GST stands for Goods and Services Tax which is an indirect tax levied on the supply of goods and services. It is levied at every step of the production process i.e. on raw materials purchased by the manufacturer, on products sold to the wholesaler by the manufacturer, on products sold to the retailer by the whole seller and finally on the sale of the product to the consumer. Goods and Services Tax is meant to be refunded to all the parties except the end consumer.
Long and Short Essay on GST
Essay 1 (250 Words)
Goods and Services Tax in India is a tax levied uniformly throughout India on the supply of goods and services as well as on the import of goods from foreign destinations. GST has divided particular goods and services under uniform tax slots, which initially varied from state to state. GST is an Indirect Tax i.e. the dealers registered with GST act as intermediaries, collecting the tax from the end customer, which is the consumer, who ultimately bears the final burden of the tax.
How GST Works
The basic mechanism of taxation under GST is that it is levied at every stage of the supply process. It is subsequently paid by the manufacturer, wholesaler, retailer, and consumer. Though the registered dealers (manufacturers, wholesalers, and retailers) charge GST, they don’t keep the amount, rather pay it back to the government with a tax invoice and claim credit for the tax thus collected.
This leaves the end-user i.e. the customer as the one who bears the final burden of the tax. The end customer has to pay prescribed GST on the product purchased or on the services availed, without any provision of claiming the return or credit.
An uniform Goods and Services Tax replaces other central and state indirect taxes like – VAT (Value Added Tax), CENVAT (Central Value Added Tax), excise tax, customs tax, state excise tax, etc. In a way, the GST has integrated the central and state taxation system into one uniform tax regime. In a layman’s term, the manufactures and suppliers of a particular product, now have to pay a uniform tax throughout India.
Essay 2 (300 Words)
GST stands for Goods and Services Tax, India. It is a comprehensive tax levied by the government on the supply of goods and services. It is also an indirect tax, replacing other central and state levied indirect taxes. GST has brought the whole India under one tax regime, saving time and resulting in a low tax burden.
Types of GST
There are basically four types of Goods and Services Taxes, as described below-
1) Central Goods and Services Tax (CGST)
CGST is the GST levied by the Central Government of India on the transaction of goods and services with a state or Union Territory. CGST replaces other central taxes like – Central Excise Duty, Central Sales Tax, Customs Duty and SAD (Special Additional Duty) Tax.
2) State Goods and Services Tax (SGST)
SGST is the GST levied by the state on transactions of goods and services within the state. It is one of the two taxes levied within a state, other being the CGST. State GST replaces the state levied taxes – Value Added Tax, Luxury Tax, Entry Tax, Entertainment Tax, etc. The revenue thus collected under the SGST is solely claimed by the respective state government.
3) Integrated Goods and Services Tax (IGST)
While CGST and SGST are the GST levied on intrastate (within the state) transactions of goods and services; IGST stands for the GST levied on the interstate (between two states) transaction of goods and services. However, IGST is collected by the central government and reimbursed later to the respective state.
4) Union Territories Goods and Services Tax (UTGST)
UTGST is the GST levied on the transaction of goods and services in these five Union Territories of India – Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Chandigarh and Lakshadweep. Total GST levied in a Union Territory is the sum of CGST and UTGST. State GST isn’t applicable to UTs, as it would require a legislature. Union Territories of Delhi and Pondicherry rather have SGST, because they have their own legislature.
The main reason for GST is to bring the whole of India under one uniform tax regime. It has reduced the unnecessary tax burden of different state and central taxes, on the dealers and has made the goods cheaper for both the stakeholders and the consumer.
Essay 3 (400 words)
Goods and Services Tax, India abbreviated as GST is a tax based on the consumption of goods or services throughout India. GST is an indirect tax which has replaced the previous indirect taxes. Direct taxes like – income tax, corporate tax, etc, are not affected by the GST.
Brief History of GST
Goods and Services Tax (GST) was proposed in 1999, in the government of the then Prime Minister of India, Atal Bihar Vajpayee. Further, a committee was set up by Prime Minister Vajpayee under the then Finance Minister of West Bengal, Asim Dasgupta to formulate a GST model. Since then, the GST could not be implemented, until recently on 1st July 2017 by the NDA (National Democratic Alliance) government led by the BJP (Bhartiya Janata Party).
Significance/Importance of GST in India
Goods and Services Tax is essential indirect tax reform in India. Before GST, India had many indirect taxes levied respectively by both central and state governments, resulting in a high amount of taxes also requiring a high amount of resources for their collection and maintaining records.
Integration of both central and state taxes into one will forego many adversities of previous tax system i.e. multiple taxations, cascading, loss of time and resources, etc. Besides, GST considers the whole of India as one unified market, consequently promoting foreign investment.
By eliminating the cascading of tax at various levels, GST makes the goods cheaper for the registered dealers as well as the end consumer consequently leading to the economic growth of the nation. India is a developing nation, still struggling with the issue of unemployment. GST is expected to create new employment opportunities in the field of taxation and accountancy along with vacancies in the manufacturing sector.
A centralized GST has resulted in the elimination of various check posts during the interstate transportation of goods. The travel time of interstate goods transport vehicles has reduced considerably by 20% due to the absence of check posts. Also, the multi-party involvement in GST will improve the compliance level.
GST will lead to a more transparent and corruption-free taxation system. The GST is formulated in such a way so that it benefits both the businesses and the consumers. India needed a better tax reform on indirect tax like the Goods and Services Tax. GST places India at a better place to negotiate in the international market. Also, by bringing SMEs (Small and Medium Enterprises) and other organized sectors, under its gambit, GST leads to a more stable Indian industrial sector and an improved economy.