Good and Service Tax
Good and Service Tax (GST) is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. It is the biggest tax reform in India to integrate state economy and boost overall growth. Government has been making all efforts to ensure that Bill to pass and implemented in April 2016.
GST is worldwide accepted system. France is the first nation to introduce and implement the GST. Some of the Nation which follow the GST are Canada, Australia, Hong Kong, New Zealand, Malaysia, Singapore etc.
This can be better explained through an example. Suppose you buy a soap for Rs.50 per piece, it includes Excise duty, VAT/CST, custom duty on imported material etc. So currently you will have to pay multiple taxes.
Like the food you buy at hotel will have VAT as well as service Tax. So reduce this cumbersome government has to Introduce the GST.
Model Of GST
—Central Government Level
—State Government Level
—Both, Dual GST
The significant features of dual GST recommended in India, in Conjunction with recommendation by Joint Working Group are as
- There will be central GST to be administered by the Central Government and there will be state GST to be administrated by State Government.
- Central GST will replace existing CENVAT & Service Tax and State GST will replace state VAT.
Major Impact of GST are:-
- Reduction in business costs
- Special scheme to alleviate cash flow problems
- Credit offset mechanism
- Can claim the input tax due based on the invoice produced.
- Lead to more competitive pricing
- Make our export more competitive as exports are to be zero rated
- Increase Gross Domestic Products
- Reduce shadow economy activities.
- It is a tool manage the economy E.g.: tourist refund scheme is proposed as a means to boost the tourism industry and tourism spending in the country, exports are zero rated to make over goal more competitive globally.
- Cash Flow Management and Financial Operation
- IT System
- Legal Contracts
- Recording Keeping, Vendors/ Suppliers
Some Critics GST as regressive tax which has a more pronounced effect on lower incomes earners, that the tax consumers a higher proportion of their income, compared to those earning large incomes.
Good and Service Tax
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