What is GST?
It is called goods and service tax Act, 2016 and it extents to whole of India/state’s name. GST is an indirect taxation process implemented as “single taxation “window. Thus it is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. The only value addition will be taxed and burden of tax is to be borne by the final customer. The GST shall replace the following taxes: 1. Central Excise duty 2. Duties of excise (medicinal and toilet preparations) 3. Additional duties of Excise (goods of special importance) 4. Additional Duties of Excise(textiles and textile products) 5. Additional duties of customs (CVD) 6. Special additional duty of customs 7. Service tax 8. State VAT 9. Central sales tax 10. Luxury tax 11. Entry tax (all forms) 12. Entertainment and Amusement tax (except when levied by the local bodies) 13. Taxes on advertisements 14. Purchase tax 15. Taxes on lotteries, betting and gambling 16. State surcharges and cess so far as they relate to supply of goods and services.
Advantages of GST 1) With the implementation of GST, the taxation process gets simpler as more than 16 taxes are clubbed together. 2) Revenue: There shall be a boost in revenue as the input tax credit will encourage the suppliers to pay taxes and further the number of tax exempted goods will decline. 3) Increase in investment: input tax credit shall not be available for many capital goods thereby dropping the cost of capital goods. 4) Cascading effect removed: since the GST will be levied on only the final destination and not on various point this will help in increasing the investments, this will help in removing the economic distortions and will help in building a common market. 5) Transparent functioning: with the implementation of GST, a transparent and corruption free tax administration shall be achieved.
Disadvantages of GST 1) Implementation: the implementation of the GST shall be tough as all the 16 acts are being clubbed. There are certain aspects which shall contradict the growth story and can be regarded as hurdles in implementation of GST. 2) Many sectors such as Information technology, banking and insurance sector, petroleum sector shall be effected with the implementation of GST.
Conclusion: GST if implemented shall be successful in all states and the Centre if done in similar trait and regime. This would help in bringing out the common market nationwide. It would definitely help in flawless taxation system and will put India’s fiscal system on a better edge in front of world economies. However implementation of GST shall be tough enough and will increase the paper work as well. A single rate will ensure low compliance costs, preclude disputes, and would ensure uniformity. It is definitely a welcome move for the economic growth.