Goods and Services Tax (GST)
The Goods and Services Tax (GST) is a single indirect tax levied on the supply of goods and services in India. It has replaced a multitude of indirect taxes previously imposed by the central and state governments, such as excise duty, value-added tax (VAT), service tax, and octroi. Introduced in 2017, GST aims to create a unified and efficient tax system across the country.
How does GST work?
GST follows a multi-stage, destination-based tax system. This means tax is applied at every stage of the value chain, from manufacturing or import to the final sale to the consumer. However, the tax paid at each stage is only on the value added at that particular stage, eliminating cascading effect of taxes seen in the previous system.
GST Components:
- Central GST (CGST):Levied by the central government on the supply of goods and services within a state.
- State GST (SGST):Levied by the state government on the supply of goods and services within the state.
- Integrated GST (IGST):Levied on interstate supplies and imports. The revenue collected is shared between the central and state governments.
Benefits of GST:
- Simplified tax structure:GST streamlines the tax system, reducing compliance burden and paperwork for businesses.
- Enhanced transparency:The credit mechanism ensures transparency and eliminates cascading of taxes.
- Increased efficiency:GST minimizes tax leakages and promotes inter-state trade, fostering economic growth.
- Level playing field:GST creates a level playing field for businesses across different sectors and locations.
GST Rates in India:
Currently, in India, goods and services are categorized into various tax slabs, including:
- 0%:Exempt goods and services (essential items like milk, fruits, and vegetables)
- 5%:Essential goods and services (like newspapers and books)
- 12%, 18%:Most commonly applicable rates
- 28%:Luxury goods and sin goods
Understanding GST can be crucial for businesses and individuals alike to comply with the regulations and optimize their tax liabilities. For further information, consulting with a tax professional is always recommended.
Services provided by SAKH & Associates
- GST Registration
- GST Consultancy
- GST refund
- GST Compliances
- GST Audit
- GST Return filling (Quarterly/ Monthly/Annually)
