What is GST?
GST – Goods and Service Tax is a kind of tax imposed on manufacturing, sale and usage of services and goods. Goods and Service Tax (GST) is applied on services and goods at a national level with a purpose of achieving overall economic growth. GST is particularly designed to replace the indirect taxes imposed on goods and services by the Centre and States.
Goods and Service Tax Definition:
Goods and Service Tax can be defined as a kind of Value Added Tax imposed by on various goods and services by different countries. It will replace all indirect taxes levied on goods and services by the Indian Central and state governments. Goods and service tax is imposed to collect revenues for the government. This tax is paid by the consumers of goods and services and collected and forwarded to the government by the business entities.
GST is aimed at being comprehensive for most goods and services.
Which Taxes will GST Replace?
It will replace all the following taxes and bring them under one umbrella to make compliance easier:
- Taxes currently levied and collected by the Centre:
- Central Excise duty
- Additional Duties of Customs (commonly known as CVD)
- Special Additional Duty of Customs (SAD)
- Service Tax
- Taxes currently levied and collected by the State:State VAT
- Central Sales Tax
- Entertainment and Amusement Tax (except when levied by the local bodies)
- Taxes on lotteries, betting and gambling
Benefit of GST:
- Eliminating cascading effect of taxes.
- Tax rates will be comparatively lower as the tax base will widen.
- Seamless flow of Input tax credit.
- Prices of the goods and services will fall.
- Efficient supply chain management.
- Promote shift from unorganized sector to organized sector.
Goods and Service Tax in India:
In India, the Goods and Service Tax Bill was officially introduced in 2014 as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014. The GST Bill in India proposes the implementation of nationwide Value Added Tax on sale, manufacturing and the use of different goods and services. The Goods and Service Tax act is expected to be operative in India from April 2016.
Arun Jaitley – the Finance Minister of India announced The Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 or the Goods and Service Tax in Lok Sabha on 19 December 2014. The Parliament passed the bill on 6th May 2015, after it received 352 votes for and 37 against it.