Goods And Services Tax (GST) is the biggest reform in India’s indirect tax structure rather we can say that the biggest business reform in India since Independence.
GST is expected to bring together state economies and improve overall economic growth of the nation.
What is GST¹?
GST is a Value added Tax (VAT) is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and state governments.
Why GST in Present Scenario?
– There is no uniformity of tax rates and structure across States.
– There is cascading of taxes due to ‘tax on tax’.
– No credit of excise duty and service tax paid at the stage of manufacture/supply of services are available to the traders while paying the State level sales tax or VAT, and vice-versa.
– Further, no credit of State taxes paid in one State can be availed in other States.
Hence, the prices of goods and services get artificially inflated to the extent of this ‘tax on tax’.
What does GST consist of?
The four key GST components
CGST: The Centre would levy and collect Central Goods and Services Tax (CGST) on intra state supply.
SGST: States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State.
IGST: The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services and apportioned with the concerned state.
UTGST Union Territory GST, or UTGST.
Under GST following Central and states Taxes will be subsumed:
Central Taxes to be subsumed
- Central Excise Duty
- Additional Excise Duty
- Excise Duty (Medicinal and Toiletries Preparation ) Act
- Service Tax
- Additional Customs Duty, commonly known as Countervailing Duty (CVD)
- Special Additional Duty of Customs-4% (SAD)
- Cesses and surcharges in so far as they relate to supply of goods and services
States Taxes to be subsumed
- VAT/Sales Tax
- Central Sales Tax (levied by the Centre and collected and retained by the States)
- Entertainment Tax
- Octroi and Entry Tax (all forms)
- Purchase Tax
- Luxury Tax
- Taxes on lottery, betting and gambling
- State cesses and surcharges in so far as they relate to supply of goods and services
Now, it can be very interesting to see that, what will be affected in Indian Economy and How your business will familiar with Goods and Services Tax?
Please Share your view or comments on our blog…..
Sources : 1. https://en.wikipedia.org/wiki/One_Hundred_and_First_Amendment_of_the_Constitution_of_India