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Goods and Service Tax or GST is an indirect taxation system that has been proposed in the country. The main objective behind tolling out GST is bringing all kinds of taxes together into a single taxation system. It has been seen that there a lot of taxes and many of them differ from state to state. It is very important to have a standardized taxation system that is common all across the length and breadth of the country. The Constitution (One Hundred and First Amendment) Act 2016 introduced GST. And one of the major changes from the old indirect tax regime is that GST is a Destination Based Tax.
It is significant to understand that Goods and Service Tax is an indirect tax that is going to be levied on sale, manufacture and goods and services consumption out all over the country. The objective of rolling out GST is to do away with the multi-layered taxes by the Union and state governments. Thus eliminating the cascading effect of taxes. GST or Goods and Service Tax would be applied and will be collected at every phase of sale and purchase of services or goods mainly on the basis of the method of an input tax credit. This method will also permit businesses that are GST registration to claim the tax credit as per the GST value for the time the payment for services or goods purchase was made as a commercial activity. It is significant to understand that there is little difference between taxable goods and services and as such, they are taxed at a standard unified rate in a supply chain till the services and goods reach their customers. With GST, a single authority would be responsible for the administrative issues for levying the taxes on services and goods. After tax has been levied, the imports will have the same taxes as domestic services and goods and the exports are zero-rated.
The previous Indian taxation system was rigidly structured. The Revenue Department of the Finance Ministry of the Indian Government[1] majorly responsible for the computation and levying and collection of a majority of taxes in the country. However, there were certain taxes that were levied by the Local State Bodies on their own or the governments of the states. Basically, there are two types of taxes that the Indian Government and different state government applies. These are direct and indirect taxes.
Three components of GST
This shows that the Goods and Service Tax is distinct from the current tax system that is being followed in the country. It is different from the origin-based tax as the Goods and Service Tax entails the policy of one tax only and GST is a Destination Based Tax. All the taxes that are presently existing are merged and brings the state and central government together which are legal entities. Both governments collect different taxes. With GST ready to be rolled out, a marked transformation and reforms and are expected in the country.
For GST Registration Services and other related services like GST return filing services or advisory please visit our website.
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