Chapter 1. Understanding GST (Goods & Services Tax)
With an advent of industrialization, GST altered a big step in certifying the economic development of the country. The GST comes along with the commitment of financial development and benefit to everyone.
Goods and Services Tax Bill (GST), known to be as 122nd Amendment Bill, which will be levy from April 2017.
Firstly, let us understand: What GST is all about? By its name, GST is an indirect tax (or addition to value added tax), levied on both goods and services. The main idea to pass this bill is that it is integrated not only to one state, but unified to whole nation for economic betterment. With the implementation of bill, there will 2 major taxes: – a) GST, and b) Income Tax, and yes this will be considered as one of the major reforms in Indian Taxation.
In India, there is large number of taxes which is collected by central and state government on manufacturing, sales and consumption of goods and services, and with GST implementation, all the taxes will be replaced. To introduce GST, will be bigger step taken by government to improve taxation system in India. Merging of all the taxes at Central and State level, would convert India into Common Market. GST will make life easier and simple, which will lead to more transparency and less corruption.
If we see from consumer point of view, major advantage would be reduction of overall tax burden on goods and services, which consumer has to pay on buying products, and at present it is estimated to be 30%. Post GST, there will be no entry tax or state tax, which will result in free movement of goods from one state to another, rather than consumer has to stop at state border to pay entry tax for long hours and there will be reduction in paperwork which leads to large extent.
As India is a Federal Republic, so GST would implement currently by Central and State Government. With the launch of GST, the tax rate would be nominal, say 20% (assumed) and it is proposed to enclose the revenues and it will be imposed on petroleum products to compensate for any revenue loss incurred and it will be from the date of introduction of GST.
GST will reduce paperwork and time wasting, which is being utilized to pay taxes. This bill will also lower the prices for many products that are into manufacturing; GDP would be 2%-2.5% and last but not the least, GST bill increase more number of exports like 11%-14% as there will be no entry tax to pay.