Skip to main content

Goods and Services Tax in India

Goods and Services Tax


GST or Goods And Services Tax will lead to the economic integration of India or so is believed by Mr. Arun Jaitley, the Finance Minister Of India. But what exactly is GST? It's an indirect tax which officially is known as The Constitution (One Hundred And Twenty-second) Bill, 2014 which proposes a national VAT (Value Added Tax) to be implemented in India. GST will be implemented on manufacture, consumption, and sale of Goods and Services throughout India and is to replace taxes levied by state and Central Government. GST in India is introduced so as to make the current confusing Indirect Tax System in India much simpler. Discussed below is how GST will work in India and will it actually be beneficial?
The GST basically have two components- State GST (SGST) and Central GST(CGST), both having different powers but both equally important. GST will supposedly help improve the tax compliance and is intended to be functional from first of April, 2016. It will be a destination based tax and not origin based. An Integrated GST (IGST) will be used in Inter-State transactions.
The word 'Tax' is enough to scare anyone. Courtesy of their complex nature, however, this bill will amalgamate many Central and State taxes into one single tax, this will, therefore, help not only the general public but Entrepreneurs and their companies especially the multinational ones and it would definitely be easy to handle and administrate thanks to the transparency of the bill. GST, in short, will unify different taxes that can easily confuse the general public. This confusion thus leads to the ignorance of a customer. Not understanding the concept of tax properly, the customer tends to ignore it, but ignorance can be dangerous especially when it's your money at stake. Therefore, comes GST in the picture so that there are no more cons and no more cheating.

GST would replace the following taxes currently levied and collected by the Center:

  1. Central Excise duty
  2. Duties of Excise (Medicinal and Toilet Preparations)
  3. Additional Duties of Excise (Goods of Special Importance)
  4. Additional Duties of Excise (Textiles and Textile Products)
  5. Additional Duties of Customs (commonly known as CVD)
  6. Special Additional Duty of Customs (SAD)
  7. Service Tax
  8. Cesses and surcharges insofar as far as they relate to supply of goods or services

State taxes that would be subsumed within the GST are:

  1. State VAT
  2. Central Sales Tax
  3. Purchase Tax
  4. Luxury Tax
  5. Entry Tax (All forms)
  6. Entertainment Tax (not levied by the local bodies)
  7. Taxes on advertisements
  8. Taxes on lotteries, betting, and gambling
  9. State cesses and surcharges insofar as far as they relate to supply of goods or services.
Even though GST sounds an amazing solution to the current indirect tax system in India, one needs to understand that this is being implemented so as to bring more simplicity as well as unification. Hence, GST will only work when every state will implement it together at the same time and with the same prices. Also, being a destination based tax it should be carefully noted as to where the goods are going. The states are still confused whether to go with GST or not but the current political environment of India ensures that GST will soon be coming down to India. Well, adaptability to change is one of the most desired and important characteristics, introducing GST will surely test this characteristic of all the citizens. Only time will tell us as to how much can this Dual frame of GST will help simplify the situation and will it be able to survive in a country like India. Until then, make your own suggestions and perceptions regarding the concerned topic and as always Stay legal and play smart!

This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.

Comments

Post a Comment

Popular posts from this blog

How can digital marketing help your startup to grow faster?

No one can deny the fact that startups need recognition. Startups, being new to the market, need to tell people that they exist. Market primarily consists of potential customers, investors as well as partners. And these are vital for any business. Without marketing, you and your startup is nothing. No one knows you, so they won’t even bother to spare you a glance. Your idea may be unique and outstanding, but without marketing, that idea is completely useless. Being an entrepreneur, you need to know how to sell your products and services. To sell, people need to know about your existence. You need to attract them. To attract customers, you need marketing. Now, there are two primary forms of marketing. First is traditional marketing and the second being, digital marketing. How are you supposed to choose the best way? How are they going to help? The same is discussed below. Traditional marketing is nothing but the old ways of promoting a company. It can be done via posters and banners. ...
7 comments
Read more

The 3 Relationships That Matter When Your Company Is Being Acquired

Getting acquired is one of the major moments of your life. It is a mix bag of feeling because your startup is like a baby that you nurtured from the start and now after selling it away, things will never be the same and you might not have the same freedom to run that business as you used to. The whole process itself is very tedious and involves a lot of aspects. Your legal advisor and countless manuals may furnish you with all the details however you might not have anyone who would guide you how to handle the people aspect related to you’re the whole process of acquisition. So let me help you now. There are a lot of people involved and you need to have cordial relation with almost all of them and have no grudge against any. During this delicate time, it is essential for you to maintain your calm and no matter how stressed you are from the inside, you must stay calm on the outside. And in this critical time, it is imperative for you to have soft skills and here are three important rela...
2 comments
Read more

5 Tips to Help Your Startup Operate Smoothly from Day 1

To pass the different stages of building a startup, you need not climb the treacherous mountains but pass through the valleys paved by others. Starting your own venture can be a quite daunting task. The can be like hurtling down a potholed road with the ups and downs and the unpredictability that takes extra efforts to overcome. It is good to heed the advice of the experienced people. It is always advised to take away from experiences of a person who has gone through the potholed road. To be an entrepreneur in competitive times like these can be a daunting and a demanding task. You need to give in all you have with zero complaints. The following are the best ways to get through the startup transition on day 1: 1. Keep your heart full, your mind clear and your body active You need to keep yourself well through the transition process. It’s good to take some time out for yourself. Do some physical activity, read in your free time and learn every time. You need to understand that...
1 comment
Read more