What is GST
GST is a form of tax. G.S.T is the abbreviation of goods and services tax. After goods and services tax implantation all other taxes such as octroi, Central Sales Tax, State-level sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on consumption or sale of electricity,VAT , taxes on transportation of goods and services abolish in it .
GST or Goods and services tax is applied on manufacturer, sale and consumption of goods and services.According to experts,with implantation of GST, tax collections will improves.According them, it is also boost Indian economic development.It is break tax barriers with in States .It provide business men a uniform tax rate rest of india or any country where GST applied.
How GST works ?
GST or Goods and services tax is an ideal tax system.It collects taxes at various stages of manufacturing, supply and retail. GST or goods and services tax is based on the amount added on product by the manufacturers, suppliers and retailers. You can understand GST with the following example.
For example a toy manufacturer that procures raw materials at 50 lakh per batch. The toy manufacturer keeps his operating profits at 10 lakh. The processing cost of raw material 50 lakhs. Know to calculate Goods and services tax for this manufacturing unit see the image below.
This manufacturing unit have to pay Goods and services tax on 121 lakh. To understand calculation as 10 % GST on procures process of raw material 50 lakh + 10%. It is 55 lakh. And Processing cost 50 lakh + profit 10 lakh = 60 lakh .Know total selling of product is 55 lakh + 60 lakh = 115 lakh. And according to your Goods and services Tax framework you will pay tax on 60 lakh