2. What is Tax?
• A compulsory financial contribution imposed
by government to raise revenue
• levied on the income or property of persons
or organizations, on the production cost or
sale prices of goods and services, etc
• for the support of a government
3. Types of Tax
Direct Tax
Imposed on Persons
(Paid directly to the
government)
Indirect Tax
Imposed on Goods &
Services
(Paid by the third party)
7. GST?
• Indirect tax levied on Goods and
Services.
• It will replace all major indirect taxes
levied by central and state.
• According to Article 366 (12A):
GST is a tax on supply of
goods and services.
9. Components of GST
There are four components of GST:
1. State Good & Service Tax (SGST)
2. Central Good & Service Tax (CGST)
3. Integrated Good & Service Tax (IGST)
4. Union Territory Good & Service Tax (UTGST)
11. Advantages of GST
It will replace all major indirect taxes.
It will remove Cascading Effect.
It will reduce flow of Black Money.
One India one market.
Ease of doing business.
12. Cascading Effect
COGS =100
Add: Excise Duty @ 12%= 12
112
COGS =112
Add: VAT @12.50% = 14
126
Here, 14 includes 12.50 on
COGS and 1.50 on excise
duty
13. Black Money is the money on
which the tax is not paid to the
government.
Manufacturer Wholesaler
Retailer
Customer
