what is GST ?
explain in 200 -150 words
Answers
Answer:
Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes. Multi-staged as it is, the GST is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer and as a destination-based tax, it is collected from point of consumption and not point of origin like previous taxes.
Goods and services are divided into five different tax slabs for collection of tax - 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system.[citation needed] There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold.[1] In addition a cess of 22% or other rates on top of 28% GST applies on few items like aerated drinks, luxury cars and tobacco products.[2] Pre-GST, the statutory tax rate for most goods was about 26.5%, Post-GST, most goods are expected to be in the 18% tax range.
The tax came into effect from 1 July 2017 through the implementation of the One Hundred and First Amendment of the Constitution of India by the Indian government. The GST replaced existing multiple taxes levied by the central and state governments.
The tax rates, rules and regulations are governed by the GST Council which consists of the finance ministers of the central government and all the states. The GST is meant to replace a slew of indirect taxes with a federated tax and is therefore expected to reshape the country's 2.4 trillion dollar economy, but its implementation has received criticism.[3] Positive outcomes of the GST includes the travel time in interstate movement, which dropped by 20%, because of disbanding of interstate check posts.[
Answer:
GST is an indirect tax that has subsumed most of the indirect taxes in India. Moreover, it is a type of value-added tax as it levy on different stages such as manufacturer, sales and consumption of goods or/and services. It is important how GST works in India and how the older indirect taxes used to work in India.
GST is the biggest indirect tax reform in India was introduced in India with a motive of One Nation One Tax to remove all the taxation barriers between states and create a single market that will be opened to purchase and sell with in the country freely. Ultimately, the GST is providing economic freedom to Traders to freely trade without many compliances.
However, GST is beneficial to the common man too in two ways:
All the taxes are collected at the point of consumption decreasing the cost of the product.
Less tax burden as tax barriers are broken between the states and there is no cascading effect that used to happen in the previous indirect tax regime.