The Goods and Services Tax (GST) is an indirect tax policy that was introduced on July 1, 2017 to unify multiple taxes present in India. It substituted a wide range of indirect taxes, including excise duty, VAT, and service tax, whereby levying a single tax PAN India.
It takes the structure of a value-added tax, which is also a destination-based tax applied at every stage of the supply chain across the manufacturing, wholesaling, and retail selling stages. It is fair in that tax is levied only on the value added and it leads the tax collection to the state in which the goods are consumed.
Journey of GST in India
The process was started in the year 2000, when the formation of a committee was made for preparing the GST law. This bill took 17 years of discussions to be passed in 2017 with the passing of the GST Bill. It substituted a previously disintegrated indirect tax structure prevalent in India for the concept of ‘One Nation, One Tax.’
Objectives of GST
Unified Taxation:
The complexity of multiple and direct taxes had been removed by GST, thus setting up single taxes with the same rates all over the country.
Removal of ascading taxes:
GST does away with the tax-on-tax effect by permitting tax credits at every stage of the supply chain.
Curbing Tax Evasion:
High-level measures, which include e-invoicing, reduce tax fraud. Motivations and ResistanceConcisely, the following are general motivations and resistances of compliance measures:
Ease of Doing Business:
There are online processes that make registration, return filing and refunds easier .
Boost to Logistics:
Interstate movement of goods has been particularly facilitated by GST and transportation time and costs have also been cut.
Competitive Pricing:
Working under the principle of establishing a uniform rate for products has led to reduced costs to consumers, increased consumption and increased tax revenues.
Advantages of GST
Cost Reduction: Through the process of barring cascading taxes, where GST has been implemented, it leads to a reduction of the cost of products and services.
Technology-Driven: Like the registration and returns are all done online, making the whole process very efficient.
Improved Compliance: Since there are few rates or classes under a simplified system, filing returns and documents and avoiding deadlines is easy.
Components of GST
- CGST: Central goods and services tax.
- SGST: It stands for state goods and services tax.
- IGST: It stands for Integrated Goods and Services Tax.
- UTGST: It stands for Union territory Goods and services Tax.
Take the next step towards tax efficiency with GST!
