Video Transcription

Today let us talk about what is GST?

GST is the biggest tax reform that will revolutionise the indirect tax space by eliminating the cascading effect of taxes, replacing multiple indirect taxes like excise, service tax, VAT and increasing the tax base.

However, Indian GST isn’t really one tax but five taxes.
First is the CGST, Second is the SGST, Third is the IGST or Integrated GST, Fourth is the UTGST and Fifth is Compensation Cess which is applicable on specified goods

Let us understand the 5 tax slabs prescribed under GST 

  • Nil or 0% tax rate will be applicable on all essential consumer goods like milk, fruits, grains etc
  • 5% tax rate will be applicable on daily use items like coffee, tea, spices etc
  • 12% and 18% tax rates will be applicable on non-essential daily use items like milk products, mobiles etc
  • While 28% tax rate will apply to luxurious items like chocolates, automobiles etc.

In the current regime of Indirect taxes, no tax credit is given for the goods purchased outside the state and also the credit of Excise can not be claimed by dealer unless he re-manufacturing the product and pays excise duty. But with introduction of GST, Input Tax Credit can be availed for both Excise duty as well as for interstate purchase. You can also claim ITC on services against Goods and Vise versa.

Hence due to avoidance of double taxation the tax burden on consumers is way less.

We hope you found this useful. For more information on such topics visit hrblock.in

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