In this post we will discuss something about GST (Goods & Service Tax) which will completely change the present structure of Indirect Taxes in India. Till now, many types of Indirect Taxes are levied on goods and services in India which includes excise duty, commercial tax, VAT (Value Added Tax), CST (Central Sales Tax), entertainment tax, purchase tax, luxury tax, advertisement tax. But from July 1, 2017 all these indirect taxes will subsume in one tax, that is GST. It will implement throughout India except Jammu & Kashmir (IT will applicable in J & K only after the special law regarding the CGST & IGST passed by the State Assembly). It will be levied on all transactions that is transactions related to sales, purchase, barter, lease, or import of goods & service.
A committee of 21 members was formed to look into GST Law under the head of Bhupinder Yadav (A Member of Parliament BJP). On 22nd July 2015 this committee submitted its report. After that plans were made for its implications. GST is governed by GST Council & Arun Jaitely (The Finance Minister of India) is the Chairman of this Council.
Now we will discuss what is GST, how it works, it’s benefits. So the answer to this question is GST is an abbreviated form of Goods & Services Tax. IT will levied on consumption of goods & services which means it will levied in that state where the goods & services consumed not in the state where it is produced or manufactured. By the implication of GST all other indirect taxes will eliminate.
In India, due to consensus between Central & State Govt. “dual GST” is introduced with which Central Goods & Service Tax (CGST) and a State Goods & Service Tax (SGST) will be levied on supply of goods & services. In this way it will consist of Central GST (CGST) levied by central govt., State GST(SGST) levied by State govt. and the last Integrated GST(IGST) levied by Central govt.
When CGST, SGST & IGST levied
- In case of Intra State Transactions CGST & SGST both taxes will be levied and paid by the buyer to the seller who in turn deposit CGST to Centre govt. & SGST to State Govt.
- In case of Inter State Transactions IGST will be levied and collected by the Central
It is four tier tax structure, that is under GST goods & services will be taxed by the following rates i.e. 5%, 12%, 18%, 28%.
Note: Alcohol and petroleum products are not included in GST
There are various items on which GST *Cess is also levied e.g.
- Pan Masala-60%
- Tobacco & manufacture tobacco-204%
- Aerated water-12%
- Small petrol cars( below 1200 cc)-1%
- Small diesel cars (below 100cc)-5%
- Large cars(above 1500cc)-15%
- motor cycles.(above 350cc)-3%
- hybrid motor vehicles above 1500 cc-15%
- personal use aircrafts-3%
And many more items which comes under this category
*Cess: It is a tax on tax levied by the govt. to fulfil some specific purpose and it is levied for a specific period only .It is levied on supply of both goods & services notified by the central govt.
As we all know every change has its own positive and negative impact therefore GST also has some advantages & disadvantages too.
Advantages of GST
- After the implementation of GST consumers will get rid of payment of various taxes.
- It is levied at the final stage of sale not on all the stages therefore it will help in unnecessary increment of cost of the product.
- It will consolidate all states economies by levying same tax rates on goods in every state.
- Increase export between 10% to 14%
- It will increase tax revenue for the govt.
- Some products and services will become cheaper than before such as two wheelers, branded goods, hotels entertainment, personal care products, air travel processed food items etc.
- It will help in time saving that is no need to calculate tax at every stage of sale.
- There are some items which are exempted from GST i.e. milk, cereals, meat, curd etc.
- It will also reduce paper work.
Disadvantages of GST
- There are some transactions which were not comes under CST but due to GST consumer has to pay CGST.
- There are some products will become costlier after GST such as small cars, tea coffee, home appliances metals and constructions, tobacco, luxury goods school fees mobile charges banking charges, business class air tickets etc. many more items which will become costlier.
- Due to GST tax payers have to upgrade their tax calculation procedure, they have to follow new rules and policies in this regard.
- What would be the role of Anti-Profiteering Authority after implementation of GST?
- Indian government extended the deadline for filing of July GSTR