What is Tax | What is GST | GST क्या है ?

What is a tax?

Tax is a compulsory contribution made by the citizens to the state or Central government irrespective of the number of services provided by the government to them. It is not imposed a penalty for any legal offense.

What is the difference between direct and indirect tax?

Direct taxes cannot be transferred or shifted to another person. for example and individual-based Income Tax directly to the government.

A few examples of direct taxes are Income taxes levied on and paid by the same person according to tax brackets as defined by the Income Tax Department. corporate tax paid by companies and operations on the profits.

Indirect taxes can be shifted to another person and an example would be the value-added tax. The initial tax is levied on a manufacturer or service provider who then shifts this tax burden to the consumers by charging the higher price of the commodity and including taxes in the final price.

examples are sales tax paid by A shopkeeper or retailer and then shift the tax burden to customers by charging sales tax on goods. service tax charged for services rendered to consumers such as food bills in a restaurant. 

What is GST? Why did we need it?

Goods and Service Tax is an indirect tax levied on all goods and services. The Government of India launched it in July 2017. We need it because firstly it subsumes multiple taxes. Earlier to buy one good or service we had multiple taxes like Central Excise levied by the central government, VAT by the state government, service tax by the central government extra. but now We pay only one tax which is GST.

Secondly, uniformity of taxes for the country for example if we pay 18% as GST 9% is collected as Central GST and another 9% as state GST for intrastate transactions. For interstate transactions, we pay 18% as integrated GST is collected by the central government. 

Earlier central excise duty was a different rate VAT was different in different states specially For interstate transactions.

Why do we need multiple slabs?

Goods used by people train from necessities to luxuries and all of it cannot be charged under the same slab. So we have 5 slabs 0% 5% 12% 18% and 28%. 

For convenience and showing is the example of edible. essential goods such as milk fruits serials have been exempted from all taxes. 

Edible oils sugar fall under 5% slab, butter ghee fall under 12% slab, pasta pastries cake fall under 18% slab, chocolate beverages come under 28% slab.