GST is an indirect tax lavied on the supply of goods and services. GST law has replaced many indirect tax laws that previously existed in India. The Goods and Services Tax has revolutionized the Indian taxation system. The GST Act was passed in the Lok Sabha on 29 March 2017, and come into effect from 1 July 2017. The GST is governed by a GST council and its chairman is the Finance Minister of India. Under GST goods and services are taxed at the following rates 0%, 5%, 12%, 18% and 28%. There is special rate of 0-25% on rough precious and semi-precious stones and 3% on gold.
History of GST in India: The reform process of India’s indirect tax regime was started in 1986 by Vishwanath Pratap Singh with the introduction of the modified value added tax (MODVAT). “Goods and Services Tax (GST)” was proposed and given go-ahead in 1999 during a meeting between the prime minister Atal Bihari Vajpayee and his economic advisory panel, which included three former RBI governors IG patel, Bimal Jalan and C. Rangarajan. In 2004 Congress led UPA government, the new finance. Minister P. Chidambaram in February 2006 continued work on the same and proposed a GST rollout by 1 April 2010. Asimdas Gupta admitted in an interview that 80% of the task had been done. In 2014 the NDA was re-elected and finally in August 2016, Amendment Bill was passed over the next 15 to 20 days 18 states ratified the GST bill and the president Pranav Mukherjee gave his assent to it.
Advantages of GST
1. GST is a transparent tax and also reduce number of indirect tax.
2. GST will not be a cost to registered retailors therefore, there will be no hidden taxes and the cost of doing business will be lower..
3. Benefit people as prices will come down which in turn will help companies as consumption will increase.
4. There is no doubt that in production and distribution of goods services are increasingly used or consumed vice versa.
5. Separate the taxes for goods and services.
6. When all the taxes are integrated, it would make possible the taxation burden to be split equaitably between manufacturing and services. 7. GST will be levied only at the final destination of consumption based on
VAT principle and not at various points from manufacturing to retail outlets means it bring above development of a common national market. 8. GST will also help to build a transparent and corruption free tax administration.
Disadvantages of GST
1. Some Economist say that GST in India would impact negatively on the real estate market. It would add up to 8% to the cost of new homes and reduce demand by about 12%.
2. Some expert says that CGST (Central GST), SGST (State GST) are nothing but now names for central excise/service tax. VAT and CST. So there is no major reduction in number of tax layer.
3. Some retail products currently having only four percent tax on them. After GST garments and clothes could become more expensive.
4. The aviation industry would be affected. Service taexs on airfares currently range from 6% to 9% with GST, this rate will surpass 15% and effectively double the tax.
5. Adoption and migration to the new GST system would involve teething troubles and learning for the entire ecosystem.