Goods and Services Tax (GST) is classified as the tax imposed whenever a good or service is purchased by a customer. A systematic indirect tax levy on the production, sale and use of both goods and services is imposed. GST aims to transform all indirect levies by the Central and State Governments of India on goods and services.
As shown in the figure GST is to be paid to not just one government but to both Central and State government. Practically, GST now have three forms of taxation which will aim to address inter-state transactions, viz local, state and one called integrated GST. Underneath the new GST tax reform, CGST and SGST will be in effect with all modes of supply of goods and services, such as transfer, sales, barter, trade and leasing.
Through the Cascading effect of GST , it subsumes every other indirect tax incorporated under State and Center. As shown in the figure to the right there are multiple types of taxes that earlier were there but now as a united nation, we only pay GST as an Indirect Tax.
What are the features of GST Registration?
- Outside the framework of the GST, petroleum products, alcohol for human consumption and tobacco were held.
- Just the GST charged by the last seller in the supply chain would have to be paid by the final customer.
- The bill imposes an extra tax not increasing 1% on the inter-state trade in goods, to be imposed and collected for two years by the Centre in order to compensate the States or, as proposed by the GST Council, for damages arising from the GST implementation.
What accounts as the Advantages of GST?
The implementation of the GST is thought to be a key move in India’s indirect tax reform. This would help to reduce dual taxation by amalgamating many central and state taxes into some kind of single tax, contributing to a shared national market. From the consumer’s perspective, this will be an advantage when it comes of reducing the total tax burden on products, which is originally estimated to be between 25% and 30%.
- Price reduction: producers or traders did not have to include taxes as part of their manufacturing costs, which would have contributed to price increases.
- Lower enforcement and procedural cost: The load to enforce compliance will be minimized. It would also not be necessary to maintain records of the CGST, SGST, and IGST individually.
- Moving towards a unified GST: While India is implementing dual GST, it is still a positive step towards a unified GST that is considered to be the best indirect tax system.
- GST implementation will help grow as a result of India’s GDP by 100-200 bps or (1 to 2 percent) as this will help the quicker and efficient movement of goods throughout the world with a standardized taxation structure
- The positive introduction of GST will send a clear signal to foreign investors about the potential of India to promote the industry.