Finance

All you Need to Know About GST Bill in India

July 3, 2017
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GST was a long pending issue streamlined to remove all the complex and multiple taxes from the taxation system of India. GST is a unified tax which will be levied on the supply of goods and services. Initially, GST Constitutional Amendment Bill was introduced in 2007-08 budget session and was approved in the year 2014 by the Union Cabinet Ministry. Now, it is going to be implemented from the first of July. Everybody is expecting the positive consequences of GST Bill in India. However, it can only be observed, once it is implemented. Let’s discuss about the GST details and the consequences that might take place after the it’s implementation.

The Process of GST Application

GST will be applied to the supply of goods and services at the place of final consumption. GST is collected on each stage of supply chain be its value-added tax, excise duty or any other kind of indirect tax. The manufacturer or retailer can claim the GST tax for a refund via tax credit mechanism. However, the consumer will be the last person in the supply chain and so the end consumer will have to pay the tax on goods and services. The GST in our country would be based on a dual system which means CGST (Center GST) and SGST (State GST). Therefore, it will be applied on the basis of interstate and intrastate supplies of goods and services.

Applicable GST Rates

Different products will be rated according to the GST slab that has been declared by the government recently i.e. 5%, 12%, 18%, and 28%. However, the tax rates will depend upon the type of products being sold such as daily needs products will be rated lower while the high-end products will be charged at a higher rate. It will also depend on the type of supplies that are being carried out such as intrastate and interstate.

Benefits of GST

 The benefits of GST Bill In India are expected to be as:

• The removal of all the indirect taxes such as VAT, excise duty, entertainment tax, custom-duty tax and so on and implementation of a single tax that is GST.
• The tax slab is made simple and easier to understand.
• It will help facilitate the movement and transfer of goods seamlessly within or in different states. Thereby, reducing the cost of the business.
• It will be beneficial for businesses that deal with the exportation of goods in foreign countries.
• The manufacturers, wholesalers, and retailers will be able to get back the GST tax refund by claiming it which will reduce the cost of businesses and enable fair pricing of products.
• It is thought to bring better compliance and transparency.
• The number of tax departments will reduce which is why it is expected to lead towards less corruption.

Challenges of GST

Challenges that might occur while implementing GST is that the administration needs to be changed or modified. The infrastructure of IT needs to be sound and effective, integration of information technology needs to be taken into consideration and the Center and State has to get prepared for the losses of revenue that will occur. The challenges can only be observed once the valid GST details are provided and implemented.

Wrapping Up

As we all know GST is going to remove the cascading effect of multiple taxes by a unified form of tax, it is also expected to benefit the common man by one way or the other. However, all of it depends on the GST rate at which the products, goods, and services will be dealt.

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