What is the GST Simplified in India?
Today we will talk about GST everywhere in the world there is disturbances and strikes that what exactly GST is. So what is GST? Today we will talk about this so what is basically GST. It is Goods and Service Tax.
I am telling you a definition of this "Multistage
Destination Tax based system" "based on value addition" Let's
understand multistage first. Here we are talking about full supply chaining
network Steps starting from manufacturing to consuming of the product, All
those are considered as stages Two tax systems are there in our country :
Direct and Indirect. Direct is one in which we do not have control and cannot
be transferred. So direct is Income Tax indirect is VAT. Whenever you have
purchased something you must have seen VAT applied below the bills. So what is
This is basically the tax which is being traveled from
production in supply chain network And in the end you are paying it If you are
eating in a restaurant, you pay VAT which was liability for them that they
transferred to you So that you pay that VAT Let's understand value addition.
Suppose a company purchased a product worth Rs.100/- 10% tax was applied due to
which now it is worth Rs.110/- The product costs them Rs.150/- including production
cost and profit They further sold it to distributor worth Rs.150 Plus 10% tax
After taking out a margin for them, Distributor sold it further Again 10% tax
will be applied As the product will move in the supply chain, value addition
tax will increase So what does that mean. More the stages of supply chain
network, more the tax to be paid by end consumer.
So let's take businessman point of view here Same condition : They purchased it worth Rs.100/-, 10% tax make it 110,profit of Rs.40/-, further sold it worth Rs.150 Again 10% tax applied and sold it further. So what happened here? They sold the product worth Rs.150/- +10% tax, so they sold it worth Rs.165/- So if we see they collected VAT of Rs.15 But they have already paid VAT worth Rs.10/- So we can subtract them and finally we are paying only Rs.5 VAT So let's leave about VAT, let's talk about GST.
GST is basically of 3 types
First: C-GST Cental GST
Second: S-GST State GST and
Third : I-GST
So let's understand difference between these three first If you are doing Sale within a state then CGST + SGST will be applied where earlier VAT + central excise/service tax was applied. The revenue that is being collected is divided into central and state Now let's take the opposite, you didn’t sale within a state, you did it from Delhi to Kolkata or somewhere. Here only IGST will be applied where earlier Central Sale Tax + Excise/service tax was applied. So here you have to pay only one tax which is IGST Let me give you an example to make you understand all these You purchased a product worth Rs. 1000/- in which 18% GST was to be applied You sold it within a state Let's say CGST and SGST is equal : 9% each So overall tax is Rs.1800/-, So that Rs.1800/- will be equally divided into state and central and you have to pay these taxes separately to each of them. And if you selling outside a state considering same condition.Rs.10000/- and 18% GST So here the IGST will be 18% and that amount will totally be given to central So the clear cut fund is if transaction is within a state then tax will be divided into state and central, and if transaction is inter-state then tax will be laid to central. So this is GST. Hope you understood GST If you couldn't understand GST, then please tell me in comments below, Share this article as much as possible with your businessman friends and with those people who are unable to understand about GST.
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