GST is a multi-stage tax system which is comprehensive in nature and applied on the sale of goods and services. The main aim of this taxation system is to curb the cascading effect of other Indirect taxes and it is applicable throughout India.
What is GST & How it Works?
GST is referred as Goods and Services Tax. It is an indirect tax that was implemented to replace a variety of previous indirect taxes, including the value-added tax, service tax, purchase tax, excise duty, and others. GST is a tax that India imposes on the supply of specific products and services. There is only one tax that is imposed in India.
- How GST Works in India?
- 1-Manufacturer: The manufacturer will have to pay GST on the raw material that is purchased and the value that has been added to make the product.
- 2-Service Provider: In this case, the service provider will be responsible for paying GST on both the product’s purchase price and the value added to it. However, the manufacturer’s tax payment may be deducted from the total GST that must be paid.
- 3-Retailer: It must be paid by the retailer on both the product they bought from the distributor and the margin they added. However, the retailer’s tax payment may be deducted from the total amount of GST that must be paid.
- 4-Consumer: GST must be paid on the product that has been purchased.
- Types of GST in India
- The four different types of GST are given below:
- Central Goods and Services Tax : CGST is charged on the intra state supply of products and services.
- State Goods and Services Tax : SGST, like CGST, is charged on the sale of products or services within a state.
- Integrated Goods and Services Tax : IGST is charged on inter-state transactions of products and services.
- Union Territory Goods and Services Tax : UTGST is levied on the supply of products and services in any of the Union Territories in the country, viz. Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. UTGST is levied along with CGST.
- Know the GSTIN – GST Identification Number
- A 15-digit distinctive code that is provided to every taxpayer is the GSTIN. The GSTIN will be provided based on the state you live at and the PAN. Some of the main uses of GSTIN are mentioned below:
- Loans can be availed with the help of the number.
- Refunds can be claimed with the GSTIN.
- The verification process is easy with the help of the GSTIN.
- Corrections can be made.
- Verify GST Number Online by visiting https://services.gst.gov.in/services/searchtp. Enter the GSTIN mentioned on the invoice in the search box and followed by captcha, Final click “enter” to view the details.