As we all know GST is now in action in India, but still so many queries are there in the minds of Common people, Businessmen, Industrialists, employees, etc.
The full form of GST is Goods and Services Tax. Here I am trying my best to explain GST straightforwardly. GST was proposed much earlier in India by Economist cum Prime Minister Manmohan Singh about 13 years ago, but it did not come into play due to some political reasons.
The Goods And Services Tax act 2009, the first mention of this bill was in 2009 when the previous Manmohan Singh government introduced it in Parliament for discussion. They succeeded in presenting the bill but could not get it pass. On December 17, 2014, the current Narendra Modi led NDA government made teeny weeny changes to it and re-introduced it in the Lok Sabha. The bill cleared on May 6, 2015, in Lower house of the Parliament, but got stuck up in the upper house. Later on, It is now a reality since July 1st, 2017.
GST stands for GOODS and SERVICES Tax;
Goods mean anything which carries some utility and possession of which is transferable whereas services define anything which is not Goods. Hilarious definition but that is how Section 2(102) of GST act explain it.
Any movable property
Anything which is agreed by two parties before supply,
and most importantly, Goods don’t include money and securities (shares).
Any convertible activity through cash into another form, denomination, for which some kind of consideration is charged. For example, To purchase bitcoins through online Gateways like zebpay, as conversion of INR into bitcoins and we pay zebpay some consideration for both sale and purchase.
Before talking about taxation system, I hope it is evident what is Goods and Services. Tax, as you all are aware of, is compulsory contribution levied by the government on an income of its nationals.
Why GST when we had a working Taxation system for years??????
This is the biggest question comes in mind. There’s a merger of five taxes on Central Level and six taxes on the state level in GST.
At Central level: 1. Excise Duty 2. Additional Excise Duty 3. Service Tax 4. Other custom duty (countervailing duty) 5. The special additional duty of customs.
At State Level 1. VAT (Value added tax) 2. Entertainment tax 3. octroi ( tax in some countries on various goods entering a city.) 4. Luxury Tax 5. Taxes on lotteries 6. Central Sales tax (the central government levies this tax and collected by the state).
As we can see how complicated earlier tax system was, various taxes, different rates, departments, etc. Now it’s a single agency, individual Tax (almost).
Other Benefits of GST are as follows:-
Easy to understand:
GST is easy to comprehend even for those persons who don’t have commerce background. It has simple slabs for tax rates, an easy portal to operate.
Uniform tax rates and structure:
We have seen in advertisements, lots of people saying “ONE NATION, ONE TAX.” Earlier tax rates were varied in different states, but now there is a flat rate of taxes in the whole country.
Easy to avoid errors in returns:
In GST, when we file the return under form GSTR1, portal reflect the same in every firm/establishment. Same will be verified by the party with whom the transaction was processed. Any deviation or correction will be rectified under GSTR2, and at last GSTR3 will be filed as a final return.
Benefits to Consumer:
Well, how can a tax with a slab up to 28% be good for one who is ultimately paying it? But somehow Input Tax Credit (ITC) is applicable on local as well as inter-state sale and purchase of items even if it is not part of the raw material (some exceptions are there). So there are chances of commodities are getting little cheaper under GST.
So this was the overview of GST, and I tried my best to explain GST still your queries are welcomed in contact mentioned on our website.