What is GST?: Know Everything About GST

1. What is GST (Goods and Services Tax) What is GST (Goods and Services Tax) Goods and Services Tax (GST) is a unified taxation system to be implemented by the Government of India from the 1st July 2017. The GST is intended to replace all the taxes levied by the central and state governments in various forms ie. excise, sales tax, VAT, entertainment tax, luxury tax and create a single tax GST.

2. History of GST in India History of GST in India What is GST (Goods and Services Tax) Under the reign of Prime Minister Atal Bihari Vajpayee in the year 2000, the very first discussion on GST Law was flagged off. But, even after the recommendations from the various Govt. committees, the Govt. was not able to implement it. Moreover, under the current government, in the year 2014, the GST bill was cleared in the Loksabha as a 122nd constitution bill; and in the year 2016, it was passed in the Rajya Sabha as well, hence finally paving the way for GST framework in the country.

3. Why is GST so Important? What is GST (Goods and Services Tax) Right now, the taxation structure in the country is divided in two forms i.e  Direct Taxes  Indirect Taxes Direct taxes are levied where the liability cannot be passed on to someone else. For example - Income Tax, Income Tax is paid where you earn the income and you alone are liable to pay the tax on it.

4. However, in the case of the Indirect Taxes, the liability of the tax can be passed on to someone else. Like, when a shopkeeper pays VAT on his sale, he passes on the liability to the customer. So, in effect, the customer pays the price of the item as well as the VAT on it so the shopkeeper can deposit the VAT to the government. But, under the GST a system of Input Tax Credit has been incorporated, which will allow sellers to claim the tax already paid so that the final liability on the end consumer is decreased.

5. How GST functions? What is GST (Goods and Services Tax) The GST Council has formulated a foolproof method of implementing this new tax regime by dividing it into three categories i.e. CGST, SGST, and IGST. All three are explained below for the better understanding. CGST: The revenue will be collected by the central government. SGST: The revenue will be collected by the state governments for intra-state deals. IGST: The revenue will be collected by the central government for inter-state sales.

6. In most cases, the tax structure under the GST regime will be as follows: For transaction or sale within the state, both the CGST and SGST will be levied, and the revenue will be shared between the Central and the State governments. For transaction or sale to another State, IGST will be levied, i.e now only one type of tax needed to be paid for inter-state sales. This will remove the complex tax structure prevailing at the moment for all the interstate sales i.e. Central Sales Tax + Excise/Service Tax.

7. What will be the influence of GST on the economy? What is GST (Goods and Services Tax) Every kind of person wants to know about the GST's impacts on the economy. Some people think that it will be negative and some say that GST will have a positive effect. But the sources said that there will be a good impact on the economy due to the following:  Business cost might be lower.  Gross Domestic Product will be increased.  We will gain of competitive pricing.  Prices of fixed goods and services might be less.

8. Advantages of GST What is GST (Goods and Services Tax) There are several advantages of GST, some are mentioned below:  As we all know that the production and distribution of goods and services are rapidly used and consumed. Therefore, the government levies separate taxes for goods and services. GST will reduce the extra burden of taxation.  There will not be any cost to registered retailers and there will be no extra taxes, therefore any type of business might start at low cost.

9.  GST will create a transparent and corruption free tax system. At present time, the manufacturer pays a tax when the products move outside from his workplace, and a tax also levies when the retailer sells the products.  It will help to promote the exports.  It will also raise employment and boost the growth of India.  The end of cascading structure of tax is expected to attract more and more foreign investors in the country.

10. Positive Impact of GST on Indian Economy What is GST (Goods and Services Tax)  The GST will reshape the indirect tax structure by dissolving majority of indirect taxes like excise, sales and services levies prevailing in the country. This will definitely do away with the complex indirect tax structure of the country, hence will improve the ease of doing business in the country.  According to the International Monetary Fund, the adoption of the Goods and Service Tax (GST) could help raise India’s medium- term gross domestics product (GDP) growth to over 8 percent and create a single national market for enhancing the efficiency of the movement of goods and services.

11.  To claim input tax credit under GST, every dealer has an impetus to demand documentation from the dealer behind him in the esteemed tax chain. Thus this new taxation system will be less intrusive, more self-policing, and thus a more successful method for diminishing corruption.  The Confederation Of Indian Industry (CII) has estimated that the rise in 1 per cent of GDP will lead to the creation of 25 lakhs new jobs. And after the implementation of the GST, the estimated GDP growth will be about 2-2.5 percent, hence paving the way to create at least 50 lakhs new jobs in the country.

12. What is GST (Goods and Services Tax) What is GST (Goods and Services Tax) Negative Impact of GST on Indian Economy What is GST (Goods and Services Tax)  Most of the goods and services have been listed under the four broad tax slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent and in most of the cases it is up from the current level of 15 percent. This increased tax slab has led to fears that inflation could rise in the short term.  There is no doubt that the current structure of the GST is expected to lead a temporary rise in inflation, but be assured that it will typically last for a year. Because the inflation in the second year after GST implementation will benefit favorably as the numbers would be compared to already-high figures of the first year of implantation.