GOODS AND SERVICES TAX (GST)
Goods & Service Tax (GST) The
Goods and Services Tax (GST) is an indirect tax levied on the supply of goods
and services. GST Act was passed in the Parliament on 24th March, 2017 and it
came into effect from 1st July 2017.Goods
& Services Tax is a comprehensive, multi-stage, destination-based tax that
is levied on every value addition by the Central and State governments. Before
the implementation GST, various central, state and local area taxes were
levied in India. These indirect taxes have now been subsumed under GST which is
based on the principle of ONE NATION ONE TAX.
Features of GST (i)
GST is a comprehensive tax as various indirect taxes have been merged in this
single tax except Customs duty, taxes on petroleum products, alcoholic drinks
and taxes levied by local bodies. (ii)
GST is a multi-stage tax because it is proposed to be levied at all
stages starting from production up to final consumption(iii)
GST is a Value Added tax because it is levied on value addition at each
stage of the supply chain.(iv)
GST is a destination-based tax as the tax would accrue to the taxing
authority which has jurisdiction over the place of consumption.
GST
structure in India There
are three taxes applicable under GST:
•Central GST (CGST): Where the tax revenue will be collected by the
central government.
• State GST (SGST) or Union Territory GST (UTGST): Where the tax revenue will be collected within
the same state.
Advantages of GST
Various benefits that shall accrue with the introduction of GST are discussed below
• Boost Economic Growth:
The subsuming of major Central and State taxes in GST will reduce the cost of locally manufactured goods and services and increase their competitiveness in the international market thereby giving boost to Indian exports. An increase in economic activities will also help in increasing the country’s GDP.
• Ease of doing business:
Introduction of a single tax and automated procedures for registration etc. has led to ease of doing business for the enterprises.
• Attracting Foreign Investment:
Introduction of GST has given a boost to foreign investment and “Make in India” campaign by harmonising the tax base and administration procedures across the nation.
• Ensure better tax compliance:
The transparent and complete chain of set-offs will result in widening of tax base and better tax compliance.
•Reduction in the cost of goods: Implementation of GST will prevent cascading of taxes (i.e. tax on tax) which resulted due to multiplicity of taxes on goods and services. This will make products cheaper and would benefit the consumers.
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