GST (Goods and Service Tax)is an indirect tax which is charged on all the goods and services as a multistage tax in India. Also called as Single Tax used by the whole nation. There’s no extra tax included in the supply chain, from the production of raw materials till the consumers.
GST is divided into4 types that are SGST (State Goods and Services Tax), CGST (Central Goods and Services Tax), IGST (Integrated Goods and Services Tax) and UTGST (Union Territory Goods and Services Tax).
With the above various changes thatGST made and when it was introduced in India, in this process GST also replaced several indirect taxes in India some of them are :-
• At the Central level :-
- Central Excise Duty
- Additional Excise Duty
- Service Tax
- Additional Customs Duty
- Special Additional Duty of Customs
- Central Surcharges and Cess
• At the State level:-
- Central Sales Tax
- Octroi and Entry Tax
- Purchase Tax
- Luxury Tax
- Taxes on lottery, betting and gambling
- Entertainment tax
- Taxes on Advertisement
• At the Central Level
Some of the following taxes that were replaced by GST in the Central level :-
1. Central Excise Duty – Central Excise Duty was an indirect tax charged by the Government of India for the manufacture of goods.
2. Additional Excise Duty – Additional Excise Duty was charged on certain goods of special importance which was under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and the Additional Excise Duty was as same as the Central Excise Duty.
3. Service Tax – Service Tax was imposed by the Central Government of India on the services provided by the service providers. The customers paid for this service to the service providers .Service tax was collected by the Government of India
4. Additional Customs Duty – Additional Customs Duty also called as Countervailing Duty (CVD) was equal to the Central Excise Duty and was imposed on goods only if they were produced or manufactured in India.
5. Special Additional Duty of Customs – Special Additional Duty had about 4% on the total imports made, which was under the Tariff Act.
6. Central Surcharges and Cess – Surcharge, an additional charge was mostly in the Personal Income Tax. It was basically charged for high earning people or wealthy people. While Cess also called as tax on tax, it was imposed by the Government who charges this tax. Cess was also for wealthy individuals.
• At the State Level
Some of the following taxes were replaced by GST at the State Level :-
1. VAT – VAT or (Value Added Tax) was an indirect tax imposed on services and goods collected by the Government of India from the producers at the state level. It was charged at every stage of supply chain from the manufacturers to the consumers. VAT was imposed at the state or Local level.
2. Central Sales Tax – Central Sales Tax (CST) was an indirect tax imposed by the government for the sales of goods on an interstate level.The customers pay an amount of tax if any seller sells goods to that customer within a state.
3. Octroi and Entry Tax – Octroi was imposed at the local or city areas while Entry tax was charged on goods within the state. Both are imposed by the Local Tax Authorities.
4. Purchase Tax – Purchase tax, an indirect tax which was charged by the State Government for the purchase of any goods.
5. Luxury Tax – Luxury Tax was charged on expensive products or services which can be brought by the wealthy people.
6. Taxes on lottery, betting and gambling – Taxes which were charged on lottery, betting and gambling were Deducted from Income.
7. Entertainment Tax – Entertainment tax was a tax imposed by the Government for entertainment purposes like buying a movie ticket, Amusement Parks, Attending any festival parties etc.
8. Advertisement Tax – Advertisement Tax was a tax charged on buying any advertising spaces whether online media, offline media etc.
Few Reasons why GST replaced these indirect taxes
- Cascading effects of tax
- It was difficult for small business to start up their own business
- Increased the cost of all the sales and purchases that were made
- VAT was really complex and difficult to calculate and understand
With all the indirect expenses that’s mentioned above were all replaced by GST, that’s how a Single Tax was introduced in the Indian Economy on 1st July, 2017 and is followed by the whole Nation.
If you want to learn more about GST then check out on this GST COURSE.