Everything you need to know about GST and does it effect YouTube?

Everything you need to know about GST and does it effect YouTube?

Today I will be sharing topics about

  • What is GST?
  • What are the effects of GST?
  • How does it impact YouTube?
  • Advantages and disadvantages of GST.

Before entering into the main topic we need to know…

What is a tax?

In simple words, the tax is the amount which we pay to the government and in return, we get lots of basic services from the Government.

Why should we pay tax?

As I said earlier, by paying tax to the government, in return we get services from government.

Those services are like roads for travelling, security government Hospitals, to protect our country we need an army. In the case of fire, we need firefighters. For justification and security, we need police and courts etc. We need many government services to sustain our lives.

To maintain all these, Government needs money, which will be taken from us in the form of tax.

Types of Taxes

  1. Direct Tax
  2. Indirect Tax

 Direct Tax

Direct taxis which we pay the tax directly to the government. Direct tax depends on your earning. If you earn more you need to pay more tax. If you buy more luxury property you need to pay more tax.

Examples of direct tax are…

  • Income Tax
  • Co-operate tax
  • Property Tax

Indirect Tax

Indirect Tax is related to Good and services. We need to pay tax for the goods which we buy and also for the services which we use.

If we purchased an item, we need to pay tax in the form of VAT(Value Added Tax) and service tax will be levied at restaurants, travelling, hotels etc.

Service Tax, VAT, excise duty , Entertainment Tax , sales tax , luxury tax comes under Indrect Tax.

What is GST?

GST stands for Goods and Service Tax. It is a total replacement of Indirect Tax. GST doesn’t apply to direct Tax because it is applicable only on Goods and services. Before proceeding, we need to know how does our Tax system works.

Let’s assume our Government Tax is 10%

In every business, Manufacturers, distributors, retailers and customers are involved.

Normal Tax System.

  • Manufacturer. 

Let’s say, Manufacturer purchases raw material for Rs. 50 by adding another Rs.50 for manufacturing the product and including profit Margin.  The total amount of the product including Tax of 10% will be at Rs. 110. He will sell his product to the Distributor at Rs. 110.

  • Distributor.

He will purchase the product from Manufacturer at Rs. 110 and by adding his profit of Rs. 20 including 10% Tax he will sell it to the retailer at Rs.143 ( 110+20+10%=143)

  • Retailer 

Retailer purchases product from the distributor at Rs. 143 and by adding his profit of Rs. 20 including 10% Tax he will finally sell it to the customer at Rs. 179.3( 143+20+10%)

This type of Tax structure is called cascading Tax. In this customers need to pay repeated taxes. To eradicate this problem GST has been introduced.


  • Manufacturer.

Let’s say, Manufacturer purchases raw material for Rs. 50 by adding another Rs.50 for manufacturing the product and including Profit Margin and according to GST the tax will be applied only for the manufacturing the product.

i.e Raw material cost+Manufacturing Cost(10%)= Rs.105.  Now manufacturer sells the product at Rs.105 to the distributor.

  • Distributor

He will purchase the product from Manufacturer at Rs.105 and by adding his profit of Rs. 20 and the Tax 10%  will be applied only on the profit margin of the distributor i.e Rs.2. Now the distributor sells the product to the Retailer at Rs. 127( 105+20+2)

  • Retailer.

Retailer purchases product from the distributor at Rs.127 and by adding profit margin of Rs.20 and Tax is applied on profit margin only i.e Rs.2. So the final price is Rs.149 which retailer will sell it to the customer.

You can clearly observe the difference between Normal Tax system and GST Tax system. In GST Tax system only Tax is applied on profit margins. We will get products at lower cost.

Types of GST

  • CGST:  Tax which will be paid to Central Government.
  • SGST:  Tax which will be paid to State Government.
  • IGST:   Interstate Goods and Services Tax is applied when the product is moving from one state to another.

What is GST slab system?

Slab system is divided into 0% , 5%, 12%, 18%, 28%.

0%(No Tax)

No tax will be imposed on items like Jute, fresh meat, fish chicken, eggs, milk, buttermilk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom, Bones and horn cores, bone grist, bone meal, etc.; hoof meal, horn meal, Cereal grains hulled, Palmyra Jaggery, Salt – all types, Kajal, Children’s’ picture, drawing or colouring books.

5% Tax

Items such as fish fillet, Apparel below Rs 1000, packaged food items, footwear below Rs 500, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats, Cashew nut, Cashew nut in shell, Raisin, Ice and snow, Bio gas, Insulin, Agarbatti, Kites, Postage or revenue stamps, stamp-post marks.

12% Tax

Apparel above Rs 1000, frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine, cell phones, Ketchup & Sauces, All diagnostic kits and reagents, Exercise books and notebooks, Spoons, forks, ladles, skimmers, cake-servers, fish knives, tongs, Spectacles, corrective, Playing cards, chess board, carom board and other board games like Ludo etc.

Services like Non-AC hotels, business class air ticket, fertilisers, Work Contracts will fall under 12 percent GST tax slab.

18% Tax

Most items are under this tax slab which includes footwear costing more than Rs 500, Trademarks, Goodwill, software, Bidi Patta, Biscuits (All categories), flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, notebooks, steel products, printed circuits, camera,speakers and monitors, Kajal pencil sticks, Headgear and parts thereof, Aluminium foil, Weighing Machinery [other than electric or electronic weighing machinery], Printers [other than multifunction printers], Electrical Transformer, CCTV, Optical Fiber, Bamboo furniture, Swimming pools and padding pools, Curry paste; mayonnaise and salad dressings; mixed condiments and mixed seasonings.

Services like AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under GST, Room tariffs between Rs 2,500 and Rs 7,500, Restaurants inside five-star hotels

28% Tax

Bidis, chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use.

Services like Private-run lotteries authorised by the states, hotels with room tariffs above Rs 7,500, 5-star hotels, race club betting, the cinema will attract tax 28 per cent tax slab under GST.

How GST affect YouTube.

GST will not affect YouTubers because it comes under income which is direct Tax and GST is not applied for direct Tax.

GST will be applied for advertisers as because they are taking service from Google Adwords.  Services come under GST and 18% Tax will be applied on Google Adwords. Google Adwords team had updated their new Tax system.

Advantages of GST

  • GST had replaced 17 taxes, from now we need to check only GST on bills.
  • A huge number of items are either tax exempt or in 5% tax bracket.
  • GST will also help to build a transparent and corruption free Tax administration.
  • By reducing Tax foreign investors show interest to do business in our country.

Disadvantages of GST

  • Branded Garments become more expensive.
  • Service Taxes on airfares currently range from 6 to 9%. With GST rate will surpass fifteen percent and effectively double the Tax rate.
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