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What is GST:
GST, also known as The Goods and Service Tax as the name implies, is an indirect tax placed on goods and services of India and is applicable on the entire country.
Approved by the Parliament in March 2017 and coming into influence on 1st July 2017, GST has replaced many Indirect Taxes in India.
Goods & Services Tax Law in India is a widespread and multilevel tax that is imposed on every rate accumulation. It is the one indirect tax law for the whole of India. Slowly and steadily, it is replacing all the indirect laws that previously used to exist in the country.
The concept of GST first arose in the year 2000. Started from the point when a committee was set up to pass the law, it took more than seventeen years from that time for the GST law to advance.
On the first of July 2017, the GST Law came into action and the GST Notice was delivered in the Lok Sabha as well as Rajya Sabha.
Since GST is a multi-level process as discussed earlier, the supply stage starts from the manufacturer to the end consumer. The manufacturer purchases the necessary raw materials which are then sent over for manufacturing.
The finished items are then stored in the warehouse and sold to the wholesaler, who further sells it to the retailer. Customer visits the shop and buys the good from the retailer. A tax is imposed on every level, according to the GST tax.
Components of GST:
There are three types of taxes, relevant under GST:
- CGST: The tax collected from the consumer by the Central Government (intra-state).
- SGST: The tax collected from the consumer by the State Government (intra-state).
- IGST: The tax collected from the consumer by the Central Government (inter-state).
Advantages of GST:
- The overall process is speedy since all the activities are carried out online like registration, refunds etc.
- The overall cost of goods decreases due to cascading effects on the sale of goods, hence all parties can benefit from the cost decrease.
Rates of GST:
Some businesses have their goods excused by the Indian Government and hence, don’t have to pay any taxes under GST. A bunch of them include fresh fruits as well as vegetables, meat and dairy products, goods of grinding trades, as well as some other foodstuffs and necessities. Coming towards the remaining items, the GST is levied at mutable rates on different goods.
Some of these rates are as follows:
- The rate of GST is 18% for soaps
- The rate of GST is 28% on washing and cleansing agents.
- The rate of GST is 5% on readymade clothes.
- The rate of GST on movie ticket varies (18% GST for tickets less than Rs. 100 and 28% GST on more than Rs.100).
- The rate of GST is 12% on under-construction property booking.
For different Goods, four different Tax Rate Slabs have been proposed, starting from a GST of 5% all the way up to 28%:
Items Included in the 5% GST slab:
- Hearing aids
- Post stamps
- Braille watches
Items Included in the 12% GST slab:
- Jams and jellies
- Accessories of hearing aids
- Nuts such as almonds etc.
- Meat products
Items Included in the 18% GST slab:
- Refined sugar
- Ice cream
- Instant food mixes
Items Included in the 28% GST slab:
- Vending machines
- Washing machines
- Personal aircraft
This consumption tax, which is refunded to every party in the marketing and sale chain but the end user, has drastically reshaped the country’s economy and has created a balance.
All the other parties have also flourished in their businesses due to the introduction of the GST tax law.