Introduction
Goods and Service Tax: This is the tax payable to central and state for the Goods and services, it is also known as multi stage tax levied on goods and services. Before jumping right into the concept let us know you what is the main concept which is related to the tax system before GST and after GST.
- For instance, if a manufacturer wants to make a product then he needs to buy the raw materials for making it, he pays the tax for the raw materials and tax for it. The manufacturer will add his profit to the product and sells the product to the distributor where he will add his profit and pay the tax which doesn’t impact on his profit. Again Wholesaler will add his profit to the profit and then will pay tax. Lastly, the retailer will add profit and pay tax. This says that the minimum tax payable has no relation with the profit gained by respective people. The End customer is the one who is imposed on the taxes and the sellers at a different stage will gain profit and pay tax by imposing it on customers.
- This is the scenario before GST but now it has changed, the manufacturer will pay the tax and adds his profit to sell it to the distributor. The distributor then will add his profit and then calculate the tax payable, he will deduct the tax paid by the manufacturer, so after deducting it he will pay the remaining tax. This means the tax is imposed from the profit. The Same thing repeats until the product reaches the final consumer, even the product cost will be reduced due to this system which incurs some cost to the seller. This will centralize the tax system which is “One Nation One Tax” reducing corruption and easy movement of goods within.
- As every time the customer needs to pay the VAT for every item they purchase which the shop keeper impose to pay to the government. The price of the product should be paid by the customer and also the tax for the product also paid by the customer increasing the cost. So after GST, the taxes will not be paid by the customer but the equal distribution of taxes from top to bottom and deducted from the profit to shopkeeper based on the profit. You may think that the shopkeeper can increase the price to reduce the tax pay but there is another rule that they should not increase the price of the product after GST it should be same before GST and after GST.
- In general e-commerce sites won’t impose the tax on the products but under GST tax they will collect 1% which they have to pay the supplier. This is why they want to clear the old stock by offering discounts at a high price, the best thing after GST is you can get your products quickly. As the extra paperwork is reduced by excluding the separate bills for logistics for a state to state, so you can get the products easily.
- But the sad thing is offers and discounts will not be reduced due to this as it will increase the additional tax to the product. If you are fond of online shopping because of the offers and discounts then I hope its bad news after GST. Returning would cost more if you buy something from E-commerce sites as they have to bear the tax amount where they have to wait for the refund from the government for those returns and cancellations made by you.
Percentage of Tax On products 0% Jute, eggs, milk, honey, meat, fruits, vegetables, besan, bread, salt, news papers, stickers, sindoor, kajal, bangles, handlooms, bones, bone meal, fish, chicken… Service: If a hotel has tariff less than 1000 has been exempted. 5% Apparels which costs less than 1000/- Services: Transport services, small restaurants. Goods: cream, skimmed milk, branded paneer, pizza bread, coal, medicines, raisin, bio gas, insulin, agarbatti, life boats, cashew nut, tea, coffee, ice, snow, first day covers, stamp post marks, packaged food items…. 12% Apparels above 1000% Services: Lotteries run by the state, Air ticket (Business Class), Fertilizers, contract works. Goods: Animal fat, ketchup, sauces, frozen food, ayurvedic medicines, picture books, mobiles, spoons, ladles, skimmers, cheese, ghee, dry fruits in packaged form, cake servers, fish knives, playing cards, chess board, carom board, luddo and other games… 18% Footwear more than 500/- Services: AC hotels with liquors, telephone and it services, Branded clothing and financial services. Goods: Cornflakes, pasta, instant food mixes, steel products, good will, software, bidi patta, trademarks, ice cream, printed circuits, pastries and cakes, mineral water, aluminum foil, electrical transformer, CCTV, Optical Fiber, bamboo furniture, tissues, envelopes, tampons, kajal pencil, swimming pools, salad dressings, all kind of biscuits, speakers, monitors…. 28% Services: Private run Lotteries, five star hotels and tariff above 7,500. Bids, chewing gum, molasses, non cocoa chocolates, waffles, aerated water, vending machines, motor cycles, ATM, ceramic tiles, shaving creams, sunscreen, hair shampoo, dye, hair clippers, automobiles, aircraft, pan masala. - So these are the items that are Goods and Services on which GST-Goods and Services Tax is imposed, no change in normal household items but the charge is more for luxury items which mean before enjoying the things there will be the tax. You can clearly check the items on which items the percentage of tax is imposed on. On the other hand, GST is for liberalizing the tax system in the country which will be the same all over India. So this is about GST, there is still a vast subject to know completely. Stay connected to us for more updates.