Yearly Archives: 2018

With the aim to make India a unified common marketplace with common tax rates and procedures, the Goods and Services Tax paves the way for an integrated economy at the national level. It subsumes almost all the State as well as Central taxes into a single tax, mitigating the ill effects of cascading and enhancing competitiveness of businesses. The tax is also anticipated to bump up GDP by approximately 2%. Let’s have a look at major benefits of GST.

1. Elimination of Multiple Taxes

The biggest advantage of GST is that it subsumes most of the indirect taxes being levied nationally. Thus, it abolishes the ‘tax on tax’ effect which has been plaguing the entire supply chain and increasing costs for the end user. This will also give a major boost to the Government’s ‘Make in India’ campaign as goods that are manufactured or supplied in the country will be competitive not only in national markets, but in the international ones too. The Integrated Goods and Services Tax (IGST) will be levied on all imported goods. IGST means State GST plus Central GST, bringing uniformity in taxation on both local as well as imported goods.

2. Ease of Business Setup

The Goods and Services Tax comes with a unique ‘one country, one tax’ concept that can make the business setup process easy and straightforward. This will be beneficial to do interstate business, preventing unhealthy competition among states. GST is anticipated to bring buoyancy to the Government Revenue by expanding the tax base and enhancing the taxpayer compliance. The tax is likely to provide a major lift to India’s ranking in the Ease of Doing Business Index.

3. Less Bureaucracy

The new tax system offers less bureaucracy. Now, you don’t have to pay bribe to any tax officer. You can check your details and pay your tax online in just few clicks. It brings more transparency to indirect tax laws, making the economics and tax value of supplies easily distinguishable. All in all, it helps the industry to take credit and the government to validate the precision of taxes paid and the consumer to know the exact amount of taxes paid.

4. Improvement in Economy

One of the major GST benefits is that it provides more taxpayers to government by lowering the cost of goods and services. Called as the biggest reform in Indian indirect tax system, the Goods and Services Tax causes an increase in manufacturing processes and improvement in exports and investments. Now, the government provides more facility with the high-budget product in the well-being of Indian citizens in many different ways. Thus, it’s a win-win situation for both the country and citizens.

5. Less Price Product

For a common man, GST tax applicability means the removal of double charging in the system. With the introduction of this new tax, the money mind game has been ended. It lowers the price of goods and services, helping common man to save more money. On the business front, it give businesses a national platform to grow with a rapid pace.

India’s biggest indirect tax reform since Independence, the Goods and Services Tax (GST) was launched on July 1, 2017 at Central Hall of Parliament by Prime Minister Narendra Modi and President Pranab Mukherjee. Came up with the principle of ‘one nation, one tax, one market’, the GST subsumes 17 central and state tariffs. With the new-fangled tax, the movement of goods has become much easier and simpler across the nation. Still confused what is GST? Well, not anymore as in this post, we’ve brought to you the answers of the most-asked queries to help you better understand what is the Goods and Services Tax, its rates, and how it affects you. Allow us to explain you in detail.

GST and its Meaning

Abbreviated as GST, the Goods and Services Tax is the only indirect tax for the entire country, making India a unified common marketplace. The tax applies to the supply of goods, right from the producer to the buyer. Through the new tax, the government aspires to construct a solitary extensive tax structure that will subsume all other minor indirect taxes on expenditure such as Service Tax, Local Body Taxes, Purchase Tax, etc. In accordance with government estimates, this tax will boost India’s GDP (Gross Domestic Product) by approximately 2%.

Why GST Needed?

The new tax splits the complex structure of different central as well as state taxes, which frequently overlap with each other, resulting in a uniform taxation system for the whole nation. Now, taxes will be implemented more effectively as all taxes like Value Added Tax (VAT), Octroi, and Excise Duty will be replaced by one single tax. However, there’re still 3 types of taxes: State GST, Central GST, and Integrated GST for inter-state trade.

GST Rates

There are 4 main tax slabs under GST: 5%, 12%, 18%, and 28% that are intended to lower tax incidence on necessary items. The first rate, i.e. 5% is applied to items of mass consumption that are used particularly by common people. The second and third slabs – 12% and 18% accommodate most of the goods and services, while the last slab of 28% has applied mainly to white goods, including washing machines and refrigerators.

Exemptions under GST

Under this tax, the Indian administration has set GST rates on around 1,211 goods and 500 services in the range of 5 to 28%. Various items like petrol, alcohol, diesel, and natural gas are exempted under this tax. Apart from this, the GST Council has also categorized several items under the 0% tax rate. The list incorporates daily-use items like rice, milk, wheat, meat, fish, fresh vegetables, printed books, newspapers, bone meal, and drawing or coloring books, among others.

GST Rate 0%

A number of services such as healthcare, education, and hotels and lodges with tariff below Rs. 1,000 are deprived of the Goods and Services Tax. However, semi-precious and rough stones have GST rate of 0.25%.

Effects of GST

On salaried employees and self-employed professionals

As the tax is valid mainly for businesses, so it won’t directly affect the salaried and self-employed professionals such as lawyers, doctors, to name a few. Nevertheless, it will affect their expenditure, owing to the change in rates of goods and services they avail. Apart from this, they will continue to pay their income tax like before.

On Businesses

The new tax has revolutionized the way businesses have been operated. The removal of several levies and formation of a single market with lower tax rates and fewer tax exemptions has enhanced the ease of doing business and reduced unnecessary proceedings. It also simplifies a complicated chaos of taxes that companies have been subjected to. Further, reduction in transaction costs of doing business has led to a superior competitiveness for the industry and trade.