What is GST :-
- ‘Goods & Services Tax’ (GST) is the biggest tax reform in India till now. GST replaces all the indirect taxes in the country.
- At present there are different tax rates in different states. With GST, tax rates will be equal through out the country.
- All the indirect taxes such as Excise tax, sales tax, service tax etc. will be replaced by GST.
- GST also eliminates double taxation. Till now, manufacturers have to pay tax on the goods they manufactured. For example, the maker of wooden toys had to pay tax on the rate of the toy, that he is going to sell. But with GST, he has to pay tax only on the value he added, that means he bought wood from another manufacturer and he added value to it by transforming the wood into toys. He will not pay tax on the wood, because tax on wood was already paid by the wood manufacturer.
- GST is going to be implemented from July 1st, 2017.
- A four-tier GST tax structure of 5%, 12%, 18% & 28% will be implemented based on the type of products. For essential goods like food, GST will be 5%, and for luxury goods, GST will be 28%.
- GST is an international tax regime. More than 160 countries already implemented GST….
In Favor :-
- With the elimination of multiple taxation, taxes will be lower. Hence the burden on manufacturers & prices of goods will be reduced.
- Tax structure will be simplified. It’s easier to pay a single GST, instead of sales tax, excise tax, entertainment tax, service tax etc. for one product.
- With the lower taxes, tax evasions will be reduced.
- With more tax payers, revenue for government will be increased, which is a boost to Indian economy.
- Foreign investors will more likely to invest in Indian market, because of the transparent tax system.
- Though state revenue from taxes will be decreased temporarily, it will be increased in the coming days. And Central government is providing 5 year compensation for states.
- Common use goods will be cheaper.
- There is no guarantee that prices of goods will be reduced. It is possible that benefits will be enjoyed by manufactures and won’t be passed to the customer.