GST Guide – Learn about Goods and Services Tax in India

GST stands for Goods and Services Tax, an indirect tax implemented in India in 2017. The value-added tax applies to the sale of all goods and services. Alternatively, it is a destination-based tax payable at the place of final consumption, no matter where it was manufactured. The GST Council makes and implements GST-related laws and regulations that all business owners and consumers must adhere to. In the following sections, you will learn about the GST in India.

Objectives of GST Implementation

These are the key objectives of implementing Goods and Service Tax in India:

• Minimising the cost 
• Enhancing efficiency and productivity 
• Simplifying taxation by eliminating multiple taxes
• Enhancing business compliance 
• Improving the country’s revenue
• Making “One Nation, One Tax”
• Widening the country’s taxpayer base 
• Mitigating the cascading effect of taxes
• Single window clearance
• Increased transparency in the taxation system

How Does GST Work?

The following steps are involved in the working of GST:

1. Manufacturers: The manufacturer pays for the raw materials and adds value to manufacture the product.
2. Service Provider: The service provider pays GST on both the good’s purchase price and its added value. However, the producer’s tax liability is deducted from the total GST payment.
3. Retailer: The retailer pays on both the products they buy from the distributors and the value they add. However, their tax payment is deductible from the total GST amount. 
4. Consumer: The consumer pays GST on the product they purchase.

Types of GST

The Indian federal government system has ministers at the state and central levels. The same modal applies to GST, making it a concurrent or dual model. Consequently, both the state and central governments charge GST simultaneously. GST can be any of these four types:

1. SGST (State Goods and Service Tax): The state government levies SGST on all product and service supplies within a state. 
2. CGST (Central Goods and Service Tax): The Central Government levies CGST on all product and service supplies within a state.
3. IGST (Integrated Goods and Service Tax): The Central Government levies IGST on all product and service supplies between different states and on imports.
4. UGST (Union Territory Goods and Service Tax): The Central Government levies UGST on all product and service supplies within union territories.

Advantages of GST in India

GST has been one of the biggest tax reforms, resolving major flaws in the old taxation system. The major advantages of GST in India include the following:

1. Overcomes Deficiencies in the VAT System: The VAT system had a cascading effect that led to a tax on already paid taxes. The GST system has resolved this issue efficiently.
2. Removes the Confusion: The Goods and Service Tax in India resolves the issue related to classifying goods and services. 
3. Integrates All Existing Taxes: The old tax system had several ambiguities, such as separate CENVAT, VAT, service tax, luxury tax, etc. The GST complies with a single procedural requirement, making the system a lot more convenient. 
4. Eases Compliance: Handling several things at a time leads to ineffectiveness and mismanagement. GST implementation has eased compliance by recording separate compliance requirements under a single law provision.
5. Increases Transparency: Easier compliance with GST results in better monitoring, allowing businesses to take the required actions promptly.
6. Accelerates Redressal: GST reduces dispute grievances by making tracking easier and supporting the One Nation, One Tax policy.
7. Facilitates Clearances in a Single Window: Earlier, multiple formalities and registrations under various laws caused a pathetic situation for business owners. GST lets taxpayers follow a simple set of regulations under a single tax norm.
8. Makes Tax Payment Easier: Under the old tax regime, taxpayers had to file taxes separately for different taxes. GST eradicates this issue by requiring a common tax payment online.
9. Support Economic Growth: Taxpayers can efficiently save resources like time, money, and effort and invest them in their business expansion.

Following the path of digitalisation, GST has been a revolutionary and remarkable reform in the Indian taxation system’s history. It unifies the country under a single market system, consolidating and empowering the nation. By ousting several taxes and relegating the effect of multiple taxes, the Goods and Service Tax in India reduces the tax burden on the taxpayers. It increases revenue by making tax evasion impossible. If you are a business owner, apply for GST registration now and bring a positive impact on the Indian economy.