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Existing Tax

Currently on Purchase from Factory (Manufacturer)
Excise duty is charged on Sales and Vat is charged on Amount Including Vat

Example

SUPPOSE EXCISE RATE IS 12.5% AND VAT RATE IS 5%

PARTICULARS AMOUNT
SALES 100000
EXCISE 12.5% 12500
TOTAL 112500
VAT 5% 5625
GRAND TOTAL 118125

 

In Future  After Implementation of GST


Both Central and State GST will be charged on Sales Amount
Hence there will not be any cascading of taxes (tax on tax)

Example

SUPPOSE CENTRAL GST IS 12% AND STATE GST IS 6%

PARTICULARS AMOUNT
SALES 100000
CENTRAL GST 12% 12000
STATE GST 6% 6000
GRAND TOTAL 118000

 

 

SUMMARY

Currently

there is tax on tax

 

In future,

No Tax on Tax in Case of GST

  1. GST - Goods and Services Tax, India
  2. GST Impact
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 7 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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