WHAT IS GOODS AND SERVICES TAX (GST)? - Make Money Online

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WHAT IS GOODS AND SERVICES TAX (GST)?

GST stands for “Goods and Services Tax”, and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level.

Simply put, goods and services tax is a tax levied on goods and services imposed at each point of sale or rendering of service. GST is an indirect tax in lieu of tax on goods (excise) and tax on service (service tax). The GST is just like State level VAT which is levied as tax on sale of goods. Goods and services tax (GST) will be a national level value added tax applicable on goods and services.

 According to the Task Force under the 13th Finance Commission, GST, as a well designed value added tax on all goods and services, is the most elegant method to eliminate distortions and to tax consumption.

UNDERSTANDING PROPOSED GST Law

The spread of Value Added Tax (VAT), also called Goods and Services Tax (GST) has been the most important development in taxation world over in the last half-century. Limited to less than ten countries in the late 1960s, it has now been implemented by over 160 countries worldwide; making it the world’s most commonly used tax.

In these countries, it typically accounts for one-fifth of the total tax revenue. The recognized capacity of VAT is to raise revenue in a neutral and transparent manner. At the same time as VAT was spreading across the world, international trade in goods and services was expanding rapidly as part of globalization developments and revolution.

INDIRECT TAXES IN INDIA

A strong indirect tax system is fundamental to the development of a nation’s economy. In stepping up the tax effort in India, indirect taxes have played an increasingly important role. Presently, the contribution of Indirect Tax is about 68 percent of the total tax revenues of the Central Government Accounts outsource india

The term ‘indirect taxes’ generally refers to taxes levied on the basis of production, sale or purchase of goods such as import and export duties, excises, and sales taxes.

Indirect taxes include taxes levied on production of goods, rendering of services, entertainment taxes, electricity duties, tax on passenger fares and freights etc. They are called indirect taxes and can be passed on to someone else (e.g. customers) whereas direct taxes are supposed to be borne by those on whom they are levied.

For the Central Government, Central Excise, Customs and Service Tax are the two main components of indirect taxes. For states, Value Added Tax (VAT) is the major indirect tax.

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WHAT IS GOODS AND SERVICES TAX (GST)? WHAT IS GOODS AND SERVICES TAX (GST)? Reviewed by Dhanur Chauhan on 4:33 AM Rating: 5

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