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Complete Guide to GST

On

05-Jan-2018 12:52 PM

 
By Thiyaga Lakshmi
Category: GST
Complete Guide to GST

We all would have come across the world GST at least once in a while we pay our shopping bills or Dine in a Restaurant, Nearly in all aspects of our purchase.
Have you ever wondered what is meant by GST?
GST is the acronym of “GOODS AND SERVICE TAX”. It is an Indirect Tax that is levied on manufacture, sale and consumption of goods and services at national level. It also replaces all the indirect taxes levied on goods and services by state and service at national level.
There are around 160 countries that follow GST in place. There are three types of GST: SGST – State GST collected by State Government, CGST – Central GST collected by Central Government, IGST - Integrated GST collected by Central Government.
So, now as we are clear about GST. Let us see why GST is important and what all the benefits we are having from GST.
Introduction of GST is significant as it helps to combine various taxes levied by central and State Government into a single tax that eliminates cascading, double taxation, multiplicity of taxes, classification issues and taxable events etc leading to common national market. It also brings in uniform tax system across all the states as the taxes in GST are divided into state and central government.

Benefits of GST for customers:

  • As cascading is eliminated the price of goods and services are reduced.
  • The prices are uniform throughout the country.
  • The tax system is simple.
  • The tax system is very transparent.
  • There is an increase in Employment opportunities. 

Now, let us learn to calculate GST.
Three factors needed for calculating GST is A) Basic Customs Duty B) IGST C) Compensation cess. 

  • The total tax is calculated by adding A+B+C.
  • Compensation cess and IGST is calculated by adding Assessable Value + Basic Customs Duty.
  • Assessable Value is calculated by CIF Value + 1% landing charges on CIF.
  • CIF Value is calculated by cost + insurance + freight.