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Goods and Services Tax (GST) was implemented on the 1st of July 2017 as Goods & Services Tax Act. This indirect taxation system thus went through a chain of amendments since its inception. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country. With the introduction of GST law, the government aimed to consolidate all indirect taxes under one umbrella. Thus, except customs duty that is imposed on import of goods, Goods & Services Tax replaced multiple indirect taxes such as excise duty, \service tax, value-added tax, octroi, entry tax and luxury tax.
Implemented by the nations worldwide with individual customisations, the tax has been successful in simplifying the indirect taxation structure of India. Customers are required to pay tax on the purchase of goods or services as an inclusion in the final pricing. The tax collected by the seller is to be paid to the government, thus implying indirect taxation. GST rates are uniformly applied on different goods and services; they have been categorised under different slab rates. Luxury goods are classified under higher slabs, necessities have been included in lower and nil slab rates.
The journey GST began in the year 2000, the Prime Minister of India introduced the concept of Goods and Services Tax (GST). He also formed a committee to draft new indirect tax law. However, its implementation process took years, and the bill went through multiple introductions, amendments and rescheduling. Here’s a summation of GST’s chronology, from drafting to final implementation.
Year |
History Of GST |
2000 |
The PM set up a committee for drafting Goods & Service Tax law for India. |
2004 |
A task force reported the requirement to implement GST tax laws to improve the indirect tax systems. |
2006 |
Goods & Services Tax introduction was scheduled on 1st April 2010 by the Finance Minister of India. |
2007 |
A decision was made to phase out Central Sales Tax (CST). Consequently, CST rates were reduced to 3% from 4%. |
2008 |
The EC finalized GST’s dual structure for separate legislation and levy. |
2010 |
The GST introduction was postponed due to structural and implementation hurdles. |
2011 |
The Constitution Amendment Bill was introduced for enabling the Goods & Services Tax Law. |
2012 |
The tax initiated by the Standing Committee was stalled due to lack of clarity regarding Clause 279B. |
2013 |
GST’s report presented by the Standing Committee. |
2014 |
The Finance Minister of India reintroduced the GST Bill to the Parliament. |
2015 |
The Lok Sabha approves the bill, but it gets stalled in Rajya Sabha.. |
2016 |
Goods and Services Tax Network (GSTN) went live, and the GST law amended got approved by the President of India. |
2017 |
The Cabinet approves four supplementary bills on GST. The Goods & Services Tax Law was implemented on 1st July 2017. |
|
GST Tax |
Old Tax Structure |
Number of laws |
There is only one law applicable |
There were separate laws for separate taxes and respective VAT on states |
Tax rates |
There will be only one CGST rate and uniform SGST rate applicable across all the states. |
Existence of separate tax rates
|
Cascading effect (Taxes on Tax) |
The cascading effect is reduced which makes it very simple |
Presence of the cascading effect of taxes due to diversity in taxes |
Tax Burden |
The tax burden is much reduced. |
The high tax burden on taxpayers |
Tax Structure |
Subsuming or absorbing the taxes into one makes compliance simple and easy. |
Presence of multiple taxes makes compliance difficult. |
Prices for Consumers |
Prices are expected to be reduced. |
Usually very high due to the cascading effect of taxes. |
Know about online GST registration process and fees.
GST is primarily categorized into three types, i.e. Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST). Read on to know about the particulars of each type of GST.
CGST is applicable on intra-state supply of goods and services. Thus, the revenue collected from taxpayers under this tax is collected by the Central Government. The introduction of the CGST led to the abolition of central taxes such as Central Excise Duty, Customs duty, Service Tax, etc. Typically, taxpayers are charged CGST along with SGST and the rates are the same.
SGST is also applicable on goods and services that are sold within the state (intra-state). SGST too replaced several other taxes, including Value Added Tax (VAT), Entertainment Tax, Entry Tax, State Sales Tax, and any applicable surcharges. Revenue collected through SGST is directed towards the State Government.
Integrated Goods and Services Tax or IGST is charged on products and services that are transacted inter-state. It is also applicable on goods that are imported. The revenue from IGST is distributed among all the states. IGST was implemented to streamline the tax process and ensure that each state only transacts with the Union Government.
Apart from these, there’s also the Union Territory Goods and Services Tax (UTGST).
As the name suggests, UTGST is applicable in the union territories of the country. It is levied on the goods and services supplied within the union territories of Chandigarh, Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, and Lakshadweep. UTGST is collected along with CGST.
The new GST tax regime has introduced several new systems. They are as follows:
GST introduced a centralized system of bills by the introduction of “E-way bills”. This system was launched for inter-state and intra-state movement of goods in a staggered manner.
Manufacturers, traders and transporters can quickly generate e-way bills for transportation of goods from the place of its origin to its destination with ease. Tax authorities are also benefited as the E-way bill system helps reduce the time consumed at check -posts and reduces tax evasion..
Recently, the e-invoicing system has been launched on a trial basis starting from January 2020 and applicable from October 2020. This system requires large businesses with an annual aggregate turnover of more than Rs.100 crore to comply with some requirements. They must obtain a unique invoice reference number for every business-to-business invoice by uploading on the GSTN’s portal known as the invoice registration portal. The portal verifies the correctness and genuineness of the invoice. After that, it authorizes using the digital signature along with a QR code. E-invoicing allows interoperability of invoices and helps reduce data entry errors. It is designed to pass the invoice information directly from the IRP to the GST portal and the e-way bill portal. It will, therefore, eliminate the requirement for manual data entry while filing ANX-1/GST returns and for the generation of part-A of the e-way bills.
Also read about the various components of GST
Easy compliance
Uniformity in tax rates and structure
Removal of cascading or compounding effect of taxes
Enhance the competitiveness
Growth towards the development of a common national market
Simple and easy administration
Improved compliance and revenue collections
Better revenue effectiveness
Payment of the single and transparent tax
Reduction of the burden of the taxpayers
Taxpayers often find themselves confused or skeptical about GST filing. To clarify their questions or doubts, they can use the dedicated GST helpline and connect with the concerned authority. The means of contact are as follows:
Toll-free Phone Number: 1800 1200 232
Self Help Portal: https://selfservice.gstsystem.in/
In the earlier tax regime, there were many indirect taxes levied by both the state and the central government. The states mainly collected taxes in the form of Value Added Tax (VAT). Every country had a different set of rules and regulations. The centre taxed Inter-state sale of goods. CST (Central State Tax) was applicable for inter-state sale of goods. These indirect taxes such as the entertainment tax, octroi and local tax were levied together.
The following are the list of indirect taxes that were applicable in the pre-GST regime:
Central Excise Duty
Duties of Excise
Additional Duties of Excise
Additional Duties of Customs
Special Additional Duty of Customs
Cess
State VAT
Central Sales Tax
Purchase Tax
Luxury Tax
Entertainment Tax
Entry Tax
Taxes on advertisements
Taxes on lotteries, betting, and gambling
Taxes like CGST, SGST, and IGST have replaced all the above taxes.
The Goods & Services Tax or GST brought a major change in the taxation visuals in India. Earlier, different taxes were paid separately to the state and the centre. However, GSTIN subsumed all taxes into one, and now there is the practical application of ‘One nation, one tax.’ Some of the changes that GST brought in are as follows:
No multiple taxes to be paid
Replacement of indirect taxes like excise duty and sales tax into one
Clear distinction of taxes on luxuries and necessities
Introduction of simplified ways to fill Income Tax Returns and taxes, for instance through GST online portal or website
Boost for Real estate and MSME sector
Ease for transportation of goods, as no separate taxes
Tax administration under both State and Central governments
Transparency in the taxation process
Also know about the impact of GST on personal loans.
Goods & Services Tax is a tax, charged on the consumption and supply of goods and services in India. The Government collects GST from the ultimate point of consumption.
The Government collects GST services on various goods and services. It is distinguished into four types, which are IGST, CGST, SGST, and UGST.
The three types of GST are CGST (Central Goods and Services Tax), SGST (State Goods and Services Tax), IGST (Integrated Goods Services Tax), and UGST (Union Goods and Services Tax).
Both Central and the State Government collect IGST (Integrated Goods and Services Tax) based on the prefixed revenues. This GST bill is collected in case of inter-state transactions.
Yes, the GST bill can be paid online through the GST official website.
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