Goods & Service Tax

Taxation

A fee charged (levied) by a government on a product, income or activity. The purpose of taxation is to finance government expenditure. One of the most important uses of taxes is to finance public goods and services, such as street lighting and street cleaning.

A Nation Is Made When Taxes Are

paid

Types of Taxes

Direct Taxes Income Tax Wealth Tax Property Tax Corporate Tax

Indirect Taxes Custom Duty Sales Tax Excise Duty Service Tax

GSTGST is known as Goods and Service Tax. GST will replace all indirect taxes (Service tax, Excise dusty, VAT/Sales Tax) levied on goods and services by the Indian central and state government.

GST rate of different countriesCOUNTRY RATE of GST %

Australia 10%France 19.6%Canada 5%Germany 19%Japan 5%Singapore 7%Denmark 25%New Zealand 15%Hungary 27%Sweden 25%

How is GST applied?

 Applicable GST rate

The rate (percentage) of GST is not yet decided. There might be CGST, SGST and Integrated GST rates. It is also widely believed that there will be 2 or 3 rates based on the importance of goods. Like, the rates can be lower for essential goods and could be high for precious/luxury items.Hon’ble Finance Minister of India Mr. Arun jaitley said that the rate decided by GST council (i.e 27%) will be too high and it should be around 18%. Earlier, a sub-panel of the empowered committee of State Finance Ministers had recommended State GST at 13.99% and Central GST at 12.77%. But the rates will be decided later.

Benefits of GST implementation

The tax structure will be made lean and simple The entire Indian market will be a unified market Removal of barriers to trade. In the long run, the lower tax burden could translate

into lower prices on goods for consumers. The Suppliers, manufacturers, wholesalers and

retailers are able to recover GST incurred on input costs as tax credits. This reduces the cost of doing business, thus enabling fairer prices for consumers.

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It can bring more transparency and better compliance.

Number of departments (tax departments) will reduce which in turn may lead to less corruption

More business entities will come under the tax system thus widening the tax base. This may lead to better and more tax revenue collections.

Companies which are under unorganized sector will come under tax regime.

Dual GST Concept

Indian Government is opting for Dual System GST. This system will have two components which will be known as o Central Goods and Service Tax (CGST)o State Goods and Service Tax (SGST) The current taxes like Excise duties, service tax, custom duty etc will be merged under CGST.The taxes like sales tax, entertainment tax, VAT and other state taxes will be included in SGST.

How GST will change taxation in India? GST, or Goods and Services Tax, will subsume central indirect

taxes like excise duty and service tax, as also state levies like value added tax, octroi and entry tax, luxury tax.

The final consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

However, only the Centre may levy and collect GST on supplies in the course of inter-state trade or commerce. The tax collected would be divided between the Centre and the states in a manner to be provided by parliament, on the recommendations of the GST Council.