what is GST | gst in full explained

Hello I will be telling you about GST. GST Means Goods and Services Tax. It means we are paying the tax to the centraland state governments for getting the goods and services. These both are called as taxable suppy. Before going to know more about the GST, letme tell you about the old tax system. In our old tax system, we have two types oftaxes. They are Direct and Indirect taxes. 

Under Direct Taxes we have Income and Corporatetax 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 thedirect taxes and it doesn’t have any impact on GST. But the indirect taxes is replaced by GST. And under the GST we have Central GST andState GST or Integrated GST. 

In Central GST, we will pay taxes to the centralgovernment and in state GST, we will pay taxes to the state government. Integrated GST means, when the goods thatmanufactures in one state and then moves to another state then we have to pay the IntegratedGST. This IGST will be divided equally betweenthe two states. When we pay the IGST, then you don’t needto pay the State GST. Now let me tell you how the VAT input taxcredit differs before GST and after GST. Suppose, the product manufactures in one placeand move to another place within the same state, then the VAT input tax credit applies. 

When the same product moves from this stateto another state then the distributor have to pay the central tax, where no VAT is appliedhere and final product price increases. In GST structure, there are no individualtaxes so, the distributer will get Input tax credit at any stage. For example, the product manufactures in oneplace and move to another place within the same state, then the manufacturer have topay the GST. And when the same product moves from thisstate to another state then the distributor have to pay the difference. Where the final price of the product decreaseswhen compared with old tax system. Now let us see the major difference betweenthe old tax system and the new GST system. 

And for easy math, I’m taking the flat taxrate as 10%. Let’s us consider the old tax systemFirstly, the manufacture get the goods for 100 rupees. It includes 10% tax which is approximately10 rupees. Now he adds his profit of 10 rupees and sellsthe final product to distributor for 110 rupees. Distributor adds his profit of 20 rupees andthe cost of the goods is now 130 rupees. 

As the distributor have to pay the 10% taxwhich is 13 rupees and the cost of the product is now 143 rupees and he sells it to the wholeseller. Wholeseller also adds his profit of 20 rupeesand the cost of the product is now 163 rupees. As the Wholeseller need to pay the tax of10% which is 16.3 rupees and the cost of the goods is now 179.3 rupees. Likewise, the retailer gets the product fromthe Wholeseller 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 becomes219.23 rupees. Now take a look at the GST systemFirstly, the manufacture get the goods for 100 rupees. It includes 10% tax which is approximately10 rupees. 

Now he adds his profit of 10 rupees and sellsthe final product to distributor for 110 rupees. Distributor adds his profit of 20 rupees andthe cost of the goods is now 130 rupees. In GST system, we don’t have to pay thetax to the tax. So, the manufacturer already paid the taxof 10 rupees and it should be subtracted from the distributor tax of 10% which is 13 rupees. Now the tax that should be paid by the distributoris 3 rupees and the cost of the product remains 130 rupees and he sells it to the wholeseller. Wholeseller also adds his profit of 20 rupeesand the cost of the product is now 150 rupees. 

As the distributor already paid the tax of13 rupees and it should be subtracted from the wholeseller tax of 10% which is 15 rupees. Now the tax that should be paid by the distributoris 2 rupees and the cost of the goods is now 163 rupees.

 Likewise, the retailer gets the product fromthe Wholeseller for 150 rupees and adds his profit of 20 rupees and the cost before theGST is 170 rupees. As the wholeseller already paid the tax of15 rupees and it should be subtracted from the retailer 10% tax which is 17 rupees. 

Now the tax that should be paid by the distributoris 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 inGST. It was divided into 5 categories. In 0% we have unpacked food grains5 % widely used items like, oils, packed grains etc12 % to 18 % normal items like, medicines, computers, fertilizers, services etc28 % luxury items like cars, cosmotics etc That’s it about the GST. If you find this video useful, hit the likebutton and consider sharing this video with your friends. 

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