Introduction of GST: Goods and Service Tax
GST stands for Goods and service tax. It is an Indirect tax which is levied on sales of goods and services.
There are two types of taxes one is direct tax and other is Indirect tax. Burden of Indirect taxes can be shifted to some other person but in case of direct tax burden of payment of direct tax can’t be shifted to other person.
sales tax, VAT, excise, are example of Indirect taxes. Income tax, wealth tax are examples of Indirect taxes.
GST Bill 2014 and GST Act 2017
Goods and Service tax Bill was introduced by the former finance minister of India Shri Arun Jaitley in Lok Sabha as 122nd constitutional amendment bill. But it came into effect from 1st of july 2017. After completing all required formalities it become GST act 2017.
Components and Rates of GST
components of GST
GST has four parts.
First part of GST is CGST. CGST stands for Central Goods and service tax. It is levied on sales of goods and services when goods or services are sold within states. CGST collected goes to Central government.
Second Part of GST is SGST. SGST stands for State Goods and service tax. It is levied when goods and services are sold within the states. concerned state government get benefits from SGST.
Third part of GST is IGST. IGST means Integrated Goods and service tax. It is levied when goods and services are sold from one state to other state.
Fourth Part of UTGST. UTGST means Union Territory Goods and service tax. It is levied when goods and services are sold with the union territory or one UT to other UT. Benefit of UTGST goes to Central government and to concerned Union Territory.
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Rates of GST
There are various rates of GST. Besides this some goods are also come under category of exempted goods. which means no GST is charged on such goods. Under the category of exempted goods essential goods like vegetables, Fresh Honey, newspaper, meat, egg, milk, fruits etc came.
Besides exempted goods there are 5%, 12%, 18% and 28% GST rates on other goods. 28% is the highest rate slab in GST act. 28% gst is levied on non essential goods like tobacco, chewing gum, bidi, pan masala, deodorants, shaving creams, after shave, hair shampoo, weighing machine, washing machine etc.
Benefits of GST
Before the implementation of GST Act in India there were various taxes like VAT, Sales Tax, Service Tax, Octroi, Entry tax, entertainment tax, taxes on betting and lottery etc, levied on sales of goods and services but after 2017 GST act came into force all these taxes are subsumed by one taxation system which is Goods and service tax. Now all these taxes has came under single umbrella of GST.
With the implementation of GST there is a uniformity of taxes in whole India.
GST Act helps to remove the cascading effect of tax which ultimately helps in reduction of prices of goods.
GST make tax compliance easy because only one tax return i.e GST return is required to file by business houses.
Since it helps to reduce the prices of goods and services therefor it boosts export of Indian goods and services.
GST Act 2017 has proved a milestone for Indian economy. It has improve the taxation system in India and the effect of this can be measure with the improvement of India’s rank in list of Ease of doing Business Countries. But many more steps are required to taken like most of goods falls under category of 18% tax rate slab which put a burden on middle and lower income group families. Further different parts of GST make things difficult in claiming tax benefits in GST return.