The government of every country needs a steady stream of revenue to enable the country to play its truest role, and taxation is the main source of this revenue. The taxes collected by the government are ultimately spent on the public of the country. There are two main types of taxes in India, namely direct taxes and indirect taxes.
Direct tax is basically an income tax levied on a person’s income, which comes from various sources, such as house rent, wages, etc. Increase the global margin price of related goods or services. In India, this is called GST (Goods and Services Tax). It applies to the supply of goods and services in India.
What is GST
The full form of GST is goods and services tax, which is a destination-oriented multi-stage tax that applies to every added value. This is a relief for most people, because it completely replaces many indirect taxes that once worked, such as consumption tax, value-added tax, service tax, property tax and so on. With the introduction of goods and services taxes, 17 such taxes have been eliminated.
Simplify government taxation procedures. GST is a consumer goods tax levied on people with annual turnover of Rs. More than 4 million. These people must be registered as ordinary taxpayers. This option is now open to all people buying goods and services across the country.
Meaning of Global GST
The full form of global GST is the global goods and services tax. There are several countries in the world that actively adopt the goods and services tax system. The first country to implement GST was France in 1954. Today, about 160 countries have adopted the GST idea. These include the United Kingdom, Canada, Australia, Vietnam, Singapore, Spain, Brazil, Italy, Nigeria and South Korea.
Most countries call this value added tax (VAT). Globally, goods and services tax has been adopted as a unified taxation system. It can be concluded that tax rates are levied uniformly across the country on various goods and services. Consumption tax is the merger or unification of the central and state tax systems and is levied as a single tax.
This overcomes the overload problem under certain conditions, eliminates the chain effect of taxation, and improves public participation and confidence.
History of GST
Since the goods and services tax was implemented in France in 1954, it has been implemented in many countries. In India, the tax system was introduced in 2000 after the then Prime Minister Shri Atal Bihari Vajpayee formed a committee to improve India’s tax structure.
In 2006, the Federal Ministry proposed to introduce GST in 2010, but after due diligence and amendments, it was finally announced in 2011. Once implemented, the taxes mentioned below will be replaced and merged respectively.
What are the Different types of GST?
Basically, under the current GST tax system, there are now three types of applicable taxes:
Central Goods and Services Tax (CGST)
CGST is levied on the supply of products and services within the state. The central government levies CGST and is regulated by the Central Goods and Services Tax Law. CGST has completely replaced all previous central taxes, such as central consumption tax, tariff, service tax, SAD, CST, etc. Taxpayers are required to pay SGST. The CGST fee rate is usually the same as the SGST fee rate, and the income collected under CGST is turned over to the central government.
State Goods and Services Tax (SGST)
The SGST is the same as the CGST mentioned above. Charge fees when selling products or services in a state. The state government is responsible for collecting SGST. This tax replaces all previous taxes, such as input tax, value-added tax, entertainment tax, state sales tax, taxes and surcharges. The income collected by SGST will be sent to the state government.
Integrated Goods and Services Tax (IGST)
IGST applies to interstate transactions of goods and services. It also applies to imports. The central government receives IGST and distributes it among the states. If goods or services are transferred from one state to another, IGST applies. Taxation is mandatory, so the states only need to deal with the federal government, not with all states.
Union Territory Goods and Services Tax (UTGST)
UTGST applies to products and services provided in any Union territory of the country, such as Andaman and Nicobar Islands, Dammam and Diu, Dadra and Nagar Haveli, Lakshadweep and Chandigarh. UTGST is charged together with CGST.
Meaning of GST in Different languages
- Hindi – वस्तु एवं सेवा कर
- Marathi – वस्तू आणि सेवा कर
- Gujrati – માલ અને સેવાઓ કર
- Punjabi – ਗੁਡਸ ਅਤੇ ਸਰਵਿਸਿਜ਼ ਟੈਕਸ
- Malayalam – വസ്തുക്കളും സേവന നികുതിയും
- Bengali – পণ্য ও সেবা কর
- Kannad – ಸರಕು ಮತ್ತು ಸೇವೆಗಳ ತೆರಿಗೆ
- Telugu – వస్తువులు మరియు సేవ పన్ను
- Tamil – பொருட்கள் மற்றும் சேவைகள் வரி
- Sindhi – سامان ۽ خدمت ٽيڪس
- Nepali – सामान र सेवा कर
- Arabic – ضريبة السلع والخدمات
What is meant by Direct Tax?
Direct tax applies to the income of the appraiser (individual or company or company or HUF or any other person). The amount of tax payable depends on the income earned by the individual from various sources, such as wages, housing rental income, bank FD interest, and so on.
Therefore, the more you earn, the more taxes you pay to the government, which essentially means that rich people pay more taxes than poor people. The responsibility for paying taxes cannot be transferred to anyone else.
The following is a list of relevant direct taxes in India:
- Income Tax
- Wealth Tax (Abolished and revoked later)
- Estate Tax
What is meant by Indirect Tax?
Indirect taxes are not levied directly on personal income, as described above. Rather, it is imposed on the goods and services being traded, which in turn increases the cost or MRP of these goods and services. Unlike direct taxes, indirect taxes must be borne by the end customer, and the poor and the rich enjoy the same treatment.
Many indirect taxes. Some of them are centralized by the central government, while other countries’ governments, which makes the collection of indirect tax systems extremely complicated.
The following is a list of indirect taxes, currently in India:
- Goods and Services Tax (GST)
- Customs duty
- Excise duty (on Petrol, diesel, natural gas, alcohol)
- Central Sales Tax (relevant for certain goods only)
- Securities Transaction Tax (STT)
- Stamp Duty
- Entertainment Tax