GST Tax

                                                           What is GST

The 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.

Goods & Services Tax (GST) is an indirect tax throughout India to replace taxes levied by the central and state governments. It is introduced as The Constitution (One Hundred and Twenty Second Amendment) Act 2017, following the passage of Constitution 122nd Amendment Bill. The GST is governed by GST Council and its Chairman is Finance Minister of India. Under GST, goods and services will be taxed at the following rates, 0%, 5%, 12%, 18%, 28%. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold.

The following taxes will be bound together by the GST:

• Central Excise Duty
• Commercial Tax
• Value Added Tax (VAT)
• Food Tax
• Central Sales Tax (CST)
• Introit
• Entertainment Tax
• Entry Tax
• Purchase Tax
• Luxury Tax
• Advertisement tax

Why India needs GST?

We have always heard that ‘Business drives tax, and not the other way round’. However, in the Indian context, indirect taxes have driven businesses to re-structure and model their supply chain, systems etc. owing to multiplicity of taxes and costs involved.

1. Purpose- GST is introduced majorly due to two reasons:

• The current indirect tax structure is full of uncertainties due to multiple taxes and multiple rates.
• Due to multiple rates, there are multiple forms and intern cumbersome compliances. This will improve Tax compliances.

2. Because of above transparency, Taxation would increase and lead to reduced tax evasion.

3. It would also reduce cascading effect(tax on tax) up to much extent.

“The government also realizes that becoming a manufacturing hub will need several strategic reforms to simplify manufacturing in India. One of the proposed reforms, in line with Make in India, is the implementation of the Goods and Services Tax (GST)."

How will GST impact you?
Expect reduction in prices of :

• FMCG goods such as shampoos, chocolates
• Eating out
• Small cars
• DTH

Increase in prices of:

• Luxury cars
• Tobacco
• Aerated beverages
• Textiles

History

The reform process in indirect tax regime of India was started in 1986 by Vishwanath Pratap Singh by introduction of Modified Value Added Tax (MODVAT).^[2]

Goods and services tax (GST) taxes including central excise duty, services tax, additional customs duty, surcharges, state-level value added tax and Octroi.^[3][4] Other levies which are currently applicable on inter-state transportation of goods are also likely to be done away with in GST regime.