A tax may be defined as a “pecuniary burden laid upon individuals or property owners to support the government, a payment exacted by legislative authority. A tax “is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority.”

In simple words, tax is not nothing but money that people have to pay to the Government, which is used to provide public services.

Two type of tax are

Direct Tax.
Indirect Tax.

1. Direct Tax :-

The incidence of tax bears directly government to the person paying the tax.
The progressive in nature – Higher ability to pay having higher rate of taxes for people.

2. Indirect Tax :-

The indirect taxes are those taxes which are paid by the tax payers indirectly, when purchasing some goods or commodity or when hiring some services, which are taxable.
It also includes interest tax, expenditure tax, and foreign travel tax.

The GST Genesis in India.

There has been more than a decennary since the idea of national Goods and Tax ( GST ) was mooted by the Kelkar Task Force in 2004.The Task Force Strongly suggested fully integrated ‘GST’ on the national basis.

Path Breaking is a GST, indirect tax reform which will create a common national market. GST has indirectly subsumed taxes like excise duty, service tax, VAT, CST, luxury tax entertainment tax, entry tax, etc

The first country was France to implement GST in the year 1954. There are within 62 years of its advent, about 160 countries across the world that have adopted GST because this tax has the capacity to raise revenue in the most transparent and neutral manner.

WHY INDIA NEED GST ?

Purpose :-There are two reasons for introducing GST :-

The indirect tax structure is full of uncertainties due to multiple taxes and multiple rates.
There are due to multiple rates, there are multiple forms intern cumbersome compliance. This will improve the tax compliance.

Transparency matters the most and because of the transparency, Taxation would increase and lead to the reduced tax evasion.
There would also be reduced cascading effect (Tax on Tax ) up to much extent.

What is GST ?

GST is a Tax on the Good and services.
It’s a Value added, Consumption based tax.
GST shall be levied on the supply of all goods and services except those exempted
GST will subsume many existing indirect central and service taxes such as Central sales tax, Stamp duty, Excise duty, Service tax etc.
It shall be levied at a uniform rate on the supply of most goods and services consumed in India.

COMPONENT ( TYPE ) OF GST

There are three type of taxes applicable in the GST, are :-

CGS

It is a central exercise duty.

There is an excise duty on Medicinal and Toiletries Preparation

It is Central sales tax.

It is also a service tax.

Example :- a transaction happening within Delhi.

SGST

It is a Central exercise duty.

There is an Entertainment Tax.

Tax on lottery, betting and gambling

an Entry Tax

also on Luxury tax.

Example:- a transaction happening within Delhi.

IGST

It is the Tax collected by the Central Government for an inter state sale.

Example :- Delhi to Punjab

Exclusions on GST

1 Petroleum crude oil.

2 High speed diesels.

3 Natural gas

4 Aviation turbine fuel

5 Motor spirit.

The Framework of GST

India will be Concurrent Dual GST comprising of Central GST and State GST levied on the same base.
GST slab rate = CGST slab rate + SGST slab rate.
Total tax collected in GST will be distributed to central and state as per the CGST and SGST rate. The Central GST (or CGST) would be administered by the central government
The State GST (or CGST) would be administered by the state government,
The Integrated GST(or IGST) administered by Central government on the inter state transfer of the goods and services,
In this model, all the goods and services would be subject to concurrent taxation by the State and Center.

For example, if the Product have a levy at the base price of Rs. 10000 and rate of GST are 8 %, the CGST is 3 % and the SGST is 5%, then collected during the transaction is 800, 300, goes to central government as the CGST tax, 500 goes to the state government as the SGST tax.

Central GST (CGST)

there is No Excise
and No Service Tax
No Cess
No Surcharges, etc

State GST (SGST)

No VAT
No Cess
There are No Entry taxes, etc

Types of interstate transaction

Supply occasioning movement from one state to another state.
There is transfer of documents of title – During movement.
Transit pass of goods through territory of other state but origin and destination in same State.
There is supply by transfer of documents on high seas.
There is supply in the course of Import.
Movement wherein goods to return to same state, Example Supply for exhibition, fore repair, etc.

Benefits of GST

There is improve logistics movement of goods across the country as entry check points for entry tax won’t be there. It will be end the warehousing obsession of large Companies.
It will convert Indian market into a uniform market.
There are better compliance and tax buoyancy.
A lowest GST rate and removal of the Cascading effect will bring down the prices.
GST shall be levied only at destination point and not at various points from manufacturing to retail outputs.
There is expect to build a transparent and corruption free tax administration.
There is no distinction between imported goods and the indigenous goods. Same rate (CGST/SGST) on both.
There is exports would however will be Zero rated, i.e. The exporters of goods/services need not pay the GST.GST paid by them on the procurement of goods/services will be refunded to them.