Goods & Services Tax is a comprehensive, multi-stage, destination-based tax that will be levied on every value addition.
To understand this, we need to understand the concepts under this definition. Let us start with the term ‘Multi-stage’. Now, there are multiple steps an item goes through from manufacture or production to the final sale. Buying of raw materials is the first stage. The second stage is production or manufacture. Then, there is the warehousing of materials. Next, comes the sale of the product to the retailer. And in the final stage, the retailer sells you – the end consumer – the product, completing its life cycle
1. A Person Registered under the any Existing Indirect Tax laws like VAT, CST, Excise, Service tax i.e. shall be automatically migrated to GST.
2. A person who is location in north east states and annual turnover is 10 lac or more shall be required to be registered under the GST laws. For the rest of India the mandatory registration under GST Act is required if annual turnover is Rs. 20 lac or more
Currently, the Indian tax structure is divided into two – Direct and Indirect Taxes. Direct Taxes are levies where the liability cannot be passed on to someone else. An example of this is Income Tax where you earn the income and you alone are liable to pay the tax on it.
When Goods and Services Tax is implemented, there will be 3 kinds of applicable Goods and Services Taxes:
1. CGST: where the revenue will be collected by the central government
2. SGST: where the revenue will be collected by the state governments for intra-state sales
3. IGST: where the revenue will be collected by the central government for inter-state sales
In most cases, the tax structure under the new regime will be as follows:
| 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. |
Copyrights © 2017 All Rights Reserved, Designed and promoted by Print2digital