GST (Goods & Service Tax) 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.
GST is India’s biggest tax reform in 70 years of independence and is finally effective from 1st July 2017. The immediate impact of GST is that its introduction increased the costs of most consumer goods and services in India including food, hotel charges, insurance and cinema tickets.
Upon its introduction in the country, GST led to a number of protests by the business community, primarily due to an increase in overall taxes and hence the prices of goods.
Under GST, goods and services are taxed at the following rates, 0%, 5%, 12% and 18%. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. In addition a cess of 15% or other rates on top of 28%, GST applies on few items like aerated drinks, luxury cars, and tobacco products.
GST is single tax system. Under GST, there would be only one tax from the manufacturer to the consumer, leading to the transparency of taxes paid to the final consumer.
At the Central level, these taxes are being subsumed: Central Excise Duty, Additional Excise Duty, Service Tax, Additional Customs Duty is commonly known as Countervailing Duty and Special Additional Duty of Customs. While at the State level, the taxes like Subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling is being subsumed.
The major features of the proposed registration procedures under GST are as follows:
- Existing dealers: Existing VAT/Central excise/Service Tax payers will not have to apply afresh for registration under GST.
- New dealers: Single application to be filed online for registration under GST.
Image Source: Economic Times