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GST Full Form

GST Full Form, i.e., Goods and Services Tax, is a comprehensive tax applied on goods supplied from the manufacturer to the consumer. The tax is applied only in cases where there is a value addition to the goods en route from the manufacturer to the consumer. With the introduction of GST, all indirect taxes like Service Tax, Luxury Tax, Central Sales Tax, State VAT, Advertisement Tax, Purchase Tax, State Cess, Tax on lottery, etc., have been consolidated, and now there is only one indirect tax, i.e., GST.

GST eliminates the chain of Taxes that had to be paid in the earlier Tax system and has facilitated a common national market.

Updated:

How many segments does the existing Taxation System in India have?

The existing taxation system in India has two segments, i.e., 

  • Direct Tax
  • Indirect Tax

Direct Tax

Income Tax, Estate Tax as well as Wealth Tax form a part of the Direct Tax. Under this segment, the tax is directly levied on the income of the assessee based on the declaration by way of filing Income Tax Returns. The assessee can be an individual, a firm, a Company, HUF or any other entity. The tax is paid to the government directly by the assessee on the taxable income indicated in the Income Tax Returns.

Indirect Tax

Under this segment, as the name indicates, the tax is not paid directly to the Government. Tax is indirectly levied on the purchaser for the purchase of goods and services from the seller. The seller then pays the Government the tax collected on the goods and services sold. 

About the Taxation System Before Introduction of GST

The taxation system before the introduction of GST was very complex. There were various Central and State Taxes levied based on the production that lacked clarity and was difficult to understand. The taxes levied differed from State to State, and consumers stayed perplexed. There were different taxes like Central Sales Tax, VAT, Luxury Tax, Entertainment Tax, State VAT and Cess, Advertisement Tax, Purchase Tax etc. Everything consolidated into a single indirect tax, i.e., GST, which is uniform across the country.

Additional Info: Also check Home Loan Tax Benefit

About the Taxation System After Introduction of GST

After the introduction of GST, the various indirect taxes that were collected at the State and Central level got consolidated into one indirect tax, that is, the Goods and Services Tax. The taxation system is centralised now, and there is one uniform indirect tax across the nation, i.e., GST. There are 17 different taxes the Central and the State Governments levied which are replaced by GST. The introduction of GST in 2017 has made the taxation system simple.

Additional Info: Also check Tax Benefits on Personal Loans

What are the benefits of GST for consumers?

Consumers have benefitted in the following ways from the introduction of GST.

  • Earlier, there were 17 different indirect Central and State taxes levied before the introduction of GST, and to complicate further, the tax differed from State to State. This perplexed the consumers.

With the introduction of GST, it is a ‘One Nation One Tax’ policy that has resulted in a uniform structure for tax across the country. There is a lot of clarity, and the consumers are able to understand the taxation system better.

  • GST has eliminated repetitive tax payments and the chain of events that occur on paying tax on a product at different stages during the course of the sale of the product.ly
  • With the elimination of repetitive tax payments, the prices of goods and services have come down considerably.
  • Businesses that have a turnover of less than Rs. 20.00 lakhs need not pay GST. This aspect has benefitted a lot of consumers.
  • Registration of GST and filing GST Returns have been made online, which has made tax payment very convenient for the consumers.
  • Businesses with a turnover of up to Rs. 75.00 lakhs are eligible to participate in the composition scheme and pay only 1% of the turnover.
  • There is a lot of transparency and accountability in the unorganised sectors after the implementation of GST.

What are the components of GST?

The following are the components of GST:

  • CGST: For the intra-state(within the state) supply of goods and services, tax is levied by the Central Government, which is CGST, i.e., Central Goods and Services Tax.
  • SGST: For the intra-state supply of goods and services, tax is levied by the State Government, which is SGST, i.e., State Goods and Services Tax
  • IGST: The Central Government collects taxes for the inter-state (supply to different states) supply of goods and services. The tax so collected will be distributed among the various states. IGST is Integrated Goods and Services Tax, and it is levied on the import of goods as well.
  • UTGST: The tax levied when the goods and services are supplied to Union Territories like Andaman Nicobar, Lakshadweep, Diu and Daman, Chandigarh etc., is the Union Territory Goods and Services Tax.

Who are the members of the GST Council?

The GST Council is the regulatory body of GST and has 33 members.

  • The Finance Minister is the Chairperson.
  • Union State Minister of Finance, State Finance or Taxation Ministers, and other ministers appointed by the Government of each State.

What are the different slabs of GST?

The different slabs of GST are:

Tax slab
Items under the slab-percentageCategory of items under the slab
0%7%Consumption Goods
5%14%Daily essentials and household articles
12%17%Items secondary necessity wise
18%43%Items that are relatively important
28%19%Luxury items

What is the procedure for GST Registration?

If your business has a turnover of over Rs. 40.00 lakhs GST Registration is mandatory. Failing to register for GST will be treated as an offence. On registration, each taxpayer will be given a unique reference number, i.e., GSTTIN, which has to be quoted in all the business transactions.

GST Registration can be done on an online portal. You have to fill up the GST Registration form and upload the required documents. On completion of the registration process, you will be given the GSTTIN number.

All you need to know about GST Returns

GST Returns is a form that has to be filed. There are 22 different types of GST Returns, out of which only 11 are active, eight are enabled only for the view, and three are withdrawn. The type of GST Return you need to file depends on the category of GST Registration.

GST Returns can be filed monthly, quarterly or annually.

Procedure to file GST Returns

Follow the simple steps given below to file GST Returns.

  • Access the GST portal www.gst.gov.in
  • A 15 digit number based on the State and PAN number has to be obtained.
  • Upload the relevant invoices on the GST portal. A reference number will be issued against each invoice.
  • After uploading all the inward, outward returns and cumulative returns, you can file the return after reviewing for errors.

Conclusion

Knowledge of GST Full Form, the implications and importance of GST, Registration of GST and Filing of GST Returns is very crucial if you are contemplating on starting a business. An in-depth reading of this article will give you a fair idea of everything you need to know about GST.

GST Full Form FAQs

What is GST Returns?

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Filing of tax through GSTR Forms on the basis of the slabs and eligibility criteria is GST Returns. It will contain all the details regarding sales and purchases, tax collected on sales and tax paid on purchases. Subsequent to the filing of GST, Returns tax can be paid.

If for a period there is no business activity, even then should the GST Returns be filed?

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Yes. A Nil-Return has to be filed when there is no business activity for that particular period.