Goods and Services Tax (GST)
or 101st Constitutional Amendment Act is the biggest tax reform in
India since Independence. It was implemented from 1st July, 2017. France being its
first member which implemented the GST in 1954.
India the classic taxes involved direct and indirect taxes.
an Indirect tax levied on goods and services. GST is a single tax on the supply
of goods and services, right from the manufacturer to the consumer which means
it will replace all major Indirect taxes levied by Central as well as State
deals with five tax brackets i.e. 0%, 5%, 12%, 18% and 28%. Under GST all
necessities are taxed at a lower rate and luxuries at a higher rate. The
principal rationale behind this tax structure is that items which are presently
taxed at rates closer to the range of each of the slabs will be fitted into the
particular rate of the slab. Let’s see how Mr Sharma and his family will deal
with these taxes.
Sharma daily goes to market to buy fruits, vegetables and milk that mean these
are his family’s daily needs therefore he will not pay any tax on them. Mrs
Sharma often bakes pizza for kids at home as she is well aware about the cost
of eating in restaurant but on items like pizza base, cheese, herbs and spices
she will land up paying 5%tax.Their son often demands a smart phone which Mr
Sharma is denying for a while because he knows that he will have to pay
12%tax.The family members are cost effective when it comes to choosing a well
data or talktime plan according to their needs but now they have to pay 18% tax
for such services.
regular items are considered as non-taxable like fresh fruits, vegetables,
cereals, milk everything remains untaxed because the object of this is to
ensure that the GST structure is not burdensome on the common man.
we use the process version of the above, then we have to pay tax on it
like fish fillet, cream, skimmed milk powder, branded paneer and frozen
vegetables etc. Services like transport services, a small restaurant.
12%- Frozen meat products, butter, dry fruits in packaged
form, animal fat and sausage etc. Services like Non-Ac hotels, business class
air ticket, fertilizer.
flavoured refined sugar, pasta, cornflakes, pastries, cakes, preserved
vegetables, jam, sauces and mineral water etc. Services like AC hotels that
serve liquor, telecom services, IT services, branded garments and financial
Chewing gum, molasses, chocolate containing cocoa, waffles, and wafer coated
with chocolate etc. It also includes Aircraft for personal use are the
costliest services like 5-star hotels, race club betting, cinema.
The items exempted from
GST are alcohol, petroleum crude, petrol, diesel, natural gas, aviation turbine
There are three parts of
GST or CGST will replace the previously existing central level taxes.
GST or SGST will replace all the previously existing taxes to the State
will levy CGST and IGST while respective states will levy SGST.
time when you order something from Jaipur while staying in Delhi then you won’t
be charge just CGST and SGST but IGST too that is Integrated goods and service
tax which is applied when the location
of the supplier and the place of supply are in different states.
and disadvantages of GST
1. Although GST has replaced all the existing indirect tax and fixed
the tax for different commodities but 18% service tax has posed a big challenge
2. GST will facilitate Make in
India by making India a one market place that will also contribute to ease of
doing business in different states.
3. GST act will not apply for
small business whose turnover is below 25 lacs boosting the entrepreneurship in
India. Inspite of One Nation-One Tax Policy, if someone has business in
different state, he has to register at all places.
4. Although the main purpose of GST is to keep tax
same all over the nation but allowing States to levy the additional rates of 1%
to 2% on certain commodities will defeat the purpose.
5. The provision of IGST dilutes the objective of
creating a harmonized national market of goods and services. Inter state trade
of goods would be more expensive than intra trade as the burden will be borne
by retail customers. Further evasion of tax will continue.
The biggest gainers of this seem to be the export
industry as the exports will become more competitive internationally, and will
show higher rate of growth. The GST is also expected to raise the national GDP
by 1-2% as per some experts, while strengthening long term FDI inflows.
in India can now look forward to a greater ease of doing business in the
country, as the jumbled indirect tax system is not there.
GST will simplify the tax system and
will curb the corruption to some extent. Besides boosting foreign investment it
will lead to a healthy competition among traders in the country.
phase of growing economy the multiple tax rates is inevitable for several
reasons because one cannot tax an aeroplane and a needle at a same rate. Different items used by different segments of
society needs to be taxed differently. Otherwise the GST would be regressive.
The tax on some products in a narrow slab regime will substantially increase. This
would disrupt the market and would be highly inflationary. Each good would be
taxed on the basis of its own demerit. So it depends on us we have to take a
benefit of necessity or luxury, according to this we have to pay tax on our
The so called
shortcomings are temporary in nature and will be cured by the time coming.