What is GST?
GST stands for Goods and Services Tax. It is a tax system introduced in India in July 2017 to replace the existing taxes and unify the country’s taxation system. The GST is a comprehensive value-added tax levied on goods and services consumed in India.
GST is a destination based tax which means the tax is collected by the state where the goods or services are consumed. It is levied at various stages of production or distribution of goods and services.
How Does GST Work?
GST works on the principle of ‘one nation one tax’ which means it is applicable on all goods and services throughout the country. It is collected at different stages of production and distribution of goods and services.
When a product is sold, the seller first collects the GST from the buyer. The seller then pays the collected GST to the government. The government then uses this money to fund public services.
Benefits of GST
GST has several benefits for both consumers and businesses. It simplifies the taxation system by eliminating the need for multiple taxes at different levels. This makes it easier for businesses to comply with the taxation system.
GST also helps to reduce the cost of goods and services as it eliminates cascading of taxes. This means that businesses don’t have to pay multiple taxes on the same product or service. This helps to reduce the cost of goods and services.
GST also helps to increase the government’s revenue as it captures the entire value chain of a product or service. This means that the government can collect taxes from all the stages of production and distribution of goods and services.