WHAT IS GST FULLY EXPLAINED.........

WHAT IS GST..,,,,

Hello guys ,i know you all must have read the news that raja sabha has passed the GST  bill almost unanimously this bill is being touted as one of the biggest reforms in india after 1991 financial reforms so what is exactly GST bill and how does it impact us .Before moving to that we will first understand what is GST bill. 

GST 

GST MEANS GOODS AND SERVICES TAX which  means attack which applies uniformly to goods and services and also it is a uniform tax across india.To understand GST  we need to understand our present taxation system tax .Tax structure in india is basically divided into to board categories direct taxes and indirect taxes.So direct taxes is bascially the taxes which are taken directly from the individuals so income tax,corporate tax or direct tax ,indirect taxes are paid by the intermediaries on behalf of the final consumer indirect taxes are collected by both  central  and state government . Central government collects majorly three type of indirect taxes:-

1.Excise tax.

2.Service tax.

3.Customs tax.

Excise tax is the tax on production and manufacturing of goods.Obviously applied by central government.Similarly service tax is a tax which is on services provided or are to be provided by the vendor and custom is the tax on international trade .Moving on the state taxes level where our sale tax is applied on goods distributed within state but is a value added tax we will discuss in detail about value added tax in our later posts.Central tax is applied on goods movement from one state to another similarly entertainment acts of trial luxury or all  other taxes which state levies.Now GST rationalizes this while bucket of indirect taxes.Ideally GST is one tax regime but India is going for well GST which means there would be a two separate taxes  one will be the central GST the second will be the state GST and all other heads like excise service tax central sale part and detainment all these taxes will be replaced by  GST.There is few still heads which are not in the GST purview like customs petroleum products tax on liquor stamp duty or tax on electricity to understand this better let's take an example we already know the central excise is applied on the manufacture of the product and what our sales tax is applied on the distribution of the product.So here the good is supposed at 100 rupees and the central excise is at the 10percent which makes it at 110.Now why it is applied on that 110 at 14℅ which comes out at 15.4 which basically takes tax to 25.4 and our product becomes from 100 to 125.40.Now with GST both central and state GST is applied on the supply side of the product not on the manufacturing.So if we take central GST as at 10℅  which is same as central excise .We have taken in above example .it comes out to be 10 and state GST at 14 which is at same percentage as VAT above.It comes in 24 rupees.So your product rising now becomes 124 rupees.So basically you can see the benifit .there is no tax in GST.