GST INDIA :- GST or the Goods and Services Tax is the biggest tax reform ever done in India. It was founded on one notion of “one nation, one market, one tax”.
In view of the fact that GST has made Taxation of goods, services and investment, the Government of India has added some new concepts in the existing laws. Earlier, taxes on many such items were assessed at a single rate. However, under GST laws, a particular tax has been applied to each of the above items with different rates. The same item has different rates for use in generating income and other tax purposes. The rate of tax is also assigned to various types of items depending upon their use.
An item can be taxed under a certain rate with some exceptions while other rates are not applicable. This makes the whole system difficult for the taxpayers to understand, assess and pay the tax. Due to this, the tax payable becomes higher than the actual tax. If a person is charged at a high rate, he/she may feel frustrated to pay tax due. But due to new rules on implementation of the GST in India, the processes are becoming more and easier. Now a person can pay the taxes with a minimum of paperwork and at the same time, they will not get any penalty due to which, they are ready to pay their taxes.
There are different options available for the person to pay the tax under the GST. If a person wants to pay the taxes online, it would be possible to do so. There are some companies providing services for online payments through internet. Payment made through this option should be collected from the taxpayer’s banking account. In fact, now a person can pay his/her taxes through such ways as Credit Card, Debit Card, Mobile Faxing, Cash on Delivery and Money Transfer.
The wait for over a decade is over as the single biggest indirect tax has kicked into force and has dismantled all the inter-state barriers with respect to trade.
GST has been introduced in replacement to all the previous state and central government taxes and duties. This tax system was implemented in India from 1st July, 2017.
With the implementation of GST India, there has been a change in the cost and tax of various goods and services. The tax on various goods and services has been divided into four slabs of 5%, 12%, 18% and 28%.
The implementation of GST INDIA has made some positive as well as negative impacts on the economy of India. Let us discuss them in details.
Unification of taxes
The nationwide application of GST has convoluted the indirect taxation system and has unified the $2 trillion economies along with 1.3 billion people into a single market.
Previously there were various taxes levied on the same product. With the implementation of GST, a consumer has to pay a single tax for a single purchase of a product. This is a good impact of GST in India.
Ease of running business in different states
Another impact of GST in India is that it has made the running of any type of business very easy in different states.
Before the implementation of GST, a businessman had to pay various amounts of taxes in different states. But now the one tax system has got rid of other taxes and the business has to pay just a single tax in every state he does business.
Faster transportation of goods
For having to run a successful business, it is necessary to have a good transportation service. The transport system helps in the incoming of raw materials and outgoing of the final and processed goods.
Before the implementation of GST INDIA, a businessman had to pay individual tax for every state his transport services would go.
The impact of GST in India has led to the unification of tax system which leads to the single tax. This leads to the faster and better transportation of goods.
Increase in Foreign investment
Another vital impact of GST India is that it has made the country more open to getting indulge in the business with foreign countries.
With the unification of tax and a formation of a unified market, foreign investors will not have to go through the hassle of paying different types of taxes. This system will definitely attract more foreign companies to directly invest in our country in the future.
Decrease in black money
With the implementation of GST INDIA and demonetization, the state of black money in our country has suffered a huge blow.
All the formal transactions which happened in the business were done with cheque payments and direct bank transfers. While all the informal transactions happened in the form of cash.
But with the implementation of GST, the supplies from raw materials to the delivery of finished products are all tracked which leads to less scope for an informal transaction and decrease in black money.
Documentation of every transaction
Previously many businessmen favored in the cash flow as it didn’t require any documentation. By this way, the businessmen could easily evade the income tax.
But with the implementation of GST, every transaction is tracked and documented. As a result, the businessmen have to file tax returns every month. This is indeed a positive impact of GST in India.
The new GST rates implemented on the goods are higher than the previously imposed VAT (Value Added Tax) which people used to pay earlier.
As a result, the prices of some goods and services will definitely increase after the implementation of GST which will affect a significant amount of people in the society.
Dual control system
The new GST policy is divided into two parts− the CGST (Central Goods and Services Tax) which will be collected by the central government; and the SGST (State Goods and Services Tax) which will be collected by individual state governments.
This means that the business will be indirectly controlled by both the parties. The state will lose the autonomy of changing the tax rate, which will now be controlled by the GST Council.
Loss incurred by the Manufacturing States
Since GST is mostly related to the manufacturing segment, the states which have industries and factories in a large number and manufactures goods, will suffer a huge loss.
However, the Central Government has discussed this issue with the manufacturing states and has proposed to compensate for their losses for a period of 5 years.
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