What is Goods and Services Tax (GST) in India?

Introduction

“Invention is born out of necessity.”As said, GST is born out of necessity. When the current indirect tax structure is no more able to take India towards the dream of an economic superpower, the government steps up and introduced Goods and Service tax (GST).

Goods and Service Tax (GST) has been introduced with an only motive to accelerate the economic growth. It is expected that GDP growth will increase by 2% after introduction of GST.

Meaning;

Goods and Service tax (GST) is an upgraded version of Value Added Tax (VAT). GST is a consumption based tax and a comprehensive indirect tax which shall levy on the supply of goods and services.

Presently, Indian indirect tax structure is very vast and complex. Under indirect tax ambit, we have Central Excise, Service tax, Central Sales Tax, 31 VAT laws, Luxury tax, entry tax etc. As we can see, there is a whole complex web of laws.

GST is set to subsume all these taxes and will prevail as a single indirect tax levy in the whole country. This will facilitate wider tax base, more compliant business, less litigation and tax collection cost will also decrease

GST Applicability in India

GST is applicable on the supply of all goods or services or both except taxes on the supply of the alcoholic liquor for human consumption. Alcoholic liquor for human consumption shall continue to be taxed under the current system.

GST is currently not applicable on Alcoholic liquor for human consumption and Petroleum crude, high-speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel (GST council will decide until when these will be brought under GST ambit).

GST shall also be applicable on tobacco, tobacco products. The further centre may also impose excise duty on tobacco and tobacco products.

What all taxes are subsumed under Goods and Services Tax (GST) in India

The following taxes are subsumed:

• Excise Duties
• Service Tax
• Additional Custom Duty
• Additional Excise Duty
• State Value added tax
• Central Sales tax
• Entertainment tax
• Octroi and entry tax
• Purchase tax and luxury tax
• Taxes on lottery, betting and gambling.

Conclusion

GST meaning has been explained in the above article. However, you maybe looking for something else and you might not get the answer. In that case, you can ask us any time through below mentioned query form.

Know more about the GST Registration in India.