New Delhi, Jun 29: GST acronym for Goods and Services Tax which will be launched tomorrow midnight at the Central Hall of Parliament. GST implementation will be the turning point in the Indian Economy since many decades. This is the tax which is basically similar to the Value added Tax. It will unify all other taxes that were levied earlier by integrating into single tax named Goods and Services Tax. The mega Rehearsal for GST Launch was planned and supervised by Mr Ananth Kumar, Parliamentary Affairs Ministers and Team on Wednesday to make the event of GST Launch successful.
The leading personalities including President of India Mr Pranab Mukherjee, Prime Minister of India Mr Narendra Modi, Finance Minister of the country Mr Arun Jaitely including senior ministers and bureaucrats of the India. Through the implementation of GST, Government of India want to bring the transparency in the Indian Tax Culture. For making the people understand about the true definition of Goods and Services Tax, our team has prepared some points on GST that will enable them to know what exactly GST is. Lets discuss it through the below mentioned points.
Which all taxes would GST Replace?
The biggest advantage to commerce with the implementation of GST is that there would be one single tax now. GST will replace the following taxes:
- Service Tax
- Entertainment tax
- Value Added Tax (VAT)
- Octroi
- Central Sales Tax (CST)
- Lottery taxes
- Advertisement taxes
- Purchase tax
- Luxury tax
- Countervailing and Special Countervailing Duty
- Central Excise Duty
What is the Four Slab Structure of GST?
As per guidelines issued by GST council, GST will be a four-tier tax structure of 5%, 12%, 18% and 28%. Lower rates will be applicable on essential items and highest rates are fixed for luxurious goods and tobacco, pan masala and aerated drinks. Necessary food items like rice will be taxed at zero rates. However, Service Tax will increase to 18% from existing 15%.
What do you mean by Destination based tax?
GST is also known as destination based tax. It includes Inter-state supplies, i.e. those occurring within India have to compulsorily register themselves for GST. Intra-state supplies, i.e. those occurring outside India, may not attract GST but will certainly attract Central and State levy, namely CGST and SGST respectively.
How will GST be Levied?
GST will be levied on point of supply only. Supply, as defined by the GST Act, is the sale of goods and services. Supply can take place even without actually selling the product, such as transfer, exchange or rent. So if a business is engaged in the supply of product or service, they will be mandated to pay GST.
It is Single Tax for Whole Country: Goods and Services Tax will integrate all the taxes, collectively into a single tax across all states. CGST – Central Goods and Services Tax will comprise of Central Taxes such as Central Excise Duty, Service Tax, Customs Duty etc. SGST – State Goods and Services Tax will consist of State levies such as sales tax, luxury tax, VAT etc. CGST will be levied by the Centre and SGST will be levied by States respectively.
What would be the Short term impact of implementation of GST on the current economy and household expenses?
In the short run, inflation is likely to increase. With 5-18% taxes on basic services like entertainment and restaurants, prices of movie tickets are bound to increase. Also, a major source of revenue for the government, liquor, and petroleum are excluded from the ambit of GST which will further cause a fiscal deficit.
Is GST Beneficial to Consumers?
Most consumers are not aware of the plethora of taxes that they pay. Starting from manufacture to the sale of goods and services, consumers are liable to pay tax over tax. GST will bring a transparent tax structure, letting the consumers know the taxes that they pay at each stage. It will also eliminate multitude taxes, making certain items cheaper while increasing the cost of others.
Which Items would become costly with the implementation of GST?
Cigarettes, Commercial vehicles like trucks, Cell phones and Jewellery would actually become costlier with the implementation of GST tomorrow. The present slabs of tax would be shifted to a higher tax slab from the present one.
Which Items would become cheaper with the implementation of GST?
Items that may become cheap are Cars and bikes, Paint and cement, Movie tickets, Electronic products
What would be the impact of GST Implementation on industry?
Ease of doing business in India will improve. A transparency in the taxation system will reduce hidden costs of doing business. Besides, registration and payment will become online for the taxpayers making compliance easy and transparent.
Impact on inflation: India will experience a high inflation rate in the initial stages of GST implementation, but in the long run, inflation will be brought under control. Also, it is likely to boost economic growth by 1-2% leading to a win-win situation for all parties involved.
