Goods and Service Tax is an indirect tax that the government of India levies to various goods and services in India. It is a destination-oriented multistage tax. It replaces every other indirect tax, including the excise duty, value-added tax, and service tax.
All goods and services are included under the domestic indirect taxation law. The various GST bill advantages and disadvantages are mentioned below.
History of goods and service tax
The goods and service tax was first implemented in 1954 in France. Subsequently, every other country, including the United Kingdom, Australia, Vietnam, South Korea, Spain, Canada and many more, took over this taxation system. In India, the government implemented the goods and service tax in 2017. With the introduction of GST, one could improve India’s taxation standards and structures. Upon the implementation, the taxation system of GST replaced various Central taxes, including:
- Service tax
- Central excise duties
- Duties of excise
- Additional duties of customs
- Additional duties of excise
- Cess and surcharge
The goods and service tax also subsumed various States taxes, including
- Purchase tax
- Luxury tax
- Entry tax
- State tax
- Taxes on advertisement
- Entertainment tax
- Central sales tax
- Taxes on lottery and gambling
Every business with an annual turnover of Rs. 20 lakh or more would get exempted from the goods and service tax.
The objective of the goods and service tax
The various goals of GST include:
- Elimination of the cascading effects of tax
- Increase the revenue surplus and GDP ratio
- The subsumption of other indirect taxes
- Increase the tax compliance
- Decrease in the level of corruption
- Increase in the efficiency and overall productivity
Benefits of goods and service tax
The various advantages of the goods and service tax are encapsulated below:
- It helps to remove the cascading effect of tax. With implementing the goods and service tax, every other taxation system came under one umbrella. Due to this, inputting the tax credit claims became quite simple.
- The goods and service tax system helps to form a uniform tax structure. It helps to facilitate uniformity in the law, processes and tax rate across the country.
- One can initiate all the goods and service tax processes online. One can also choose to do the return and registration online. Hence without hassle, you can complete the process of GST online.
- The GST bill streamlines the various processes related to online compliance, claim procedures and payments. It also helps the unorganized sectors to bring them under the regulation of the norms of goods and service tax.
Types of goods and service tax
There are four different types of goods and service tax in India. These are:
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State goods and service tax
The state government charges the state goods and service tax on every intrastate goods and service. The state government collects the revenue that gets collected under this.
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Central goods and service tax
The central government charges the central goods and service tax on every transaction. The concerned authorities are responsible for collecting the tax revenues generated under the taxation system.
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Integrated goods and service tax
This tax is charged on every inter-state transaction of the various goods and services.
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Union territory goods and service tax
It is a tax that is levied by the union territory. It comes with similar payment terms and conditions as any other GST tax.
To get yourself registered under the goods and service tax, you must apply it online. You will receive an application reference number that would help track down your goods and service tax registration status. After filling up the form, you must provide the required documents, including address proof, PAN card number, photographs of the owner, bank account details, and Aadhar card of the owner.
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