What is GST? Detailed Notes - Important for WBCS, UPSC, SSC, IBPS and Other Exams

GST ( Goods and Services Tax )
Before we start our discussion on this revolutionised taxation system, we should know where this taxation system was first introduced. The Goods and Services Tax or GST was first introduced in France in the year 1954. It was consequently after France that countries like Japan, South Korea, UK and Australia implemented the GST law. India has adopted canadian version of GST Model ( Dual-GST). Here is the detailed Post on “History of Indian GST”. Read it here.
What is GST?
So, What is GST? In single sentence we can explain this like “It is a Multi-Staged, Destination based tax that will be levied on every value addition.” Final consumer will bear only the GST charge by the last dealer in supply chain. Well, I hope you find this defination very confusing. Right?
So lets give you another defination.
GST is an Indirect Tax. It was replaced many other indirect taxes which was existed previously in India.
What is GST - WBCS - UPSC

***Below is a list of VAT and levies which is no more existed or subsumed by GST.
At central Level , It is :
1.   Service Tax.
2.   Central excise duty.
3.   Additional Excise Duty.
4.   Special Additonal duty of Customs.
5.   Others.
At State Level, it is :
1.   State Value added tax/Sale Tax
2.   Entry Tax
3.   Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States)
4.   Taxes on lotteries and luxury.
5.   Others.
**So now lets discuss the first Sentence of the defination of GST.Multi-Staged, Destination based tax that will be levied on every value addition.”
1.   Multi Staged : Before we start discussion. Please check below image first.
So we see a full production cycle case in above image, from raw materials to Consumer. GST will be levied on each of these stages, That is why GST ( Goods and Services Tax ) is called Multistaged.

2.   Destination Based : Suppose Goods is manufactured in Maharashtra and finally a consumer from West bengal buy that product. Since GST is levied at the point of consumption, So Entire tax revenue will go to West Bengal.
3.   Value Addition : GST will be levied on each stage where monetary worth is added.
Components of GST
Till now India has 3 components in this revolutionary taxation system. These three components are :
Lets explain.
1.   CGST : CGST or Central Goods and Services Tax is collected by Central Government based on inter-state sale.
2.   SGST : SGST or State Goods and Services tax is collected by the State Government based on inter-state sale.
3.   IGST : IGST or Integrated Goods and Services Tax is collected by the Central government based on Inter-state sale.

India adopted a dual GST model, meaning that taxation is administered by both the Union and State Governments.
Some Special Points on GST :
1.   GSTN : GSTN or Goods and Services Tax Network is a non-profit organisation formed for creating platform or websites for GST related parties.
2.   France is the first country in the world to adopt GST. France adopted GST in the year 1954.
3.   USA” does not have GST.
4.   Indian has the highest GST rate of 28%.
5.   Argentina is the second country to have highest GST rate of 27%.
6.   Current GST slabs are 5%, 12%, 18% and 28%. (note : GST Rate and Slab is different)
Ok, Now lets find out how much you have learned so far. Take a Quiz on GST. Click Here to Start GST Special Quiz – Set 1
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