GST is the short abbreviation Goods and Service Tax. It concept of GST was brought up in 1986 by the 7th Prime Minister Vishwanat Pratap Singh. Later in the year 2007 GST was proposed which was also proposed in 2011 in Lok Sabha. By the December 2k14 GST was again proposed and finally was accepted in 2k15.
Right after it was accepted in Rajya Sabha which was then termed as the 101st amendment of Indian constitution and has been finally implemented from July 2k17. It took nearly 25 years of economic efforts in the indirect taxes which led to the global transformation in disguise of GST. To understand conclusion of GST it is first necessary to understand what it is.
What do you mean by GST?
In our country, there are various sort of taxes which are imposed in disguise of indirect taxes. For instance, the manufacturer purchases the raw material and change it into finished goods and clear the excise duty of manufactured products. Later, the traders such as retailer and wholesaler pay up VAT or sales tax. In such a scenario the inter-state sale and procurement central tax is charged on goods traded. Another charge which is known as OCTROI is paid on transporting of goods and services form one place to another.
There are mainly 3 types of GST
Central goods and service tax is the amount which is channeled to the central government of revenue department which is equal to SGST. The specific tax amount is for remuneration for loss of the already existing excise duties which is supposed to be paid to the central government. In such a scenario of the regional sales, the remaining 50% share of GST is sent to the CGST.
IGST stands for the Integrated Goods and Services Tax which is imposed when the state-to-state sales and procurement is in transition. A specific share is sent to the central government along with the partner state to which the goods and services belong to. The IGST is levied only when the two states procurement and sales take place.
State Goods and Service Tax is the integral part of tax which is transferred to the state government and state revenue department. This actually is something more like CGST. This remunerates the loss of present Sales Tax and VAT to state government. It is where the 50% share of total tax imposed is transferred to the SGST tax.
Trouble with the GST implementation
1. The sales tax or VAT that is imposed and raised by state government. The rate of taxes vary from one state to another depending on types of goods and services exchanged within the specific boundaries beneath the supreme power offered to state which falls under the state constitution list.
2. On the other hand the CST is imposed by the central government and raised by the state government in accordance with the constitution list. In accordance with the finance act 1994 is imposed and raised by the Central Government by extreme power offered according to the Constitution union list.
3. Because of the power distribution underneath the Constitution, the state government does not want to incur the losses to revenue department known as Sales Tax or VAT. GST is the context union list and none of the state accepts to branch the income to central government and now similar party is in state majority and central.
The significance of GST in India
The present framework of the taxes in India is a trap as it powers to impose and raise taxes offered to central and state government, as an outcome, both imposes various sort of taxes which takes care of the Indian Taxation Structure. This is very complicated in an already complicated economy like India. The small ventures of India continuously faces such issues.
There are 2 taxes in India i.e. Direct & Indirect Taxes
(a) Direct Tax: Refers to the taxes which are paid straight by an individual on whom it is imposed. For instance – Property Tax, Wealth Tax, Gift tax and Income tax etc.
(b) Indirect Taxes: Refers to the taxes which are charged as a burden reduction for others. For instance Excise Duty, Service and Sales tax etc.
The GST Tax rates
The rates of GST are parted into different categories that are 0%, 5%, 12%, 18%, 28% accordingly.
All the standard urge of goods and services are entertained in 0% category like grains, food, bread, book, salt etc. Other goods such as packed food, paneer, tea and coffeeetc. are charged in the category of 5%. Goods such as sweets, mobiles and medicines fall in the 12% category. The rest of the goods and services not coming into the mentioned category fall in the category of 18%. And the final checklist of items that are left are categorized in the 28%. This information available is ideal for a project on GST for class 12.
Goods such as crude oil, petrol, and diesel are exempted from GST criteria.
The Effect of GST
In the discussion of indirect taxes, the load was on the end consumer or customer. However because of the execution of a unified tax across the country the complete production cost of goods and services will be minimized. But in case of other services it will be resulting into a hike after execution of GST although the CST gets removed which in the end minimizes the overall cost of goods. In a scenario of goods, the direct as well as indirect taxes levied by the state government hikes up the overall cost by 30%.
Conclusion of GST
GST conclusion pertaining the execution of GST stands as one of the most flawless determination taken by Government of India. And for the similar reason, 1st of July is commemorated as the Financial Independence day across the country whereupon the entire MOP (Member of Parliament) took part in the Parliament house function. The transformation of the GST jurisdiction which was approved by +150 countries is not so easy to get done. It was not just the complexities but also the confusions were expected to pop up. In a country like India, there is a possibility of such complexities.
Despite the fact that the framework of the newly introduced GST will be not flawless but once implemented, the massive tax structure will contribute to the making of India a better economy which is ideal for FDI (Foreign Direct Investment). At present India was a country which had a union of 29 petty tax economies along with the 7 union territories with various duties varying from one state to another. However a much appreciated and accepted jurisdiction as it is does get along with the numerous taxes by States and Centers.
So just in case if you are doing any sort of business one should definitely enroll for the GST which is for sure going to be of great help in development of Indian economy and eventually Indian government. Also this will help you keep a track of weekly business in accordance with the GST one will have to prepare the business activity statement for each week. This hence furnishes on conclusion onGST in India.