The Basics of GST You Need to Know Right Now! - Make Money Online

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The Basics of GST You Need to Know Right Now!

One of the hottest topics which is going around in the business world is GST. Everyone is talking about it. And why shouldn’t they? After all, it is going to affect every single person.

There are very limited items which are exempted from the purview of GST. This means that right from major business houses to common men, everyone would witness some kind of an impact resulting out of this new reform.

Before we go any further, it is important to understand what the entire confusion revolving around GST is all about? Every business has to pay some additional taxes apart from income tax.

Depending on the nature of operations it could be service tax, VAT, excise duty, CST, etc. These are termed as indirect taxes.

GST is a revolutionary step which will subsume most of the indirect taxes. This means that no separate taxes will have to be paid under various circumstances.

GST Tax in India will follow the rule of “One Nation. One Tax”. This is a comprehensive structure which will streamline the diversity of various indirect taxes into a single tax.

All the major indirect taxes being levied on manufacture, sales and purchases of goods and services throughout the various states in India will be replaced by this new tax reform.

Amalgamation of various taxes into one would foster a common national market while mitigating the system of double taxation.

What are the Different Types of GST?

The GST tax in India can be bifurcated into three broad categories.
  1. Central Goods and Services Tax: CGST will be charged on the intra-state movement of goods and services. This would be levied by the Centre and collected by it as well.
  2. State Goods and Services Tax:SGST will be levied by the states and will be the source of revenue generation for them. Post-implementation of SGST various taxes like VAT, Entertainment Tax, Entry Tax, etc. would be merged into it.
  3. Integrated Goods and Services Tax:IGST would be levied on transfer of goods and services from one state to another. This would be levied by the Centre itself.

Who needs to prepare for GST?

Another question which is boggling the minds of everyone is on whom the GST would be applied? Businesses who are having a turnover of more than INR 20 Lakh (and INR 10 Lakh for North Eastern Region) will have to mandatory pay for GST. Goods and Services tax bill would be applicable on those who are having a website from where they are trading various items. In addition to this, GST will have to be paid by ‘Input Service Distributors’ as well.

What are the final rates of GST?

GST will be levied at multiple rates. The range of these might vary from 0% to 28%. As of now, the GST Council has decided on a four-tier GST structure: 5%, 12%, 18% and 28%. Essential items like food and other consumable items will supposedly be taxed at a zero rate. Common use items will fall under the lowest tax slab of 5%. Luxury items, demerit and sin goods will attract an additional cess above 28% for a time period of five years. All of these cess, along with others, will create a revenue pool which will then be utilised to compensate any losses which the states might have incurred as a result of GST implementation.

Why dual GST?

In India, both the Centre and states have the authority and necessary powers to levy and collect taxes. The responsibilities are bifurcated between both and they need to perform the assigned duties. In order to accomplish their tasks they need funds. A system of dual Goods and Services tax bill will help them in gaining capital to carry out their work smoothly.

Which taxes are being subsumed under GST?

The purview of GST will subsume some indirect taxes both on the Centre as well as state level.

The taxes being subsumed at the state level are as follows:
  • Luxury Tax
  • Value Added Tax
  • Octroi
  • Purchase Tax
  • Entertainment Tax
  • Tax on Lottery and Gambling
At the Central level, taxes being subsumed under GST are: 

  • Central Sales Tax
  •  Service Tax
  • Central Excise Duty
  • Additional Excise Duty
  • Additional Customs Duty
GST rollout is set on July 1st, 2017. Various organisations and individuals are preparing themselves for integrating the new tax regime into their businesses seamlessly.
The Basics of GST You Need to Know Right Now! The Basics of GST You Need to Know Right Now! Reviewed by Dhanur Chauhan on 2:48 AM Rating: 5