Introduction to GST in India | Meaning of GST |Definitions of GST |Features of GST | NEP | SY BAF

0:00 Hello students, welcome to my YouTube channel. In the subject of Open Active their Accounting and Finance Paper Five in which we are going to cover about GST. So today is its first lecture where we will see the introduction. We will cover GST meaning in India , definitions and see the features of GST. Ok? So you must watch the video till the end and if you have come to the channel for the first time then you must subscribe. Do check out the playlist. I have covered many new topics related to NAP there. So please check it once. So let's start the video. Introduction to GST in India. GST means Goods and Services Tax is a comprehensive destination based indirect tax levied on the supply of goods and services across India. It was implemented on the first of July 2017

0:46 replacing a complex web of indirect taxes previously levied by the centre and the state governments. It marks the biggest tax reform in India since independence and aims to unify the taxes into a single economic market promoting ease of doing business. The motto of GST is One Nation One Tax One Market. So what we understand is that Good GST is a comprehensive destination based tax. Meaning where goods and services will be provided. Ok ? Whatever is consumed, that particular state will pay tax on it. Ok? And this is a tax of indirect nature. What is indirect tax? I have already covered that. You should check the playlist once. A separate series of indirect taxes has been maintained. Ok? So indirect taxes are not levied directly. Indirect taxes are taxes of progressive and regressive nature.

1:32 Ok? So it is not affecting your wealth. You indirectly that consumption is imposed on your consumer. Ok? Levy on the supply of goods and services across India. It is it was implemented. Since when did this happen? So July 1st, 2017. You have to remember this date. Such questions may come in MCQ. And this is a tax of indirect nature. Where earlier both the center and state used to impose many taxes in their own ways. Due to which the final product which was made, its price becomes very high and because of that the consumer suffers loss. Ok? Where what can we say because of GST? One of the biggest tax reforms came due to which a proper single economic market was promoted where it would become

2:18 easier to do business. The main motto of GST is that One Nation, One Tax, One Market, which means that nowhere is there a state-wise different tax being levied. Ok? The same tax rules are being followed in every state. For example, if we look at B for GST, there is a multi-tax structure and the Centre imposes taxes from its end. The state used to impose so many taxes on the centre from its end. Centre Excess Duty, Service Tax, Central State Slush Sales Tax, Additional Excess Duty, Countervailing Duty on Import, Special Additional Duty. So so many centres used to impose taxes. On top of that she also used to apply the stat from her end. Value Added Tax, Entry Tax & Octroi Tax, Luxury Tax, Entertainment Tax, Purchase Tax, Tax & Lottery, Betting, Gambling Excess. Ok? So there used to be a lot of taxes. If

3:04 not, there used to be 17 plus taxes. Ah these taxes overlap, lack uniformity and create insufficiency as the cascading taxes create compliance issues and barriers to interstate trade. Ok? Where if you want to do trade between two states like Gujarat and Maharashtra, then the state of Gujarat has different taxes. If it is different from Maharashtra, then less issue would have been created there. There was lack of hum uniformity. Tax rates were different. Tax was imposed multiple times on the same product. Ok? When it left Gujarat, some tax was imposed on it. When it enters Maharashtra, some tax will be levied on it. So by the time it reaches the final product, a lot of taxes are imposed on that product. The price of his product increases. Ok? And caste cascading taxes mean that taxes are imposed on top of taxes in

3:51 this manner. There was overlap. Ok? So due to so many things there used to be multiple tax structure before GST. So now multiple taxes of a single unified tax system has been introduced due to GST. Meaning GST umbrella, if we say, all the center and the state indirect taxes to be summed up in the GST. Ok? So all those things are included in GST. Ok? Of the centre and the state as well. So the Central Taxes which we will call CGST & IGST and the State Taxes which will come under SGST. These details will be forthcoming. Ok? At Central & State. So earlier 17 taxes and 23 cess sum all. Okay, so this much there used to be 17 plus taxes, 23 plus cess used to be levied on a particular product, so all that has ended,

4:36 now only tax has been imposed, GST is to be levied. Okay, additional and duties and customs CVD ced used to be levied, service tax surcharge duty state separately surcharge state and purchase tax entertainment tax tax on the lottery betting eye surcharge and cess a lot of things used to be levied, all of that has been summed up and has now come under the GST umbrella. Then looking at the meaning, GST is a single tax on the supply of goods and services right from the manufacturer to the consumer. Credits of the input taxes paid at each stage are available in the next ah in the next stage of the value addition in the value added tax system. Simplified means GST eliminates the cascading effects of taxes i.e. tax on tax and aims to create a uniform national market. Ok? So GST is a single

5:22 tax which is levied on the supply of goods and services from the end manufacturer to the consumer till the last consumer is reached, it is a value added tax where if you have earned some credit, you have made a purchase, now when you sell that purchase, you are adding value there, so what additional points will you get in that way, that will come next, you will understand Goods and Services Tax in India Scope of Goods and Services Tax due to GST, improvement of profitability bringing unity in tax structure providing transparency is being achieved. Simplification of taxation removes the cascading effect. This way, there is easy compliance of tax over tax. Then if we cover definition various definitions are given Legal Economic Academic

6:09 Practical Perspectives to help understand the concept with full clarity. So what does the first legal definition say? The Constitution of India as at the Age. Article 366 Chapter 12 A of the Constitution inserted by the 1001 Chapter 1 Constitutional Amendment Act 2016 16 Goods and Services Tax means any tax on the supply of goods and services and both except tax on the supply of alcoholic liquor for human consumption, that is, alcoholic liquor was not added thereto. Be it any goods or service, both have been discussed. If its ego is being supplied and for human consumption. Ok? Ah sorry if supply is happening then we will call it ah GST. So what are its key elements? GST is levelled on the supply, not the manufacture, but the sale. Meaning, the

6:54 product is on wherever it is coming. Cover Both Goods and Services is covering both the things. Alcohol for human consumption is excluded and petroleum products are also temporarily excluded. So, this is something you have to remember. Then ah CBIC Central Board of Indirect Taxes and Customs. It is the apex body for indirect taxes. You have to remember this. CBIC GST is a destination based tax. Destination means where the product is going. On consumption of goods and services it is proposed to be levied at all the stages right from the manufacturer up to the final consumption with credit of taxes paid at the previous stages available at any as set off. Ok? Ah means it is destination based. It is proposed to be taken through all stages right from the manufacturing. From manufacturing to final consumption, everyone is

7:42 paying tax with credit. And pre if he has done all those things at every stage where he has done something or the other, then he will get the credit for it in the final. What are its key points? A GST is destination based consumer state gets the tax. Ok? The state which is consuming it, that is, the product is going from Gujarat to Maharashtra, and Maharashtra is consuming it, so Maharashtra will benefit from it. It provides the input tax credit thereby removing the cascading effect. Ok? Input Tax Credit: The more you purchase and the more you sell, the more tax benefit you will get. Then it covers the entire supply chain. I mean, I said the entire supply chain, it covers all the stages. Right from the manufacturer up to the final consumption with credit of the tax paid at the previous stages available as a set off. Ok?

8:28 Whatever tax you have paid in future, you can set it off right now. Then the academic and economic definition says that GST is a comprehensive multistage destination based indirect tax that is leveled on every value addition; the more you keep adding, the more you keep paying tax, the more you will get its benefit; then the breakdown of the terms, I mean you are understanding comprehensively, it sums up all indirect taxes, VAT, excise, service tax, extra, all these things will come into it; then what we understand by multistage is that it is level at the average stage of the production and distribution chain. Ok? From production to distribution chain, to supply chain. Then from value addition we understand that tax is levied only on the value added at each stage. Ok? Some value has been added. Meaning,

9:14 some output is being received from some product from there. And from destination base we understand that revenue goes to the place where the goods and services are fully finally consumed. Ok? Finally we are talking about where it will be consumed. Revenue will be available there, at that place. Then if we look at the simplified practical definition, GST is a single tax on the supply of goods and services which is collected at every point of the sales and allows full credit for the tax paid earlier in the supply chain. Ok? If we look at its simple definition, it is a single tax on the supply of goods and services and it is collected at every point where we sell it. Ok ? I have done a sale there. Meaning, if something is being produced in the beginning, then in the beginning, the

10:00 manufacturing working process and the final product is being made, then in this entire sequence, wherever we have paid tax, the tax will be collected from there and in the end we will get the credit for it. Then the definition by the notable organization where the World Bank is saying that GST is the most complex indirect tax system in the world with the multiple rates and numerous exceptions. Ok? This reflects the Indian GST model simply and specifically. Ok? So the World Bank is saying that it is the most complex indirect tax system in the world with multiple taxes and numerous exceptions and we are talking about it. Ok? Then the OECD generic definition calls it a value added tax levied on the domestic consumption of goods and services except those that are zero rated. Ok? Zero rated

10:47 includes those products which have 0 percent, meaning those on which GST is not levied, apart from them, all the goods and services for value added domestic consumption have been put under the GST category, then what do you understand by goods, what do you understand by service, okay, so section 254 52 says that goods means every kind of movable property, meaning it is moving other than money and securities, meaning it will not include money and securities but includes the actionable claim, growing crops and grass extra. Ok? These three things will come. Apart from this, money and securities will not come. Apart from this, everything that is moving will come under the category of goods. Then service means anything other than goods, money and securities and includes the activities related to the use

11:32 of money and its conversion. Ok? The services that we are providing will not involve goods, money or securities. This has to define the scope of what is taxable under the GST. Then let's look at the features. The important point where we will talk about comprehensive tax. What do you mean? A comprehensive indirect tax because it consolidates a wide range of centre and state indirect taxes into a single system. We just saw further that it replaces the taxes taxes include the center excise duty, service tax, VAT entry tax, octo entertainment tax, ah luxury tax. This integration simplifies the tax process compliance and administration. So in all this we already saw that umbrella term, it is the same. Ok? So that is the comprehensive tax, where by

12:17 cutting so many taxes we have got a uniform tax credit. Ok? In which state tax and central tax are included. We had seen so many taxes ahead. Then there is the dual GST structure where the India follows a dual model of GST. Meaning that both centre and state governments have the authority to levy tax and collect tax. This model ensures the federal balance and allows both centre and states to share the revenue. Ok? There is dual GST, which means that the center as well as the state levies tax on the same goods and services. That means CGST means Central Ah Central Goods and Services Tax, so the Central Government had imposed tax on it and it applies on the intrastate supply means within the state, meaning goods are coming and going to Maharashtra only. The service is coming and going. Then CGST will be applicable. Then STSC STST and

13:04 UTGST is State GST and UTGST which will be levied by the State and UT Government when interest supply is taking place, meaning it is happening in Maharashtra only and any UT is happening in another UT, like if there is a UT, okay, there is Dadra Nagar Haveli there, then it is happening within the UT, then it will be interest tax, then IGST will be levied wherever the Central Government will impose interest supply, meaning it is going from Gujarat to Maharashtra to Delhi, is it okay in this way ? Then there is destination based tax. The tax is GST. GST is a destination based consumption tax. Meaning that the tax revenue goes to the state where goods and services are consumed. Meaning it will go to that state where the goods and services are actually being consumed. Not where they are produced. Meaning it will

13:50 not go where it will be produced. Example if the goods and manufacture in Gujarat and sold in Maharashtra get the tax. Ok? If you are going from Gujarat to Maharashtra, then GST is dual tax, a concern by both the centre and the state, the tax will go to Maharashtra, then there is value added tax, meaning GST is applicable at every stage of the supply chain but input tax credit is available at each stage, this makes it a value added tax system, okay, for that, value added tax is applicable on every stage of the supply chain, ah but you get input tax credit for that, wherever we say, for whatever you purchase, the final burden is borne by the end consumer avoiding the tax on tax cading effect. Ok? That goes down to the final consumer, like when you go to eat something in a hotel and get the bill , you are paying it, not the person who is cooking the

14:35 food. Ok? The hotel doesn't pay you. If you are consuming it for any product , then you have to pay for it. Ok? Then elimination of cost cutting effect under the earlier tax system, tax was levied on the earlier already tax amount like the weight on the excise duty. GST removes this cascading effect by fully taking along full ITC. Ok? What is happening because of input tax credit? The cascading effect is being nullified. has been eliminated. This leads to lower tax effect and tax rates and reduces the product cost. Due to this the product cost will also reduce. Then there are multiple tax slabs where GST in India has a multiple tax slabs based on the nature and essentiality of the goods and services. What all tax slab end items are covered ? 0% includes basic food, items, health care and education. Where you do not have to pay GST. Then 5% comes for

15:22 essentials like edible oils, footwear, you will have to pay 5% GST on all these. Then 12 to 18% comes in standard goods and services. For example, if you bought something from somewhere like a T-shirt etc., that will come at 28% on luxury and serious goods like tobacco, automobiles. Ok? Any such product that can be a threat to your life, all those products are there like tobacco, gutkha, all these. So luxury and automobiles which are highly taxable, that category will come under 28%, so you have to remember these slabs rates. Ok? 0% 50% off the consumers price basket including food grains. Ok? Food Grain Special will come in 0%. 5% mass consumption like the spices and mustard oil. 12% proceeds food will come. Where you are eating and drinking right now. Meaning

16:08 outside. Then 18% GST is levied on soap oil, teeth whitening, refrigerator and smartphone. 28% is levied on white goods and cars. And 28% is pulse sales which is spent on luxury cars, pan masala, tobacco, irritated drinks etc. Then how is the input tax credit mechanism working? Registered AH taxpayers can claim credit for the taxes paid on the inputs reducing the final tax burn. What will be the conditions for ITC ? Must be a registered tax payer. Meaning, the tax payer should be registered. Who should have GST AH number. Must have the valid invoice and goods service received and supplier must have the uploaded invoice in GSR T one. It must be full of him. So

16:56 how will it happen? Input tax credit utilization if you are doing business. You make purchases in inward supply. Ok? Meaning, in the end outward you are selling some things. Ok? If you are selling, then whatever you purchased, okay, if you sell that much then you will get that much credit in import and export in intrastate like CGST SGST UT SG and here in intra also same thing is being done with in state, out with in state, interest IGST interest IGST import is happening here, export is happening, okay, you are taking something from here, you are giving something here, okay and how will you get the input tax credit of CGST, CGST to SGST to UTGST to IGST, IGST to IGST, in this way you

17:43 can use your credit. Then there is the technology driven system where GST is administered through the fully digital portal called GST Number Goods and Services Tax in Network. Online services included, you can register online there and file returns. You can pay tax through GSTR 1 and GSTR 3B. You can claim refund which ensures transparency, reduces corruption and improves compliance tracking. Ok? Like earlier, if any business was a small business, the turnover was in lakhs but it had not got any registration done. Ok? So the government did not even know that we were not getting so much tax. But due to GST there is transparency. If your business is more than this exception limit, then you will have to

18:28 take GST number. Ok? So because of this corruption has reduced. And you can do compliance tracking. Then there is Pan India Unity where GST introduces uniform tax structure across all states and union territories reducing the interest trade barriers. Ok? If you are going from one state to another, the interest trade barriers are reducing. Which encourages the seamless movement of the goods and services boosting the concept of One Nation, One Tax and One Market. Then what are threshold exemptions? Small businesses with turnover below a certain limit are exempted from the GST registration and payment. So how many are there? If your business is of what nature? If it is goods then your threshold limit is up to Rs 40 lakh. So you do not need to get registered under GST. For service it is up to Rs 20 lakh.

19:15 And any North East and Hill State is an important State, there is a limit of Rs 10 lakh. This limit may be very based on the state notification. Ok? Like all these states are Mizoram, Tripura, Manipur, Nagaland. So there is a limit of Rs 10 lakh for goods. There is also Rs 10 lakh for service in Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana, Uttarakhand. So good for 20 lakhs and service for 20 lakhs. And for Jammu Kashmir, Assam, Himachal Pradesh and all the other states it is 40 lakhs. 20 Lakh for service and goods. Then under the composition scheme, small tax payers with turnover of Rs 1.5 crore cannot opt for the composite scheme. So this composite scheme will come forward, if you are doing any

20:00 two products or two businesses together, then which benefit will you not get, its feature is that the tax rate is lower than 1 to 6%, return filing is done quarterly, in this, every 4-four months and ITC is not available, okay here you cannot do it online, you will not get input tax credit and compliance is simplified, suitable for the small traders and manufacturers who prefer the simplified tax procedures. Ok? So, this is what you have to remember. Then there are anti-profiteering measures where pay to ensure that businesses pass on the benefit of reduced GST rates and input tax credit to consumers. Anti ah profiteering provisions are in place. Where the National Anti Ah Profiteering Authority NAA monitors the violations and ensures fair pricing. Ok? NAA will insure whether fair pricing is maintained

20:47 for the product or not. Ok? Ok? So you should remember this full form a little bit. This thing will come in detail in future lectures. This was an overall brief introduction of GST. Then there is the self-assessment system where GST is based on the self- assessment by the tax payer. Meaning the business must assess and pay their own tax liability. Meaning you yourself are assessing which category you fall into and pay tax accordingly. Then subjected to later audit and scrutiny by the tax authority. Ok? Then you will get your audit and scrutiny done according to what is showing on your invoices, then there is regular return and filing system where GSTRN one is the pen purpose of which is the details of the

21:33 outward supply, how much are you selling, whatever will be there, you have to fill it monthly, then there is also GSTR three, which is a summary return which you have to pay monthly and GSTR nine, which is the annual return, you have to pay it yearly, so you have to remember this. So I hope this video helped you. Thanks for watching.