GST Full Form And Meaning : EXPLAINED

The full form of GST or GST full form is Goods and Service Tax which is a form of indirect tax.

This article attempts to comprehend how taxes operate in India before delving deeper into the Goods and Services Tax. Every nation’s government requires funding to operate, and taxes are a significant source of funding for governments. Therefore, the government spends the money it receives from taxes on behalf of the people.

There are basically 2 types of taxes – Direct Tax and Indirect Taxes.

Direct Tax: Meaning

Direct Tax is imposed on the income of an assessee which can be individual or company or firm or HUF or any other person. 

For instance, a taxpayer pays the government for a variety of reasons, such as FBT, personal property tax, and income tax. The individual who is taxed must bear the load; it cannot be transferred to another person. The Direct Tax is governed and administered by the Central Board of Direct Taxes (CBDT).

Indirect Tax: Meaning

Indirect tax is not imposed directly on the income of the persons. However, the indirect taxes are imposed on goods and services transacted which, increases the cost or MRP of those goods and services. 

For example, if a person buys food items from a grocery store, the person has to pay GST on the product.

GST Full Form And Meaning

Goods and Services Tax is referred to as GST. To replace several indirect taxes that were formerly common in India, a new tax category was developed. With the exception of certain state taxes, the GST is a multistage, destination-based comprehensive tax that covers the majority of indirect taxes. 

Every step of the production process involves a GST charge when purchasing or selling items. Except for the ultimate customer, it is refunded to all parties involved in various stages of production. 

GST meaning in various Indian languages

Types of GST 

There are 4 types of GST collected by the government namely: 

1. State GST (SGST): It is collected by State Government
2. Central GST (CGST): It is collected by Central Government
3. Integrated GST (IGST): It is collected by Central Government for inter-state transactions and imports
4. Union Territory GST (UTGST): It is collected by the Union Territory Government.

How To Calculate GST?

With the unified system of taxation, it is now possible for taxpayers to know the tax levied at different points for various goods and services under the GST regime. For calculating GST, the taxpayer should know the GST rate applicable to various categories. The different slabs for GST are 5%, 12%, 18% and 28%.

GST calculation can be explained by a simple illustration :

If a goods or services is sold at Rs. 1,000 and the GST rate applicable is 18%, then the net price calculated will be = 1,000+ (1,000X(18/100)) = 1,000+180 = Rs. 1,180.

GST Calculation Formula

For calculating GST, a taxpayer can use the below mentioned formula :

In order to add GST to base amount,

Add GST
GST Amount = ( Original Cost * GST% ) / 100
Net Price = Original Cost + GST Amount

In order to remove GST from base amount,

Remove GST
GST Amount = Original Cost – (Original Cost * (100 / (100 + GST% ) ) )
Net Price = Original Cost – GST Amount

What is GST Inclusive Amount?

GST inclusive amount refers to the total value of the product after including the GST amount in the original value of the product. The tax is not charged separately from the customer.

What is GST Exclusive Amount?

GST Exclusive amount refers to the value of the product by subtracting the GST amount from the GST Inclusive value of the product.