GST – Goods and Services Tax
GST (Goods and Services Tax) – A comprehensive Analysis
Q1. What is GST?
Ans: “Goods and Service Tax” is one of the comprehensive method of unifying the entire indirect tax of central excise duty, Import duties, Export Duties and State VAT under one head, i.e centralising the entire tax structure.
Q2. What are the benefits of GST?
Ans: GST will benefit both the producers/manufacturers and the consumers by reducing the tax rate on any product manufactured or consumed. This is done by removing the tax barriers (like import duites, excise duties, etc) when good are sold or manufactured across States.
Q3. How will GST benefit manufacturers/Producers of goods?
Ans: Manufactures/Producers/Sellers will benefit from:
(i) Paying unnecessary Import/Export Duties will selling their goods across State Borders
(ii) Avoid multiple taxation, like taxes levied on already taxed products (e.g a manufactured product needs to pay excise duty, import or export duty, while transporting out-of-state and then VAT while selling)
(iii) One unified tax payment only charged at consumption, by the Centre and no state barriers.
Q4. How will GST benefit the common citizen?
Ans: GST will benefit Common Citizen by reducing the price of the commodities to a certain extent. This is because usually the prices of the goods depend upon the taxes levied on its manufacturing and consumption. Due to unified taxing system, unnecessary taxes will be avoided, by centralising it only to the point of consumption, thereby resulting in price reduction.
History of GST:
- The concept for unified taxing system was introduced in the year 2000 under the Atal Bihari Vajpayee Government, where a company to formulate the structure for GST was formed.
- In 2006, 28th Feb, P. Chidambaram, the former finance minister announced the target date for the implementation of GST to be 1st April, 2010.
- The 122 Amendment Bill, 2014 of the constitution was introduced in the Lok-Sabha by Arun Jaitley, the Finance Minister on 19th December 2014. The house passed it on 6th May, 2015. A Selected committee from Rajya-Sabha submitted its report on the bill on 22nd July, 2015. The Rajya-Sabha passed the bill on 3rd August, 2016 and Lok-Sabha passed the amended bill on 8th August, 2016.
- More than 22 states ratified this provision. Assam was the first state to ratify this provision
On 8th Sep, 2016, the President of India, Mr. Pranab Mukherjee, signed the bill, making it a Law. The Law will be implemented from the financial year 2017, i.e from 1st April, 2017.
This introduction of GST has been one of the greatest steps taken towards the reform of the taxation system in India.
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