December 14, 2018

What is GST

What is GST

 

 

 

“Goods and Service Tax (GST) is a comprehensive tax levy on manufacture, sale and consumption of goods and service at a national level.

GST is levied on the supply of goods and services at each stages of the supply chain from the supplier up to the retail stage of the distribution. Even though GST is imposed at each level of the supply chain, the tax element does not become part of the cost of the product because GST paid on the business inputs is claimable.

GST is a tax on goods and services with value addition at each stage having comprehensive and continuous chain of set-of benefits from the producer’s/ service provider’s point up to the retailer’s level where only the final consumer should bear the tax.” It is a Destination Based Tax

GST will replace 17 Indirect taxes namely

  1. Central Excise Duty
  2. Additional Excise Duty(Goods of special importance)
  3. Duties of Excise(Medical and Toilet Preparation)
  4. Additional Duties of Excise under Textile and Textile products
  5. Service Tax
  6. Additional Custom Duty(CVD)
  7. Special Additional Duty of Custom(SAD)
  8. Central Cess and Surcharges
  9. Value Added Tax
  10. Central Sales Tax
  11. Purchase Tax
  12. Luxury Tax
  13. Entry Tax
  14. Entertainment Tax
  15. Taxes on advertisement
  16. Taxes on Lotteries, Betting and gambling
  17. State Cess and surcharges

 

Hence, it does not matter how many stages where a particular good and service goes through the supply chain because the input tax incurred at the previous stage is always deducted by the businesses at the next in the supply chain.

 

 

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