(Goods and Service Tax)

GST….it has become the hot topic in all the Industrial, & Marketing fields. What is GST? Why GST is necessary? Who will be profitable with this GST? In the upcoming financial year GST is going to become the major issue almost in all the fields. All these doubts regarding GST (Goods and Services Tax) are been clarified by the famous Economical Expert K.Narasimha Murthy in this special feature.

GST means:

GST means Goods and Services Tax. At present there are a number of taxes under the control of the government like Counter Veiling Duty (CVD), Sez, VAT, Entertainment tax, Customs, Additional Excise, Central Excise, Lottery tax, Luxury tax, Betting & Gambling tax Purchase tax, Entry tax, State tax, Octroy etc; GST is used In order to bring all such taxes under one circle. Government says that the main aim of GST is to rectify the problems that arise in taxes & also to reduce the burden to the people in paying the taxes.

Step by Step-Number of Taxes:

Before the finished goods reach the retailer from the factory there are a number of taxes that are to be paid to the government & the burden increases when the tax was paid in the form of various stages. That burden shows effect on the price of the goods & even on the customer & retailer too. Though there is a specified amount of tax to be paid for each & every good it was not possible in the real task. Many countries had implemented a number of plans and programs in order to avoid the extra payment of tax to the government & finally brought a change in that idea. India proved to be a “developing” country even in the payment of tax & in implementing those plans. GST is one such trail that was implemented by the government. Introduction of the credit plan is one of the major achievements of GST & by this plan not only the business people are benefited but also the customers too are benefited. If this Credit plan was implemented, a number of people pay the tax. If anyone fails to pay the tax, this credit plan is not applicable & it was a threat to the traders so they show interest in paying the tax. At present, Credit is only applicable to the Input tax but, if GST came into existence, it is applicable to almost all the taxes where the traders are benefited directly & the customers are benefited indirectly. Those who purchase the goods by paying the cash directly are more benefited than others.

The best method:

At present there are three types of systems in the payment of tax. They are as follows:

1. Invoice System: It was applicable to sales tax. The tax that is paid based on the bills that are issued to the customer is referred to as Invoice System. According to this system, the credit is applicable to him though the trader fails to pay for the company where the traders are been benefited. In some cases, though the customers didn’t pay for the goods the trader has to pay the tax beforehand only to the government. At that time, it becomes a problem to the trader under this system.
2. Payment System: This system is applicable in service tax. According to this system tax is been paid only after the amount is paid for the services.
3. Hybrid System (Dual system): According to this system the trader had the option to choose either Invoice or Payment system & if once the option is chosen there is no possibility to change again & again.

Government is conducting a kind of survey to decide which system to follow & it was the duty of the citizens to choose the best.

Types of GST:

GST is divided into three types. They are:

• 1. Central Goods, Service Tax (CGST): All the taxes (Additional Excise, Counter Veiling Duty, ses, Central Excise, Customs) that come under Central Government are included in this kind.
  2. State Goods, Service Tax (SGST): All the taxes which come under State government (VAT, Entertainment Tax, luxury tax, betting-gambling tax, octroy, entry tax, purchase tax, state tax, and lottery tax) are included in this type.
  3. Special organization in central level (IGST):It was conducted by Central government & The taxes that are paid had IGST redumption.It distributes those taxes among the countries. The only thing is that the demands and plans of this IGST are in motion but not yet decided.

• GST tax rates:

• There are five types of rates that are been collected under this kind. They are as follows:

1. Standard tax rates: Most of the taxes come under this category.
2. Limited tax rates: Tax is been collected for the medical & other major basic goods in this category.
3. Special tax rates: Special tax is been collected on the goods & items like tobacco, Liquor, jewellery etc; under this category.
4. Redemption rates: This kind of tax is applicable to the backward areas & there is redemption of taxes for goods under this system & where GST & credit facility is not applicable. All these kinds of procedures will be banned if GST exists.
5. Zero rate: Though tax is not applicable to the goods that are imported there is the facility of refund under this rate system.