Goods and Service Tax (GST)

What is GST?

GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi stage, destination-based tax that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India. GST Expert in Bangalore.

Advantages Of GST

GST will mainly remove the Cascading effect on the sale of goods and services. Removal of cascading effect will directly impact the cost of goods. Since tax on tax is eliminated in this regime, the cost of goods decreases.

GST is also mainly technologically driven. All activities like registration, return filing, application for refund and response to notice needs to be done online on the GST Portal. This will speed up the processes.

Under the previous regime, classification of products into different categories caused a lot of confusion and was a litigious issue. GST aims to solve this issue by bringing in Harmonized System of Nomenclature or HSN, which is an eight-digit code to identify products according to international standards.

Instead of several different taxes being levied by state and central government, GST proposes to impose only one tax. GST will replace several hidden taxes that were imposed by state governments and it will improve ease of doing business.

Components of GST

There are 3 taxes applicable under this system: CGST, SGST & IGST.

  • CGST: Collected by the Central Government on an intra-state sale (Eg: Within Karnataka)
  • SGST: Collected by the State Government on an intra-state sale (Eg: Within Karnataka)
  • IGST: Collected by the Central Government for inter-state sale (Eg: Karnataka to Tamil Nadu)
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