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.
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.
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|
|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.
Existing Type of Taxes in India
There are two types of taxes and we will know about them below.
- 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.
- 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|
|fresh meat||fish fillet||Frozen meat products||flavoured refined sugar||Chewing gum|
|chicken||skimmed milk powder||cheese||cornflakes||chocolate|
|milk||frozen vegetables||dry fruits||cakes||wafers|
|butter milk||coffee||animal fat||preserved vegetables||pan masala|
|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|
|bindi||lifeboats||umbrella||note books||ceramic tiles|
|Sindoor||sewing machine||steel products||water heater|
|judicial papers||camera||weighing machine|
|printed books||speakers||washing machine|
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.