What is GST? Full Form & GST Meaning

What is GST? Full Form & GST Meaning

The full form of GST is Goods and Services Tax.

Before we learn more about Goods and Services Tax, let us try to understand how taxes work in India. The government of any country requires money for its functioning and is a major source of tax revenue for the government. Thus, the taxes collected are spent by the government for the public.

These taxes are broadly classified into two types - direct tax and indirect tax.

Table of contents

What is meant by direct tax?
What does indirect tax mean?
GST means in various Indian languages

What is meant by direct tax?

Direct tax is levied on the income of an assessee (person or company or firm or HUF or any other person).

The amount of tax payable varies on the income earned by a person from various sources such as salary, house rent income, bank FD interest, etc. Therefore, the more you earn, the more tax you pay to the government, which is essentially The rich mean pay more tax than the poor.

Therefore, the tax incident falls on the individual or the assessee and the responsibility to pay such incident or tax cannot be passed on to any other person.

Following is the list of relevant direct taxes in India:

  • Income Tax
  • Wealth Tax
  • Estate Tax

What does indirect tax mean?

As stated above, indirect tax is not directly levied on the income of individuals. Instead, it is levied on goods and services which, in turn, increase the cost or MRP of those goods and services.

Unlike direct tax, indirect tax should be borne by the end customer, rich and poor are considered equal.

There are many indirect taxes. Some of these are levied by the central government while some are levied by the state government making the indirect tax system a complex system.

The following is the list of indirect taxes in India at present:

  • Goods and Services Tax (GST)
  • Custom duty
  • Excise duty (on petrol, diesel, natural gas, alcohol)
  • Central Sales Tax (relevant only for certain items)
  • Securities Transaction Tax (STT)
  • Stamp duty
  • Entertainment tax

GST was introduced to replace many indirect taxes levied by the state and central governments to simplify the indirect tax system. It has replaced about 17 of the existing state and central indirect taxes like Central Excise, Additional Customs Duty, VAT, Entertainment Tax, Service Tax etc.

This is known as Goods and Services Tax as it is applicable to the supply of both Goods and Services.

 

Tags: What is GST, What is GST?, type of gst, gst tax type



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