GST (Goods and Services Tax) in India

Need of GST:

  • To regulate and organize certain industries.
  • To improve efficiency of logistics.
  • To improve the economic growth.
  • To bring transparency in the taxation system.
  • To reduce the complexities of the tax system.
  • To integrate the whole nation.
  • To get rid of tax cascading and double taxation

 

How GST is better than previous indirect taxes:

For government:

  • In the earlier Indirect Tax regime, there were many indirect taxes (like VAT, CST, Service tax, CAD, SAD, and Excise) levied by both state and centre but GST brings all the indirect taxes on one platform.
  • GST is a destination-based tax i.e. tax is imposed at the point of consumption but previous tax structure was origin based.
  • GST also helps in better tax collections as it streamlines the tax administration, avoid harassment of the business and result in higher revenue collection, both for the Centre and the States.
  • This law has replaced many indirect tax laws that previously existed in India.
  • It integrates the country through a uniform tax rate thus help in boosting the Indian economy.
  • GST will also make Indian products competitive in the domestic and international markets.

For tax payers:

  • It is more transparent as it is designed in such way that all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent.
  • It reduces harassment and corruption.
  • GST avoids cascading effect (tax on tax) as the tax is calculated only on the value-add at each stage of transfer of ownership.
  • This has been beneficial for start-ups especially, as they do not have to run from pillar to post to get different registrations such as VAT, excise, and service tax.
  • It leads in reduction of manufacturing costs due to lower burden of taxes on the manufacturing sector. Hence prices of consumer goods will be likely to come down followed by lower burden on the common man.

 

How GST works:

  • Under GST, every registered taxable person is assigned a unique identification number for every state he is registered in. This number is known as GSTIN
  • GST process is very simple and it is made online from registration to filing returns.

2 Comments

  1. Sir ,
    Can you explain why govt is not including petroleum products under GST and what are advantages and disadvantages of this actions on citizens of india?

    Reply
  2. Explained in a very simple language and lucid manner. But not good for RBI Grade B essay purpose or interview. The critical analysis is missing.

    Reply

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