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We all are aware of the fact that our country’s tax system is very complicated. Due to this complexity, the startup business entities find difficult to grow, as they face a lot of direct and indirect taxes.
To solve the problems that arise through this complex tax system in India, the Government has proposed a Goods and Services Tax or GST. We can also consider it as ‘One Tax for All Taxes’. GST is now grabbing the attention of every citizen of India as they will get impacted by the rules set in the GST Act.
Here, in this article, we have put together: -
The meaning of GST (Goods and Service Tax) or GST Act 2017
The journey of Goods and Service Tax ‘GST’ from 2006 to 2017
Its Key Features
Existing Indirect Tax Structure in India replaced by GST
Complete GST Rate Schedule
Its benefits & Impact on Economy
GST or Goods and Service Tax is a tax that is imposed on sale, manufacturing, and usage of goods and services. It is enforced on services and goods at the national level with a purpose of achieving overall Economic Growth. GST will take over the indirect taxes that used to be imposed by the Centre and States on goods and services.
The tax is different in every country. GST is imposed to collect revenues for the Government. The consumers pay the tax to the Government through the business entities from which they bought the goods and services.
Goods and Service Tax has not raised in just one day. It is the combined efforts of 10 years’ planning that has gone through many committee meetings, training of professionals, hours of discussion by GST Council, and Constitution Amendments approval. Let’s take up the yearly synopsis of its journey with the help of the points given below: -
2006 - Announcement to introduce GST by the year 2010
2009 - First Discussion Paper (FDP) released by EC
2011 - Constitution (115th Amendment) Bill introduced
2013 - Three committees constituted by EC and GSTN set up
2014 - Constitution (122nd Amendment) Bill (CAB) introduced in Lok Sabha
2016 - Constitution Amendment Bill passed
2017 - 12 GST Council Meetings held and CGST, SGST, UTGST, IGST, Compensation Cess Bills recommended.
The GST Council was a joint forum of the Centre and the States. The council consisted the following members: -
Arun Jaitley, Union Finance Minister and Chairperson of GST Council
Santosh Kumar Gangwar, Union Minister of State and in-charge of Revenue of Finance
Senior IAS officer Arun Goyal, Additional Secretary GST Council
The Minister in Charge of Finance or Taxation or any other Minister, nominated by each state Government.
Below, we are combining the most prominent features of Goods and Service Tax (GST): -
1. GST comprises of all the Central Indirect Taxes like Excise Duty, Service Tax, Special Additional Duty of Customs, Countervailing Duty, Central Surcharges and Cesses till they relate to the supply and consumption of goods and services.
2. It also includes State Value Added Tax or Sales Tax, Entertainment Tax, (excluding the tax charged by the local bodies), Entry and Octroi Tax, Central Sales Tax (taxed by the Centre and collected by the State Government), Purchase Tax, Luxury Tax, Taxes on betting, lottery and State cesses and surcharges involved in the supply and consumption of services and goods.
3. It is having Indian Constitution’s concept of ‘declared goods of special importance’.
4. There is an additional tax of 1% on the supply of goods in inter-State trade which will be collected by the Government of India for a period of two years and will be allocated to the states from where the supply comes.
5. Petroleum, Petroleum Products, and Alcohol are kept out of the reach of GST.
6. There are two elements; Central GST levied by Centre and State GST levied by the states.
7. On interstate trade in goods and services, an additional tax of 1% is also imposed that will be collected by the Centre and provided to the states for two years. It will help in refunding the loss of implementing GST faced by the states.
8. A Goods and Services Tax Council is also formed to solve the issues of goods and services tax. The council will also instruct the Union and the States for operating rates, exemption list, and threshold limits.
The old structure of taxation in Indian economy was also divided into two parts as Central Taxes and State Taxes. But these two elements were also subdivided into many parts which made the taxation bulkier.
Let’s understand it as below: -
Central Excise duty Additional duties of excise Excise duty levied under Medicinal & Toiletries Preparation Act Additional duties of customs (CVD & SAD) Service Tax Surcharges & Cesses
State VAT / Sales Tax Central Sales Tax Purchase Tax Entertainment Tax (other than those levied by local bodies) Luxury Tax Entry Tax (All forms) Taxes on lottery, betting & Gambling Surcharges & Cesses
All the above-given taxes are now replaced by the Goods and Service Tax (GST) 2017.
On 1st July 2017, Goods and Service Tax (GST) declared four tax rates that are 5%, 12%, 18%, and 28%. These taxes will be applied to the services like telecom, insurance, hotels, and restaurants.
The GST Council decided to levy 1 per cent Tax Collected at Source (TCS) rate for e-commerce players such as Flipkart, Snapdeal, etc.
Below we are giving the complete official list of Goods and Services Tax Rates: -
[gview file="https://cdn.eduncle.com/library/scoop-files/2017/07/chapter-wise-rate-wise-gst-schedule-03.06.2017.pdf" save="1"]
GST has been launched with an aim of “One Nation, One Tax, One Market”. The tax rates decided by the council will throw a significant impact on our economy as well us on the consumers.
The Benefits of GST can be understood with the following points: -
Benefits for Trade –
Multiple Taxes will be reduced.
The problem of cascading/ double taxation will be cured.
Taxes for Exports will efficiently be dissolute.
The common national market will be developed.
Tax regime will be simplified.
There will be less tax and exemption will be more.
The distinction between Goods and Services will not be required
Benefits for Consumers –
Tax System will be simplified.
Prices of Goods and Services will be reduced because of the elimination of cascading.
There will be uniform prices all over the country.
There will be more transparency in the taxing system of the country.
Employment opportunity will get a boost.
As the prices of goods and services changed due to the new taxation system. It will also impact the consumer. Below is the list of goods and services from cheaper to costlier: -
| Maida, Besan, Salt, Unbranded Atta, Unpacked Food grains
Fresh Vegetables and Fruits Food at Small Restaurants
Cutlery, Ketchup, Sauces, and Pickle
Soaps, Hair Oil and Toothpaste
Pressure Cookers and Pans
Movie Tickets that costs less than 100 Rs.
Rooms at Non-luxury hotels and hotels with tariffs of less than Rs 7500
Footwear and Apparels, weighing machinery, UPS, Revenue Stamps
Airfares for economy class travel
Bikes/ Scooter with engine capacity below 350 cc SUVs
| Tea and Coffee
Food at fine dining Restaurant and five-star hotels
Shampoo and deodorants
TVs Refrigerators, ACs, Washing Machine
Movie tickets above Rs. 100
Hotels which have room tariffs over Rs. 7500
Courier services, mobile phone tariffs, insurance premium, banking charges, broadband services
Aerated drinks, Tobacco
Tuition fees, Buying a flat/shop
Airfare for business class and train tickets
Bikes which have an engine capacity of over 350 cc
On the day of GST Launch (1st July 2017), Prime Minister Narendra Modi placed a speech on GST. These are the memorable quotes by him, please have a look –
“Today, the GST Council had its 18th meeting. It is a coincidence that the Bhagavad Gita also had 18 Chapters”
“Historic reform GST is not an achievement of any one party or Government”
“At midnight, we will together decide the course of the future of this country”
“We have united in the Central Hall. This is a place where many iv=cons of our country have set foot”
These were the important things that should be marked by the citizens of the country.
The major decision of implementing the GST Act 2017 has received mixed reviews. For some people, it is good and for others, it’s sad news. We want to hear your views on the GST Launch.
So, please write your views about GST in the comment section below. Your thoughts are welcomed here.