What is Goods and Service Tax
GST is a Target-based tax, as against the current principle of origin based taxation. The new tax scheme follows a multi-stage collection mechanism wherein tax is collected at each stage and therefore the credit of tax paid at the previous stage is available as a set-off at the next stage of transaction. This helps to cancel “tax on tax” or the descending impact of tax. GST shifts the tax incidence near to the consumer and benefits the industry through better cash flows and better working capital management. From customer point of view, GST helps to bring down overall tax.
The GST bill is been looking forward to transform the country into a consolidated market, replacing most indirect taxes and merging all those into a single tax scheme.
With the all-general tax levied on manufacturing, sale and consumption of goods and services at the national level, the bill avoids extra taxes on transportation of goods across state boundaries
CGST, SGST, IGST
The GST to be levied by the Centre would be called Central GST (CGST) and that to be levied by the States (including Union territories with legislature) would be called State GST (SGST). An Unified GST (IGST) would be collected on inter-State supply including stock transfers of goods or services. This would be collected by the Centre. Import of goods would be treated as inter-State supplies and would be subject to IGST in addition to the applicable customs duties. shipping will be done as zero-rated provides which makes no tax will be payable on exports of products or services. However, exporters can claim input tax credit.
Transaction in the retail sector is done mainly through cash and we have already seen the drop down of sales during demonetization. Post GST, there is no significant change in sales as consumer behavior would not be changed. Unorganized retail sector would likely to participate more by coming in mainstream taxpaying system. GST on any transaction cannot be eliminated unless the complete transaction is out of GST system right from manufacturer to retailer. Because of simplicity of taxes like one tax, credit of all type of taxes even small business men would like to contribute in India biggest tax reform. The government is also discouraging the purchase from the unregistered dealer as tax on the purchase from unregistered dealer needs to be paid by the registered dealer by way of reverse charge
Hence, on a concluding note we would like to say that, just the way we are certain about the benefits of GST in the retail segment, we are confident that it will bring relief to the consumers as well by eliminating a plethora of taxes such as CST, Octroi and excise, among others.
