Saturday, 24 October 2020

What is GST? Advantage and Disadvantage, Rate of GST

What is GST ?

GST stands for goods and service tax. Many people think that it is a kind of another tax which is an additional tax on the current tax system in India but seriously it is not that kind of Tax.
In India, the tax system is broadly classified into two categories such as

• Direct Tax
Direct Tax are taxes which are imposed on individuals and paid to government directly by them.


• Indirect Tax
Indirect taxes are imposed on goods and services and pay in directing to the government by an individual.

For example, The tax is paid on bills of restaurants, movie tickets, and any commodity which is purchased by an individual.

What is GST? Advantage and Disadvantage, Rate of GST

Indirect taxes is levied by central government and state government


Central Government


• Excise Duty
while on the central government the individual pays excise duty
which is charged on goods manufactured in India.

• Service Tax
service Tax which is charged on services used by an individual.

• Central Sales Tax
CST is a central sales tax and it is charged on the interstate of sales.

• Custom Duty
Custom duty is charged or import and export of goods.


State Government


• Valued Added Tax (VAT)
The tax which was levied by the state government was VAT ( Value Added Tax) and it is charged on the goods soul within the states.

• Entertainment Tax
Entertainment Tax it is charged on various form of entertainment.

• Luxury Tax
luxury tax is imposed on luxury items and luxury hotel rooms.

• Octroi & Entry Tax
Octroi and entry tax this tax is imposed on the transfer of goods.

What is GST and Rate of GST?

As the name suggests it is an indirect tax levied on goods and services which clears that GST is indirect and it is not going to have any impact on the rate and structure of direct.

Taxes such as excise duty service tax luxury tax wet will be replaced by GST. There will be two parts of GST that are CGST and SGST.

All central government indirect tax is replaced by CGST and all state government indirect taxes is replaced by SGST.

Before coming to India it is applicable to many countries such as Australia, Japan, and even in Pakistan, the GST is also applicable.

Rate of GST

As the government has announced four tax Slabs in GST that is 5 percent 12 percent 18 percent and 28 percent. which process price under 1211 items.

According to the government, some essential items for example grains will be taxed at 0 percent. The lowest 5% rate will be used on commonly used as Items for example coffee cream etc.
12 percent and 18 percent are two standard rates of GST. highest 28 percent rate will be applicable on luxury items and services used by an individual.

These services is also been classified into four different slaves that is 5 percent 12 percent 18 percent and 28 percent.

For example,
In five percent transport of goods to rail and ears will be charged.
In 12 percent air travel business class will be charged.
In eighteen percent of restaurant bills will be charged.
In 28 percent hotel rent and gambling will be charged.

Advantages of GST

• It will replace all major indirect taxes.
This means that all central government indirect taxes are replaced by CGST and all state government indirect taxes is replaced by SGST.

• It will remove the cascading effect.
It is a situation when Tax is imposed on previously charged tax. in simple words we can say a tax on tax.if any commodity on which the excise duty is charged it is also liable for weds for example if we manufacture a commodity and sold to a shop we will charge 12 percent excise duty and that shopkeeper sells to individual will charge 12.5% VAT. so in this case wet is charged on excise duty amount which made the burden on individual this is called cascading effect.GST will remove the cascading effect as there is only a single tax is applicable.

• GST will reduce the flow of black money in the country money on which tax is not paid to the government is known as Black money. There are individuals who are not reporting each transaction of Taxes. which will increase their profit by reducing their tax.

Now GST is the single tax on goods and services right from the manufacturer to individual in GST to get credit fairs of Tax everyone has to insist for getting an invoice for transaction uses of man and Aadhar will be required for filing GST returns this will help income tax department to track every transaction of the commodity.

Disadvantages of GST

• It is an impact on the real state market by listening to many economist's words the implementation of GST in India will also show an impact on the real state market. it may increase the cost of new homes by 8% which in turn will cease the demand by 12%.

• Costlier service the service tax which is applicable till 30 June is 15 percent. which will increase to 18 to 20 percent when GST is levied as such many services will become costlier like courier service rail and air ticket house rents, school fees, life insurance policies, healthcare services, bank and investment management services and many modes.

• GST is the complexity for the businessman. According to the proposal of the GST tax. The control on business will be rendered on central and state governments with businessmen binding bylaws. As such complexity may arise for many businessmen across the nation.

• Old wine in a new bottle according to Indian economics GST charged by the government as central goods and service tax for central and state goods and service Tax for state government. Are nothing but the terms which were earlier treated as CST VAT and Service Tax. As it is a little bit confusing taxation because in this GST bill the tax is levied by the single taxation name as GST payment there are no major reductions of the tax layers so there are no major advantages.

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