GST is an indirect tax i.e. indirect tax which is going to come into force in India from 1st July 2017. And as its name suggests, it will apply to both goods and services.
160 About 160 countries of the world have already implemented GST.
What does Goods & Services mean?
Goods means the things that we can either use or consume… we can eat and drink. These are the tangible things that we can touch… see and own. Such as –
- The books
- Food and drinks
- Real Estate
- Printers, computers and computer hardware
Services means that we take some kind of service and give money in return. It is intangible in nature, such as –
- When we do a haircut in a parlor, service tax is added to the bill.
- We pay service tax even after eating food in the hotel.
- We pay service tax even after taking service of a CA or getting a house built by an architect.
What happens here is that the service provider, who takes money from us for his services, deposits the service tax in the government’s account.
What is this indirect tax?
There are two types of taxes, direct and indirect. An example of direct tax is the income tax paid by a working person to the government.
When we take any goods, we give money according to the MRP written on it. But if we notice, it is written next to MRP (Inclusive of all taxes) i.e. the tax is also attached to the price that goes to the government. This means that in this case also we pay tax but indirectly, hence it is a kind of indirect tax.
What is expensive after GST
Some important things about GST:
The introduction of GST is being considered as a major step to improve the Indirect Tax Structure of India.
GST is a consumption based tax i.e. this tax will be collected by the state where the goods and services will be consumed and not by the state where these goods and services are manufactured. Different rates will apply to different goods and services under GST. GST rates have been fixed.
Basically on all goods and services –
- 18% more
GST will be levied at the rate of Rs. In particular, a 28% rate will be applied to luxury items.
There are also some items which have been kept outside the purview of GST. Such items mainly include –
- Five petroleum materials such as crude oil, petrol, diesel, aviation turbine fuel and natural gas are included.
These taxes will disappear
After the implementation of GST, all goods and services will be levied, that is, most other indirect taxes will be removed from the tax structure. The list of state level and central level taxes ending with the coming of GST is as follows:
State Level Tax:
- Central Sales Tax
- Entry tax & Octroi
- Entertainment Tax
- Taxes on lottery, betting, gambling (Taxes on lottery, betting, gambling)
- State Cess and Surcharge
Center Level Tax:
- Service Tax
- Central Excise Duty
- Additional Excise Duty
- Additional Duty of Custom
- Central Cess and Surcharge
Since both the State Government and the Central Government have the right to collect taxes in India, the GST is divided into three parts:
1) State GST
2) Central GST and
3) Integrated GST
- Under the state (Intra-State), both the State GST and Central GST will be applicable on the sale and purchase within the same state, which will be collected by both the State Government and the Central Government in a specified proportion.
- An inter-state purchase and sale between two or more states will attract an integrated GST which will be recovered by the central government.
Benefits of GST – Benefits of GST in India:
The present tax structure of India is very complex. There are many different types of taxes in India due to the tax collected by both the state government and the central government. Due to the presence of different taxes, businessmen have to face many problems. With the introduction of Goods and Service Tax, these problems will be solved to a large extent.
The implementation of the Goods and Service Tax will benefit both the government and the general public. The objective behind implementing GST is to earn all these benefits:
1. Ease of doing business –
With the introduction of GST, most of all indirect taxes will be abolished, due to which businessmen will no longer have to pay different types of taxes and will not have to face different types of tax returns. Now all the businessmen will pay only one indirect tax, GST registration and GST, and will submit only one type of tax return, GSTR.
2. Abolition of tax on tax
At present, Excise Duty and Service Tax is collected by the Central Government and VAT and Sales Tax by the State Government. Because of which the Input Tax Credit to the Central Government, the tax to the State Government and the Credit to the State Government (Input Tax Credit), to the tax to the Central Government. Could not be found Because of which taxes are taxed. But after the introduction of GST, due to the elimination of various types of indirect taxes, the system of taxing the tax will end.
3. Reduction in tax burden
With the introduction of Goods and Service Tax, most of all indirect taxes will be abolished and all will have to pay only one tax, GST. These changes will reduce the tax burden.
4. Reduction in the price of goods and services
Due to the abolition of indirect tax structure and various types of indirect taxes, the tax on goods and services will be less than before, which will reduce the value of goods and services.
5. Reduction in tax evasion
Under GST, any seller can avail input tax credit (tax benefit on goods purchased) only if the person from whom he has bought the goods pays his share of tax to the government and to the buyer to whom he sells the goods Pay the invoice. Therefore, this process works in a chain system, which is likely to eliminate the tax evasion at the present time.
6. Increase in government’s tax-income
Reduction in tax evasion will be of great benefit to both the central and state governments. Apart from this, the reform of indirect tax structure will make the tax structure simple and more and more people will pay tax and due to this, the tax-income of the government will increase, which can be used for the progress of the country. is.
Any change, even if it is for our good, seems painful. Initially there will be problems due to GST but in the long term we can get many benefits from it. Overall, it can be expected that with the implementation of GST, a positive change can be seen on India’s economy.