several indirect taxes such as excise duty, state tax, VAT, entertainment tax and luxury tax and others. It was passed in August 2016 and implemented on the 1st of July 2017. This will make the taxation system uniform and reduce the burden put on people by the payments of multiple taxes. Goods and services have been categorised into the following tax rate slots 0%, 5%, 12%, 18% and 28%. Rough and semi-precious stones and gold have a special rate of 0.25% and 3% respectively. The entire concept of GST revolves around subsuming all the indirect taxes into one single tax.
ADVANTAGES OF GST
1) Removing cascading tax effect.
2) Higher threshold for registration.
3) Composition scheme for small business.
4) Online simpler procedure under GST.
5) Lesser compliances.
6) Defined treatment for e-commerce.
7) Increased efficiency in logistics.
8) Regulating the unorganised sector.
IMPACT OF GST
Salaried employees- The term goods and services tax clearly demarcates the taxation area. It is applicable on business and salaried employees won’t be affected directly by this. Prices of most of the commodities shall change and this may indirectly affect this class.
Business- Doing business will be a much sorted affair with the elimination of a mesh of taxes and the creation of a single market. But these advantages shall only be visible on the long run.
Crude petroleum, motor spirit, diesel, aviation turbine fuel and natural gas shall not be taxed.
COMPONENTS OF GST
CGST- the Central Goods and Services Tax shall be levied by the centre.
SGST- the State Goods and Services Tax would be imposed by the State.
IGST- Integrated Goods and Services Tax shall be paid when goods or services of one state are being sold in another. This shall also be levied by the centre.
HOW TO PAY GST
GST payment is done on every level of value addition by the buyer. Every person involved in a business must file for a GST return. The following must be submitted by a registered dealer in this process:
1) Purchases
2) Sales
3) Output GST (on sales)
4) Input tax credits (GST paid on purchases)
The dealer has to file 3 monthly returns and one annual return amounting to 37 returns in a year. The variation between this output GST and Input Tax Credit shall be the amount either payable or returned by the government.
ADVANTAGES OF GST
1) Removing cascading tax effect.
2) Higher threshold for registration.
3) Composition scheme for small business.
4) Online simpler procedure under GST.
5) Lesser compliances.
6) Defined treatment for e-commerce.
7) Increased efficiency in logistics.
8) Regulating the unorganised sector.
IMPACT OF GST
Salaried employees- The term goods and services tax clearly demarcates the taxation area. It is applicable on business and salaried employees won’t be affected directly by this. Prices of most of the commodities shall change and this may indirectly affect this class.
Business- Doing business will be a much sorted affair with the elimination of a mesh of taxes and the creation of a single market. But these advantages shall only be visible on the long run.
Crude petroleum, motor spirit, diesel, aviation turbine fuel and natural gas shall not be taxed.
COMPONENTS OF GST
CGST- the Central Goods and Services Tax shall be levied by the centre.
SGST- the State Goods and Services Tax would be imposed by the State.
IGST- Integrated Goods and Services Tax shall be paid when goods or services of one state are being sold in another. This shall also be levied by the centre.
HOW TO PAY GST
GST payment is done on every level of value addition by the buyer. Every person involved in a business must file for a GST return. The following must be submitted by a registered dealer in this process:
1) Purchases
2) Sales
3) Output GST (on sales)
4) Input tax credits (GST paid on purchases)
The dealer has to file 3 monthly returns and one annual return amounting to 37 returns in a year. The variation between this output GST and Input Tax Credit shall be the amount either payable or returned by the government.
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