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What is GST? | All about GST - YouTube
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India is notorious for its complex tax
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system it is almost impossible for new
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businesses and startups to understand
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the direct and indirect tax systems this
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problem gets even more aggravated when
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constant changes are made to taxes with
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each financial year but things change
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with the new goods and services tax
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commonly known as GSD let's take an
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example auditor would like to start a
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business in Delhi for which he needs raw
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materials from Beijing in China while
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importing it would first land at a port
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and then from there it would travel to
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the manufacturing center at Delhi via
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road passing through various states
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now when auditor starts analyzing the
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various taxes he needs to pay in the
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process of just transporting the
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material to his centre he will lose his
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mind
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in fact this happens with many budding
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entrepreneurs who want to give shape to
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their dreams but fail to because the
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complex tax structure in India is the
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biggest hindrance first he needs to pay
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a customs duty along with the shipping
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charges it's fine up till this point but
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to comprehend the complexity in the tax
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structure after this stage would drive
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anyone crazy he would have to pay
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central and state governments ten
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different taxes like central excise duty
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service tax VAT central sales tax of
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Troy etc and not only this he also would
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have to pay tax or taxes already
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collected by the government to
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understand this let's take a very simple
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example under the present tax system a
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seller in Mumbai sells a product to a
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buyer in Nagpur on top of the price of
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the product what is being judged now the
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same product is to be sold from Nagpur
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to Chennai the seller in Nagpur
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increases
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the price to gain profit now on top of
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the new price including his profit
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central sales tax that is CST is added
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the price of the product for the buyer
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in Chennai will comprise of cost of the
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product plus VAT plus profit plus
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central sales tax
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did you see the cascading effect of
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taxes here so how does GST effective
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taxation system the goods and services
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tax promises to alleviate this problem
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among many others GST is a consumption
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based tax which is levied on sale
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manufacture and consumption of goods and
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services at a national level only one in
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debt tax has to be paid by the trade and
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industry and all other index taxes like
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sales tax purchase tax service tax of
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Troy effect on will be absorbed in GST
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exports and direct tax like income tax
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corporate tax capital gain will not be
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affected by GST GST would apply to all
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words other than crude petroleum motor
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spirit diesel aviation turbine fuel and
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natural gas it would also apply to all
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services barring a few to be specified
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in future the proposed tax system will
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take the form of dual GST which is
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concurrently levied by central and state
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government this will comprise of central
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GST that is C GST which will be levied
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by centre state GST that is s GST which
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will be levied by state integrated GST
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that is IGS D which will be levied by
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central government on interstate supply
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of goods and services so who is going to
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pocket the taxes in case of intrastate
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transactions seller collects both see
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GST and as GST from the buyer see GST
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goes to the central government and s GST
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goes to the state government
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and in case of interstate transactions
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IGS T will be levied on interstate
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transactions of goods and services and
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the task gets transferred to the
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importing state what would be the cost
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of the same product under GST system
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products sold from a seller in Mumbai to
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a buyer in Nagpur see GST and as GST is
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to be added now again the same product
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is being sold from Nagpur to Chennai
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this is an interstate transaction so I
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GST will be applicable now but wait a
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minute isn't this tax on tax again so
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here is the twist a tax has already been
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paid on the product in the form of CGS D
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& S GST so the buyer in Chennai gets a
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tax credit the IG ST gets reduced with
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the amount of C GST and s GS d this
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prevents a buyer from paying tax on tax
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so under the GST system the drawbar
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faced by the manufacturers and business
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class due to cascading effect of
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taxation and also complexity in
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comprehending indict taxes has been
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removed to some extent to learn more
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about GST watch our upcoming videos in a
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trapeze world
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