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What is Goods and Services Tax (GST)?

What Is GST (Goods and Services Tax)? A Simple Explanation

GST is a consumption or Indirect Tax used in India for all types of supplied goods and services. GST is comprehensive, multi-staged and Destination Based Tax. Destination Based because it is collected at the point of consumption rather than point of origin. It is Multi-Staged because GST is imposed on every step of the production and is then later refunded to all parties except consumer in stages. And Comprehensive Because almost all the indirect taxes have been absorbed into GST except some state taxes.

What is GST Returns?

GST Returns is basically a document that contains all the information on income/sales and/or expense/purchase of the taxpayer which are required to be filed with tax administrative authorities. Which are then used by the government and these tax administrative authorities to calculate net tax liability of a taxpayer.

Inclusion of the following details are required to file GST Returns:

  • Purchase Records
  • Sales Records
  • GST on Sales
  • GST Paid on Purchases.

Who is required to File GST Returns?

Any regular business which has an annual aggregated turnover of more than 5 crores is required to file GST Returns twice on a monthly basis and one yearly return.

The number of times GST is filed is different for every variant of the GST Scheme,  The number for quarterly GSTR-1 filer under QRMP Scheme is 9 yearly.

Some special cases like consumption dealers have separate returns that are to be filed 5 times a year.

What are the Goods that are Kept outside of GST as of now?

As of now some Goods and services like Alcohol for human consumption and Petrol and Petroleum Products like Crude oil, High-Speed Diesel, Motor Spirit, Natural Gas, and Aviation Turbine Fuel are some of the products which do not fall under GST.

Although it was planned to include Petroleum to GST as well it has not yet been implemented and may be included at a later date.

Types of GST and what happened to Subsumed State Taxes?

After the GST Subsumed all the state taxes like VAT, Luxury Tax, Purchase Tax Etc. a very simple yet detailed 4-fold breakup of GST was formulated. The GST is Classified into the following 4 Types:

  • SGST (State Goods and Service Tax)
  • CGST (Central Goods and Service Tax)
  • IGST (Integrated Goods and Service Tax)
  • UGST (Union Territory Goods and Service Tax)

From above self-explanatory names in SGST the taxes are levied by the state government on transactions of intra-state goods and services whereas in case of Union Territories it is replaced by UGST, In CGST The central collects the tax on the intra-state goods and services transaction. In IGST or Integrated GST tax is levied on inter-state transactions by both state and central government and shared in the 50-50 ratio. 

author

The Tax Heaven

Mr.Vishwas Agarwal✍📊, a seasoned Chartered Accountant 📈💼 and the co-founder & CEO of THE TAX HEAVEN, brings 10 years of expertise in financial management and taxation. Specializing in ITR filing 📑🗃, GST returns 📈💼, and income tax advisory. He offers astute financial guidance and compliance solutions to individuals and businesses alike. Their passion for simplifying complex financial concepts into actionable insights empowers readers with valuable knowledge for informed decision-making. Through insightful blog content, he aims to demystify financial complexities, offering practical advice and tips to navigate the intricate world of finance and taxation.

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