GST

What is GST?

GST (Goods and Services Tax) is the biggest indirect tax reform of India. GST is a single tax on the supply of goods and services. It is a destination based tax. GST has subsumed taxes like Central Excise Law, Service Tax Law, VAT, Entry Tax, Octroi, etc. GST is one of the biggest indirect tax reforms in the country. GST is expected to bring together state economies and improve overall economic growth of the nation.

GST is 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 states and Central. Businesses are required to obtain a GST Identification Number in every state they are registered.

There are around 160 countries in the world that have GST in place. GST is a destination based taxed where the tax is collected by the State where goods are consumed. GST has been implemented in India from July 1, 2017 and it has adopted the Dual GST model in which both States and Central levies tax on Goods or Services or both.

§  SGST – State GST, collected by the State Govt.

§  CGST – Central GST, collected by the Central Govt.

§  IGST – Integrated GST, collected by the Central Govt.

§  UTGST – Union territory GST, collected by union territory government

Impact of GST on Indian Economy

GST offers several benefits to our economy. Here are some key advantages:

§  Create unified common national market for India, giving a boost to Foreign investment and “Make in India” campaign

§  Boost export and manufacturing activity and leading to substantive economic growth

§  Help in poverty eradication by generating more employment

§  Uniform SGST and IGST rates to reduce the incentive for tax evasion

 Impact of GST on Consumers

GST is also beneficial for consumers. Here is how it impacts the Indian consumers:

§  Simpler Tax system

§  Reduction in prices of goods & services due to elimination of cascading

§  Uniform prices throughout the country

§  Transparency in taxation system

§  Increase in employment opportunities

Impact of GST on Traders

GST is also has some positive impact on traders. Let’s see how it affects the traders:

§  Reduction in multiplicity of taxes

§  Mitigation of cascading/ double taxation through input tax credit

§  More efficient neutralisation of taxes especially for exports

§  Development of common national market

§  Simpler tax regime

§  Fewer rates and exemptions

§  Distinction between Goods & Services no longer required