Question

Define gst. Explain its origin and important concepts.

Answer 1

Answer:

GST stands for “Goods and Services Tax”, and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. Its main objective is to consolidates all indirect tax levies into a single tax, except customs (excluding SAD) replacing multiple tax levies, overcoming the limitations of existing indirect tax structure, and creating efficiencies in tax administration.

Simply put, goods and services tax is a tax levied on goods and services imposed at each point of sale or rendering of service. Such GST could be on entire goods and services or there could be some exempted class of goods or services or a negative list of goods and services on which GST is not levied. GST is an indirect tax in lieu of tax on goods (excise) and tax on service (service tax). The GST is just like State level VAT which is levied as tax on sale of goods. GST will be a national level value added tax applicable on goods and services.

A major change in administering GST will be that the tax incidence is at the point of sale as against the present system of point of origin. According to the Task Force under the 13th Finance Commission, GST, as a well designed value added tax on all goods and services, is the most elegant method to eliminate distortions and to tax consumption.

One of the reasons to go the GST way is to facilitate seamless credit across the entire supply chain and across all States under a common tax base. It is a tax on goods and services, which will be levied at each point of sale or provision of service, in which at the time of sale of goods or providing the services the seller or service provider can claim the input credit of tax which he has paid while purchasing the goods or procuring the service. This is because they include GST in the price of the goods and services they sell and can claim credits for the most GST included in the price of goods and services they buy. The cost of GST is borne by the final consumer, who can’t claim GST credits, i.e. input credit of the tax paid.

Answer 2

Answer:

GST stands for Goods and Service Tax. It is a tax that is mandatory for every citizen to pay, based on a uniform and evenly distributed tax rate which is basically fixed for both goods as well as services across India, and it is finally payable at the final point of consumption by customers.

Explanation:

• The GST was launched by Indian Government on July 1, 2017 and it is a single value-added tax solely defined on the manufacture, sales and the consumption of both goods as well as services at the central level.
• Some important concepts introduced in GST are:

1. Under GST, the inter–State supplies that occur between two states and all the imports to the country are subjected to the IGST, which collected by the federal government
2. The term 'Tax on supply' generally refers to the GST that is commonly applicable on the supply of goods as well as services.
3. Suppliers at every stage are permitted to set off the GST which is paid on the purchase of input goods.