How GST (Goods and Services Tax) is different from Past Indirect Taxes

We all know that GST (Goods and Services Tax) is the indirect tax, that has been already rolled out in India from 1st July, 2017. GST has replaced almost all the indirect taxes. GST has come with some new features which are very different from the past indirect taxes. Following are the major difference between the past indirect taxes and GST.

One GST instead of several Taxes

Previously there were several indirect taxes in India, which made the taxation system difficult and complicated. But GST has subsumed almost all the indirect taxes and make the taxation system easy and simple.

VAT and Service Tax under one GST 

Before implementation of GST, Government used to collect VAT and Service Tax separately. VAT was levied and collected by State whereas service tax levied and collected by Center. But after the implementation of GST, both VAT and Service Taxes are treated under GST.

Tax Burden

In Previous Taxation system, the tax rate was higher as it had several indirect taxes and also different states imposed different taxes in case of inter-state transaction. Each indirect taxes added a level of tax burden to the end user. As GST replaced almost all the indirect taxes, the overall tax burden is less as compare to the previous tax structure.

Compliance 

Previous indirect tax compliance was a difficult and complicated one. For each tax, the tax payer/dealer worked separately starting from paying tax to filing return. But in GST system, the compliance is less. The tax payer/dealer need to work only one that is GST.

Inter-state Transaction

Previously inter-state transaction for goods and services treated differently. All the inter-state transaction for goods are covered by CST while all the inter-state transaction for services are covered by service tax. But in GST all the inter-state transaction comes under IGST.