GST Easy Explanation (Hindi)

Summary

This video provides an insightful explanation of the Goods and Services Tax (GST) system in India, detailing how it replaced multiple indirect taxes such as sales tax, entertainment tax, and service tax. The presenter uses a simple example to demonstrate how GST works, highlighting its efficiency in reducing tax-on-tax effects, which previously led to higher product prices. The video also covers the different GST categories, including zero percent, 5%, 12%, and 28%, and examples of items falling under each category. The aim is to help viewers better understand the GST system and its benefits.

Takeaways

• 😀 GST (Goods and Services Tax) was implemented in India on July 1, 2017, to simplify the complex tax structure.
• 😀 GST consolidates multiple taxes into one, including excise duty, service tax, and entertainment tax.
• 😀 The introduction of GST reduces the cascading 'tax on tax' effect, which was present in the previous system.
• 😀 Under the old tax system, the product's price increased due to taxes being applied at multiple stages of the supply chain.
• 😀 GST applies taxes only on the value added at each stage, making the system more efficient and less expensive for consumers.
• 😀 The GST system divides goods and services into five main tax categories: 0%, 5%, 12%, 18%, and 28%.
• 😀 Items falling under the 0% category, like books, bread, eggs, and fresh vegetables, are exempt from GST.
• 😀 Commonly used items like shoes, coffee, and small restaurants fall under the 5% tax category.
• 😀 Items like mobile phones and Ayurvedic medicines are taxed at 12%, while items like cameras and computers are taxed at 18%.
• 😀 Luxury items such as branded jeans, telecom services, and five-star hotels are taxed at 28%.
• 😀 The implementation of GST has simplified tax payment and reporting, benefiting businesses and consumers alike.

Q & A

What is GST and when was it implemented in India?

GST (Goods and Services Tax) is an indirect tax that replaced multiple earlier taxes in India. It was implemented on July 1, 2017.

What are the main types of indirect taxes that GST replaced?

GST replaced several indirect taxes including Income Tax, Entertainment Tax, Service Tax, Custom Duty, and Excise Duty.

How did the old tax system affect the price of products?

The old system led to the 'cascading effect,' where tax was applied on tax, which increased the final price of products for consumers.

How does GST reduce the cascading effect?

GST only taxes the value added at each stage of the product's lifecycle, eliminating the cascading effect and ensuring products are cheaper for consumers.

What is the process of taxation under GST from producer to consumer?

Under GST, taxes are applied only on the value added at each level: producer, wholesaler, and retailer, ensuring that each only pays tax on their value addition.

Can you provide an example comparing the old and new tax systems under GST?

In the old system, the final product price could be ₹156, while under GST, the price would be ₹127, showing a difference of around ₹30 due to the elimination of the cascading effect.

What is Input Tax Credit (ITC) under GST?

Input Tax Credit allows producers, wholesalers, and retailers to reclaim the tax they paid on raw materials, reducing the overall tax burden.

What are the GST tax categories and which products fall under each?

The GST tax categories include: 0% for exempted items like books and fresh vegetables, 5% for common items like shoes and coffee, 12% for products like mobile phones, 18% for items like computers, and 28% for luxury goods like branded jeans.

How does GST benefit consumers compared to the previous system?

GST makes products cheaper for consumers by simplifying the tax system, reducing tax burdens, and removing the cascading effect of taxes.

Why is GST considered a more efficient tax system compared to the old system?

GST is more efficient because it consolidates multiple taxes into a single system, reduces complexity, and ensures taxes are only applied on the value added at each stage of the product lifecycle.