Overview of GST (Goods and services tax)

Present scenario of indirect taxes in India.

Excise Duty- Taxable event is Manufacture. Service Tax- Taxable event is Provision of service. Sales Tax/ VAT/ CST- Taxable event is Sale. Customs Duty- Taxable event is Import & Export. Entry/ Entertainment tax- Taxable event is Entertainment & Entry of goods.

Taxes to be subsumed- 5. In place of CVD and SAD, IGST will be charged.

Drawbacks of Present System e. Narrow Base

GST- Answer to all problems GST is expected to rationalise and simplify the consumption tax structure at Centre and State level. Besides simplifying the current tax system and lowering cost of doing business, GST will also call for a fundamental redesigning of the value chain. It will affect how companies operate their business and the consumer demand in the country. Efforts will have to be made to transform the existing IT systems for implementation of GST which could be a challenging task for the IT department.

Conceptual background The Goods and Services Tax has revolutionized the Indian taxation system. The GST Act was passed in the Lok Sabha on 29th March, 2017, and came into effect from 1st July, 2017.

What is GST? In simple words, GST is an indirect tax levied on the supply of goods and services. GST Law has replaced many indirect tax laws that previously existed in India.

Under the GST regime, tax will be levied at every point of sale Sale to the end consumer Goods and Services Tax will be levied on each of these stages, which makes it a multi-stage tax.

Value addition The retailer packages each shirt separately and invests in the marketing of the shirt thus increasing its value. GST will be levied on these value additions i.e. the monetary worth added at each stage to achieve the final sale to the end customer.

Destination based Consider goods manufactured in Rajasthan and are sold to the final consumer in Karnataka. Since Goods & Service Tax (GST) is levied at the point of consumption, in this case Karnataka , the entire tax revenue will go to Karnataka.

Advantages of GST Removing cascading tax effect Higher threshold for registration Composition scheme for small business Online simpler procedure under GST Defined treatment for e.commerce Increased efficiency in logistics

Benefits to the government It will be beneficial for India Inc. as the average tax burden of the company will fall, reducing production cost.

Benefits to individuals Reduction in multiplicity of taxes. Mitigation of cascading effect. Simpler tax regime. Harmonizing Centre and State tax will reduce duplication and compliance cost.

Benefits to exporters Complete and comprehensive set-off of input goods and services and phasing out CST can make domestic goods cheaper and more competitive in the international market.

Roadmap and Way Forward to GST iii. President to give assent of enactment.

e. GST Network (GSTN), the IT backbone of GST shall be formed as Section 25 company to design automation of GST and to facilitate online registration, tax payment and filing of return.

What are the components of GST? IGST: Collected by the Central Government for inter-state sale (Eg: Karnataka to Tamil Nadu)

. Transactions New regime Old regime Sale within the state CGST + SGST VAT + central excise /service tax Revenue will be shared equally between the centre and the state Sale to another state IGST Central sale tax + excise /service tax There will only be one type of tax (central) in case of inter-state sales. The Center will then share the IGST revenue based on the destination of goods. .

illustration The GST rate is 18% comprising of only IGST. In such case, the dealer has to charge Rs. 1800 as IGST. This IGST revenue will go to the Central Government.

What changes does GST bring in? GST avoids this cascading effect as tax is calculated only on the value add. at each transfer of ownership. GST will improve the collection of taxes as well as boost the development of Indian economy by removing the indirect tax barriers between states and integrating the country through a uniform tax rate.

Conclusion it can be concluded that GST will be a game changing reform for Indian economy, by developing a common market for goods and services and reducing the cascading effect of tax on the cost of goods and services. It will impact the Tax Structure, Tax Incidence, Tax Computation, Tax Payment, Compliance, Credit Utilisation and Reporting, leading to a complete transformation of the current taxation system.