What Is GST? All About GST: Full Form | Meaning | Types… Explained

GST Full Form

The full form of GST is — “Goods and Services Tax”.

Wherein, each and every letter of the word GST has its own word. Have a look…

• G stands for ~ “Goods”,
• S stands for ~ “Services”, and
• T stands for ~ “Tax”.

As a result, these words after encapsulating forms “Goods and Services Tax”.

All right, but what type of tax this is? Ease; It (Goods and Services Tax) is an all in one tax which is imposed in India on the supply of goods and services.

Well, do you know – this imposed tax is not only-but also a major source of revenue for a government.

Consequently, let’s discover how taxes work in India. Have a look…

We all know that the government of any country needs money to survive or for its functioning. But, we aren’t aware of the fact – where this money comes from?

An answer to this is – “TAX”.

Wherein, the tax itself is classified into two types:

• Direct Tax.
• Indirect Tax.

Yes, the major source of surviving and functioning of a government is none other than these taxes. On & On, taxes are a major source of revenue for a government.

On the contrary to this, you must be thinking – what government does with that much tax? Ease; the tax collected by the government is spent on the public for their welfare.

All right!

What next? Nothing big, let’s try and understand the tax classification in detail;

Direct Tax: Definition | Types | Examples | Features

A tax reform which is imposed on the profits or income of a person and is paid directly to the imposing entity. Additionally, the tax should be distinct from that of the tax imposed upon a transaction – which thereby is considered as an indirect tax.

All right! But what those direct taxes are? Have a look at the types of direct tax — income tax, corporate tax, wealth tax, gift tax, expenditure tax etc.

However, the payable tax varies on the income earned by the person from various sources. Sources be like – salary, affiliation, income from house rent, etc, etc.

Therefore, the more you earn — the more tax you need to pay…!!!

Indirect Tax: Definition | Types | Examples | Features

A tax which is imposed on the goods and services instead of income or profits made by a person.

Also, it is a tax which is collected by an intermediary, which further-on himself files the tax return and forward the same to the government along with the returns.

In other words — Indirect tax is a tax which is also known as GST (Goods and Services Tax), now.

Time and again, all right! But, what those indirect taxes are? Don’t panic, have a look at the types of indirect taxes — sales tax, service tax, value added tax, custom duty and octroi tax, excise duty, anti-dumping duty tax, etc.

Well, upon going through the above-mentioned statement, you must be wondering about the meaning of GST.

GST Meaning || Meaning Of GST In Different Languages

The meaning of GST is “Goods and Services Tax”, a value-added tax imposed on the supply of overall goods and services.

Well, this tax (GST) is paid by the end consumers but is dispatched to the particular government by the businesses supplying goods and services or both.

Overall, this is how the government runs its body.

Going forth, if you are a consumer or businessman of India, knowing hardly any language other than your mother tongue, and still trying to figure out the meaning of GST then this heading is only for you, keep going…

The meaning of GST in 13 different languages are mentioned as follows:

• GST Meaning In Hindi: वस्तु एवं सेवा कर
• GST Meaning In English: Goods and Services Tax
• GST Meaning In Bengali: পণ্য ও পরিষেবা কর
• GST Meaning In Marathi: वस्तू आणि सेवा कर
• GST Meaning In Telugu: వస్తువులు మరియు సేవల పన్ను
• GST Meaning In Tamil: பொருட்கள் மற்றும் சேவைகள் வரி
• GST Meaning In Urdu: سامان اور خدمات ٹیکس
• GST Meaning In Gujarati: સામાન અને સેવાઓ કર
• GST Meaning In Kannada: ಸರಕು ಮತ್ತು ಸೇ ವಾ ತೆರಿಗೆ
• GST Meaning In Punjabi: ਗੁਡਸ ਐਂਡ ਸਰਵਿਸਿਜ਼ ਟੈਕਸ
• GST Meaning In Malayalam: വസ്തുക്കളും സേവന നികുതിയും
• GST Meaning In Sindhi: سامان ۽ خدمتتون ٽيڪس
• GST Meaning In Arabic: ضريبة السلع والخدمات

Other than this, let’s discuss what is GST in detail…

What Is GST || GST Working From Manufacturing To Delivery

Literally, modifications are still being uttered about GST and there is no second-guessing that statement.

Time and again, let’s address this with a quick overview…

Something like 2 years back – when the GST was introduced (1 July 2017), it subsumed multiple but bounded indirect taxes into it.

Time changed and as of now, it has replaced almost 17 of the existing state and central indirect taxes.

Also, more to come in the future like — Entertainment Tax, Sale Of Land or Building Tax, Central Excise Duty Tax, Additional Customs Duty Tax, and a lot.

So, it is completely transparent that this is not the end of GST.

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Going forth, let’s discuss GST from its root. Commencing it with a question: why it is called GST?

Root consider — as of the indirect tax was applied to the goods and services, so, in order to connect the applicability with naming, it was named GST (Goods and Services Tax).

Well, GST is a single uniform indirect tax which is applied on all small to large-sized businesses.

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On-going, the quality of being single and unique makes it one of the greatest tax reforms in the country. However, to be a single tax reform, it has replaced numerous indirect tax laws which existed in India before 1st July 2019. And as of now, it is a multi-stage, comprehensive, destination-based tax which is levied on each and every stage of value addition.

Also, now-a-days, it (GST) is one (1) indirect tax for the whole country.

Subsequently, to understand it with an imaginary and orbicular method; join the ongoing article…

Firstly, let’s figure out the pattern of tax levy which was applied before GST (Goods and Services Tax) era, which we often call – Previous Tax Levy Pattern:

Understood. If not, then try to understand it here.

As appears in the above infographics, from stage first “Buying Raw Materials” to final “Sale To Consumer” — the tax included on each stage is VAT and Excise duty.

In fact, some more of the taxes have to be mentioned as well. But to these stages and to only this infographic, they are sufficient to be mentioned.

After all, this is also not a bit less. Filing this much of taxes may carry off anyone’s mind from the tax filing and finding another theft way to go with.

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But within time, the government came up with a new tax reform — The GST.

Have a look…

Isn’t it easy and cost-effective? The answer is cut and clear — it is.

An address to this is; taxes levied over the latest pattern (GST) are less and the very phenomenon makes it easy to file and cost-effective too.

Of course, it will be cost-effective (will cost least) if a single tax will be levied on every stage, also with a single and constant percentage.

Now, let’s try to understand the same with its on-going definition statement.

Statement says — GST is a multi-stage, comprehensive, destination-based tax which is levied on each stage of the value addition. and it is so.

Let’s figure out the same statement;

GST: Multi-Stage

All right, we assume Goods and Services Tax (GST) is a multi-stage tax.

But, how it is so-and-so?

Ease; as appears in the above-illustrated infographics — a single product from being manufactured to supply, relocates multiple places with the applicability of GST on each.

Let’s fondle out each place; starting from buying raw material to the end-consumer sale, it relocates five (5) places, as follows:

• To first — the purchase of raw materials (product itself),
• Second — production or manufacture + GST,
• Third — warehousing and sale of finished goods to wholesaler + GST,
• Forth — sale to retailer + GST,
• Fifth — sale to consumer + GST.

So, what do you say now? Isn’t it multistage?

Certainly, Goods and Services Tax (GST) is a multi-stage tax reform, and it seems clearly through-out the above-mentioned theory and infographics.

What next? Next, let’s subsume its second phase of the very definition statement.

GST: Comprehensive

Apart from being multi-stage, it too is comprehensive.

And how it is so and so? Have a look…

Comprehensiveness asks to deal with all the elements of anything and this is only what GST is known for!

Yes, GST is the only tax reform that deals with all the stages of value addition. So, whatever you call GST is “OK” but you just have to call it #comprehensive.

Next, head over to another phase of the same statement i.e — Destination Based Tax!

GST: Destination Based Tax

We agree – it is a multi-stage, comprehensive as well, but how it is destination-based, means how?

Don’t panic, regard an illustration…

Think as — goods (products) manufactured in Mumbai and are sold to the final consumer in Delhi. Going forth, as we all know that GST is levied at each stage of value addition but on the consumption side.  So, the tax revenue is supposed to go to Delhi only.

Apparently, the entire tax revenue is going to flow Delhi and not Mumbai. Thus, with this illustration, it is translucent clear that the GST is a destination-based tax.

Now, let’s consider going with the value addition…

Value Addition: GST

This ultimate phase is somewhat the entire stage’s together. Means, somewhat a collaboration of all the stages, together. Hence it involves, the manufacturer, the wholesaler, the retailer and lasts the consumer.

Let’s deal with the working of the same…

Starting from the end of the manufacturer, who wishes to make a product — biscuit.

So, in order to make biscuits, the manufacturer needs to buy some raw material like – sugar and flour. Upon buying, he will bake sugar and flour to make #biscuits. To which, he will suffer a value addition on the baking of biscuits. And this value addition is going to affect the wholesaler because he is going to buy it from the manufacturer.

Now, the terms are to the wholesaler. Wholesaler upon buying the baked biscuits will pack the biscuits into a fixed quantity and will also label them. More like to the baking process, he (wholesaler) too is going to suffer a value addition on packing and labeling.

And this time, this value addition is going to affect the retailer, because he is going to buy biscuits from the wholesaler.

Subsequently, now the turn is of the retailer, he upon buying the biscuits will pack them in small quantities and even will invest in the marketing of the biscuits. To which, similar to manufacturer and wholesaler, he too is going to suffer a value addition on packing and marketing as well.

But this time, this value addition is going to affect the end consumer.

Now, you might be wondering about the GST, don’t you? Have patience; GST is here only…

Actually, GST is levied on the value addition of each biscuit production stage or you may name it — the monetary value added at each production stage to gain the final sale to the end consumer.

So, the statement that “GST is a tax reform which is paid by the end consumers but is dispatched to the particular government by the businesses supplying goods and services” has been proven true.

All right! What now? Nothing big, let’s discuss out the journey of GST in India, so-long…