Goods and Services Tax (GST) is an indirect tax applicable throughout India which replaced multiple cascading taxes levied by the central and state governments. It was introduced as The Constitution (One Hundred and First Amendment) Act 2017[1][2], following the passage of Constitution 122nd Amendment Bill. The GST is governed by a GST Council and its Chairman is the Finance Minister of India. Under GST, goods and services is taxed at the following rates, 0%, 5%, 12%, 18%, 28%[2]. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold.[3]
The Goods and Services Tax (GST), India's biggest tax reform in 70 years of independence, was launched on the midnight of 30 June 2017[2] by the Prime Minister of India Narendra Modi. The launch was marked by a historic midnight (June 30-July 1, 2017) session of both the houses of parliament convened at the Central Hall of the Parliament.[4]
Members of the Congress boycotted the GST launch altogether. They were joined by members of the Trinamool Congress, Communist Parties of India and the DMK, who reportedly found virtually no difference between the existing taxation system, and therefore claimed that the government was trying to merely rebrand the current taxation system but made it worse for common people by increasing existing rates on common items and reducing rates on luxury items.[5] GST was initially proposed to replace a slew of indirect taxes with a unified tax and was therefore set to dramatically reshape the country's 2 trillion dollar economy. However, it has been meet with sharp criticism from various fronts.
Tax replaced
A single GST replaced several existing taxes and levies which include: central excise duty, services tax, additional customs duty, surcharges, state-level value added tax and Octroi.[14][15] Other levies which are currently applicable on inter-state transportation of goods are also likely to be done away with in GST regime.[16][17]
The following taxes will be replaced by the GST:
Central Excise Duty
Commercial Tax
Value Added Tax (VAT)
Food Tax
Central Sales Tax (CST)
Introit
Octroi
Entertainment Tax
Entry Tax
Purchase Tax
Luxury Tax
Advertisement tax
Service Tax
Customs Duty
Surcharges
GST is levied on all transactions such as sale, transfer, purchase, barter, lease, or import of goods and/or services. India adopted a dual GST model, meaning that taxation is administered by both the Union and State Governments. Transactions made within a single state will be levied with Central GST (CGST) by the Central Government and State GST (SGST) by the government of that state. For inter-state transactions and imported goods or services, an Integrated GST (IGST) is levied by the Central Government. GST is a consumption-based tax, therefore, taxes are paid to the state where the goods or services are consumed not the state in which they were produced. IGST complicates tax collection for State Governments by disabling them to collect the tax owed to them directly from the Central Government. Under the previous system, a state would have to only deal with a single government in order to collect tax revenue.[18]
Effects
The Central Government has proposed to insulate the revenues of the States from the impact of GST, with the expectation that in due course, GST will be levied on petroleum and petroleum products. The central government has assured states of compensation for any revenue loss incurred by them from the date of GST for a period of five years.[19]
Goods and Services Tax Network (GSTN)
"Goods and Services Tax" Network (GSTN) is a nonprofit organization formed to create a platform for all the concerned parties i.e. stakeholders, government, taxpayers to collaborate on a single portal. The portal will be accessible to the central government which will track down every transaction on its end while the taxpayers will be having a vast service to return file their taxes and maintain the details. The IT network will be developed by private firms which are being in tie up with the central government and will be having stakes accordingly. The known authorized capital of GSTN is ₹10 crore (US$1.6 million) in which Central Government holds 24.5 percent of shares while the state government holds 24.5 percent and rest with private banking firms.[20]
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The Goods and Services Tax (GST), India's biggest tax reform in 70 years of independence, was launched on the midnight of 30 June 2017[2] by the Prime Minister of India Narendra Modi. The launch was marked by a historic midnight (June 30-July 1, 2017) session of both the houses of parliament convened at the Central Hall of the Parliament.[4]
Members of the Congress boycotted the GST launch altogether. They were joined by members of the Trinamool Congress, Communist Parties of India and the DMK, who reportedly found virtually no difference between the existing taxation system, and therefore claimed that the government was trying to merely rebrand the current taxation system but made it worse for common people by increasing existing rates on common items and reducing rates on luxury items.[5] GST was initially proposed to replace a slew of indirect taxes with a unified tax and was therefore set to dramatically reshape the country's 2 trillion dollar economy. However, it has been meet with sharp criticism from various fronts.
Tax replaced
A single GST replaced several existing taxes and levies which include: central excise duty, services tax, additional customs duty, surcharges, state-level value added tax and Octroi.[14][15] Other levies which are currently applicable on inter-state transportation of goods are also likely to be done away with in GST regime.[16][17]
The following taxes will be replaced by the GST:
Central Excise Duty
Commercial Tax
Value Added Tax (VAT)
Food Tax
Central Sales Tax (CST)
Introit
Octroi
Entertainment Tax
Entry Tax
Purchase Tax
Luxury Tax
Advertisement tax
Service Tax
Customs Duty
Surcharges
GST is levied on all transactions such as sale, transfer, purchase, barter, lease, or import of goods and/or services. India adopted a dual GST model, meaning that taxation is administered by both the Union and State Governments. Transactions made within a single state will be levied with Central GST (CGST) by the Central Government and State GST (SGST) by the government of that state. For inter-state transactions and imported goods or services, an Integrated GST (IGST) is levied by the Central Government. GST is a consumption-based tax, therefore, taxes are paid to the state where the goods or services are consumed not the state in which they were produced. IGST complicates tax collection for State Governments by disabling them to collect the tax owed to them directly from the Central Government. Under the previous system, a state would have to only deal with a single government in order to collect tax revenue.[18]
Effects
The Central Government has proposed to insulate the revenues of the States from the impact of GST, with the expectation that in due course, GST will be levied on petroleum and petroleum products. The central government has assured states of compensation for any revenue loss incurred by them from the date of GST for a period of five years.[19]
Goods and Services Tax Network (GSTN)
"Goods and Services Tax" Network (GSTN) is a nonprofit organization formed to create a platform for all the concerned parties i.e. stakeholders, government, taxpayers to collaborate on a single portal. The portal will be accessible to the central government which will track down every transaction on its end while the taxpayers will be having a vast service to return file their taxes and maintain the details. The IT network will be developed by private firms which are being in tie up with the central government and will be having stakes accordingly. The known authorized capital of GSTN is ₹10 crore (US$1.6 million) in which Central Government holds 24.5 percent of shares while the state government holds 24.5 percent and rest with private banking firms.[20]
Thank You
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