Good & Service Tax was introduced in India on 1 July 2017. It was Governed by GST Council and it chairman is Finance Minister in India. It was first thought by Atal Bihari Vajpayee in 2000 but it was applicable on 1 July 2017. It was India’s 122 sansho Dhan and given more importance to GST [Vat or custom excise duty, sale tax, customs duty] all these are removed and only people have to pay one tax GST. GST means the tax on goods and service. The main motive is to aim to streamline the taxation structure in the country and to replace a Gamut of Indirect taxes with a similar GST to simplify the taxation procedure. GST is one and the biggest economic and taxation reform undertake in India. GST is essentially consumption tax and is levied at the final consumption point. It is levied on the value edition and provides set off(input credit). Government can fix some rates 0%, 5%, 12%, 18%, and 28%. The Central Government had proposed to insulate the revenues of the States from the impact of GST, with the expectation that in due course, GST will be levied on petroleum and petroleum products. The central government had assured states of compensation for any revenue loss incurred by them from the date of Good & Service Tax for a period of five years. However, no concrete laws have yet been made to support such action.
Benefits of GOOD and SERVICE TAX
- Good & Service Tax is a transparent tax and also reduces the number of indirect tax.
- Good & Service Tax will not be a cost to register retailer. Therefore, the cost of doing business will be lower.
- The prices of goods and services will be lower in due course.
- Good & Service Tax will help to build a transparent and corruption force tax administration.
Benefits of Economy
- It will help to generate employment by increased economic activity.
- Help into boosts investment and exports.
Removing Cascading Tax Effects
An important benefit to issuing Good & Service Tax is to reduce the cascading effect; “Cascading Effect” means the tax on tax.Under GST, the input tax credit can be availed smoothly across the spectrum of goods and services, thus reducing the tax burden on the end user and removing cascading effect.
Higher threshold For Registration
In earlier, VAT on every business has turnover more than 5 lakh is liable to pay VAT. Under Good & Service Tax, the threshold has been increased by 20lakh.
Composition scheme for small businesses
GST has an optional scheme to pay lower tax for those who have the turnover between 20 to 50 lakh. It is called Composition scheme. It has now increased by 75 lakh.This will bring respite from tax burdens to many small businesses.