New Delhi: India has got its biggest tax reform as Goods and Services Tax (GST) was officially implemented at the midnight stroke of July 1, 2017, by Prime Minister Narendra Modi at Parliament’s historic Central Hall, in the presence of President Pranab Mukherjee.
GST, which replaced a slew of indirect taxes with a unified tax, is set to dramatically reshape the country’s 2 trillion dollar economy.
Here’s all you need to know about GST
What is GST?
One Nation One Tax- GST or Goods and Services Tax is applicable on the supply of goods and service which replaced the taxes of excise, VAT and service tax.
Why is GST needed?
With different states, there were different laws which gave rise to various problems, especially when businesses sold to different states. Also, most businesses had to pay and comply with 3 different taxes – excise, VAT, and service tax.
With the implementation of GST, uniformity in taxation across the country will be ensured. This reform gives equal footing to the big enterprises as well as SMEs. The aim of GST is thus to simplify tax hurdles for the entire economy.
Who will have to pay GST?
GST being an indirect tax, it will be ultimately borne by the end consumers, just like it use to happen, GST will be paid by all manufacturers, sellers and service providers such as telecom providers, consultants, chartered accountants etc.
What kind of GST is implemented in India?
India implemented the Canadian model of Dual GST, i.e., both the Centre and State will collect GST.
There are 3 types of GST:
CGST- Collected by Centre
SGST- Collected by State
IGST- Applicable on inter-state sales. It will help in smooth transfer between states and the Centre.
What are GST proposed rates?
Though GST rates are as follow:
How will GST affect your pocket?
A reduction in prices of:
- FMCG goods such as shampoos, chocolates
- Eating out
- Small cars
The increase in prices of:
- Luxury cars
- Aerated beverages