One Nation & One Tax Policy of Indian central government is the one of the significant change in Taxation policy since Independence takes place as on 1st July 2017. That concept of one tax across the whole nation is known to be as GST [ Goods and Services Tax ].
According to our research team, GST is one of the important initiatives that must be taken as an economic point of view. GST will ensure the fair trading of goods and services in the market and also reduce the chances of stealing tax and cheating with customers.
GST will bring a new revolution in our taxation system and help Indian economy to compete in harsh on the international market. In this post, you will know about GST, its importance, and benefits along with disadvantages. After reading this post, we hope you will support GST and help to build our nation strong.
GST History and Meaning
GST is a fiscal reform which proposes an idea of one single tax in the whole of the nation. It will replace all the various auxiliaries tax and brings all of them under a head. GST or Goods and Services Tax will be levied on goods and services.
In other words, Goods and Services Tax will be levied on all transactions happening during the entire production process. GST carries a whole different taxation system than earlier. Earlier central govt. Imposes Excise duty on the production of goods and then VAT is added to every next stage of the sale. But in GST only a single Tax is added to every manufacturing process or point of sale of goods and services.
There are three types of GST
- CGST [ Central Goods & Services Tax ] – Revenue will go to central government.
- SGST [ State Goods & Services Tax ] – Revenue will go to state government.
- IGST [ Integrated Goods & Services Tax ] – Revenue will go to the central government in case of Interstate transactions.
Tax structure under new tax regime is as follows.
|Transaction||New regime||Old regime||Comments|
|sales within the states||CGST + SGST||VAT + Central Excise/Service Tax||Revenue will be shared by central government and state government.|
|Sales interstate||IGST||Central Sales Tax + Excise/Service Tax||Revenue will only go to central government. Only CGST will be charged|
Let’s understand Working of GST with the help of a Short illustration,
A dealer in Gujarat sold goods to a consumer in Gujarat worth Rs. 20,000. The Goods and Services Tax rate is 18% consisting CGST rate of 9% and SGST rate of 9%. In such cases, the dealer collects Rs. 3600 and of this amount, Rs.1800 will go to the central government, and Rs.1800 will go to the Gujarat government.
Now, let us assume the dealer in Gujarat had sold goods to a dealer in Rajasthan worth Rs. 20,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%. In such case, the dealer has to charge Rs. 3600 as IGST. This IGST will go to the Centre. There will no longer be any need to pay CGST and SGST.
According to our research team, 85 percent of us didn’t know the history of GST or Goods and Services Tax. Many of us thought that GST is a very new concept but unfortunately that is not a new policy of taxation. France was the world’s first country to propose and adopt GST taxation policy in the year 1954. Since then 159 countries have implemented this one tax idea in some form or other. Many nations use GST as a substitute for VAT, unlike Indian VAT system.
In India the idea was brought under the concern in the year 2000, Atal Bihari Vajpayee was Honourable Prime Minister of our country. But it takes a very long time to implement it on a national level; maybe the government is sleeping for as 16 years.
ADVANTAGES AND BENEFITS OF GST
- TO THE INDIAN ECONOMY
- GST will improve collection of taxes and helps in boosting up the growth and development of Indian Economy by removing Indirect taxes and other auxiliaries burden.
- GST will put us on par with foreign nations who have a more structured tax system
- The tax rate will be equal in all over India because GST applies to all of the countries.
- For many capital goods, input tax credit is not available. Full input tax credit under GST will mean a 12-14% drop in the cost of capital goods. Expected: A 6% rise in capital goods investment, 2% overall.
- GST will lead to the corruption-free taxation system, where all the transaction is clarifying with proper vouchers or proofs.
- GST will provide a kick to Make in India project because all the cascading tax got removed and economic distortions flushed away.
- TO THE COMMON LAYMAN
- Reduction of all the complicated taxation and there will be now a single clear and transparent tax charged.
- Burden from the taxpayers of filling tax, return filing, and much more will be reduced.
- TO THE COMPANIES OR BUSINESSES
- The cost of Logistics, inventory will fall than earlier. Hence manufacturing market will receive a boost. Due to fall in logistics cost many of the investors started showing their interest in investing money in warehousing in different states of the country.
- The entire GST process – starting from registration to filing returns and payment of GST tax – is online. Startups do not have to run around to tax offices to get various registrations under excise, VAT, service tax.
- GST has a provisions about lower taxes for small-scale business having turnover under 75 lakh. It is called the composition scheme. This will bring respite from tax burdens to many small businesses.
- In the GST system taxes rate will fall for commodities, so it leads to higher consumption, and more consumption leads to more manufacturing of goods and services. Hence companies will undoubtedly be benefited.
- Expenses on filling tax and VAT, and other auxiliaries liability equivalent to tax will end. All the payments and documentation is online, so you don’t need to pay extra charges.
- GST will reduce the accounting complexities because there is only a single tax that has to be paid and charged. Their no 11 or 17 types of taxes you have to charge or pay, so accounting process will no more be complex.
DISADVANTAGES OF GST
- The Service Tax in India is now 15%, but the recommended GST is about 18-20%.
- GST tax will have a negative impact on the Real-estate market’s will raise the cost of the new homes by 8% which in turn will off the demand by 12%.
- A very new platform for taxation, it takes the time to learn the mechanism of GST and its environment.
- As we see in today’s time hacking, cracking of networks by ransomware and viruses, So data security is a concern, and also the possibility of the system crashing and bringing the economy to a standstill is a mind-boggling scenario.
It is worth to say that a smart decision made by the government. This will make the Indian market more competitive than before and create a level playing field between large & small enterprises. NO MORE CHEATING WITH TAXATION AND CONSUMERS. Further, Indian business will be able to compete in the international market with appropriate reputation.
There is also some of the disadvantages of GST because the whole of the taxation system has changed suddenly and it will take some time to pop up with GST and its environment. A policy change of such a vast nature is sure to be faced with teething troubles.
Our research team is keeping a regular eye on the GST for helping our audiences, Till then EARN WITH HONESTY AND SUPPORT GST.