GST Introduction

GST is one indirect tax for the whole nation, which will make India one unified common market.GST is on supply of goods and services rather than on production, trading or service rendered. It is destination based tax i.e. it is taxable in state in which goods or services are consumed.

It is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages. Presently most of the items are levied at 40%-50% tax rates but due to introduction of GST flat tax rate shall be applicable which will reduce tax burden on consumers.

Applicability of GST

With the 101st Constitution Amendment Act coming into force on 8th September, 2016 and notification of the GST Council on 15th September the road to GST rollout is clear. Government is keen on introducing GST the biggest indirect tax reform, with effect from 01 April 2017. One of the biggest challenges is to train the indirect tax officials of both Centre and State, as well as the trade on the concepts, processes and procedures of GST.GST shall be applicable on following persons:

  • Manufacturers who produces and sells (local or inter-state) goods.

  • Traders who sells good (within state or interstate).

  • Service provider or Service Receiver in case of Reverse Charge.

Commodities that are kept outside the purview of GST:

There are some commodities are kept outside the purview of GST, they are alcohol for human consumption, petroleum products and electricity. In such commodities the existing taxation system (VAT & central excise) will be continue. However in case of tobacco and tobacco products GST will also be levied and the central government also have the power to levy the central excise.

GST Features

  • Manufactured goods could become cheaper due to Lower logistics and tax costs

  • Less developed states get a lift

  • Logistics, inventory costs will fall

  • It is destination based tax

  • Life gets simpler as GST will replace 17 indirect tax levies and compliance costs will fall

  • More transparency

  • Due to less evasion of tax the revenue of government will get a boost