There will be 3 types of GST:
CGST- Collected by Centre
SGST- Collected by State
IGST- Applicable on inter-state sales. It will help in smooth transfer between states and the Centre.
GST or Goods and Services Tax is applicable on the supply of goods and services. It will replace the current taxes of excise, VAT and service tax.
Currently, there are different VAT laws in different states. This creates problems, especially when businesses sell to different states. Also, most businesses have to pay and comply with 3 different taxes – excise, VAT, and service tax.
GST will bring uniform taxation across the country and allow full tax credit from the procurement of inputs and capital goods which can later be set off against GST output liability. This reform gives equal footing to the big enterprises as well as SMEs. The aim of GST is thus to simplify tax hurdles for the entire economy.
What will be cheaper?
What will be Expensive?
GST will be paid by all manufacturers and sellers. It will also be paid by service providers such as telecom providers, consultants, chartered accountants etc. However, being an indirect tax, GST will be ultimately borne by the end consumers, just like in the current process.