Goods and Services Tax India ( GST )

GST or Goods and Services Tax+ , set to launch on July 1, is a multi-stage, destination-based tax that will be levied on every value addition.Set to revolutionise the way India does its taxes, GST will be levied on value additions+ at each stage of the production cycle - buying raw materials, processing, manufacturing, warehousing and sale to customers - the monetary worth added at each stage to achieve the final sale to the end customer will be taxed. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.Goods & Services Tax (GST) is an indirect tax throughout India to replace taxes levied by the central and state governments. It is introduced as The Constitution (One Hundred and Twenty Second Amendment) Act 2017, following the passage of Constitution 122nd Amendment Bill. The GST is governed by GST Council and its Chairman is Finance Minister of India. Under GST, goods and services will be taxed at the following rates, 0%, 5%, 12%, 18%, 28%. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold.[1][2]

The GST regime is set to be in force from 1st July 2017 with a special midnight session in the Central Hall of the Indian Parliament to commemorate the occasion. The reform process in indirect tax regime of India was started in 1986 by Vishwanath Pratap Singh by introduction of Modified Value Added Tax (MODVAT).[3] Goods and services tax (GST) taxes including central excise duty, services tax, additional customs duty, surcharges, state-level value added tax and Octroi.[4][5] Other levies which are currently applicable on inter-state transportation of goods are also likely to be done away with in GST regime.[6][7] The following taxes will be bound together by the GST: Central Excise Duty Commercial Tax Value Added Tax (VAT) Food Tax Central Sales Tax (CST) Introit Entertainment Tax Entry Tax Purchase Tax Luxury Tax Advertisement tax Service Tax

GST will be levied on all transactions such as sale, transfer, purchase, barter, lease, or import of goods and/or services. India will adopt 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. 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. Advantages and disadvantages of GST Advantages of GST 1. GST is a transparent Tax and also reduce numbers of indirect taxes. With GST implemented a business premises can show the tax applied in the sales invoice. Customer will know exactly how much tax they are paying on the product they bought or services they consumed. 2. GST will not be a cost to registered retailers therefore there will be no hidden taxes and the cost of doing business will be lower. This in turn will help Export being more competitive. 3. GST can also help to diversification of income sources for Government other than income tax and petroleum tax. 4. Under Goods and Services Tax, the tax burden will be divided equally between Manufacturing and services. This can be done through lower tax rate by increase Tax base and reducing exemptions. 5. In GST System bothe Central GST and State GST will be charged on manufacturing cost and will be collected on point of sale. This will benefit people as prices will come down which in turn will help companies as consumption will increase. 6. Biggest benefit will be that multiple taxes like octroi, central sales tax, state sales tax, entry tax, license fees, turnover tax etc will no longer be present and all that will be brought under the GST. Doing Business now will be easier and more comfortable as various hidden taxation will not be present.

In the amended Bill a cap Of 18% GST will be applicable on Goods and Services through the country. Because of this Prices of Those Goods and services on which we used to pay taxes below 18% will be increased. For example right now we pay around 4-5% Tax on packaged foods. But after GST the total tax on these products will definitely go up which will increase its retail price. Similarly Jewelery, Mobile Bill, Credit Card Bill, Services rates will also go up. And Prices of those goods and Services on which we used to pay taxes above 18% will be reduced.

Fr example taxes will be reduced on Mini SUV for which we are paying 30-40% Tax right now. After GST it will be reduced to 18%. Similarly Consumer goods like AC, Refrigerator and Transportation cost will also go down. More than 150 Countries have implemented GST and each of them faced Rise in Inflation for next 3-5 Years. Disadvantages of GST 1. Critics say that GST would impact negatively on the real estate market. It would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent. 2. Some Economist says that CGST, SGST and IGST are nothing but new names for Central Excise/Service Tax, VAT and CST and hence GST brings nothing new for which we should cheer. Updates About GST 1. You can enroll for GST online by visiting government website – https://www.gst.gov.in/

2. There will be four tax slabs of 5%, 12%, 18% and 28%. Luxury and demerit goods will be taxed at 28% plus cess. 3. Unlike aother countries where GST has already been implemented, India opted for dual GST – SGST and CGST, administered by State and Centre respectively.

4. Threshold for GST has been set to 15 Lakh for North east and Hill states, and 20 Lakh for other states. 5. Many Tax Experts say that 1st July 2017 is the best case scenario for Implementation of GST in India