What is GST? | GST INDIA | Dual GST Model | 2017

GST (Goods and Service Tax):

GST stands for Goods And Service Tax. 160 Countries have already implemented GST. GST was first introduced in France in the year 1954.

In India, before GST, there are different taxation system for each state and city for example Suppose a bike cost in Mumbai is Rs 90,000 and same bike cost is Rs 85,000 in Delhi. This is difference is due to Previous taxation system.

After GST, The Tax in all state will be Same i.e  One Country, One Tax.

Advantages:

1. GST is Transparent Tax.
2. Corruption free tax administration.
3. As the tax rate will be equal in all over India.
4. Reduces number of indirect tax.
5. As price will come down which in turn help companies as consumption will increase.

Disadvantages:

1. The Service Tax in India is now 15% but the recommended GST is about 18-20%.
2. All the services will be Costlier and that is one of the Disadvantages of GST.

Example:

Without GST	With GST
Product of Rs 10,000 sold from Mumbai to Pune.	Product of Rs 10,000 sold from Mumbai to Pune.
VAT (10%) -> 100 Rs Subtotal -> 1100 Rs	CGST (5%) -> 50 Rs SGST (5%) -> 50 Rs Total: 1100 Rs
Same Product sold from Pune to Delhi. Profit -> 1000 Rs Selling Price -> 2100 Rs	Same Product sold from Pune to Delhi. Profit -> 1000 Rs Selling Price -> 2100 Rs
CST (10%) -> 210 Rs Total: 2100 + 210 = 2310 Rs	IGST (10%) -> 110 Rs Total: 2100 + 110 = 2210 Rs

Dual GST Model:

SGST: State GST, Collected by State Government.

CGST: Central GST, Collected by Central Government.

IGST: Integrated GST, Collected by Central Government on Interstate supply of Goods and Services.


Overview:

Transaction	Old Taxation System	GST
Sale within State	VAT + Excise + ST	CGST + SGST
Sale outside State	CST + Excise + Local Taxes	IGST