What is GST 17 Jun 2017 What is GST

Essential GST Hacks for Every Tax-paying Indian Featured

GST, an acronym for Goods and Services Tax, is the latest buzz in the Indian economic scenario courtesy of it coming into play from 1st July, 2017 onward. As a form of taxation GST or Goods and Services Tax is employed by more than 150 countries the world over, the honour of being the first belonging to France and that of being the most recent going to Malaysia. Whether or not this system of unified taxation will work in the world’s largest democracy, namely India, is something that will become apparent only after it has been implemented for at least six months at a stretch.

GST

How is GST or Goods and Services Tax different from the current tax structure?

Unlike the current tax structure wherein there is a clear distinction between the manner in which goods and services are taxed, GST or Goods and Services Tax entails equal treatment of both. Therefore, while goods are currently levied with excise duty and VAT and services are being levied by service tax, under GST or Goods and Services Tax both categories would come under the same tax bracket.

Another crucial difference between the two is the point in the supply chain at which taxes are levied. Presently, taxes charged on goods are collected during the manufacturing stage and those on services are charged at the point of sale. In sharp contrast, GST will be levied only at a single point, namely supply, thus eliminating the incidence of repeated taxation.

As a result of these differences, not only is the GST or Goods and Services Tax expected to lower taxes being paid on goods and services but it is also likely to bridge the taxation gap that exists between traders and manufacturers.

Following are some of the inherent features of GST or Goods and Services Tax that you should be aware of –

Dual System – Given the vast and complicated nature of the world’s largest democracy, the nation’s think-tank has deemed it appropriate to employ a dual system of GST or Goods and Services Tax. As per this system, the GST or Goods and Services Tax levied by every individual state will be distinct from that meant to be paid to the central government.

Courtesy of the federal nature of the Indian state, the Central Government and the State Governments can exercise their powers to levy taxes as they feel necessary. Hence, subsequent to its introduction, GST or Goods and Services Tax will take two forms, namely CGST and SGST, to be paid to the centre and state authorities respectively.

Integrated and Comprehensive – The slogan ‘One Nation, One Tax’ aptly summarizes the integrated and comprehensive nature of GST or Goods and Services Tax since it has been structured to encompass several individual taxes and duties. Therefore, instead of paying a number of separate indirect taxes, there will only be one tax which would be inclusive of everything.

Tax Based on Destination – Point of taxation would be determined by the place of consumption of goods. For example, for goods being transported from Gujarat to Maharashtra, the right to collect revenue would belong to the Maharashtra Government since it is the final place of consumption.

One of the reasons as to why GST or Goods and Services Tax has been under a cloud of debate is because there are sections of society that are yet to be convinced about its positive impact on the Indian economy. But now that the bill has been passed and with the date of implementation drawing closer, it is imperative to understand how it will affect the economy. That being said, following are some of the reasons as to why India needs GST –

Doing Away with Multiple Taxes – Currently, the Indian consumer pays multiple taxes on any good or service owing to the complex nature and number of stages involved in production and supply chain. GST or Goods and Services Tax is required so that the multiple taxes can be clubbed together under a single banner which is turn will curb overlapping and also reduce prices.

Eliminate Cascading Taxation Effect – Rather than paying taxes to both Central and State Governments on the same goods and services, GST or Goods and Services Tax would ensure that taxes are paid just once. In this way, the cascading effect of taxation which is evident on commodities at present would be completely eliminated.

Facilitate Smooth Flow of Credit – With the cascading effect and indirect taxes having been controlled, GST or Goods and Services Tax emerges as a viable solution to ensure smooth flow of credit in the economy which in turn will ensure stability in Government’s revenue collection.

Final Word Thanks to the determined effort of the Central Government, the GST Bill stands passed in majority of Indian states and Union Territories. Even the GST Council has met on as many as 16 occasions to finalize every aspect of GST or Goods and Services Tax like laws, rules, structure and so on. Enrollment now being in the final stages, it looks as though GST or Goods and Services Tax will indeed become a reality on 1st July, 2017, as promulgated by the Central Government.

GST ad English 33x20 cm FINAL

GST AD 2 eng 

GST ad eng

 

GST English 33x20cm

 

GST less and more eng

Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.