GST – Goods and services tax is an indirect tax introduced in 2017. The primary purpose of GST was to abolish multiple tax structures in the country. The central concept of GST was to bring one country one tax regime. It simplified the tax collection in the country and increased the tax revenue. The GST concept mainly relies on levying taxes on goods and services which are consumable. There are various slabs in it depending upon the product or services. There are many participants in the GST structure from manufacturer to supplier. The entire supply chain is now under GST.

 Purpose Of Introduction Of Gst Concept

  • It reduced tax evasion and also helped in lowering gaps
  • One country, one tax, one market
  • It increases productivity
  • It eliminates cascading effect of multiple taxes
  • GST subsume all the indirect tax at the centre and state level
  • It is the most straightforward tax system
  • It makes the taxation system more transparent
  • It increases compliance and due diligence

GST Concept definition

Goods in GST Concept

“GOODS” that are part of every kind of movable property other than money and securities. Still, GST also includes crops, actionable claims, and things attached to or forming part of the land agreed to be severed before. Some Goods not included under GST like – unbranded atta, maida, besan, unpacked food, grains, milk, eggs, curds, lassi, fresh vegetables etc.

Excluded items from GST

  1. Fresh fruits and vegetables (other than frozen or processed)
  2. Meat (other than in frozen state or put up in the unit container.)
  3. Raw silk
  4. Puja samagri
  5. Cotton used in khadi yarn.
  6. All goods seed quality
  7. Kumkum, bindi, sindoor
  8. Handloom
  9. Services by the government.
  10. Printed book including Braille books, newspaper maps
  11. Postal items like an envelope, postcards etc. sold government
  12. Hand tools
  13. Services by RBI
  14. Services by SEBI

Services

“SERVICES” in GST means anything other than goods, money or securities. It comprises activities relating to the use of money or activities related to its conversion by cash or by different modes. This modification contains one form of currency or denomination to another.

The Implication Of The GST Concept

GST covered the whole of India jurisdiction on July 17, 2017. The first country to introduce  GST was France in 1954. More than 160 countries across the globe have adopted GST. In India, tax has been imposed concurrently by the central and the state. Article 246A gives the power to the state to levy Goods and Services.

Classification of GST Concept

CGST- Central Goods and Services Tax 

This complete form of CGST applies to the intrastate movement of goods. The state and the central government share the revenue generated. The division of income is two halves. The CGST has been instrumental in identifying loopholes in the system and revenue collection. Earlier, some exercises were too complex for the central to record and compile. CGST replaces the following taxes.

  • Central excise duty
  • Service tax
  • Duties of custom
  • Surcharges
  • Cess

The CGST has the same rates as the SGST or UTGST, and this process has a dual GST model.

SGST- State Goods and Services Tax 

The SGST comes under the GST regime. SGST is applicable within the same state transaction. When the sale invoice occurs in the state, both SGST and CGST are collected. IT is because both state and central government share equal revenue of the cess. The state GST applies in all the states except two union territories- Delhi and Puducherry. These two union territories have their legislative assembly and council.

IGST-Integrated Goods and Services Tax 

Integrated Goods and services tax is applicable basically on interstate transactions. The imports and exports of goods and customs come under the ambit of IGST. On the other hand, GST covers  Supplies of products and services between two states. For example, a manufacturer from Uttar Pradesh sells goods to a customer in Delhi. In this case, IGST will apply to the transaction value of the Goods, and the central government will collect the sum of goods. Later on, this sum is split between the consumer state, in this case, Delhi and the central government.

Gst Concept And Its Application 

Under the GST regime, the turnover of businesses that exceeds Rs 40 lakhs (Rs 10lakhs for NE and hilly states) comes under the GST. Companies have to file GST online every quarter. The process is online, and it has streamlined the earlier tax collection methods. The business houses are now not required to pay taxes separately on their business activities. The GST concept has removed the complication of tax cascading. Ordinary citizens got relief in some products and services, the taxes like- medicines, clothes and apparel. Whereas on some products the cess has increased like- electronic items, restaurant dining.

GST Council

The GST council came into force on September 12, 2016, and the President constituted it. Its chairperson is the Union Finance Minister. The union state and finance minister’s minister is nominated from different states as its member. The GST council has 33 members, out of which 31 members are from 28 states and two members are off centre. To procure any law or regulation based on the terms of goods and services tax in India or to the committee to modify and reconcile the GST council work.

Criticism Of GST Concept

There are many positives of GST, but the different tax slab rates have created a lot of confusion. The GST rates have been confusing while calculating taxes because of various slabs. Manufacturing, as well as automobile industries, have suffered because of higher tax rates. However, the government has criticised and made changes to make it more flexible. GST has a very positive future; it can be a game-changer if appropriately utilised. It has made the made in India story a very successful one. GST should be improved further to strengthen the tax revenue collection and make it more difficult for tax evasion. In coming times newer tax rates should be introduced.