Goods and Services Tax is an indirect tax that will be levied on goods as well as services. All the existing state and central indirect taxes will be subsumed under these apart from Customs Duties. It will be applicable in throughout the country. Under GST regime , every product will be taxed at the same price in every place of where tax is same as in Himachal Pradesh as well as Tamil Nadu thus we also refer GST as ONE NATION ONE TAX.It does not mean that every product will be charged at the same price as we cannot fix the same price for AC and food powder. Apparently, the essential will be collected at a lower rate than the affluence, but a single luxury product or an individual essential product will be charged the same rate throughout the country.
How GST works?
GST will be divided into three components the Central Goods and Services Tax(CGST), State Goods and Services Tax(SGST), Inter State GST. The CSGT will combine the Central indirect taxes like the service tax, excise duty, additional customs duty, additional special excise duty whereas SGST will integrate all the State indirect taxes like VAT, entertainment tax, octroi and others. The CGST is been collected by the Central Govt whereas the SGST is collected by the state government. In the case of an sales transactions within the states, IGST will be collected by the Central Government. GST will allow the Input tax credit for the taxes paid on the purchase of goods and services during a commercial activity and input tax credit of CGST and SGST will be provided by the respective governments.
How will GST effect the country?
GST bill envelope the Goods and Services Tax and can be the great indirect tax reform providing a uniform and simplified way of Indirect taxation in India. Once introduced it will replace and combine all the number of other taxes like VAT,CST, Service tax, CAD, SAD, Excise, Entry tax, purchase tax etc. The common idea for implementing GST is making India into a single market. This may have a better impact on GDP of India and help to boost the Indian economy.
Main Benefits of GST
- A unified indirect tax system.
- decreasing in manufacturing cost.
- It integrates a number of other taxes like VAT, CST, Service tax, CAD,SAD, Excise, Entry tax, purchase tax etc.
- minimized complex tax system.
Positive effect of GST
- A single tax scheme eliminating a bunch of indirect taxes.
- Less tax compliance.
- eliminates cascading effect of taxes.
- making costs shall be minimized, therefore prices of consumer goods likely to come down.
- Due to reduced costs some products like cars, FMCG etc. will become cheaper.
- minimize prices will improve consumption. improvement in demand will lead to increase supply. Hence, rise in production of goods. Maximizing production will lead to more job opportunities in the long run.
Hence, this is possible only if the benefit is actually passed on to the consumers. There are exceptional factors also like the merchant profit index that determine the final price of products. GST alone cannot estimate the final price of goods.Use Asimot GST feature to make your business profitable
