Must Read!!! Best Essay on GST 2019-20

Essay on GST

Hello, everyone here we are again with the best essay on GST  in India, the one all were waiting for a long time, we have researched a lot about this topic, we hope you like it.and dont forget to read out our other articles.
essay on GST pdf
INDIA is well known for its complex tax system. Its almost impossible for new businesses and startups to understand the direct and indirect tax systems. This problem gets even more aggravated when constant changes are made to taxes with each financial year. But things change with the new Goods and Services Tax, commonly known as GST.
Let’s take an example; Aditya would like to start a business in Delhi for which he needs raw materials from Beijing in China. While importing, it would first land at a port, and then from there, it would travel to the manufacturing centre at Delhi via road passing through various states.
Now, when Aditya starts analyzing the multiple taxes, he needs to pay in the process of just transporting the material to his centre, he will lose his mind, In fact, this happens with many budding entrepreneurs who want to give shape to their dreams , but fail to, because the complex tax structure in India is the biggest hindrance
First he needs to pay a customs duty along with the shipping charges its okay up until this point But to comprehend the complexity in the tax structure after this stage would drive anyone crazy He would have to pay central and state governments Ten different Taxes like primary excise duty, Service Tax, VAT, Central Sales Tax, Octroi, etc.

must read GST essay

And not only this. He also would have to pay tax on taxes already collected by the government To understand this let’s take a straightforward example under the present tax system A seller in Mumbai sells a product to a buyer in Nagpur. On top of the price of the product, Vat is being charged.
Now the same product is to be sold from Nagpur to Chennai The seller in Nagpur increases the amount to gain profit Now on top of the new price including his profit Central Sales Tax that is CST is added The price of the product for the buyer in Chennai will comprise of Cost of the product+VAT+profit+CST Don’t you see the cascading effect of taxes here? So how does GST affect the taxation system? The Goods and Services Tax promises to alleviate this problem, among many others.
GST is a consumption-based tax that is levied on sale, manufacture, and consumption of goods & services at a National Level. Only one indirect tax has to be paid by the trade and industry and all the other indirect taxes like sales tax, purchase tax, service tax, octroi, etc.
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will be absorbed in GST Exports and direct tax like income tax, corporate tax, and capital gain will not be affected by GST GST would apply to all goods other than crude petroleum, motor spirit, diesel, aviation, turbine fuel and natural gas It would apply to all services barring a few to be specified in the future The proposed tax system will take the form of dual GST which is concurrently levied by Central and State Government
This will comprise of, Central GST (CGST) which will be collected by centre State GST (SGST) which will be collected by State Integrated GST (IGST)- which will be levied by Central Government on Inter-state supply of goods and services. So who is going to pocket the taxes?
In case of Intrastate transactions seller collects both CGST and SGST from the buyer CGST goes to central government, and SGST goes to state government And in case of Interstate sales IGST will be levied on Inter-State Transactions of goods and services and the tax get transferred to the importing State what would be the cost of the same product under GST system?
Best GST essay in English
Product sold from a seller in Mumbai to a buyer in Nagpur CGST and SGST is to be added Now again the same product is being sold from Nagpur to Chennai This is an interstate transaction, so IGST is applicable now But wait a minute, isn’t this tax on tax again? So here is the twist A charge has already been paid on the product in the form of CGST and SGST

so the buyer in Chennai gets a tax credit And IGST gets reduced with the amount of CGST and SGST this prevents the buyer from paying tax on tax So under the GST system the drawback faced by the manufacturers and business class due to cascading effect of taxation and also complexity in comprehending indirect taxes has been removed to some extent.

In our old tax system, we have two types of taxes. They are Direct and Indirect taxes. Under Direct Taxes, we have Income and Corporate tax, and when we come to Indirect taxes, we have central and state taxes. Now let me tell you about the GST structure. Like from the old tax system, we have the direct taxes, and it doesn’t have any impact on GST. But the indirect taxes are replaced by GST.

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Essay on GST in India
And under the GST, we have Central GST and State GST or Integrated GST. In Central GST, we will pay taxes to the central government, and in-state GST, we will pay taxes to the state government. Integrated GST means when the goods that manufacture in one state and then move to another country, then we have to pay the Integrated GST. This IGST will be divided equally between the two countries.
When we pay the IGST, then you don’t need to pay the State GST. Now let me tell you how the VAT input tax credit differs before GST and after GST. Suppose the product manufactures in one place and move to another location within the same State, then the VAT input tax credit applies.
When the same product moves from this State to another state, then the distributor has to pay the central tax, where no VAT is involved here and final product price increases. In GST structure, there are no individual taxes so, the distributor will get an Input tax credit at any stage.
For example, the product manufactures in one place and move to another location within the same State, then the manufacturer has to pay the GST. And when the same product moves from this State to another state, then the distributor has to pay the difference.

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Where the final price of the product decreases when compared with the old tax system, now let us see the significant difference between the old tax system and the new GST system. And for easy math, I’m taking the flat tax rate as 10%. Let’s consider the old tax system.
Firstly, the manufacturer gets the goods for 100 rupees. It includes a 10% tax, which is approximately 10 rupees. Now he adds his profit of 10 rupees and sells the final product to distributor for 110 rupees. Distributor adds his profit of 20 rupees and the Cost of the goods is now 130 rupees.
As the distributor has to pay the 10% tax, which is 13 rupees, and the Cost of the product is now 143 rupees, and he sells it to the wholesaler. The wholesaler also adds his profit of 20 rupees, and the Cost of the product is now 163 rupees.
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As the wholesaler needs to pay a tax of 10%, which is 16.3 rupees, and the Cost of the goods is now 179.3 rupees. Likewise, the retailer gets the product from the wholesaler for 179.3 rupees and adds his profit of 20 rupees, and he pays the 10% tax on the product cost. Now the final price of the product becomes 219.23 rupees. Now take a look at the GST system. Firstly, the manufacturer gets the goods for 100 rupees.
It includes a 10% tax, which is approximately 10 rupees. Now he adds his profit of 10 rupees and sells the final product to distributor for 110 rupees. The distributor adds his profit of 20 rupees, and the Cost of the goods is now 130 rupees. In the GST system, we don’t have to pay the tax to the tax.
So, the manufacturer already paid the imposition of 10 rupees, and it should be subtracted from the distributor tax of 10%, which is 13 rupees. Now the fee that should be paid by the distributor is 3 rupees, and the Cost of the product remains 130 rupees, and he sells it to the wholesaler.

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The wholesaler also adds his profit of 20 rupees, and the Cost of the product is now 150 rupees. As the distributor already paid the tax of 13 rupees and it should be subtracted from the wholesaler tax of 10%, which is 15 rupees. Now the fee that should be paid by the distributor is 2 rupees, and the Cost of the goods is now 163 rupees.
Likewise, the retailer gets the product from the wholesaler for 150 rupees and adds his profit of 20 rupees, and the Cost before the GST is 170 rupees. As the wholesaler already paid the tax of 15 rupees, and it should be subtracted from the retailer 10% tax, which is 17 rupees. Now the fee that should be paid by the distributor is 2 rupees, and the final price of the product becomes 170 rupees. Now let me tell you about GST Slabs.
Like Income tax, we, too, have the slabs in GST. It was divided into five categories. In 0%, we have unpacked food grains, 5 % widely used items like oils, packed grains, etc. 12 % to 18 % ordinary items like medicines, computers, fertilizers, services, etc. 28 % luxury items like cars, cosmetics, etc. That’s it about the GST.
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