GST is a revolutionary tax reform which has been designed to provide an all-inclusive destination-specific taxation which will be levied for each value addition. There are typically many steps which are involved in the pricing of an item because it must go through multiple stages, right from its manufacturing to the ultimate sale. The first stage deals with purchasing raw materials while the second stage is that of manufacturing or production of the item. This is followed by warehousing and then the sale of the item to retailers. In the last stage, the retailer will sell the finished product to the customer or the end-user. This is the whole product life cycle.
The Indian structure has been traditionally divided into the direct taxes and indirect taxes. When the liability could not be passed to others, direct taxes were levied such as the Income Tax. In this case, the tax-payee earns and he will have to pay the tax on his own. But, where the liability of taxes could be passed over to others, indirect taxes were levied. So, if the shopkeeper pays VAT on the sale of a product, he is passing on the liability to his customer. In other words, the buyer will pay for the price of the product including the VAT which the shopkeeper will submit to the government. This also means that the buyer has a greater outlay when he buys any product because he pays tax liability.
The reason why the shopkeeper had to be given this VAT was because he had also paid taxes when buying the product from his wholesalers. So, to make up for that price he has paid the wholesaler and the VAT which he needs to pay the government, he transfers this liability to the buyer. The GST has been designed to address this concern. It comes with a Tax Input Credit so that sellers can claim taxes already paid. This move is expected to bring down costs for the buyer.
The GST is therefore meant to offer tow key benefits. On the one hand, it is expected to lessen cascading effects of taxes. Secondly, it is expected to lower burden of taxes and prices on end buyers by making way for input tax credit.
Cloud Security: An Introduction
Cloud technology has grown by leaps and bounds over the last 15 years. With the cloud becoming mainstream, cloud security has become all the more important. Cloud se....
10 Key Factors to Consider when Buying Dedicated Server Hosting for your Business
As the world experiences digital disruption, organizations far and wide are taking their businesses online. Websites have become a crucial link between a company and its customers. If you own a websit....