“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 TAXES||STATE TAXES|
|Central Excise Duty||Value Added Tax/ Sales Tax|
|Excise Duty under the Medical and Toilet Preparation (Excise Duty) Act, 1955||Entertainment Tax excluding such Taxes levied by Local Bodies|
|Additional Excise Duty||Taxes on Lotteries, Betting & Gambling|
|Special Additional Customs Duty||Central Sales Taxes|
|Additional Customs Duty commonly Known as countervailing Duty||Octrai And Entry Tax, Purchase Tax & Luxury Tax|
|Central Surcharges and cesses that relate to supply of goods and service Tax||Statel 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:
- Wider tax base, necessary for lowering the tax rates and eliminating classification disputes
- Elimination of multiplicity of taxes and their cascading effects
- Rationalization of tax structure and simplification of compliance procedures
- Harmonization of center and State tax administrations, which would reduce duplication and compliance costs
- Automation of compliance procedures to reduce errors and increase efficiency
Drawbacks of GST India
- Doesn’t include Petroleum, Real Estate, alcohol products. A heavy loss to the exchequer(funds of government).
- 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.
- 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.
- Very high rates compared to current 12.5 % VAT.
- Tax-sharing between states and the Centre was another bottleneck. Nice to see that there is a consensus now.