What is the Full Form of GST in Indian Economy?
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Full Form of GST in Indian Economy - Full Form, Meaning, and Definition
The full form of GST in Indian economy is Goods and Services Tax.
What is GST and What are its types?
GST was introduced in 2017 by the Government of India and is a single tax levied on the supply of most goods and services. This tax is paid by the consumers but is collected by the government from the suppliers of these goods and services.
In the previous tax system, we had to pay taxes at multiple tax points and sometimes also pay tax on taxes as the goods and services travel through the consumer chain. GST solved all these problems by bringing together all these taxes bringing efficiency in tax administration.
What are the types of GST?
- Central GST (CGST)-GST levied from any transaction is divided into two parts, the part of Centre’s is called CGST
- State GST (SGST)- The share of GST when the transaction happens inside the state
- Union Territory GST (UTGST)- The share of GST Union Territory without a legislature gets when the cash flow takes place inside UT
- Integrated GST (IGST) - The share of GST taken by States, Union Territory, foreign territory get when the transaction takes place between-
- Two states or Union Territories
- State-Union Territory
- State-Foreign Territory
What are the items not counted under GST?
- Alcohol
- Tobacco
- Petroleum products (crude oil, petrol, diesel, natural gas)
- Entertainment
What are the GST rate slabs?
Following is the list of the rate slabs of goods and services under various categories.
- Exempted GST Rate Slab (No Tax) - Essential commodities like vegetable, milk, fruit, flour, bread, fish, meat, eggs, flour, salt, honey, curd, kajal, vermilion, judicial paper, printed books, newspaper, jute, hotels, lodges etc have the tariff under 1000 INR. 7% of such things fall under this category.
- 5% GST Rate Slab - Commodities like frozen vegetables, tea, coffee, spices, pizza bread, cashew nuts, ice-cream, coal, medicine and services like rail, air tickets, restaurant etc of which 14% fall under this category.
- 12% GST Rate Slab - Foods like frozen ghee, cheese, frozen meat, dry fruits, animal fat, ketchup, sauces, ayuyrvedic medicine, diagnostic kits, tooth paste, umbrella, gaming equipments, above 1000 INR, business class air ticket, lottery etc fall under this category.
- 18% GST Rate Slab - Biscuit, pastry, cake, jam, soup, mayonnaise, mineral water above INR 500; printer, camera, electronic products, aluminium foil, luxurious hotel, five star restaurants, IT services, branded dresses, financial services etc of which 43% things go under this category.
- 28% GST Rate Slab - Rest of the foods like chocolate, cocoa, waffles, chewing gum, pan masala, products like deodorant, shaving cream, shampoo, cream, heavy electronics like washing machine, automobiles, 5 star hotel stays, club, movie tickets etc have been included under this category.
How is GST calculated?
To calculate the GST of a product or service one should know the rate applied to it. GST calculation formula is mentioned below:
Suppose the price of a good or service is 1000 INR and the GST rate applied to it is18%. So the net price of it will be = 1000+{1000x(18/100)}= 1000+180 = 1180.
What are the Advantages/Benefits of GST?
- Eliminates levying tax at multiple points
- A seamless way to pay taxes and allows centralised registration
- Small business and unorganized business are made accountable
- Reduction in corruption and illegal tax impositions
- Optimized logistics transportation
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