1. GOODS AND SERVICES TAX (GST) in Nutshell
Goods and Services Tax (GST) is an indirect tax that brings most of the taxes imposed on
goods, services, manufacture, sales and consumption of goods under its ambit in to a single
domain at the national level. It will change the taxation pattern that is levied separately on
goods and services and will introduce a consolidated tax, based on a uniform rate of tax
fixed by the government for both goods and services and it is payable at the final point of
consumption.
GST has two components, CGST (Central Goods & Service Tax) and SGST (State Goods &
Service Tax). Both Centre and State will simultaneously levy tax across the value chain.
Under GST since the taxes will be integrated hence it will bring transparency as the burden
will be shared between manufacturing and services. It will promote growth, create more
employment opportunities and boost the economy as a whole. No tax reform has generated
such enormous interest among business and general public as GST. It has in some ways has
become a barometer for government’s success. And for the first time the Centre and State
have come together on a common platform for GST implementation.
GST makes India a common unified market. There will be just one tax on the supply of goods
and services right from sourcing to customer. The new tax regime may be effective from
April 01st 2017. Some companies will gain as the GST rate will be lower than the tax now it is
paying and some companies will lose as the GST will be more than the tax now they are
paying.
BENEFITS OF GST TO BUSINESS & INDUSTRY: 1. Easy Compliance. 2. Common tax rates.3.
Removal of cascading effect of taxes. 4. Improved competitiveness.
BENEFITS OF GST FOR THE GOVERNMENT: 1. Easy to administer. 2. Better control of tax
leakage. 3. Higher revenue.
BENEFITS OF GST TO THE CUSTOMER: 1. Single and transparent tax. 2. Relief from overall
tax burden.
THE BIGGEST BENEFIT WILL BE THAT THE MULTIPLE TAXES LIKE OCTROI, CENTRAL SALES
TAX, STATE SALES TAX, ENTRY TAX, TURNOVER TAX ETC WILL NOT BE THERE AND ALL
THAT WILL BE BROUGHT UNDER GST. DOING BUSINESS WILL BE MORE EASIER AND
COMFORTABLE AS VARIOUS HIDDEN TAXATION WILL NOT BE THERE.
SOME OF THE SECTORS WHICH WILL BE BENEFITED BY GST: Textiles, Auto and Auto
dealers, Engineering & capital goods, Power equipment industry, Pharmaceuticals FMCG,
Cement.
SOME OF THE SECTORS WHICH WILL HAVE NEGATIVE IMPACT BY GST: IT Sector, Airlines,
Mutual Funds, Real estate.
CONCLUSION: The present taxation of goods and services in India is misallocation of
resources resulting in to lower productivity and thus lower economicgrowth. But with the
implementation of GST the problems will be effectively addressed as the tax burden is
equally distributed from Production/Trade to final consumption. Under GST all different
stages of production/distribution and consumption will be covered and taxed.