GST How to Guide



Indirect taxes have constantly evolved in India. Now, that the One Hundred and First Amendment Act of the Constitution of India has been enacted, the citizens of India have been greeted by GST. Not to mention it has created ripples in the financial world.

Which brings us to the fact, what is GST and how it can impact each citizen of the country? If we have to explain things in a simplified way, it is the comprehensive Goods and Services Tax. The imposition of GST in India, that is the Indian system of indirect taxation is said to be a revolutionary step as it has rationalized indirect taxes in India. 

In a nutshell, GST will create a single market as it will replace all indirect taxes in the country.
With the advent of this much-awaited goods and services tax on the 1st of July, The various departments of the governments are ensuring that the transition of the former tax regime to the present tax regime is smooth. Not without reason, GST has caught the imagination of the teeming millions and said to be one of the biggest financial reforms since the independence.
 
The Effect of GST on the Entire Population

Whether it is good or bad, it is difficult to gauge now but it has impacted just about everyone right from the small shopkeeper to the greatest of a businessman, nobody has been able to avoid the impact. 

 GST converges about 15 different taxes and levies and amalgamated and unified the entire country into one common market which has a single tax structure. This ensures the smooth transferring of goods from one end of the country into another, across different territorial borders without any hurdles. 

The long and short of GST

 The GST Tax is a comprehensive, multi-stage, tax which is destination-based, that will be levied upon on all value additions.

What is multi-stage and how can we explain it? A good or an item follows an entire gamut of steps right from manufacture to the final stage of production. When you buy the raw materials it will be regarded as the first stage. The next stage is all about the production or manufacture. 

Then again there is another stage which involves the warehousing of materials. The next obvious step is selling off the product to the retailer. 

Finally, you have the retailer selling you the product, thus completing the journey and ending up with the consumer.

So let us understand this process with an example, suppose a manufacturer wants to make a shirt. For the same, he has to buy the yarn. Then it gets turned into a shirt after manufacture. 

So, the value of the yarn immediately increases when it is made into a shirt. 

When the manufacturer sells it again to the warehousing agent who labels and attaches price tags to the shirt. So like this value keeps on rising and when the warehouse sells it to the retailer who invests in the marketing and increases the value still further.

GST will be imposed on all these value additions and this helps achieve the final sale to the end customer.

 Goods and Services Tax will also be imposed on all transactions right from the starting process to the end process and that means the whole manufacturing chain.

The chief reason of having one consolidated indirect in place of multiple existing indirect taxes is to help build a strong economy and hopefully, the GST will live up to its ever-increasing hype and hoopla.  There are various accounting firms in the country such as chartered accountantfirms in Chennai which will guide you through the entire process of unraveling GST and make sure you are able to keep yourself financially afloat.

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