What is GST & Benefits of GST Bill in India

what-is-gst-benefits-of-gst-bill-in-india
Jun 03, 2017 Share
What is GST? and why does India need such taxation policy and how will it reform current structure of taxation? Goods and Services  Tax would be implemented from 1st of July 2017 and would change the taxation structure.
Topics covered under the article:
GST meaning
Overview of GST Taxes
Need For GST
How to access on GST portal and GST Registration
What are the benefits of GST in India
What is the Threshold for GST
History of GST Bill in India

 

GST meaning: It is a combined indirect tax levied on sale, consumption of goods and services throughout India.  GST will not affect export tax and direct taxes like income tax, corporate tax, and capital gain tax. Taxes are divided between centre and states by the constitution. This has been one of the most important agendas of Narendra Modi's government which can affect us all. The Rajya Sabha cleared the constitutional amendment in 2016 and would be implemented on 1st July 2017. GST is governed by GST council and the chairman of GST Council is Union Finance Minister of India -Arun Jaitley.

The GST model would be administered by both Union and State governments. If there is an intrastate transaction, the seller will collect both CGST & SGST from the buyer while depositing CGST with the central government and SGST with State Government. IGST is levied on an intrastate transaction where goods and services are sold from one state to another. For example, if goods are sold from Maharashtra to Gujarat, IGST is levied on such goods. The revenue generated out of IGST is shared by the State Government and Central  Government as per the rates fixed by the authorities.

Overview of GST Taxes

CGST: Central GST which will be levied by Centre

SGST: State GST which will be levied by State

IGST: Integrated GST which will be levied by Central Government on inter-State supply and goods and services.

Taxes subsumed under GST are as follows:

CGST:  Central GST

  • Central Excise Duty
  • Additional Excise Duties
  • Excise Duty Levied under the medicinal preparations (Excise Duty ) Act, 1955
  • Service Tax
  • Additional customs duty (CVD)
  • Special Additional Duty of Customs
  • Central Surcharge and Cess

SGST: State GST

  •  VAT / Sales Tax
  •  Entertainment tax (other than the tax levied by local bodies)
  • Central Sales Tax
  • Octroi and Entry tax
  • Purchase Tax
  • Luxury Tax
  • Taxes on Lotteries
  • Betting and gambling
  • State Cesses and Surcharges

Also Read: List of GST Rate

Need For GST

To reform the indirect taxation in India, GST (goods and services tax) is introduced.  GST will make it is easy for a common national market where several central and state taxes are merged to ease the administration and enforcement.   GST will lead to more transparent and unbiased ways to raise revenue. For a consumer, GST would reduce the overall tax burden on goods which are now in the range of 25% - 30% and there would be less paper work.  GST will not be charged on the export of goods and services as under the law of GST it is treated as Zero rated supplies.

How to access on GST portal and GST Registration:

NSDL is chosen to incubate and develop the features for the GST portal known as  'GST Pilot portal'.

The taxpayers would be issued a Goods and Service Tax Identification Number (GSTIN). This would be a 15 digit common identification number.

For the dealers, online application form would be available and they can directly upload documents on the same.

Registration for GST includes steps like registering themselves on the enrolment page and then logging in using the given user ID and password. After the application is done, one must upload required documents  related to Excise, Service tax, IEC, CIN, Professional Tax number, hops & Establishment Number and any other state-specific registration numbers, contact numbers, postal address & email address of business entity, bank account details including MICR code, Place of business, Details of goods & services, scanned signed photographs etc.

What are the benefits of GST in India:

GST tax benefit will eliminate various indirect taxes. All indirect taxes will fall under GST.

GST will allow both Central and State Government to have dual oversight over taxes. It would result in a reduced number of tax-exempt goods, as everyone will pay taxes henceforth and there would be a steep boost in revenue.

GST will reduce double payment of taxes and this, in return, would reduce the cost of goods and consumer would be able to save money.

GST would create common market across India, as GST benefit sector covers all primary sectors of India.

GST will bring down inflation due to the reduction in prices.

GST makes the process of registration, documentation and paying taxes easier, as one does not have to deal with multiple taxes.

Goods and Service tax is going to give a lift to Indian economy and be a boon to the common men and GST registered companies.

Below image will explain how GST will make difference for consumers in long run.

What is the Threshold for GST:

GST will be applied when turnover of the business exceeds Rs 20 Lakhs (Limit is 10 lakhs for the North Easter States).

The increase in GT threshold limit will mean a sign of relief for traders and service providers.  The goods and service tax council decided that business in the North-eastern and hill states with annual turnover below Rs 10 lakh would be out of GST net, while the threshold for the exemption in the rest of India would be an annual turnover of Rs 20 Lakh.

Those with an annual turnover of less than Rs 20 lakh would be exempted from GST. the Constitutional Amendment paving the way for the GST has a provision to accord special status to the north-eastern and hill states. The GST threshold of higher Rs 20 Lakh will reduce substantial burden for tax authorities to assess small time dealers and at the same time the small scale traders and service providers would be saved from undertaking GST compliances.

To explain GST with an example see below image, it would be much clear how it will benefit a consumer on small products in our day to day life.

History of GST Bill in India:

The Vajpayee government started a discussion on GST by setting up a committee held by Asim Dasgupta (Finance Minister, Government of West Bengal).

In 2006, budget speech for the financial year, a proposal to implement goods and service tax by April 1, 2010, was mooted.

 In April 2008, the EC submitted a report, titled "A Model and Roadmap for Goods and Services Tax (GST) in India" containing broad recommendations about the structure and design of GST.

In April 2008, the empowered committee submitted report titled ‘A Model Road Map for Goods and Services Tax (GST) in India’, Which had a recommendation about the structure and design of GST.

In 2009 the empowered committee released First Discussion Paper on Goods and Services Tax in India. Its objective was generating a debate and obtaining inputs from all stakeholders.

In March 2011, the constitutional 115th amendment bill was introduced in Loksabha for levying GST on all goods or services except for the specified ones.

Officers from Central as well as State government were constituted to get GST implemented faster. Which later formed 3 different groups, one group was dedicated to draft legislation required for GST, the second group worked on the process and forms to be followed in GST regime and third group focused on IT infrastructure development needed for smooth functioning of proposed GST.

The bill was passed by the Rajya Sabha on 3 August 2016, and the amended bill was passed by the Lok Sabha on 8 August 2016.

GST would be implemented on 1st July 2017.

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