Overview of GST
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What Is GST?

GST is one indirect tax for the whole nation, which will make India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

The Goods and Services Tax was launched at midnight on 1 July 2017 by the former President of India, Pranab Mukherjee, and the Prime Minister of India Narendra Modi. The tax came into effect from July 1, 2017 through the implementation of One Hundred and First Amendment of the Constitution of India by the Narendra Modi government. The tax replaced existing multiple cascading taxes levied by the central and state governments. The tax rates, rules and regulations are governed by the Goods and Services Tax Council which comprises finance ministers of centre and all the states. GST simplified a slew of indirect taxes with a unified tax and is therefore expected to dramatically reshape the country's 2 trillion dollar economy.

What are the components of GST?

There are 3 taxes applicable under GST:

  • CGST: Collected by the Central Government on an intra-state sale (Eg: Within Maharashtra)
  • SGST: Collected by the State Government on an intra-state sale (Eg: Within Maharashtra)
  • IGST: Collected by the Central Government for inter-state sale (Eg: Maharashtra to Tamil Nadu)

Centre and State Taxes subsumed under the GST are:-

The GST would replace the following taxes currently levied and collected by the Centre:

  •  Central Excise Duty

  •  Duties of Excise (Medicinal and Toilet Preparations)

  •  Additional Duties of Excise (Goods of Special Importance)

  •  Additional Duties of Excise (Textiles and Textile Products)

  •  Additional Duties of Customs (commonly known as CVD)

  •  Special Additional Duty of Customs (SAD)

  •  Service Tax

  •  Central Surcharges and Cesses so far as they relate to supply of goods and services

 State taxes that would be subsumed under the GST are:

  •  State VAT

  •  Central Sales Tax

  •  Luxury Tax

  •  Entry Tax (all forms)

  •  Entertainment and Amusement Tax (except when levied by the local bodies)

  •  Taxes on advertisements

  •  Purchase Tax

  •  Taxes on lotteries, betting and gambling

  •  State Surcharges and Cesses so far as they relate to supply of goods and services

Benefits of GST

Benefits of GST can be grouped into direct and indirect benefits. Direct Benefits includes

  • Reduction in Cascading of Taxes

  • Overall Reduction in Prices

  • Common National Market

  • Benefits to Small Taxpayers

  • Self-Regulating Tax System

  • Non-Intrusive Electronic Tax System

  • Simplified Tax Regime

  • Reduction in Multiplicity of Taxes

  • Consumption Based Tax

  • Abolition of CST

  • Exports to be Zero Rated

  • Protection of Domestic Industry - IGST

Indirect Benefits includes

  • Decrease in Inflation
  • Ease of Doing Business
  • Decrease in "Black" Transactions
  • More informed consumer
  • Poorer States to Gain
  • Make in India

 

 

 

 

 


 
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