Everything you need to know about Goods and Services Tax (GST)

GST is an Indirect Tax which has displaced many Indirect Taxes in India. The Goods and Service Tax Act were enacted in the Parliament on 29th March 2017. The Act evolved into effect on 1st July 2017; Goods & Services Tax Law in India is a complete ideal tax that is levied on each value extension.

In other words, Goods and Service Tax (GST) is an indirect tax charged on the supply of goods and services. This government has reimbursed many indirect tax laws that earlier subsisted in India.

What is the Policy of GST?

  • The Centre will levy and receive the Central GST.
  • States will levy and receive the State Goods and Service Tax on the supply of goods and services within a state.
  • The Centre will impose the Integrated GST (IGST) on the regional supply of goods and services and distribute the state’s percentage of tax to the state where the good or service is utilized.
  • The 2016 Act needs a Parliament to repay the state for any income loss owing to the implementation of GST.

Advantages of GST Bill implementation

  • The tax formation will be built strong and manageable
  • The whole Indian market will be a centralized market, which may decode into moderate business expenses. It can promote the seamless movement of goods across states and decrease the transaction charges of businesses.
  • It is suitable for trading-oriented businesses. Because it is not implemented for goods/services which are exported out of our country
  • In the long run, the cheaper tax load could turn into cheaper costs of goods for consumers.
  • The wholesalers, Suppliers, retailers, and manufacturers are capable to increase GST incited on input costs as tax assets. This decreases the price of doing business, therefore facilitating reasonable rates for customers.
  • It can produce more transparency and much compliance.
  • The number of businesses (tax departments) will diminish which in turn may drive to less exploitation
  • More business substances will be fall under the tax system, therefore extending the tax principle. This may drive to reliable and added tax revenue collections.
  • Companies which are below the unorganized sector will be fall under the tax management.

For Central and State Governments

  • Flexible and Secure to manage: Because various indirect taxes at the central and state levels are being supplanted by a single tax “GST”. Furthermore, supported with a strong end to end IT system, it would be simpler to manage.
  • Excellent control on leakage: Due to valid tax compliance, lowering of rent-seeking, clarity in levying due to IT practice, an inbuilt device in the design of the GST that would incentivize tax assent by dealers.
  • Greater resources performance: Since the price of the collection will lower adjacent with an expansion in the expertise of compliance, it will head to higher tax revenue.

For the Consumer

  • The single and direct tax will produce a lowering of inflation.
  • Support in overall tax burden.
  • A tax regime that is excess items will be charged more and basic goods will be tax-free.

For the Business Class

  • The expertise of doing business will develop due to simple tax compliance.
  • The regularity of tax rate and composition, therefore, greater future business decision planning and investments by the corporates.
  • Elimination of cascading impacts of taxes.
  • The decrease in transactional price will lead to enhanced competitiveness.
  • Gain to the manufacturer and exporters.
  • It is demanded to boost the country GDP by 2% points.

GST Council

  • Known as the 1st Federal Institution of India, according to the Finance minister.
  • It comprises of Centre, 29 states, Puducherry and Delhi
  • It will support all decisions linked to taxation in the nation.
  • judgments are taken subsequent to a majority in the council.
  • Central has 1/3rd polling rights and states have 2/3rd polling rights.

The course of GST in India

The GST campaign launched in the year 2000 when a board was set up to the draft law. It took 17 years from then for the Law to develop. In 2017 the GST Bill was transferred in the Lok Sabha and Rajya Sabha. On 1st July 2017, the GST Law evolved into existence.

Few major Tax Laws before GST

In the initial indirect tax regime, there were various indirect taxes levied by both state and center. States principally raised taxes in the form of Value Added Tax (VAT). Each state had a distinct set of laws and ordinances. Domestic sale of goods was taxed by the Centre. CST (Central State Tax) was appropriate in the case of domestic sale of goods.  Other than above, there were many indirect taxes like octroi, entertainment tax, and local tax that was levied by Central and State. This led to a number of overlapping of taxes levied by both C For example, when goods were manufactured and sold, excise duty was charged by the central. Over and above Excise Duty, VAT was also charged by the central and State.. The following is the list of indirect taxes in the pre-GST administration:

  • Central Excise Duty
  • Special Additional Duty of Customs
  • Cess
  • Duties of Excise
  • Additional Duties of Excise
  • Additional Duties of Customs
  • On lotteries, betting, and gambling
  • Entry Tax
  • State VAT
  • Central Sales Tax
  • Luxury Tax
  • Entertainment Tax
  • Purchase Tax

SGST, CGST, and IGST have succeeded all the above taxes. Though, the changeability of CST for Interstate buying at a concessional price of 2%, by delivery and utilization of c-Form is yet prevailing for several Non-GST goods such as Petroleum crude, Aviation turbine fuel, High-speed diesel, Natural gas, Motor spirit, and Alcoholic liquor for human consumption.

The positive impact of GST:

  1. Rise in Foreign Investment– With GST, India is now a centralized market and the foreign investment has grown in India. The goods that are produced within India because of their decreased prices have become more aggressive in the international market heading to growth in export. The implementation of Goods & Service tax places India in the line of international tax measures, making it accessible for Indian businesses to sell in the global market.
  2. Fewer Tax- GST has two elements: The central GST and the State GST. The Central GST will substitute – Central Excise Duty, Service Tax, and Customs Duty, etc. The State GST will substitute – Central Sales Tax, State VAT, Tax on Publications, Purchase Tax, Luxury Tax,  Entertainment Tax and so on. Before GST, there were various taxes and now they have displaced all these taxes and services with  State GST. and Central GST.
  3. Diminish the price of doing business- GST has reduced VAT all over India. Now we do not require to pay various amounts of taxes in several states. It is one tax system for all states of our country and so we have already got relieved of different taxes and duties on our businesses.
  4. Clarity The tax committee has begun working bribery free. Also allowing sales invoices to determine the tax applied has resulted in transparency.

Negative Impact of GST

  1. Dual Power – GST is being pointed to as a single levying system, but in fact, it is a dual tax because both the state and central both will manage separate tax on a single transaction of sale and service.
  2. Necessary increment in the price of some goods – The tax percentage has been raised for several products, thus raising their prices.
  3. Some sector is at a disadvantage Sectors like Media, Textile, Dairy Products, Pharma,  Telecom and IT are carrying the brunt of a higher tax. Also, the cost of goods has risen like mobile phones,jewelry,  and credit cards.
  4. Real Estate Market changed – Economists are of the opinion that GST in India has previously had an adverse impact on the real estate market. It has supplemented up to 8 percent to the cost of new homes and decreased demand by about 12 percent.

There are about 140 nations where GST has already been achieved by Japan, Australia, Pakistan, and Germany. India is one of the most durable economies of the world and we have determined to be totally capable of adapting to significant economic restorations.

As the coin has two surfaces, the equivalent way implementation of GST impacts a country, both ways, positively and negatively. If we neglect the contrary aspects and recognize the positive effect, then it is a way to defeat the black money. GST is having a few significant problems, but with time, we will be capable to see a significant idea and it will positively result in the commercial alliance.

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