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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
