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Know about GST

GST stands for Goods and Services Tax which was passed by the Indian government in 2016. It will get into action from 1st of April'17. This article will let you know more about GST and GST regime.

What is GST?

The present government of India has introduced the goods and services tax in India to ensure the complicated taxation process can become unified and simplified under one regime. The introduction and the implementation of the GST regime aim at removing all the complication in tax collection, tax filing and return filing for the businesses and working professionals.

The GST law was created under the Indian Authorities in accordance with the Income Tax Act, 1961. The GST offers benefits to the producers, services providers, and the retailers. This tax gets collected from the end-user for the consumption of the product or the service.

The Goods and Services Tax are a destination-based tax that applies to the products and services purchased and consumed by the customer.

Let us understand the reason; Why the Central Government has passed the GST Law in India?

Objectives behind Goods and Services Tax.

  1. The tax is applicable for the domestic consumption of the goods and services.
  2. The present system is optimised to become more efficient and transparent for working professionals and businesses.
  3. There cannot be multiple taxes at a state level, causing confusion and obstacles for the businesses to become successful.
  4. Domestic market of India gets integrated into a single common market.
  5. GST promotes harmony and co-operation of different taxation authorities, leading to a flexible and efficient federal system at the nationwide level.

It is crucial to understand different points to get better clarity of GST law and its model. Let us discuss the GST model and its application on two separate levels State and Centre.

GST Model

A dual structure is now considered by the government has per the recommendation of the Election Commission of India. The two GST modules under one regime are State GST (SGST) levied by the States and Central GST (CGST) levied by the Central Government. GST should get applied on all the goods and services until the final stage of consumption by the buyer or consumer. In future, the imports are liable to both CGST and SGST and the Exports will be relieved of the burden of the Goods and Services Tax. As the consumption of the goods and services takes place in different states in India, the state level authorities will collect the revenues for the same.

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Jyoti McKenzie is an experienced and renowned author in the matters of Taxation and Financial Auditing. She has more than 12 years of work experience as a legal consultant and a chartered accountant. She has provided her guidance as a financial expert to different businesses in the matters of financial auditing, accounts, and taxation.

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