Question

In the year 2017, the government merged service tax and sales tax and introduced the Goods and Services Tax (GST). When we are presented with a bill in a store, a small percentage of the total is always added. This is known as sales tax. GST is levied by the government on the sale of an item and is calcu-lated based on the selling price of the item. GST -rat e of 100 GST x selling price rate of GST = sales tax x100 selling price

Answer 1

Answer:

GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.

In other words,Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country.

Before the Goods and Services Tax could be introduced, the structure of indirect tax levy in India was as follows:

GST pattern of tax levy was

Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. All the inter-state sales are chargeable to the Integrated GST.

Now, let us understand the definition of Goods and Service Tax, as mentioned above, in detail.

Multi-stage

An item goes through multiple change-of-hands along its supply chain: Starting from manufacture until the final sale to the consumer.

Let us consider the following stages:

Purchase of raw materials

Production or manufacture

Warehousing of finished goods

Selling to wholesalers

Sale of the product to the retailers

Selling to the end consumers

GST Multi-stage

The Goods and Services Tax is levied on each of these stages making it a multi-stage tax.

Value Addition

GST Value Addition

A manufacturer who makes biscuits buys flour, sugar and other material. The value of the inputs increases when the sugar and flour are mixed and baked into biscuits.