Goods and Service tax is an indirect tax levied on supply of goods and services in India. It has subsumed various taxes that were there in pre GST era.i.e, VAT, service Tax, Sales tax, Custom Duty, Excise duty, Entertainment tax and so on. GST is a comprehensive, multistage , destination based tax.
If we see, in the earlier tax regime, there were multiplicity of taxes levied on same supply chain. On manufacturing, Excise duty was levied, on provision of services, sales tax was there which was collected by central government, VAT on intrastate sale which was collected by state governments. Set off of central and state collected taxes was not there and this led to cascading effect.
GST is a twin levy tax system. On intra-state supply of goods or services, the Central Government will levy and charge Central GST (CGST) and the State will levy and charge State GST (SGST).On inter-state supply of goods or services, Central government will levy and charge Integrated GST (IGST).
Therefore, under GST we will have One Nation, one tax.
GST implementation has created a single national market with same tax levied by central government and state government.
A very important feature of GST is availability of input tax credit.
Input tax is basically the tax that you have paid on your inward supplies. It is automatically calculated in the GST portal once you feed in the information about your inward and outward supplies. Everything is IT based and there on GST Network thereby leading to transprancy in the entire tax system.
Advantages of GST
Advantages for the government:
- It will increase FII and FDI as it has created a common market for India with one tax applicable on entire country.
- It has eliminated double taxation as now input tax credit is available at each stage of value addition.
- It has created more clarity and better relations among state governments and center government on the matters of taxation law.
- Compliance has become easy as every this is online under GST, right from registration to the return filing and input tax credits are verified online and thereby reducing corruption the the country.
- It has given a boost to export and manufacturing industry and helped to reduce unemployment , poverty in India and promoted growth and GDP of the country.
Advantages to Trade and Industry:
- It is a simpler tax regime with fewer exemptions and Increased ease of doing business
- It has reduced multiplicity of taxes and thereby reducing cascading effects in sectors like job work, works contract, etc. Now ITC is available at each stage of supply chain.
- As everything is IT based in GST , so it has reduced the compliance cost, investment cost in resourced like manpower and maintaining records has also reduced.
- It is expected that the tax burden will come down with increased consumption and as a result boosting production in manufacturing sector
Advantages to Consumers:
- The final prices of goods and services are expected to reduce in long run due to transparent system of conduct and availability of input tax credit on each stage of supply.
- Small businesses can get registered in composition scheme where they will charge less price from customers as composition dealers cannot charge GST.
The above said changes in taxation law and advantages suggest intent of the government behind introduction of GST. It is a simple, smooth, transparent and automated system that can benefit all stakeholders and society at large.
Ms. Dikshita Kathuria
Post: Asstt. Prof.
