- There has two months since GST is implemented in India and people are really confused What is GST. Whether it is Good or Bad? So here let’s talk about GST What are its advantages? What is need of GST? Which taxes have been submerged in GST? What is a dual model of GST? How will GST affect normal person life?
GST (Goods and Services Tax) Good or Bad ? ?
What is GST in India?
It has been more than a decade since the idea of national Goods and Services Tax (GST) was mooted by Kelkar Task Force in 2004. Subsequently, the Union Finance Minister, Shri P. Chidambaram, while presenting the Central Budget (2007-2008), announced that GST would be introduced from April 1, 2010. Since then, GST missed several deadlines and continued to be shrouded by the clouds of uncertainty.
In the following year, on 27th March. 2017, all the forms of GST were introduced in Lok Sabha. Lok Sabha passed these bills on 29th March 2017 and with the receipt of the president’s assent on 12th April 2017, the bills were enacted. It was geared to attain July 1 deadline for implementation of GST across India.
France was the first country to implement GST in the year 1954. Within 62 years of its advent, about 160 countries across the world have adopted GST because this tax has the capacity to raise revenue in the most transparent and neutral manner.
What is the concept of GST?
GST is a value-added-tax charge on manufacture, sale, and consumption of goods and services. GST offers a comprehensive and continuous chain of tax credits from the producer’s point/service provider’s point to the retailer’s level/consumer’s level thereby taxing only the value added at each stage of the supply chain.
Your doubt what is gst will get clear in after reading the full article.The supplier at each stage has permission to avail credit of GST paid on the purchase of goods and/or services and can set off this credit against the GST payable on the supply of goods and services to be made by him. Thus, only the final consumer bears the GST charged by the last supplier in the supply chain, with set-off benefits at all the previous stages.
Since only the value added at each stage is a tax under GST, there is no tax on tax or cascading of taxes under GST system. GST does not differentiate between goods and services and thus, the two are tax at a single rate.
What is need of GST?
The existing indirect tax framework in India suffer from various shortcomings. Under the existing indirect tax structure, the various indirect taxes being levied are not necessarily mutually exclusive. To illustrate, when the goods are manufactured and sell both central excise duty (CENVAT) and State-Level VAT are levied.
Though CENVAT and State-Level VAT are essentially value add taxes, set off of one against the credit of another is not possible as CENVAT is a central levy and State-Level VAT is a State levy.
Moreover, CENVAT is applicable only at the manufacturing level and not at distribution levels. The existing sales tax regime in India is a combination of origin base (Central Sales Tax) and destination base multipoint system of taxation (State-Level VAT). Service tax is also a value-added tax and credit across the service tax and the central excise duty is integrating at the central level.
Which taxes has been submerge in GST?
- Excise Duty under Medicinal & Toilet Preparation Act
- CVD & Special CVD
- Central Excise Duty & Additional Excise Duties
- Service Tax
- Central Sales Tax
- Surcharges and Cesses in so far as they relate to supply of goods & services
- State surcharges and cesses in so far as they relate to supply of goods & services
- Entertainment Tax (except those levied by local bodies)
- Entry Tax (All Forms) & Purchase Tax
- VAT/ Sales tax
- Luxury Tax
- Taxes on advertisements
What is a dual model of GST?
From this, your doubt about What is GST model for state and What is GST model for the center will be clear. India will adopt a dual GST which will be imposed concurrently by the Center and States, i.e. Centre and States will simultaneously tax goods and services.
Centre will have the power to tax intra-State sales & States will be empowered to tax services. GST will extend to the whole of India except the State of Jammu and Kashmir. GST is a tax base destination applicable on all transactions involving the supply of goods and services for a consideration subject to exceptions there of.
- The GST in India will comprise of Central Goods and Service Tax (CGST) levied and collected by Central Government.
- State Goods and Service Tax (SGST) levied and collected by State Governments/Union Territories with State Legislatures.
- Union Territory Goods and Service Tax (UTGST) levied and collected by Union Territories without State Legislatures, on intra-State supplies of taxable goods and/or services.
Image credit – capitaworld.com
Will GST affect my daily budget?
Let’s understand this with help of some graphs.
Slides Credit:- CA Priyali Parashari
I hope this will give you fare idea about what is GST for any kind of question or query comment down below and let us know. New suggestions are always welcome.