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Introduction:

Our Indian taxation system has moved forward to a new reform, and it becomes very important that as a citizen of India that we should understand it.

Goods and services tax council is a constitutional body for making recommendations to the union and State government to look after the issues related to goods and services tax.

Constitutional Basis of Tax in India

The 88th amendment act, 2003 made provision for service tax (Article 268A). The GST council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in charge of Finance for taxation of all the states. Article 246A (of the Indian Constitution) was newly inserted, to give power to the parliament and the respective State/ Union Legislature to make laws on GST.

How this New Taxation System (GST- Goods and Services Tax) will Work for us or, How it will Apply on us?

So, previously (before the GST system) in the Indian taxation system we have to pay taxes in two ways. One is as the direct tax and the other is an as indirect tax. In direct tax, the government recovers taxes from us directly, but in indirect taxes, the government doesn’t recover tax in a direct way. Instead of that, they recover their tax through the goods and services that we use. Government recovers taxes from us in many other ways, there are so many taxes which are imposed on us, in which some taxes are imposed by the state government and the other, are imposed by the central government. Like: exercise duty which is imposed by the central government and on those goods state government imposes sales tax. And if that good is imported from one state to the other status then the central government imposes multiple sales taxes on it. So, like this only, there are many taxes that are imposed on us.

What is GST?

 GST stands for goods and services tax. It simply means that previously we used to pay taxes in multiple times in different sectors, after the implication for GST we just have to pay our taxes collectively at a time. So, through this, many people get benefits from it and those who are getting extra money through that old taxation system will face loss.

Some benefits of imposition of GST are:

  • The rates of consumer products will reduce.

(You know why?)

So, previously when we purchase any commodity whatever the price we pay for that commodity, the government will get 25% -30% as taxes.)

For example: If we buy a product of Rs100 then the government will get Rs25 as its taxes. But if we impose only one tax system then due to this the rate of the tax will be reduced and accordingly the price of the product will automatically reduce. So, that we can avoid double taxation system. And through this, the final price of the commodity is comparatively low and in the international market, due to this, the product is more competitive. So, when the market is growing day by day and due to more competition we can easily grow or set-up our business and due to that business we can employ more and more people. Through this, while giving those salary/wages our poverty will get reduced in one way or the other. Due to this the circle or the process, the economic system will get a boost from it.

Previously ( before the implication of GST ) in our automobile sector, companies have given so many discounts over their products because when the new taxation system will be introduced in the market on 1st January 2017 or when the GST will be imposed, then the on-road price of those automobiles will be in huge loss. Because the price of the products will get reduced and the companies will not get any extra profit from it. So, that’s why the companies have given discounts because due to this they can easily clear out their old stocks.

  • Ordinary people (middle-class people or the lower class people) will get benefits from it.
  • The price of the product will be the same in every state.
  • Those taxes which are imposed on the states like entertainment tax, luxury tax, lottery tax, entry tax and many more taxes have been removed.
  • The way of getting extra money or black money the taxes will automatically come to its end.

How GST works?

GST is applied in 4-5 rates which are 5%, 12%, 18% and 28%. And for gold and silver jewellery there is a new slab introduced for it which is of 3%.

GST applies on the supply of goods rather than the manufacture of goods (when we manufacture goods that time we don’t have to pay any tax but when we supply those goods in the market then at that time we have to pay GST).

GST is consumption-based taxation system. (I.e. the state which consumes our bought that product, it itself will be the revenue of that particular state or the tax of that state).

And in intra-state sales (sales within the state) at that time there is an equal distribution of taxes between Central Government and state government which is called CGST (a tax taken by the central government) and SGST (a tax taken by the state government).

On some intra-state sales, there they have to pay a charge for it which is IGST ( integrated goods and services tax ) the money of the tax will directly go to the central government.

Due to the implication of the GST system. Many sectors will get affected by this. When we purchase any good we get to know that there is a huge impact of GST in different-different sectors.

For example:

  • In E-Commerce system (e-commerce sector) after the implication of the GST system, the price of that good has been increased.
  • Due to GST textile industries are in profit.
  • In the automobile sector, the price of four-wheelers like SUVs has been decreased.
  • The price of gold and silver jewellery has been increased. (Previously it charges only 2% but after the implication of GST charges 3% of tax).

Likewise, due to impose of GST many sectors has been affected.

Conclusion

There will be uniformity of taxation as far as the whole country is concerned. Now, after the implication of GST, we will not come across a situation where trucks are either waiting outside a state or outside a city in order to enter, there will be an easy transfer of goods and services. The whole country, which is one-sixth of the world’s population, would become a single market.

References:

  1. Constitution – National Portal of India  www.india.gov.in
  2. GSTs promise of one nation, one tax. Has it…-The economic times m.economictimes.com
  3. GST : One nation, one tax – GST India  www.gstindia.com
  4. The idea of one nation, one tax id under siege – Mint  www.livemint.com
  5. Despite glitches, ‘ One nation, one tax’ chugs along  www.thehindubussinessline.com
  6. One nation, one tax mow a reality – India Inc Group  www.indiancgroup.com

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