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What is GST ?

What is GST ? IN INDIA - Goods & Service Tax
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  • 30 June, 2017

What is GST ?

What is GST ? IN INDIA – Goods & Service Tax

GST means Goods & Service Tax is set to launch on July 1, is a multi-stage, destination-based tax that will be levied on every value addition.

Goods & Service Tax is being glorified as a system of taxation by which economy will take an upward swing and further it will ease the trade and industry with respect to the indirect tax system of the country. “Only one” indirect tax has to be paid by the trade and industry and all the other indirect taxes will be subsumed in GST.

What Is GST ?

GST is a consumption based tax levied on sale, manufacture and consumption on goods & services at a national level. This tax will be substitute for all indirect tax levied by state and central government. Exports and direct tax like income tax, corporate tax and capital gain tax will not be affected by GST. GST would apply much as all goods other than crude petroleum, motor spirit, diesel, aviation turbine fuel and natural gas. It would apply to all services barring a few to be specified. With the increase of international trade in services, GST has become a global standard. The proposed tax system will take the form of “dual GST” which is concurrently levied by central and state government. This will comprise of:

  • Central GST (CGST) which will be levied by Centre
  • Central GST (CGST) which will be levied by Centre
  • Integrated GST (IGST) – which will be levied by Central Government on inter-State supply of goods and services.
Transaction New Regime Old Regime Comments
Sale within the state CGST + SGST VAT + Central Excise/Service tax Revenue will now be shared between the Centre and the State
Sale to another State IGST Central Sales Tax + Excise/Service Tax There will only be one type of tax (central) now in case of inter-state sales.

What impact GST will have on pricing of products as compared to current scenario?

Let us take an EXAMPLE to understand this clearly.

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