GST (Goods and Service Tax) in India is regarded as one of the largest taxations that has taken place in India and also passed by the Indian Government. India has adopted two GST which means GST will be administrated both by the State Government as well as by the Central Government.
In keeping the federal structure of India, it is proposed that the GST will be issued both by the Central Government (CGST) and the State Government (SGST). Prime Minister Narendra Modi introduced GST in India on the midnight of 1st July 2017.The development of GST took many negotiations as well as revisions before getting launched in India in its final form in the year 2017.
Goods and Service Tax (GST) is an indirect tax in India imposed when a customer buys a good. GST is regarded as an indirect tax imposed on the sale, manufacture, buying of goods. The aim of GST is to remove all the indirect taxes imposed on goods by the Indian Central governments and State governments.
There are three taxes that are applicable under the GST and they are as follows:
- CGST: CGST is the tax collected by the Central Government of India.
- SGST: SGST is the tax that is collected by the State Government of India.
- IGST: This is the tax that is collected by the Central Government of India for an inter- state sale.
The main objectives of GST in India are:
- To remove Indirect Tax issues.
- Increase the number of tax payers.
- To entertain consumption-based tax rather than manufacturing.
- Diminish Tax corruption.
The benefits of GST to re- boost on Indian economy are as follows:
- GST increase in export by removing the custom duties applicable to exports.
- GST supports Small and medium- sized enterprises (SME).
- GST increases revenue by extending the tax base.
- GST enhanced Pan India operations.
- GST reduces burden of tax on producers and increases the growth through more production.
- GST provides transparency as the customers will exactly know about the taxes they are being charged.
- GST abolishes the cascading effect of tax.
- GST defined treatment for the operators of E- commerce.
- GST has reduced taxes on some goods by 2% while on the other hand it reduces taxes on other goods such as smartphones and cars by 7.5%.
- GST has a positive impact on India’s GDP as it is expected to increase by at least 80% within the couple of years.