Characterstics of good and service tax
Answers
Answer:
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.Jan 11, 2017
Explanation:
Indian Economy
Home Classroom
Classroom
Features of the new Goods and Service Tax (GST) System
tojo joseJanuary 17, 2017
Features of the new Goods and Service Tax (GST) System
The Goods and Services Tax, or GST is a major indirect tax reform introduced in India by integrating the major indirect taxes of the centre and states. It is a comprehensive tax levied on the manufacture, sale, and consumption of goods and services. The GST is a destination based consumption tax made on value addition. It is “collected on value-added goods and services” at each transactional stage of the supply chain or process. Already several countries have adopted GST based VAT systems. In India, the GST came into effect from July 1, 2017.
Features of GST
GST belongs to the VAT family as tax revenues are collected on the basis of value added. Unlike in the case of a pure commodity based VAT system, GST includes services tax also. Similarly, input credit is given while calculating the tax burden. Following are the main features of the GST as per the final agreement.
1. Taxes covered: Most of the important indirect taxes of the centre and states are integrated under the GST. The most important tax of the central government (in terms of tax revenue collection) -the Central Value Added Tax (or Union Excise Duty), Additional Customs Duty (CVD), Special Additional Duty of Customs (SAD), Central Sales Tax (levied by the Centre and collected by the States, the fastest growing tax revenue of the centre – Service Tax, the most important tax revenue of the states – the state VAT (Sales tax) are now merged into a single tax under the Goods and Service Tax.
There are three important indirect taxes for the centre – the union excise duties, service tax and customs duties. Of these, the central excise duties and service taxes are brought under the GST. Customs duties as a tax on trade was not merged with the GST.
States have two important indirect taxes – sales tax and state excise duties. Of these two, only the sales tax is merged with the GST.
Along with these four big taxes of the centre and states, several other low revenue incurring taxes are also brought under the GST.
A. The following taxes levied and collected by the Centre are merged with the GST:
a. Union Excise duties
b. Services tax
c. Duties of Excise (Medicinal and Toilet Preparations)
d. Additional Duties of Excise (Textiles and Textile Products)
e. Additional Duties of Excise (Goods of Special Importance)
f. Additional Duties of Customs (commonly known as CVD)
g. Special Additional Duty of Customs (SAD)
h. Cesses and surcharges
B. State taxes that are subsumed under the GST are:
a. State VAT
b. Central Sales Tax
c. Entertainment Tax (not levied by the local bodies)
d. Entry Tax (other than those in lieu of octroi)
e. Luxury Tax
f. Taxes on advertisements
g. Taxes on lotteries, betting and gambling
h. State cesses and surcharges insofar as they relate to supply of goods or services.
Notable exlusions from GST: Some notable taxes are not covered under GST and these includes: leveis on petroleum products, tax on alchoholic products, electricity duteis/taxes, stamp duteis on immovabel properties and vehicle taxes.
The achievement of GST reforms is the unificaiton of the numerous taxes into the single GST. Here, both the centre and states agreed to sacrifice thier fiscla right or power to give way for the common tax.
2. Unified tax regime: The GST integrates Goods and Service Taxes into one unified tax regime. Previously, the goods and services were imposed and administered differently.
3. The four-tier rate structure: the GST proposes a four-tier rate structure. The tax slabs are fixed at 5%, 12%, 18% and 28% besides the 0% tax on essentials. Gold is taxed at 3%. The centre has strictly demanded and got an additional cess on demerit luxury goods that comes under the high 28% tax. Essential commodities like food items are exempted from taxes under GST. Other consumer goods which are common items will be taxed at 5%.4. The new GST seems to have two standard rates – 12% and 18%. GST rate structure for the goods and services are fixed by considering different factors including luxury/necessity nature.
GST calculation can be explained by simple illustration : If a goods or services is sold at Rs. 1,000 and the GST rate applicable is 18%, then the net price calculated will be = 1,000+ (1,000X(18/100)) = 1,000+180 = Rs. 1,180
What are the types of GST?
Currently, the types of GST in India are CGST, SGST and IGST. This simple division helps distinguish between inter- and intra-state supplies and mitigates indirect taxes. To learn more, read about these 3 different types of GST.
Types of GST in India- CGST, SGST & IGST
How do I calculate GST?
The formula for GST calculation:
Add GST: GST Amount = (Original Cost x GST%)/100. Net Price = Original Cost + GST Amount.
Remove GST: GST Amount = Original Cost – [Original Cost x {100/(100+GST%)}] Net Price = Original Cost – GST Amount.