What is GST? How it works?👇👍😁

Are you in search of some basic information about GST and How it works in India then you are at right place. In this blog post, I am going to tell you some basic information about GST whichever Taxpayer needs to know. So let's move on to out topic - 

What is GST?

GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.

GST is one indirect tax for the entire country.

Under the GST regime, the tax will be levied at every point of sale. In case of intra-state sales, Central GST and State GST will be charged. Inter-state sales will be chargeable to Integrated GST.

How GST works in India?

The Government of any country needs money for its functioning and taxes are a major source of revenue for a Government. The taxes thus collected are spent by Govt. on the public.

These taxes are broadly classified into two types: Direct Tax and Indirect Tax

• Direct Tax – Direct Tax is imposed on the Income of an individual. The amount of Tax payable varies on the income earned by the individual from various sources such as salary, house rent income etc. So, the more you earn, the more tax you pay to the Government which essentially means the rich pay more tax in comparison to the poor.

• Indirect Tax – Indirect tax is not imposed directly on the income of individuals. Instead, it is imposed on goods and services which in turn increase the cost MRP) of Goods and Services. Unlike a direct tax, the indirect tax should be borne by the end customer, rich and poor alike., There are many indirect taxes. Some of these are levied by the Central Government whereas some are levied by the State Government making the indirect tax system an extremely complicated system.

GST has been introduced to replace multiple indirect taxes levied by State and Central Governments in order to simplify the indirect tax system.

GST has replaced almost 17 of the existing state and central indirect taxes (more to come in the future) such as central excise duty, additional customs duty, VAT, entertainment tax, service tax etc.