GST Explanation - YouTube

Hello Friends, today we'll discuss about GST

Goods and Services Tax but before that

we need to what is the tax, Tax is the

money which is paid to the government

It is imposed on your income, business profit

Cost of Goods and Services and the

Transactions so that the government can

use this money in public interest and

to pay of the National depths

There are actually two type of Taxes one is

direct Tax and other is indirect

the direct tax is whose liable can not be

shifted to someone else like corporate

tax income tax

wealth tax etc, but index is the tax

whose liability can be shifted to someone else

it is central exercise tax takes, sales tax,

service tax etc, Here the point of

interest is indirect taxes because GST

will replace all indirect taxes which

includes exercise duty, service tax,

additional duty of custom, VAT, sales tax

central sales tax, entertainment tax, luxury tax etc

so the question is how GST is different

from the current taxation system in india

I'll explain this with a simple

example consider a simplified tax rate of

10% percent at each level there are

generally four levels Manufacturer,

Distributor, Wholeseller and Retailer

manufacturing buys raw material, let's say

of rupees 50 and manufacture the

product which expertise value it so the

product becomes of hundred rupees and

for selling this product he needs to pay

ten percent Tax which is 10 rupees

so the cost of product for distributor

is 110 rupees the distributor add

value of release 20 which is nothing but

his profit so the price will become 130

distributor also sells it by adding ten

percent tax of rupees 13 so the

product is of 143 rupees now

wholeseller follows the same pattern and

the price will become 143 + 20 that is

163 and ten percent tax which is of

rupees 16.3 and sells it for 179

rupees to the retailer then the

retailer adds 20 rupees profit and the

price will become 199.3 the

consumer buys this product from retailer

by paying 10 % tax on 199.3

that is 19.93 rupees so the final

consumer price is 219.23 this is

how the current taxation system works in India

now we will take the same example in GST

system raw material of 50 Rupees and

the manufacturing value of rupees 50

make the product of 100 rupees but

this time the manufacturer has to pay

taxes on the value added by him which is

rupees 50 so he pays 10% of 50 which is

5 as tax from his profit but the selling

price will not increase and the cost of

product for distributor is 100 rupees only

then the distributor add 20 rupees

profit and the product becomes of

100 + 20 which is 120 rupees

he pays the tax of rupees two on his

profit of 20 rupees the wholeseller buys

the product for 120 rupees and

follow the same pattern

adding 20 rupees his profit and price

will become 140 and pay the tax of

rupees 2 on his profit of twenty rupees

retailer buys the product for 140 rupees

add profit of twenty rupees pay the

taxes of 2 rupees on this profit of

twenty rupees and raise the final

consumer price to 160 rupees so if the

prices are compared the product is 59.23

rupees cheaper in GST system than

the current system

let's take GST in details GST is a

combination of CGST and SGST or IGST

CGST is central GST which is paid to

the central government SGCT is the state GST which

is paid to the state government and

IGST is the integral GST which comes

in the situation when goods and services

moves interstate for example product A is

manufactured and MP and sold in UP

so I GST is distributed

between both the states in this case

SGST will not be collected. We'll also

have five categories in GST in India 0%

category which will apply on food grains

etc five percent category which

will apply mostly and widely used items

12 and 18 % category which will

apply in the items which are normally

used 28 % category which will apply

on luxuries items. After applying GST

the cost of items will increase or

decrease so here are some items whose

cost will increase packaged food,

jewellery, ready made garments, mobile services,

credit card services etc and

there are some items whose cost will

decrease after applying GST home,

restaurant, AC, washing machine, microwave Oven,

small cars and less taxs on

industries there are some items which

are exempted from the GST alcohol for

human consumption, petroleum product like

crude, petrol, high speed diesel, natural

gases and aviation turbine fuel there

are some taxes also which are exempted

stamp duty, property tax, toll tax,

electricity duty etc thank you

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