Goods and Services Tax (GST)

The full form of GST is Goods and Services Tax. GST is actually an indirect tax which is applied when a customer buys a good or a service.

GST
GST

The main theme of this tax is to apply a single tax on the supply of goods & services. With the help of GST, will remove different layers of taxation which are purchase tax, VAT, entertainment tax, etc

The Goods and Services Tax or GST Bill was passed by the Indian Rajya Sabha on August 2016 and it has been hyped to be India’s biggest tax reform since the independence of India.

Goods and Services Tax in India
Goods and Services Tax in India

Details of GST Bill

Name of Bill GST Bill
Name of Tax Goods and Services Tax
GST Tax rate 0%,5%, 12%, 18% and 28%
Bill Passing Date August, 2016
Amendment Number 122
Bill Passed In Rajya Sabha
Implementation Date 1st July 2017

Benefits of Goods and Services Tax

  • Benefit businesses and industries in India.
  • Provide easy compliance.
  • Make India a unified nation and a single structure will be maintained for taxation in India.
  • Remove the cascading of taxes.
  • Improve the competitiveness.
  • Benefit the manufacturers and exporters.
  • Benefit the Central and State Governments of India.
  • Very simple and easy to administrate.
  • Indian government will be able to provide better control on the leakages.
  • Provide advanced revenue efficiency.

    Benefits of GST
    Benefits of GST

Existing Type of Taxes in India

There are two types of taxes and we will know about them below.

  1. Direct Tax: Direct Tax is a tax paid by an individual or a company directly to the government. Direct Tax is applicable for several individual/corporate earnings like salary, investments, etc.
  2. Indirect Tax: Indirect Tax is paid by an individual indirectly to the government. If an individual consumes a service they are obliged to pay tax to the authorities. For instance, when an individual eats in restaurants they are obliged to provide service tax to the authorities. The service tax is eventually gained by the government through the service providers.

Goods and Services Tax Rates

The GST Council, headed by Jaitley and of which all states Finance Ministers are members, has approved four main tax slabs — 5 per cent, 12 per cent, 18 per cent and 28 per cent that aims to lower tax incidence on essential items and to keep the highest rate for luxury and demerits goods. The lowest rate of 5 per cent will be on items of mass consumption which are used particularly by common people. The second and third category of standard rates of 12 and 18 per cent will accommodate most of the goods and services. The fourth slab of 28 per cent is levied mainly on white goods such as refrigerators, washing machines etc.

GST Tax rates on these goods
0% 5% 12% 18% 28%
fresh meat fish fillet Frozen meat products flavoured refined sugar Chewing gum
fish cream butter pasta molasses
chicken skimmed milk powder cheese cornflakes chocolate
eggs branded paneer ghee pastries waffles
milk frozen vegetables dry fruits cakes wafers
butter milk coffee animal fat preserved vegetables pan masala
curd tea sausage jams aerated water
natural honey spices fruit juices sauces paint
fresh fruits pizza bread Bhutia soups deodorants
vegetables rusk namkeen ice cream shaving cream
flour sabudana Ayurvedic medicines instant food mixes after shave
besan kerosene tooth powder mineral water hair shampoo
bread coal agarbatti tissues dye
prasad medicines colouring books envelopes sunscreen
salt stent picture books tampons wallpaper
bindi lifeboats umbrella note books ceramic tiles
Sindoor sewing machine steel products water heater
stamps cellphones printed circuits dishwasher
judicial papers camera weighing machine
printed books speakers washing machine
newspapers monitors ATM
bangles vending machines
handloom vacuum cleaner
shavers
hair clippers
automobiles
motorcycles
aircraft
yachts

The much-anticipated tax reform will be launched at a special midnight event at the Central Hall of Parliament on June 30. India will have the big-bang tax reform in place on 1st July 2017.

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