Goods & Services Tax Law is a multi-stage and destination-based tax. It was passed in the Parliament on 29th March 2017 and came in effect on 1st July 2017. The ultimate goal of this tax is to remove all indirect taxes and only GST will be levied. This is divided into five tax slabs for collection of tax- 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks, electricity, are not taxed under GST and instead are taxed particularly by the individual state governments, as per the previous tax regime.
Journey of GST
Good and Services Tax in India began in 2000 when a committee was set up to draft allow. It took almost 17th years from then for the Law to evolve. The bill passed in parliament in 2017 and came into the force.
How the GST Applied?
GST is a consumption-based tax, work on the destination principle. It is applicable to goods and services at the place where final consumptions happen. This is collected on the value-added goods and service at every level of sell and purchase under a supply chain.
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GST is based on three different taxation systems and it is applicable under it:
CGST: CGST is collected by the central government on an intra-sale level.
SGST: The amount of SGST is collected by the state government on an intra-state sale level.
IGST: IGST is collected by the central government for inter-state sale level.
The GST tax rates and rules are regulated and governed by GST Council, this council consists of the finance ministers of centre and all states and chaired by the Union Finance Minister.
Advantages of GST Bill Implementation
GST is based on technical development, all its process are based online including registration, return filing, application for refund and response to the notice. Apart from it has many more advantages, some are given below:
- In the long run, the low burden of the tax will translate into the lower cost of products and services.
- The implementation will bring more transparency to the system.
- More business will come under the tax system and will widen the tax base.
- It will improve the overall investment climate in the country, and it will benefit in the state’s growth.
GST implementation includes disadvantages as well. Some of them are given below:
- As per the World Bank’s 2018 version, the version of GST in Indian is very complex and noticing many flaws.
- It contains a lot of documentation and administrative efforts.
- Many people are blaming that it will destroy small businessmen and industries.
In nutshell, GST will bring transparency and a corruption-free system. It is a business-friendly and consumer friendly as well.
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