GST Meaning

GST

GST Full Form is Goods and Services Tax.

The Government of any country needs money for its functioning and taxes are a major source of revenue for a Government. The taxes thus collected are spent by Govt. on the public.

These taxes are broadly classified into two types

1.      Direct Tax and

2.      Indirect Tax

1. Direct Tax – Direct Tax is imposed on the Income of an individual. The amount of Tax payable varies on the income earned by the individual from various sources such as salary, house rent income etc. So, the more you earn, the more tax you pay to the Government which essentially means the rich pay more tax in comparison to the poor.
2. Indirect Tax – Indirect tax is not imposed directly on income of individuals. Instead, it is imposed on goods and services which in turn increase the cost MRP) of Goods and Services. Unlike direct tax, indirect tax should be borne by the end customer, rich and poor alike., There are many indirect taxes. Some of these are levied by the Central Government whereas some are levied by the State Government making the indirect tax system an extremely complicated system.

GST has been introduced to replace multiple indirect taxes levied by State and Central Governments in order to simplify the indirect tax system.

GST has replaced almost 17 of the existing state and central indirect taxes (more to come in the future) such as central excise duty, additional customs duty, VAT, entertainment tax, service tax etc.

It is called as Goods and Services Tax because it is applicable on the supply of both Goods and Services.