What is GST and how it works ?

As GST is a multi-stage tax, it involves collection by registered
vendors throughout the production and distribution chain before the goods or
services reach end-consumers

The total amount of GST paid to the tax authority by all the
vendors in the production and distribution chain is equal to the amount of tax
finally borne by the consumer.

The fabric maker processes the cotton into suit material and then
sells the material to the tailor for $1,000 plus $50 GST. Therefore,
the tailor pays $1,050 to the fabric maker.

The retailer displays the suit in his shop and then sells it to a
consumer for $2,500 plus $125 GST. The retailer has received
$2,625 from the consumer....

To comply with his GST obligations at
the end of the GST period, he needs to remit the net amount of $50
(which is output tax of $125 less input tax of $75) to the tax authority.

The tax authority receives GST payment of $25 each from the raw
material vendor, fabric maker and tailor, and $50 from the retailer.
In total, the tax authority receives GST of $125 for the suit
(equivalent to the amount paid by the consumer), which is collected
progressively through the production and distribution chain.

GST is not the only form of general consumption tax. It is often
compared with Retail Sales Tax (“RST”), which is an indirect tax levied at the
retail stage where goods pass from retailers to end-consumers.

GST is a combination central and state taxes put together. Hence there will be three types of taxes Central GST and State GST for intrastate transactions and IGST (Integrated GST) for interstate transactions.

All the center and state taxes are merged and brought as one tax under GST, state governments and central government will need to have their share of GST. Hence, there will be three types of taxes under GST.

GST aims to eliminate cascading effect of tax. All inputs credits can be utilized and it will bring down the tax burden on account of usage of credit.

GST aims to reduce the compliance burden of the customers. There is only one compliance that is required and only a single compliance has to be done.

Under the current regime, service tax, VAT and other returns are to be filed separately whereas the input tax mechanism under each tax is different..

In GST the returns are prepared by the GSTN once the assessee inputs all his purchase and sale details

One of the greatest benefits of GST is avoidance of cascading effects of tax and seamless flow of tax credits.

GST returns are to be prepared based on your invoices for the period of filing of return.

GST is a technology enabled solution and all returns, matching etc, happens within the IT infrastructure businesses will be left with no other option to adopt to technology solutions which will empower them will compliance.

GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017.

GST will help the country in achieving the goal of ‘One Nation, One Tax’, by removing the State tariffs that hinder the free movement of goods and services and transforming the country into a common market.

The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.

Tax will be levied on the supply of Goods and Services.

the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. Inter-state sales are chargeable to Integrated GST.

The GST journey began in the year 2000 when a committee was set up to draft law. It took 17 years from then for the Law to evolve. In 2017 the GST Bill was passed in the Lok Sabha and Rajya Sabha. On 1st July 2017 the GST Law came into force.

which would be equal to CGST and SGST. The concerned seller would levy IGST on the sales of his goods and accordingly pay taxes after adjusting credit of IGST, CGST and SGST on his purchases.

GST has mainly removed the Cascading effect on the sale of goods and services. Removal of cascading effect has impacted the cost of goods. Since the GST regime eliminates the tax on tax, the cost of goods decreases.