Goods and Services Tax (GST)

GST is an abbreviation for Goods and Service Tax. This taxation is an all-inclusive, multi-stage tax system charged on selling products and services. The main goal of this taxing procedure, which is functional all over India, is to lessen the cascading influence of all other indirect taxes. GST is an indirect tax created to substitute several indirect taxes, including purchase tax, VAT, excise duty, service tax, and others. In India, GST is charged on the provision of some products and services. Additionally, This taxation is a solitary tax that is levied across India.

The GST Journey in India

The GST journey started in 2000 when a group was formed to develop legislation. It took 17 years for the Law to develop after that. The Empowered Committee (EC) of State Finance Ministers that designed State VAT was asked to provide a path and framework for GST. Joint Working Groups of officials from the centre and the states were formed to investigate different elements of GST and provide reports, particularly on thresholds and exemptions, taxation on inter-state supplies, and taxation of services. 

In November 2009, the EC issued its First Discussion Paper (FDP) on the Goods and Service Tax, based on internal and external talks with the Central Government. This outlined the elements of the proposed GST and has served as the foundation for discussions between the Centre and the states thus far. The Indian Parliament passed the GST Act on 29th March, 2017 and it came into effect on 1st July 2017. The implementation of the Goods and Services Tax (GST) is a big step forward in India’s indirect tax policies.

Goods and Services Tax Slabs

The Indian Government has separated goods and services into five distinct tax categories for tax collection purposes : 0%, 5%, 12%, 18%, and 28%. Pre-GST, most commodities had a statutory tax rate of around 26.5 per cent However, after GST came into effect, most goods are likely to have a tax rate of around 18 per cent.

Tea, spices, and mustard oil, for example, are included in the 5%. GST tax slab. Furthermore, the 12% tax slab includes processed food items. 

Gold is taxed at 3% while precious and semi-precious gemstones are taxed at a special rate of 0.25 per cent. Movie tickets, five-star hotels, casinos and racing betting are among the four services that are subject to a 28 per cent GST tax. On top of the 28 per cent GST, a 22 per cent cess or other rates apply to certain commodities such as luxury automobiles, aerated drinks,  and tobacco products.

Items like food grains, wheat, and rice are included in the 0% tax rate. Also, petroleum items, aviation turbine fuel, natural gas, electricity, and alcoholic beverages are not taxed under GST. Additionally, milk, fruits, vegetables, fish, unprocessed green tea leaves and coffee beans, etc., fall under the 0% tax slab. They are instead taxed separately by individual state governments, according to the old tax regime. 

How does GST (Goods and Services Tax) Work?

The Goods and Service Tax is imposed on the provision of goods and services. The following is a list of how GST will interact with the following.

• Manufacturers:  The producer will be obligated to pay GST on the raw resources acquired and the value-added to the goods.
• Service Provider: In this case, the service provider must pay GST on the price charged for the goods and the value-added. On the other hand, the manufacturer’s tax can be deducted from the total GST paid.
• Retailer:  The merchant must pay GST on both the merchandise acquired from the wholesaler and the margin which has been applied. On the other hand, the retailer’s tax can be deducted from the total GST to be payable.
• Consumer:  Goods and Service Tax must be charged on the purchased merchandise.

GST Portal

The Indian government has initiated the Goods and Service Tax portal that allows people to complete their tax returns online. The platform can manage all aspects of the Goods and Services Tax. It preserves time and allows technical help, eliminating the requirements for the taxpayer to travel to the tax office. It is simple to use and enables taxpayers to lodge their GST returns even without the assistance of a professional.

Goods and Service Tax Portal is the official site of the Indian government. After registering and completing the login procedure, you may see your consent GST data. Users can utilize this site to enrol their taxes, submit returns, make payments, and request a reimbursement. The taxpayers can also terminate her subscription and access multiple GST-related analyses.

Who Qualifies for GST?

The following businesses and persons are required to register for Goods and Services Tax:

• Aggregators of e-commerce
• People who pay taxes following the reverse charge procedure
• Persons that provide goods and services through e-commerce networks
• Agents of suppliers and Input service wholesalers
• Businesses with a greater-than-the-threshold-limit turnover.
• Individuals who do not reside in the United States yet pay taxes
• People who registered before the implementation of the GST law

Objectives of Goods and Services Taxes

• GST has abolished several indirect levies that existed under the prior tax structure. Instead, implementing a single tax is that each state applies a similar rate to specific products or services.
• Previously, India had different indirect taxes, including service tax, Central Excise, Value Added Tax (VAT), etc., that were levied at various supply chain levels.
• One of the critical goals of the Goods and Service Tax was to eliminate the cascading tax impact.
• GST regulations in India are significantly more rigorous than any previous indirect tax laws. For example, to collect an input tax credit in GST, users must provide invoices submitted by their vendors.
• Because GST is a combined tax applied on both commodities and services, the number of tax-registered firms has expanded.
• Taxpayers faced several challenges while interacting with various tax agencies under each tax code.
• A unified indirect tax system eliminates the need for numerous forms of paperwork for the provision of products. 

Conclusion

To summarise, GST is a single indirect tax for the entire country that would transform India into a united common market. The cascading impact on selling products and services has mostly been eliminated. The elimination of the significant impact has influenced the cost of items. Because the Introduction of this tax removes the taxes on tax, the price of products falls. Furthermore, GST is driven mainly by technology.