Value Added Tax - VAT

VAT – or Value Added Tax is a stage wise levy of tax on value addition – thus at every stage of ‘value addition’ VAT is levied and passed on to the next person in the chain of changing hands.

Sales Tax is a tax on sale of goods – interstate and intrastate.

The rules and regulations and compliance procedures of all are different – and complex and tedious – and we’re only talking about the popular four indirect taxes!

To bring all these varied and sometimes overlapping taxes under one umbrella and to plug the loopholes that invariably comes with such multiple and confusing and dual taxation system – the concept of GST was formulated.

Goods and Service Tax or GST

GST is a combined or ‘one’ tax on both goods and services – incorporating the concept of ‘value addition’ – extending from manufacturing to consumption.

GST is the new ‘it’ word in today’s economic scene – with economists and Finance Ministers to tax payers and Chartered Accountants all eyeing the 2016 roll out with either eager, optimistic, skeptical or doubtful outlooks!

But until GST is a 100% reality – we the students need to know the 101s of what on earth GST is? What is this GST? Is it a three headed tax monster out to chew and drool on out life styles and expendable incomes?

The Salient Features of GST:

 GST will combine the best of all indirect taxes to bring a compact, singular and easy system for levy, collection and assessment of indirect taxes in India.

 Empowered Committee of State Finance Ministers and their ‘thinkers’ are the ones nailing down the details for proper introduction and application and back-end operational requirements, infrastructural requirements, databases,

consumer education, and most importantly the procedural compliances during transition stage etc.

 Most important feature - Tax Input Credit under GST – will be available for set-off at every stage.