Goods And Services Tax

gst

It’s a uniform tax on goods and services uniformly taxed across the country (in our case India). There are two kinds of taxes direct and indirect taxes. In direct the individual pays the amount and in indirect intermediaries pay with the help of final consumer. All these direct and indirect taxes have been added in the bucket of GST (customs being an exception). It was introduced officially in parliament in 2006. It already prevails in 140+ countries and France was the first nation to introduce in it 1954.

GST symbolizes a single tax structure though India would be the only nation adopting Dual Tax Structure. Hence paving way for CGST, SGST AND IGST. In GST tax is applied on consumption rather than on manufacturing. Hence the central govt would be reimbursing those states (Maharashtra, Gujarat, AP, & Telangana) who are big powerhouses in manufacturing and would be losing revenue due to GST for the next 5 years with the help of cess to be applied on luxury goods and tobacco.

BEFORE

Good                        100

central exercise     10

subtotal                   110

vat @14%                15.40

Total                      125.40

AFTER

Goods                 100

CGST  @10%       10

SGST @14%         14

Total                    124

The decision making body formed is GST Council whose Chairman is the Finance Minister. It would help in removing the cascading effect which means it would remove tax on tax .it would reduce tax on manufacturers. Competitors won’t have advantage due to location. Petroleum products, liquor and electricity have still been kept outside the purview of GST though they make 40 % of trade. It will help in the fight towards inflation, tax evasion, and black money.

Movement of goods intra state would lead to payment of SGST and CGST. Movement of goods interstate would lead to payment of IGST. Canada, Australia, New Zealand are rent countries to adopt GST. Under GST there will be a system of input tax credit, under which tax already paid by one intermediary won’t have to be paid by the other intermediary which would lead to proper keeping of bills. Indian GST has a multi tired rate structure comprising of 0%, 5%, 12%, 18%, 28%, and 28%+ cess.

Its rollout is stated on 1 st July and naysaying states like West Bengal and Kerala have also agreed to role a bill till then or pass an ordinance .

 

 

 

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5 thoughts on “Goods And Services Tax

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