When was Goods & Service Tax Started in India?
India's two of the major problems are tax evasion and corruption. So, to come out of these problems a big step has to be taken by the government which is in the form of GST. India's tax system is more complex and GST will help in the simplification of tax system in our country and help in the reduction of tax evasion.
Meaning of GST
The Goods and Service Tax (GST) is a comprehensive value added Tax on the supply of Goods and services. GST will replace all the indirect taxes (like Excise duty, VAT, CST etc.) levied on goods and services by Government once it is implemented. The main motive of GST is to reduce the cascading effect of tax on the cost of goods and services and create a common, cooperative and undivided Indian market to make economy stronger and powerful. So the GST system will combine Central excise duty, additional excise duty, service tax, State VAT entertainment tax etc. under one banner. It may be rightly termed as a national level VAT on goods and services with one of the differences that it also covers Service under its scope.Basically, Goods and Service Tax is that tax credit mechanism wherein the tax is levied on goods and services at each point of sale or provision of service. Under this tax regime the seller of goods or the service provider can claim the input credit of tax paid by him (i.e. input GST) for purchasing the goods or procuring the service. Thereafter he can utilize that credit of GST to set off against the amount payable on the supply of goods or services (i.e. output GST). Precisely, it can be termed as a consumption tax collected on the value-addition made in the goods and services at each stage of the supply chain.
What is GST?
GST is a consumption-based tax that has to be paid by every consumer in the supply chain. GST was passed by the government in the Parliament on 29th March 2017. Moreover, under GST the supplier can claim Input Tax Credit (ITC) to set off the output liability.
Why GST is implemented in India?
The purpose of introducing GST is because current indirect taxation structure of India is full of uncertainties due to multiple rates where multiple rates we mean by is, such as, at state level we have VAT (Value Added Tax), at center level we have ST (Sales Tax), CD (Custom Duty) , ED (Excise Duty) and many more where all these taxes carry different rates and the more the number of rates, more the number of forms which make it more cumbersome so all these taxes will be abolished and only one tax system will be introduced which is GST because it will rule out the problem of multiplicity of rates.
Under the GST regime, the indirect tax structure has been simplified as now the supplier and consumer has to adhere to only one indirect tax. In addition to this, the government is now having greater control over the indirect tax structure in India as most of the other indirect tax department has been streamlined into a single authority.
Many countries across the world have single unified GST system but due to non-consensus between central and state government of India, India shall adopt a Dual GST model, meaning that the GST would be administered both by the Central and the State Governments. A Dual GST will be levied on the taxable value of every transaction of supply of goods and services.
Benefits of Dual GST: –
1. The Dual GST will reduce the cascading effects of the taxes on the final price of the product or service. i.e. eliminate Tax on tax effect. So It will certainly reduce the tax burden for consumers.
2. It will decrease the tax rate for many goods
3. It will also help to build a transparent and will increase efficiency in tax administration.
4. It will increase proximity of our tax system to the global tax system.
5. It may boost our economy and enable us to compete at the global front.
6. It will foster a common market across the country.
7. Only three accounts; CGST, SGST, IGST have to be maintained. So it will be Simplified and cost saving system as procedural cost reduces due to uniform accounting for all types of taxes.
Who is liable to pay GST?
Every person consuming the good is liable to pay GST until or unless it is not exempted goods. Howsoever, it shall be noted that the registered supplier has to collect GST from the end consumer and remit the same to the government through filing GST Return.
Will prices go up after the implementation of GST?
In fact, the prices of commodities are expected to come down in the long run as dealers will be allowed to avail the CENVAT credit of Excise duty paid by Manufacturers and more over he will be allowed to avail the CENVAT credit of tax paid on services also. This passing of the benefits of reduced tax incidence to consumers by slashing the prices of goods will definitely reduce the prices.
Final Words
So just in case if you are doing any sort of business one should definitely enroll for the GST which is for sure going to be of great help in development of Indian economy and eventually Indian government. Also this will help you keep a track of weekly business in accordance with the GST one will have to prepare the business activity statement for each week. This hence furnishes on conclusion on GST in India.
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