GST or the Goods and Service Tax system came into effect on 1st July 2017. Since its inception, GST has become one of the most instrumental economic reforms in India. With the intent of ‘One Nation, One Tax’, GST included in itself all of the indirect taxes levied by the center and state machinery. It has brought uniformity to the law in terms of taxation and administration of these taxes.
Though many voices were raised against the Goods and Service Tax scheme, no one can deny that this taxation system has brought in a new wave of change in respect to how taxation was applied. It also unifies the nation under its ‘One Nation, One Tax’ policy.
It brings a unified front towards many consumer goods and GST also causes to amend the tax rates.
We can best describe GST as a destination-based tax, meaning it is levied only at that point where the commodity or service is being sold, also known as the point of consumption.
How did GST come to become a law?
Looking at retrospect, before this scheme was introduced, whenever a consumer wanted to buy goods or services they had to pay for not only the cost price of the product but also service tax, VAT, excise, CST, and many such indirect taxes. Under the umbrella of GST, all these indirect taxes are combined into one. Thereby making taxation uniform and removing all the financial hassles that the consumer had to face when buying a commodity.
Components of Goods and Service Tax
GST is further divided into and is applicable as per the following –
- State Goods and Services Tax (SGST): This constitutes the tax levied by the State Government on interstate sale of goods and services
- Central Goods and Services Tax (CGST): This constitutes the tax levied by the Central Government on interstate sale of goods and services
- Integrated Goods and Services Tax (IGST): This constitutes tax applicable on all the inter-state supply of goods and services by the central government on interstate sale of goods and services. This is divided between the state and the central government.
We also observe the following GST slab rates –
- 0% corresponds to basic consumer products such as food grains, hulled cereal, grains, sanitary napkins, etc.
- 5% corresponds to mass consumption items such as spices, sugar, mustard oil, etc.
- 12% corresponds to processed food, items like computers, monitors, spectacles, etc.
- 18% corresponds to basic living amenities such as toiletries, soaps, hair oils, etc.
- 28% corresponds to goods like AC, refrigerators, etc.
- 28% plus cess corresponds to luxury goods, aerated drinks, tobacco, gold, stones, imitation jewelry, etc.
Benefits you derive out of GST
Now let’s delve into the various benefits of the GST taxation scheme –
- Similar Pricing across the nation
The most important benefit of GST is that it is a uniform taxation scheme for the country. With the intention of ‘One Nation, One Tax’ in mind. In the previous tax format, many indirect taxes were levied. Another essential tax, VAT, was levied by the State Government. This tax varied in different states, leading to a difference in the price of the same commodity.
With GST comes a uniformity that encircles all the states. The GST council has been made that has members from all the states. Each representation assists in helping to set up a single tax for various goods and services all over India.
- Reducing Tax evasion
With the enforcement of the GST Act, the tax administration has become accountable and transparent, thereby making the system corruption-free.
The complicated tax system has been made fully online and the consumers’ trust has increased. The entire process of GST is now online and quite an easy procedure. This increased the accountability of our tax system. The government also introduces certain measures undertaken by the authorities to keep things in check like syncing GST registration and PAN, generating e-way bills, tracking the movement of goods, and reconciling credit.
- Easy Procedure
As the GST process comes online, it makes it easy for the consumers to process their registration. There is a common procedure for registration making it possible to keep uniform formats. This also helps in keeping clear and transparent rules through ease of bookkeeping.
With GST online, it has also reduced enormously the complicated taxation routine which was there before GST.
Now the filling has become more of an easy and manageable task with the advent of the cloud-based GST billing framework. The computerization of GST also has helped in identifying errors.
- Eliminating Cascading effect
Before GST, we saw the cascading effects of taxes. We have heard a lot about this but what exactly is meant by cascading effect? Cascading effect means paying taxes over another tax. Now whenever a good is produced, taxes are attached to it as it moves through the different production stages.
GST eliminated in its entirety the tax-on-tax impact on goods and services. With the implementation of GST, all the indirect taxes came under it and thereby bringing down the value or the cost of these goods and services. Therefore, making this uniformity of taxes under GST one of the crucial benefits!
- Increase in Indian Exports
With the implementation of GST, the customs duties on exported goods have come down drastically in comparison to the previous taxation system. This, along with reduced manufacturing costs for local markets has brought in an increase in the worldwide export.
Therefore, ushering in new competition on a global level.
Conclusion
After going through with the benefits of the GST Law, change is never easy. It took a lot of time and many discussions to finally bring this tax scheme to fruition on July 1, 20
Despite many criticisms, the GST tax scheme has been going strong since its inception, more because of the efforts on the part of our government efforts.
The enforcement of this tax system has also brought in transparency and the benefits far outweigh the cons. As GST becomes more consumer-friendly rather than business-friendly thereby positively affecting the economy.
Learn GST Course Online
Module 1: GST Basics Price: 500 INR Coupon Code: Use GST1201 for 20% Off
https://www.edupme.com/course/gst-basics
Module 2: GST: Input Tax Credit Price: 900 INR Coupon Code: Use GST2201 for 20% Off
https://www.edupme.com/course/gst-input-tax-credit
Module 3: GST: Time of Supply & Place of Supply Price: 900 INR Coupon Code: Use GST3201 for 20% Off
https://www.edupme.com/course/gst-time-of-supply-and-place-of-supply
Module 4: GST: Tour & Travel Services Price: 900 INR Coupon Code: Use GST4201 or 20% Off
https://www.edupme.com/course/gst-tour-&-travel-services
