In India , we currently have 4 major indirect tax laws (not including customs law) :
1.State VAT (Value added TAX) - For any sales within the state.This tax varies from state to state.
2.Central sales tax (CST) - For inter-state sales
3.Excise Duty - This is the tax on manufacturing.
4.Service tax - On all services except some of the exempted services.
If anyone wants to know about exempted services in services they can refer to the link below:
http://www.dateyvs.com/tax/service-tax/taxability-of-a-service/exemptions-in-service-tax/
The major aim to introduce GST is to eliminate all the indirect tax laws and introduce a single tax in place of them for both goods and services.This would mean administrative convenience for the government and tax payers. The tax payers on which all of the above 4 mentioned taxes applied had to file different returns for each of them in respective departments . This would reduce the burden on the taxpayer.
To summarize, Goods and service tax is a system of taxation where there is a single tax in the economy for all goods as well as services.This is meant to bring together all the state economies and create a single taxation system for all goods and services. When GST will be introduced , it will eliminate the need of indirect taxes.
Fact:France was the first country to introduce GST.
Let us try to understand this more by an example :
Whenever you go to a restaurant for having lunch/dinner , you might have noticed that the there are couple of taxes applied on the bill and we often do not calculate or bother about the taxes , we just look at the amount food items ordered and pay the bill. And if anyone of you have noticed these taxes also vary across the states. In Mumbai, you may be charged at around 25-30% tax and same meal in same restaurant in Jaipur you might be charged around 20% this makes the whole system for the central government complicated for tax collection as well as refund.Also this leaves a space for corruption or tax evaders wherein you may not ask for the bill from the restaurant just to avoid taxes. This happens a lot at the Small Kirana stores at some places. Just imagine what would happen if a single tax is introduced all across . There would be ease in administrative system and government will be able to function smoothly. This is what GST is all about.
Now answers to some important questions :
1.What are the categories exempted from GST ?
Exports will not be subject to GST. Direct taxes, such as income tax, corporate tax and capital gains tax will not be affected.
2.How will GST benefit the economy?
It will simplify India's tax structure, broaden the tax base, and create a common market across states.
This will lead to increased compliance and increase India's tax-to-gross domestic product ratio. According to a report by the National Council of Applied Economic Research, GST is expected to increase economic growth by between 0.9 per cent and 1.7 per cent. Exports are expected to increase by between 3.2 per cent and 6.3 per cent, while imports will likely rise 2.4-4.7 per cent, the study found.
3.How will GST benefit the corporates ?
It would be beneficial for corporates as the average tax burden on the companies will fall.Reduction in production costs will make exports more competitive which would be good for a country like India.
4.Will the goods and services become costly?
The answer is "No" . Because the rate of taxation under GST would be around 15% . In comparison the current rate from all the indirect taxes is around 20 % so goods will not become costlier . They might even become cheaper.
That's all from my side. Any other thing which you want to know about GST you can please comment on this post . I will try and answer the question.
1.State VAT (Value added TAX) - For any sales within the state.This tax varies from state to state.
2.Central sales tax (CST) - For inter-state sales
3.Excise Duty - This is the tax on manufacturing.
4.Service tax - On all services except some of the exempted services.
If anyone wants to know about exempted services in services they can refer to the link below:
http://www.dateyvs.com/tax/service-tax/taxability-of-a-service/exemptions-in-service-tax/
The major aim to introduce GST is to eliminate all the indirect tax laws and introduce a single tax in place of them for both goods and services.This would mean administrative convenience for the government and tax payers. The tax payers on which all of the above 4 mentioned taxes applied had to file different returns for each of them in respective departments . This would reduce the burden on the taxpayer.
To summarize, Goods and service tax is a system of taxation where there is a single tax in the economy for all goods as well as services.This is meant to bring together all the state economies and create a single taxation system for all goods and services. When GST will be introduced , it will eliminate the need of indirect taxes.
Fact:France was the first country to introduce GST.
Let us try to understand this more by an example :
Whenever you go to a restaurant for having lunch/dinner , you might have noticed that the there are couple of taxes applied on the bill and we often do not calculate or bother about the taxes , we just look at the amount food items ordered and pay the bill. And if anyone of you have noticed these taxes also vary across the states. In Mumbai, you may be charged at around 25-30% tax and same meal in same restaurant in Jaipur you might be charged around 20% this makes the whole system for the central government complicated for tax collection as well as refund.Also this leaves a space for corruption or tax evaders wherein you may not ask for the bill from the restaurant just to avoid taxes. This happens a lot at the Small Kirana stores at some places. Just imagine what would happen if a single tax is introduced all across . There would be ease in administrative system and government will be able to function smoothly. This is what GST is all about.
Now answers to some important questions :
1.What are the categories exempted from GST ?
Exports will not be subject to GST. Direct taxes, such as income tax, corporate tax and capital gains tax will not be affected.
2.How will GST benefit the economy?
It will simplify India's tax structure, broaden the tax base, and create a common market across states.
This will lead to increased compliance and increase India's tax-to-gross domestic product ratio. According to a report by the National Council of Applied Economic Research, GST is expected to increase economic growth by between 0.9 per cent and 1.7 per cent. Exports are expected to increase by between 3.2 per cent and 6.3 per cent, while imports will likely rise 2.4-4.7 per cent, the study found.
3.How will GST benefit the corporates ?
It would be beneficial for corporates as the average tax burden on the companies will fall.Reduction in production costs will make exports more competitive which would be good for a country like India.
4.Will the goods and services become costly?
The answer is "No" . Because the rate of taxation under GST would be around 15% . In comparison the current rate from all the indirect taxes is around 20 % so goods will not become costlier . They might even become cheaper.
That's all from my side. Any other thing which you want to know about GST you can please comment on this post . I will try and answer the question.
