What is Goods and Service Tax?
GST Stands for Goods and services tax . Goods and Services Tax is a tax that would soon be levied on the supply of goods and services across India.
It would include manufacture, consumption, and sale of goods as well as services at the national level.
It Is Indirect National Tax
Goods and Service Tax GST is an indirect tax for the entire nation that will make the country one unified common market.
The primary expectation from this system is to abolish all indirect taxes so that only GST would be levied.
What Would Be changed ?
Before GST many other direct and intdirect taxes are existed in the economic system .
After Implementation of GST all of other taxes like Central taxes like Service Tax, CVD, Central Excise, CST, and SAD come under GST .
At the same time State Taxes like VAT, CST, Entry Tax, and Luxury Tax would also come under GST.
Customs would be outside Goods and service tax. But, Basic Customs Duty would continue as before on imports.
The Rajya Sabha cleared the constitutional amendment to bring about a system of Goods and Services Tax to India. The draft model of the GST law was first made public in June 2016.
The revised bill was released on 26th November 2016. GST is the most awaited tax reforms in India.
It is the single most significant economic reform by the Narendra Modi’s government.
How does the GST work?
Goods and Services Tax can be defined as an indirect tax reform that will remove tax barriers between states then create a single market.
Consumers in the present day do not have any idea about the extent of taxes they pay on goods.
Read also: How to calculate Goods and services tax ?
When you get a bill after buying something that gives you the extent of the VAT paid that in fact is an understatement of the actual amount you have paid.
Before the merchandise has reached the retail outlet, the government has collected excise duty on it.
Good and Service Tax would benefit the customer in the ways below.
Where It would Be collected ?
The tax would be collected at the point of consumption. It would be a single tax on the supply of goods and services from the manufacturer to the consumer.
Transparency in taxation would avoid governments from increasing taxes on goods as there would be a public backlash. Secondly, consumers would not end up paying double or triple tax that happens when goods move across state borders.
Finally On this unified tax form ,economist have different views . Many advantages and disadvantages are predicted of this tax.
Read Also : Disadvantages of Goods and services tax .