Goods and Service Tax has been one of the most debated terms in India for the last two years. Goods and Service Tax, GST in short form, is portrayed as the biggest tax reform of the country after independence. GST is expected to overhaul and simplify the present taxation process and transform the country into a single market. On implementation, the country will say goodbye to all indirect taxes.
What is meant by GST?
Goods and service Tax, is a tax levied based on consumption, ie when a consumer enjoys a service or buys a good. The present tax regime contains many direct and indirect taxes and the associated complexities. GST is a tax that will be applied to both services and products. It is basically a value added tax , levied at all points in the business chain. Credit is allowed for the tax paid on inputs procured or services availed for producing the output .
Which are the taxes that will be replaced by GST?
In the present context, both Centre Government and State Governments can levy different types of taxes. Some of them are enumerated below:
• Excise Duty
• Customs duty
• Sales Tax
• Surcharge & Cesses
• Income Tax ( Will not be replaced by GST and will continue as at present)
• Value added Tax
• Octroi and Entry Tax
• Luxury Tax
• Entertainment Tax
• Property tax
• Agriculture tax
• State surcharges and cesses
GST is envisaged to replace all these taxes with a single comprehensive tax. It is expected to make all goods and services to be taxed with minimum exemptions and in a simplified process.
The GST will basically have three forms of taxes – Central, state and integrated GST. The third one takes care of inter-state transactions.
What will be the impact of GST?
India is a country known for its unity in diversity. GST will result in a common Indian market and develop the economy by eliminating the cascading effect of tax. GST will impact all aspects of business starting from pricing the products and services. It will invariable affect business accounting, tax computation methods, tax payment and tax compliance.
What are the benefits of GST?
• It is a more efficient tax system
• It brings almost all goods and services under the purview of taxation. Wide tax base will support lower tax rates.
• Cascading effects of taxation is avoided (Cascading effect occurs when state and union government charges different taxes separately)
• Simplification of taxation process and tax structure
• Better monitoring through automation
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Goods and Service Tax (GST) and India
Goods and Service Tax has been one of the most debated terms in India for the last two years. Goods and Service Tax, GST in short form, is portrayed as the biggest tax reform of the country after independence. GST is expected to overhaul and simplify the present taxation process and transform the country into a single market