In many schools, students are asked to write an Essay on GST.
Many students often struggles, while few of them get confused to write a descriptive essay on GST (Goods and Service Tax).
In this post, we had provided detailed information about Goods and Services Tax (GST), types of GST, how does it work.
You’ll also learn the advantages & disadvantages of GST and what are its effects on GDP are also discussed.
Let’s get started…
The Goods and Services Tax or GST is the new indirect tax system of the Government of India which is coming into effect from 1 July 2017.
Essay on GST in 250 words:
GST is an abbreviation for Goods and Services Tax, India. It is a similar indirect tax, which is imposed by both the central and state governments, replacing different indirect taxes at different stages.
GST considers India a big market, whatever it may be, after a uniform tax government across the country.
Although GST is charged from the next customer by all registered dealers in the supply chain (raw material supplier, manufacturer, wholesaler, retailer and consumer), the ultimate burden of tax is on the end customer i.e. the consumer.
All other GST registered dealers act as middlemen, who collect GST from the consumer and give it to the government, receiving tax credits in return.
This tax credit is called the “input tax credit” and is held against the GST charged by the dealer to the customer in which he supplies the goods.
Any registered dealer is also eligible for a tax refund if the input tax credit exceeds the output tax credit, as per the provisions provided by law in this regard.
Further, no GST credit can be claimed for the purchase of discounted goods. GST is not imposed on all types of vegetables, organic manures, contraceptives, printed books, stamp papers, agricultural implements etc.
GST in India Essay 500 Words:
The Goods and Services Tax or GST is a comprehensive, multi-level, destination-based tax that will be imposed on every value.
To understand this, we have to understand the words under this definition.
Let us start with the word ‘multi-level’. Any item passes through several stages from manufacture to final consumption.
The first step is to buy raw materials.
The second stage is production or manufacturing.
And in the last stage, the retailer sells the final product to you or the end consumer. Also, read GST Essay Conclusion.
How GST works:
Nationwide tax reform cannot work without strict instructions and provisions.
The GST Council has devised a method of implementing this new tax system by dividing it into three categories.
When GST is implemented, there will be 3 types of taxes:
CGST: where revenue will be collected by the central government
SGST: Revenue will be collected by state governments for sales in the state
IGST: where revenue will be collected by the central government for interstate sales
In most cases, the tax structure under the new regime will be as follows:
|Transaction||New system||Old system||Explanation|
|In-state sales||CGST + SGST||VAT + Central Excise / Service Tax||Revenue will now be shared between Center and State|
|Sale to another state||IGST||Central Sales Tax + Excise / Service Tax||There will now be only one type of tax (central) in case of interstate sales.|
The GST rate is 18% which includes the CGST rate of 9% and the SGST rate of 9%.
In such cases, the dealer collects Rs. 1800 and in this amount Rs. 900 will go to the Central Government and Rs. 900 will go to the Government of Maharashtra.
So now the dealer has to pay Rs. 1800 IGST & CGST and SGST will not have to be paid.
The main reason for GST is to bring the whole of India under a uniform tax regime.
This has reduced the unnecessary tax burden of various state and central taxes on dealers and made goods cheaper for both investors and the consumer.
Essay on GST Bill in 1000 Words:
Goods and Services Tax, India GST for short is a tax based on the consumption of goods or services across India. GST is an indirect tax that has replaced previous indirect taxes. Direct taxes such as income tax, corporate tax etc. are not affected by GST.
history of GST:
The Goods and Services Tax (GST) was proposed in 1999 under the government of the then Prime Minister of India, Atal Bihar Vajpayee.
Also, a committee was set up by Prime Minister Vajpayee to prepare the GST model by the then Finance Minister of West Bengal Aseem Dasgupta.
Since then, the GDA could not be implemented, most recently on 1 July 2017.
The NDA (National Democratic Alliance) government formed the government led by the BJP (Bharatiya Janata Party).
Advantages of GST:
Tax affects cascading:
The cascading tax effect can be described as ‘tax on tax’, would eliminate this previous cascading effect of the tax.
High limit of registration:
In the VAT structure, it was mandatory to pay VAT to do other business with a turnover of more than 500000, although this limit has been increased to 2000000 with new Goods and Services Tax, which is beneficial for many small traders.
It gives an option to reduce tax by using tax structure scheme i.e. tax and compliance burden on small businesses have been reduced under Goods and Services Tax.
Easy online process:
The entire process of Goods and Services Tax system has been made online so that it is easy for the user and does not get entangled in external useless rounds.
Before this new tax, considerable industries were largely unregulated and unorganized. There has been regularity in industries under the Goods and Services Tax. Also, read GST Essay FAQ.
Disadvantages of Goods and Services Tax (GST):
For efficient use of new billing software, software purchases and staff training leads to increased costs.
Goods and Services Tax Compliance:
Small and medium enterprises have to understand the specifics of the Goods and Services Tax system.
Maintenance of digital records should be consistent, if the Goods and Services Tax Complaint Challan is issued, it should contain the mandatory details, like a place of supply, HSN. Code etc.
Increase in operating costs:
Employment of specialists will suffer additional costs, this will increase the cost for small businesses.
Problem with the online application:
Since the Goods and Services Tax is an online taxation system, filing details can be difficult for some small businesses.
Additionally, small businesses, in particular, will face difficulties, as earlier only businesses above Rs 1.5 crore had to pay excise duty, but now businesses with more than ₹ 2000000 pay Goods and Services Tax.
Although one can choose the structure plan, it will also be a difficult and lengthy process.
Importance of GST in India:
GST plays an important role in changing the current tax structure and the economy.
Currently, the Indian tax structure is divided into two – direct and indirect taxes.
Direct tax or direct tax is one in which liability cannot be passed on to anyone else.
An example of this is income tax where you earn income and only you are liable to pay tax on it.
In the case of indirect taxes, the tax liability can be passed on to another person.
This means that when the shopkeeper pays VAT on his sale, he can give liability to his customer.
Therefore the customer pays on the price of the item and VAT so that the shopkeeper can collect VAT to the government.
Meaning the customer not only pays the price of the product, but also has to pay the tax liability, and therefore, it costs more when he buys an item.
This is because the shopkeeper had to pay tax when he bought the item from the wholesaler.
To recover the VAT paid to the government along with the amount it collects, it gives the liability to its customer who has to pay the additional amount.
Whatsoever is paid out of his pocket for the shopkeeper during the transaction, there is no other way for him to claim the refund and hence, he has no option but to pass on the liability of the customer.
Conclusion for GST Essay:
GST will lead to a more transparent and corruption-free taxation system; it is designed in such a way that it benefits both businesses and consumers.
India needed better tax reform on indirect tax like Goods and Services Tax.