The journey of GST (Goods and Services Tax) in India began in 2000 when the government first set up a panel for drafting the law. It took 17 years for the law to evolve, and it was finally implemented on 1st July 2017.

Popularly known as the "One Nation-One Tax" regime, it eliminated a host of indirect taxes such as central excise duty, service tax, and more to make indirect taxation more transparent. While it has been around two years since the implementation of GST, a large number of people are still mostly unaware of its basics.

If you want to understand GST, here are a few essential things that you should know:

1.What is GST?

First and foremost, it is essential first to know GST meaning. GST is a multi-stage indirect taxation system where tax is levied at every value addition that goods and services go through.  In other words, tax is applicable at every point-of-sale such as raw material purchase, manufacture or production, warehousing finished goods, sale of the product to a wholesaler, sale to retailer, and final sale to the consumer.

2.What are the Components of GST?

There are three components of GST- IGST, CGST, and SGST. In case if the sale of goods or service is between two states or inter-state, IGST or Integrated GST is applicable. If the sale is within a state or intra-state, CGST or Central GST and SGST or State GST are applicable.

3.What is GST Registration?

As per the GST mandate, business with an annual turnover of more than Rs. 40 lakhs need to register themselves as a taxable entity. This limit in the North-Eastern states is Rs. 10 lakhs. This process of registration is known as GST registration.  There are different types of businesses where the registration is mandatory. Continuing business without registering is an, and severe penalties are applicable.

4.Is GST Beneficial?

A large number of people still believe that the previous tax regime was better than GST. However, GST has many benefits, which are:
  • Eliminate the cascading effect of taxation
  • Lesser compliances
  • Regulation of the unorganised sector
  • Easy online procedure
  • More efficient logistics

The government also regularly makes changes to the GST laws to make taxation more transparent for businesses and affordable for the end consumer.

Now that you know GST definition and other essential details, it should be easier for you to understand how it impacts your business. Follow the GST laws and pay the applicable taxes on time to run your business legally and avoid non-compliance and penalties.

Click here to visit our personalized online advisor that gives you the financial expertise you need.

DISCLAIMER

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.



Trending Articles

Article Links

How to Calculate Income Tax

Income Tax Benefit

Tax Saving Investment

Tax Saving Investments Under 80C

What is Tax

Latest Articles

abc-of-taxes
abc-of-taxes

Income Tax Slab for Senior Citizen: Rates and Exemptions

Read More
Posted on 24 March 2020
abc-of-taxes
abc-of-taxes

How to Get Tax Rebate in India?

Read More
Posted on 24 March 2020
abc-of-taxes
abc-of-taxes

Section 80D Of The Income Tax Act For Health Insurance

Read More
Posted on 24 March 2020

Featured Articles

image abc-of-personal-money
abc-of-personal-money

Are Millennials Any Different When It Comes To Planning Financials?

Read More
Posted on 05 February 2020

Relevant Articles

image abc-of-retirement-planning
abc-of-retirement-planning

What is PRAN (Permanent Retirement Account Number)

Read More
Posted on 27 March 2020
image abc-of-retirement-planning
abc-of-retirement-planning

Key Highlights in Transferring Your EPF Balance to NPS

Read More
Posted on 25 March 2020
image abc-of-retirement-planning
abc-of-retirement-planning

Why Ignoring to plan for Retirement can be Financially Damaging?

Read More
Posted on 25 March 2020