GST (Goods and Service Tax)
GST also known as Goods and Service tax launched by the government of India on 1st July 2017 that ousted all the previous indirect taxes. Goods and service tax has eradicated the cascading effect on common products. It has simplified the taxation system in India,earlier there were dozens of taxes imposed by central and state governments,
Currently there are 4 different tax slabs in GST i.e. (5%, 12%, 18%,28%). Unlike Britain & France, India is a federal country that signifies India has different governments at the central and state level with authority to impose and collect taxes, so this is the major reason we have different types of GST.
Some major Taxes were ousted by the GST-
- Service tax
- Sales tax
- Central excise duty
- Additional duty of excise
Types of GST
In Total there are 4 types.
- CGST also known as(Central goods and Service tax)
- It is collected by the central govt of India
- This tax is imposed for intrastate movement of goods and services
- SGST also known as (State Goods and Service tax)
- State govt collects the SGST
- UGST stands for (Union territory Goods and Service tax)
- it is collected by the union territories of India
- Only those union territories who do not have legislatures
- IGST also known as for (Integrated Goods and Service tax)
- IGST is levied by the central govt on all interstate transaction of taxable goods and services, later divided among state and union territories.
Objectives of GST
- One Nation One Tax
- To contain the cascading effect
- To increase taxpayer base
- To curb tax evasion
- Promote ease of doing business
- Reduce corruption
- Boost secondary sector
- promote simple tax regime
- Simpler tax regime with fewer exemptions.
- Increased ease of doing business.
- Reduction in multiplicity of taxes.
- It put an end to double taxation on various sectors.
- A Structured neutralization of taxes mainly for exports
- To make national products more competitive in global market.
- Simplified the whole procedures for registration, tax payments returns & refunds.
- Transparency in prices
- Price reduction due to reduction in cascading effect.
Products Exempted from GST –
All the mentioned products are vital sources for the state govt’s revenue, they are heavily dependent on these products, so putting these products under GST will cause major losses to the state govt in terms of revenue.
- According to the official govt data, GST collection for October 2021 registered the second- highest since GST has been implied.
- Rs-1, 30,127crores gross GST revenuewas collected in the month October2021, overall24%growth in comparison to the same month last year.
- The initial month of this fiscal recorded highest ever GST collection of Rs-1, 41,384crores.
- Around 1.5 crores returns were filed in the month of July 2021.
GST in news
- The govt of India is planning to introduce changes in tax slabs, the current 4 tax slabs will be replaced by 3 tax slabs by merging any 2 existing tax slabs. The financial advisor to the central govt Mr. Krishnamurthy Subramanian told media personnel it will definitely going to happen, plus he appreciated the govt’s step of GST reform introduced in 2017 as an excellent move on which he added now we all are seeing the results.No doubt we have seen the profits this fiscal year, GST collection was above Rs- 1lakh crore for 5th straight time from June to October.
- Many economic experts pondered that the merger of existing tax slabs will inflate the prices of various products and some expensive products will become inexpensive, this development is not new even the former finance minister late Mr. Arun Jaitley gave indication we will merge 2 existing tax slabs during his reign.
- Govt will end the compensation for state and union territories, this will happen next year due to completion 5 years of since GST implied, for fiscal (2020- 2021)central government released total compensation of Rs- 70,000 crore, in October 2021 central govt released Rs-44,000crore as compensation under back to back loan facility in lieu of GST.
- Recently The ministry of finance has introduced a 12% GST rate on manmade fiber (MMF), yarn, fabrics, and apparel, which will come into effect from January 2022, in the upcoming days the textiles, shoes, clothes will get costlier, the GST on these products will surge from the current 5% to 12%, (CBIT) central board of indirect taxes announced this development through a notification. Still, lots of common products are exempted from GST.
- Mr. Sanjay K Jain, the chairman textiles committee ( Indian chamber of commerce) quoted‘’In an industry, where almost 80% of the units are in the MSME segment, fixing rates at 12 percent forgarments, fabrics will only inflateprices for the common people”.
Is GSTa success or failure so far?
If we scrutinize the initial stages of GST implementation it has not lived up to the expectations. It created the skirmish between the state and central govt on various issues, compensation was one of the matters, even the demand for waiving off the GST on covid related products was an issue which we witnessed during a pandemic, but all these points cannot overshadow the worthwhile points like it eradicated cascading effect on tax. It has reduced the overall time of the logistics within the country by eradicating all interstate check posts.
India witnessed an escalation of indirect taxes that have benefited govt in tax collection, the creation of GST council is crucial innovation, it is the governing body as GST accumulates the suggestions and improvises the changes but still, there are lot challenges in GST which will get finer with time.