GST in India and the World
History of GST in India and the World
There was a lot of furor last year about the GST. The new introduced tax gave way to interesting stories and predictions. In this article on History of GST in India and the world, you will gain complete information about this new tax. So, happy reading.
What is GST full form?
The full form is Goods and Services Tax (GST). In simple words, it is a value-added tax levied on supply, production, leasing or transfer of services and goods for domestic use.
Will we break down the GST Payment?
So, when you buy a product, the company adds GST besides the price of the product or service. In turn, the companies pay the amount to the Government. In short, GST is a tax levied by the Government for revenue. It is also known by other terms, such as Value-Added Tax in other countries.
Other Countries that have GST
A brief outlook at the pages of history for GST and this is the information we get. Rance became the first country to put in place this tax in the year 1954. At present, there are 160 countries following the same tax system with some variations. Prominent are Vietnam, Singapore, Canada, Australia, Spain, UK, Monaco, Brazil, Italy and South Korea. India joined the elite category on July 1, 2017. Our erstwhile neighbor, Russia did it years earlier in 1991 and China, not far behind, in 1994.
How do the Indian GST Act work?
With the GST, India will have a sole combined tax system. In short, tax rate will be equal in the length and breadth of the nation. So, GST merges the Central Government taxes (for example, excise duty tax, service tax, and sales tax) with State Government taxes (luxury tax, transfer tax, entry tax and entertainment tax). All the countries having the GST system tax every product or service with a single rate.
So, what is this Dual GST tax return structure in Canada?
Yes, there are some countries which have the Dual GST tax structure. Prominent are Canada and Brazil. In fact, India has followed Canada’s GST system. Do you want an example? GST unifies the taxing system of the nation, but the federal or central Government applies taxes along with sales tax of States. In Canada, usually the Federal Government has the 5 percent tax. Some states and provinces also implement the provincial state tax (PST) that can vary from 7 to 10 percent. So, if a resident buys a product, his receipt will show PST and GST details applied to the real price.
But yes, changes have happened since 2013. In this year, Prince Edward Island adopted the single tax system, that comes to 14 percent. Till date, many provinces such as Nova Scotia, Labrador, New Brunswick, Newfoundland and Ontario have also joined the bandwagon for the single tax (known as Harmonized Sales Tax).
Benefits of GST in India
India achieved a milestone on July 1 2017. The nod of approval for GST got the Green Signal from the Central Government. In fact, it was an revolutionary achievement on the tax structure in India since decades. The main benefit is to ward off the tax on tax or in other words, double taxation, which comes from the manufacturing stages right to the consumer level.
How do you explain the GST tax calculator?
Let us take the example of a case study on children notebooks. Mr M is a manufacturer of notebooks. He gets the raw materials for Rs. 10. Now let us assume a ten percent tax. So, he has paid Rs 1 as tax for the Rs 9 value of materials. To gain profit for his business venture and his expertise, he hikes the price of the notebook to Rs 5. So the cost of the notebook has come to Rs 15. If, again, the ten percent tax gets levied, then the finished good will come to Rs 1.50. But, in the GST system, you can use the same extra tax opposite the previous tax, that has been already paid. In short, it will be Rs 1.50 minus Rs 1.00 which comes to Rs 0.50.
Mr M sells the notebook to Mr A, wholesale business owner, for Rs 15. To make a profit, Mr A sells it to Mr R (retailer) at a Rs 2.50 – additional value Rs. 17.50. Now, once again if the ten percent tax gets levied, then it comes to Rs 1.75. This value, Mr R can apply opposite the tax on original cost price directly from manufacturer, Rs 15. So the tax rate of Mr A tends to be Rs 1.75 – Rs 1.50, that comes to Rs 0.25. And when it comes to the retailer, and his profit value is Rs 1.50, then the tax rate comes to (Rs 19 multiplied by ten percent) – Rs. 1.75. It comes to Rs 0.15. So, if you calculate the entire tax that moves from manufacturer to the retailer – Rs 1 + Rs 0.50 + Rs 0.25 + Rs 0.15 = Rs 1.90.
The country, since the introduction of GST has given 5 various tax rates.
There tends to be no percent tax rate on hotel services, specific foods, books, homespun cotton cloth and newspapers under the price of Rs 1000.
Only 0.25 percent tax on rough industrial diamonds.
For apparel below Rs 1000, it is only a five percent tax rate. The same applies for footwear, packaged food items that are below Rs 500.
Then, there is the tax rate of 12 percent on apparel, frozen meats, bio-diesel, cutlery that costs more than Rs 1000.
Have they missed the luxury items? No, it is 18 percent tax on pastries, make-up items, footwear and swimming pools that cost more than Rs 500.
Yes, and the highest, are the taxes at 28 percent. They are for 50 luxury products such as cars, motorcycles, ceramic tiles and sunscreen.
Indian Before GST tax Implementation/After GST Act Implementation
In the old system, a consumer have to pay tax on value of goods/margin at every point of the manufacturing process. So, it corresponds to a huge total amount that gets transferred to the customer pockets. The GST payment system hopes to reduce inflation in the long period of time. The prices of goods will definitely get lower. In short, GST made several tax systems (Customs duty, Excise, VAT, luxury tax, entertainment tax and Octroi) come to an abrupt end.
Some Indians call the GST as One Nation, One Tax. Yes, it is true. It has removed inter-state barriers and has brought a uniform single tax in the nation. Our India comprises of many States have different cultures. So, the interpretation of the word GST is different in various Indian languages.
For example, GST in Hindi – वस्तु एवं सेवा कर,
Gujarathi – સામાન અને સેવાઓ કર
Punjabi – ਗੁਡਸ ਐਂਡ ਸਰਵਿਸਿਜ਼ ਟੈਕਸ
Tax Slabs in GST Bill
So, there exists two types of GST in India. One is the CGST (Central GST) and the second SGST (State GST). Let us take a case study. You have a company with home maintenance services in Bangalore. For the services, you will levy CGST and SGST on your clients. If you are giving the services to other cities such as Pune and Hyderabad, then IGST is applicable.
Did you understand the article? Yes, the revolutionary step is there to stay. But if you are a business owner, you need not worry about the complexities and procedures. You can concentrate on your business. Do you have any doubts about GST? Get them from our qualified experts on GST services in Bangalore . They can take care of all the GST needs right from registration, filing of returns. You can download the app of some of the home services company, and place a request and schedule the timing at your own convenience. The concerned GST person will come to your home and provide the necessary guidance. You can get the best answers for your queries.