What is GST? What taxes are subsumed under GST and what taxes are not a part of GST?
GST stands for Goods & Services Tax. GST is a value added tax (VAT) on goods and services and will be levied at all points in the supply chain. It is one of the most significant reforms under the Modi Government.
GST came into effect from July 1st, 2017, and was implemented to:
Create a wider tax base and a more efficient tax system
Eliminate the cascading or double effects (tax on tax) of applying taxes
Rationalize the tax structure
Make offset process convenient
Simplify compliance processes in India
GST brought more transparency and simplified the current tax system in India. However, it required a lot of work to implement, at national level, in each state, and in each individual company. Eventually, it will harmonize Centre and State tax administrations.
Taxes subsumed under GST:
Central levies State levies
Central Excise Duty
Duties of Excise (medicinal and toilet preparations)
Additional Duties of Excise (Goods of special importance)
Additional Customs Duty (known as CVD)
Special Additional Duty of Customs (SAD)
Cesses and surcharges relating to the supply of Goods or Services
Swachh Bharat Cess
Value Added Tax (VAT)
Central Sales Tax (levied by Centre and collected by States)
Entertainment Tax (not levied by the local bodies)
Lottery, Betting and Gambling Taxes
State cesses and surcharges as far as they relate to supply of Goods or Services
Taxes that are not under GST:
Import taxes, such as the Basic Customs Duty, as well as the Research & Development Cess for Technology Imports (under discussion), Stamp Duty and Taxes on specific products and services, such as tobacco, electricity or alcoholic beverages, will remain. Additionally, the necessity of Road Permits for interstate movement of goods is still under discussions.
M+V Financial Experts manage Accounting & Taxation of many foreign companies in different industries in India. We have also successfully integrated their systems to be GST ready.
Have you implemented GST successfully in India? If not, let our experts help you.