Thread: What is GST?
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Old July 6th, 2017, 10:34 AM
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Re: What is GST?

I am still not very clear about the nuts and bolts of how GST works, but from what I understand, here goes :

GST is being defined as a "consumption based tax" by the government. Basically, all the shopkeepers are supposed to upload their invoices to the relevant government website explaining the details of sales and the taxes.

There are basically 3 types of taxes - CGST (Central GST), SGST (State GST) and IGST (Inter-state GST). Each has 5 tax slabs of 0%, 5%, 12%, 18% and 28%.

If a shopkeeper has purchased something for Rs. 100 per unit + 18% tax (Total Rs. 118), and wants to sell it at Rs. 102 + tax, his sale price will be Rs. 102+18.36 = 120.36

So, his tax liability will be net Rs. 0.36 (he gets "input credit" for the tax already paid).

There are many questions the department is facing from the shopkeepers e.g.
- If I buy 50kg branded rice from the wholeseller (taxed at 12%) and sell it in loose form (unbranded rice - 0%). What is my tax calculation in this case ?

- How to adjust for wastages/damages/expired goods ?

- What is the tax liability for the "sale" or "discount" schemes the retailer offers ? Suppose I keep a sale of 10 + 1, will my tax liability be for 10 units or 11 units ?

etc..etc..

Being new, its a bit of muddle right now, but will get ironed out in due time.

My personal opinion is that as long as the government controls corruption in the tax system, the inefficiencies/ shortcomings will get taken care of.
Quote:
Originally Posted by Napolean View Post
Can someone explain how is it going to benefit India as a country? Also, is it going to somehow reduce tax theft?
Quote:
Originally Posted by Napolean View Post
Thanks Bhidu.

The wayh whatspapp forwards are coming up , it seems GST is going to put a heavier load on consumers. How much truth is there in that?
Quote:
Originally Posted by Sane Less View Post
Question (seriously) on this comment... how exactly will GST ensure that taxes are paid What is different that those who always paid cash will suddenly also include GST in their cash payments
There is a carrot and stick approach. According to the government, they know the flow of goods from raw material --> factory stage, and from there to the shops. Unless the end sale is accounted for, no one gets any "input credit". So your supplier is going to ask for your GST details for his own benefit.
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