What Is GST?GST tax is a form of tax structure wherein the tax is levied on the value addition of the products and services on every stage, and it is collected by the end consumer. There are four types of GST as per the act i.e. Central GST, Union Territory GST, Integrated GST and State GST.
Here are some of the primary differences between GST and erstwhile taxes.
· Eliminate The Cascading Effect Of Tax –Cascading effect is a phenomenon of taxation that puts an extra burden on the end consumer. With the cascading effect in place, the taxes were levied on the value on which the previous buyer has already paid the tax. Thus, GST removed this “tax on tax” by bringing the concept of input tax credit that can be claimed at every stage by the seller or service providers.
· Single And Comprehensive Tax –GST has subsumed almost all the taxes including Service Tax, VAT, Excise Duty, Entry Tax etc., levied domestically on items and services while providing for a set of uniform rates across four slabs. These taxes are divided equally into two parts, viz. Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST), depending on its nature as well as distribution.
· Destination-based taxation –With the onset of GST, the taxes were charged on the point of consumption, unlike the former tax structure that levied taxes on the place of manufacturing. This change from origin-based tax to destination-based tax has also significantly altered the revenue generation of producer states as well as consumer states.
· Simple online procedure –The GST has brought in a new digital era in the Indian taxation system. All the process, right from the registration to the payment of taxes has been made online. This uniform e-registration is a considerable change as compared to the earlier decentralised multiple registration mechanisms.
· GST Council –Earlier there was a single body - Central Board of Indirect Taxes and Customs, which was responsible for tax-related purposes. However, under the new GST regime, a GST Council was formed that would be administering different tax rates in different slabs.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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