Essay on Goods and Services Tax (GST)

GST –
Goods & Services Tax, is a holistic indirect tax on the sale, consumption and manufacturing of goods and services in its entire product cycle i.e. from manufacturer to the consumer, throughout India.

GST, as an indirect tax for the whole country would make India a unified market by replacing taxes levied by the central & state government respectively, truly on the lines of ‘One Nation One Tax’. As a destination-based taxation system, it has been ratified by the 101st Constitutional Amendment Act. GST will be calculated only in the ‘value addition’ stage of a good or service. The end consumer will pay only their part of the tax and not the entire supply chain, which was the case earlier. A GST council has been provisioned - to be chaired by the Finance Minister of India – to decide upon any matter related to GST.

The GST Council is the first federal institution of India and will approve all decisions pertaining to taxation in India. It comprises all 29 states, Pondicherry, Delhi and the centre with the states having 2/3rd voting rights and the centre having the rest.

For GST, the highest tax slab is fixed at 40% with other slabs at 0%, 5%, 12%, 18% and 28%.

GST incorporates the following taxes earlier levied at the center and state level.

State Level:

• Entry Tax & Octroi
• Luxury Tax
• Purchase Tax
• Entertainment Tax
• Sales Tax
• Lottery/Betting/Gambling Tax
Center Level:

• Service Tax
• Countervailing Duty
• Special Additional Customs Duty
• Central Excise Duty
• Additional Excise Duty

GST is envisaged to bring in benefits to the Central & State Governments, consumer and the business class. These are as follows.

Central & State governments:

• Simple & Easy to administer
• Higher Revenue Efficiency
• Better control on leakage Consumer:
• Relief in overall tax burden
• Tax Democracy – Basic goods to be tax free & luxury items to be taxed more
• Single GST will help lower inflation Business Class:

• Increasing tax compliance leading to ease of doing business
• Enhanced investments & better decision making in a less uncertain tax environment
• Increased competitiveness due to reduction in transactional cost
• GST expected to raise GDP by 2% points GST implementation is based on the following principles:
• Centre to levy & collect Central GST
• For supply of goods & services within a state, states to levy & collect State GST
• Centre to levy the Integrated GST on the interstate supply of goods & services, and apportion state’s share of tax to the state where the good or service is consumed.
• Any revenue loss to the state owing to GST implementation will be compensated by the Parliament.

GST will be applicable across India w.e.f 1st July, 2017. There are some unresolved issues (taxation for certain items, confusion regarding the consumption location, multiple tax rates & brackets, decision criteria for the tax bracket etc.,) which will most probably be resolved by consensus within the GST council.

For more information watch government website here :https://www.gst.gov.in/