GST Largest Revolution in Indirect Taxation
What is GST? How it is different from previous taxes?
GST stands for Goods and Service Tax which would be charged in place of indirect taxes which are charged on manufacture, sale and consumption of goods and also on the services. The main objective of the Act is to combine all the taxes and make it one and charge so that the compliance procedure becomes simple and remove the limitations of the current tax structure. The present indirect tax structure have lot of shortcomings and loopholes left holes which helps the person to take the advantage of the same and run out of the tax liability. Shifting to the GST would lead to transparency in the system and reduce the corruption. Now the question comes that how is it possible to get such advantages. The answer to it is explained through an example:- Example – Let us assume that there is a product which has a price of Rs. 100. Now there is an excise duty which needs to be paid on such amount @ 12%. VAT is required to be paid @12.5%. Assuming the rates of CGST and SGST as 10%. Now the tax as per the present tax structure would be Rs 100+12+14 = Rs. 126. While in case of GST it would be Rs. 100+10+10 = Rs. 120. Now here the basic and the most important difference are described. In present tax structure, we pay VAT on the total amount including Excise duty. But in the GST, it would be on the basic amount only and not on tax. So the biggest advantage is that it would remove cascading effect/double taxation.
Characteristics of GST
GST as being adopted from the Canadian value added tax; it is very comprehensive tax where the all the goods and services are taxed at uniform rate so as to avoid the complexity. Some of the features of GST are mentioned below:
List of Taxes Included in GST and Benefits of GST GST Impacts on Various Industries – Complete Analysis Filing of GST Returns, Revision of return, Short Filing of Return
Challenges for GST
Whenever any Bill is to become Act, in between there are always many challenges which come in forward. Some of the challenges are mentioned here:- There are basically three models of GST. They are:- The GST model adopted by India is “Dual GST” which says that the GST is to be levied by Centre and the States concurrently. Centre will charge CGST on goods and services and States will charge SGST on goods and services but importantly both will be charged on the basic amount of transaction only and not total amount.
Key components of GSTR-1, GSTR-2 and GSTR-3 Why GST For India – Challenges for Success in India GST Current Tax Structure and proposed GST Regime GST Definition, Objective, Framework, Action Plan & Scope
Advantages (Pros) of GST:
Disadvantages (Cons) of GST:
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