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Monday, July 10, 2017

What Is GST? in brief

Goods and Service Tax ─ GST is the biggest reform proposed in the Tax Regime of our country after Independence. It is something that each of us must understand as it is going to affect our lives in a very significant manner.

“Goods and Services Tax” would be a comprehensive Indirect Tax on the manufacture, sale, and consumption of goods and services throughout India, to replace taxes levied by the Central and  State governments.




GST will not be levied, in addition, existing taxes rather it will be replaced by GST as single tax, Following taxes will be subsumed.


CENTRAL TAXESSTATE TAXES
Central Excise DutyValue Added Tax/ Sales Tax
Excise Duty under the Medical and Toilet Preparation (Excise Duty) Act, 1955Entertainment Tax excluding such Taxes levied by Local Bodies
Additional Excise DutyTaxes on Lotteries, Betting & Gambling
Special Additional Customs DutyCentral Sales Taxes
Additional Customs Duty commonly Known as countervailing DutyOctrai And Entry Tax, Purchase Tax & Luxury Tax
Central Surcharges and cesses that relate to supply of goods and service TaxStatel Surcharges and cesses that relate to supply of goods and service Tax

This is the basic and rough knowledge about GST which won't make you an expert about it but will surely make you aware of what it actually is.

Benefits of GST

GST has been envisaged as a more efficient tax system, neutral in its application and distributionally attractive. The advantages of GST are:
  1. Wider tax base, necessary for lowering the tax rates and eliminating classification disputes
  2. Elimination of multiplicity of taxes and their cascading effects
  3. Rationalization of tax structure and simplification of compliance procedures
  4. Harmonization of center and State tax administrations, which would reduce duplication and compliance costs
  5. Automation of compliance procedures to reduce errors and increase efficiency

Drawbacks of  GST India

  1. Doesn’t include Petroleum, Real Estate, alcohol products. A heavy loss to the exchequer(funds of government).
  2. Instead of blurring out the difference between goods and services tax, it highlights them. An aam aadmi(common man) filing the tax returns will have to suffer.
  3. It requires strong IT (Information Technology) infrastructure at grass-root levels. India essentially lacks this. This factor is going to be the bottleneck, if not addressed well in advance.
  4. Very high rates compared to current 12.5 % VAT.
  5. Tax-sharing between states and the Centre was another bottleneck. Nice to see that there is a consensus now.

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