The goods and service tax was introduced for Indian businesses on July 1st, 2017. It applies to all Indian traders and service providers. The GST is considered to be an ALL-IN-ONE tax that dissolves all the old taxes like VAT, entertainment tax, luxury tax, etc. into it. Every product undergoes various stages in the supply chain starting from the purchase of raw material by the manufacturer to the consumption of the product by the ultimate consumer. GST is levied at each of the stages that the product passes in the process of being consumed.
The GST has 3 components
An input tax credit means deducting the tax amount which is already been paid while acquiring the inputs for the business and paying off the remaining or the difference left at the time of payment of tax. In other words, you pay taxes when you purchase goods from any vendor or wholesaler. Similarly, you collect taxes from the customer at the time when you sell these goods to them. With the input tax credit, a tax that is paid at the purchase of goods and services is adjusted with the tax collected at the time of sale of these goods and services, and only the liability which is the difference between the two is to be paid. A tax collected at the time of sale – Tax paid at the time of purchase = liability tax to be paid.
A GST return is a document which provides with the information about the income of the business or a person that is required to be filed with the authorities as per the law. GST returns should be filed online and under the GST law the taxpayers has to file two returns on the monthly basis and one annually.
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