Meaning
The goods and services tax(GST) is a value added tax levied on most goods and services sold for domestic consumption the gst is paid by consumers, but it is remited to the government by the business selling the goods and services.
Definition
Article 366(12A) definition of GST “Goods and services tax “means any tax on supply of goods or services or both except taxes on the supply of the alcoholic liquor for human consumption.
Needs of GST IN IINDIA
introduction of gst is considered to be a significant step in the reform of indirect taxation in india. Amalgamating of various central and state taxes into a single tax would help mitigate the double taxation, cascading, multiplicity of taxes, classification idsues, taxabale event and etc and leading to a common national market.
VAT rates and regulation differ from state to state on the other hand gst brings in uniform tax system across all the states. Here taxs would be divided between the Central and state government.
while the present system allows multiplicity of taxes being collected through an a inefficient and non transfrant system, the introduction of GST is likely rationalize it and there by plug the loop holes in the system. GST wil help reduce overall tax burden of many organizations. Following are some of the points that can easily explain the need from gst:
- Tax structure wil be simple
- Tax revenue will increase
- Competitive pricing
- Boost to exports
PRE GST INDIRECT TAX STRUCTURE IN INDIA
Central Taxes :
Central excise duty, Additional duties of excise duty levied under medicinal and toilet preparation Act, Additional duties of customs, service Tax, Surcharges and Cesses.
State Taxes :
State VAT / Sales Tax, central sales Tax, Purchase Tax, Entertainment Tax, Luxury Tax, Entry Tax, Taxes on lottery, betting and gambling, surcharges and Cesses.
OBJECTIVES OF GST
The introduction of GST aims to achieve the following Objectives:
- Simpfy the tax structure : Gst aims to simplify the complex indiret tax structure by replacing multiple taxes with a single tax reducing compleince costs and making tax administration more efficient.
- Create a comon market : Gst creats a comon national markets by eliminating barriers to interstate trade, enableing a seemless flow of goods and services across state borders
- Promote a economic growth : gst is expected to reduce to tax burden on business, encourage entrepreneurship, and incrwase investment in the country, there by promoting economic growth.
- Improve tax compliance : GSt is expected to reduce tax evision by creating comprehensive tax system and promoting a grater tax compleince among business and individuals.
- Ensure social justice : Gst provides for a uniform tax rate across the country, ensure the social justice and reducing tax burden ono common man.
ADVANTAGES OF GST :
- Increase forign investment :with the implementation of gst, india has become a single market, foreign investment has surged in the country. Because of their lower costs, commodities created in india have become more competative in the worldwide market resulting in increased exports. The implementation of the goods and services tax brings india in line with wordwide tax regulations making it easier for indian enterprises to sell on a global scale.
- One tax system : one of the primary goals of implemented gst was to eliminate various forms of taxes from indian tax structure. Prior to the established of gst there were serval tax such as VAT, service tax and so on with the implement of gst, all such levies have been eliminated.
- Simple access : anyone sitting anywahere at any time can acess the gst portal. This simplify the fitting of returns. This is extremely benificial to all types of organization.
- Efficiency in logistics : GST has replaced various earlier tax systems, such as VAT. As a results becuse the business already pays to center and state before the transpotation of goods, there is no need to pay state level taxes during interstate movement, which improves logistics and operations.
- removal of cascading : a system of seamless tax credits across the value chain and across state lines would ensure that there is minimum tax cascading. This would lower the un intentional costs of conducting business.
- Boosting revenue : consider this with the new gst in place, there is now with the current tax regulations. A simplified taxation term will encourage more suppliers to pay the tax amount, result in an increase in revenue levels.
- Transparency : The tax administration has begum working without corruption. Transparency has also resulted from allowing sales invoices to disclose the tax applied.
DIS -ADVANTAGES OF GST :
- Increased cost : gst requiures firms to upgrade the current accounting software to erp or gst complaint software in order to keep their operations keep running.
- Increase software expenses : prior to the implementation of gst regime, most indian businesses relied on basic ERP or accounting software to manage the day to day operations. These software and solutions were developed in complieance with a tax rules and structure in place at the time.
- Increased tax burden on SME’s :one of the most significant downsides of gst is that it has increased tax burdens for small and medium sized firms. This is because,under the previous tax structure,enterprise with annual sales more than 1.5 cr were require to pay excise.
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