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. It is a form of indirect tax that has removed many indirect taxes in India like the VAT, services tax, excise duty etc. The GST was passed on 29th March 2017, in the Indian Parliament and came into force on 1st July 2017. India has adopted two GST which means GST will be administrated both by the State Government as well as by the Central Government.
The Goods and Service Tax (GST) is basically imposed on the supply of goods and services. GST is a single domestic indirect tax law for the entire country. Under the GST, the tax is imposed at every point of sale. The journey of GST started in the year 2000 when a committee was formed to draft law. From 2000 it took 17 years for developing the law. Finally, in the year 2017, the GST Bill was passed both in the Rajya Sabha and Lok Sabha and on 1st July 2017, the GST Law became effective.
The importance of GST Bill to the government of India are:
- 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.
Some disadvantages of GST Bill to the Indian Government are:
- Operational costs increase under the GST.
- Costs increased due to software purchases.
- SMEs will have a higher burden of tax.
- During the middle of the financial year GST came into force.
Besides, Goods and Service Tax (GST) in India is not only business-friendly but friendly to consumers as well. Moreover, India has taken adoption of two GST models that means both the Central government as well as the State government can administrate it. Hence, GST increased both demands as well as consumption of goods which will improve the economy of India in the long run.