Goods and services (GST) is a tax charged on the manufacturing and sales of services and goods across the country. The aim of introducing this tax was to eliminate all other existing indirect taxes such as service tax, VAT, excise tax, and entertainment tax, which were centralized. This important action helped a bunch of citizens who faced a lot of problems in filing these individual taxes earlier.
GST is charged on every stage of the manufacturing process, which applies to both the customer and the manufacturer. It is to be collected at the point of consumption, which makes GST a destination-based tax. So, if a product is manufactured in Delhi and sold in Mumbai, the tax will be charged in Mumbai. It is known that at every stage of the manufacturing process, GST will be coming.
However, there are certain types of GST:
SGST (State Goods and Services Tax):
This tax is levied on the intrastate supply of services and products.
IGST (Integrated Goods and Services Tax): The tax is charged on the supply of products and services between the central and state governments, also said taxes are shared between two states.
CGST (Central Goods and Services Tax):
The tax is taken on the intrastate sale of goods and services by the central government.
Collection of GST has considerably influenced the economy and ease of citizens in some following ways:
Facilitating the tax structure:
As discussed above, managing different taxes caused a big hassle of handling tax authorities and officials. Likewise, GST is a single tax, so calculating taxes on multiple stages of the supply chain has become more accessible.
Small and Medium Enterprise support:
A composition scheme has been introduced by GST, which is very helpful for small and medium enterprises. By following this scheme they pay taxes according to their annual turnover. Moreover, businesses having a yearly turnover of 1.5 crores only have to pay 1% GST; however, other enterprises having a turnover of 50 lakh are required to pay 6% GST.
Export is increased:
The export rate has increased in the country by the reduction of customs duty on exporting goods because of the GST imposed. Knowing that the cost of local market production has also decreased due to GST. When expanding your business globally, the companies urge you to give competitive behavior.
The reduced burden of the taxes has polished the production and growth of the retail industries. So as per the Indian retail industry, the total tax is around 30% of the product cost, which makes the end consumer pay lesser tax. It makes the tax rate go down due to the impact of GST imposed.
Enhanced part of India operations:
Companies can now avoid taxation of toll plazas and check posts. Because of these taxation damages of preserved products created a problem while transporting them as manufacturers had to keep buffer stock to make up for the accident. All issues were solved after the implementation of only on tax than the other bulk of taxes to be charged. Now they can transport their goods happily.
Therefore now handling the overall taxation is easier because of the GST tax. It makes the taxpayers increase in number, and significant tax revenues have also increased.
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