What do you mean by Tax :-
Taxes are an important and largest source of income for the government. The government uses the money collected from taxes for various projects for the development of the nation.
Types of tax :-
1.Direct Tax :- Direct taxes are imposed on corporate entities and individuals as Income tax , corporate tax and capital gain tax.
2. Indirect Tax :- Indirect Taxes are imposed on sale or purchase of goods and services and moving of goods and services one place to another. Such as – VAT, Stamp duty, Custom duty, Excise duty, Service tax , STT, Entertainment tax.But these all are merged and make a single tax named GST – goods and service tax on 1st July 2017.
GST – Goods & Service Tax
What Do You Mean By GST :-
It is an indirect tax which is levid on goods and services sale or purchase and moving of goods & services from one place to another.
The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.
The GST was implemented in india to replace the old indirect taxes.
Tagline of GST is :- “ONE NATION ONE TAX”
HISTORY OF GST
On July 1st 2017, the Goods and Services Tax implemented in India. But, the process of implementing the new tax regime commenced a long time ago.
In 2000, Atal Bihari Vajpayee, then Prime Minister of India, set up a committee to draft the GST law.
In 2004, a task force concluded that the new tax structure should put in place to enhance the tax regime at the time.
In 2006, Finance Minister proposed the introduction of GST from 1st April 2010 and in 2011 the Constitution Amendment Bill passed to enable the introduction of the GST law.
In 2012, the Standing Committee started discussions about GST, and tabled its report on GST a year later.
In 2014, the new Finance Minister at the time, Arun Jaitley, reintroduced the GST bill in Parliament and passed the bill in Lok Sabha in 2015. Yet, the implementation of the law delayed as it was not passed in Rajya Sabha.
GST went live in 2016, and the amended model GST law passed in both the house. The President of India also gave assent.
In 2017 the passing of 4 supplementary GST Bills in Lok Sabha as well as the approval of the same by the Cabinet.
Rajya Sabha then passed 4 supplementary GST Bills and the new tax regime implemented on 1st July 2017.
The following is the list of indirect taxes 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
TYPES OF GST:- There are four types of GST in india are as follows :-
CGST :-It is the tax collected by the Central Government on an intra-state sale.
SGST :-It is the tax collected by the state government on an intra-state sale.
=>Example of CGST & SGST :-(a transaction happening within Maharashtra and the tax rate is 12% then 6% is taken by state govt.and 6% is taken by central govt.)
IGST :-It is a tax collected by the Central Government for an inter-state sale (e.g., Maharashtra to Tamil Nadu)
UTGST :- It is the tax collected by the Union & Central government on an intra-state sale. viz. Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Lakshadweep.
GST COUNCIL:-
GST Council is the governing body of GST having 33 members, out of which 2 members are of centre and 31 members are from 28 state and 3 Union territories with legislation.
The council contains the following members:-
(a) Union Finance Minister (as chairperson)
(b) Union Minister of States in charge of revenue or finance (as member)
(c) the ministers of states in charge of finance or taxation or other ministers as nominated by each states government (as member).
GST Council is an apex member committee to modify, reconcile or to procure any law or regulation based on the context of goods and services tax in India.
The council is headed by the union finance minister Nirmala Sitharaman assisted with the finance minister of all the states of India.
The GST council is responsible for any revision or enactment of rule or any rate changes of the goods and services in India.
how will GST works:
Manufacturer: The manufacturer will have to pay GST on the raw material that is purchased and the value that has been added to make the product.
Service Provider: Here, the service provider will have to pay GST on the amount that is paid for the product and the value that has been added to it. However, the tax that has been paid by the manufacturer can be reduced from the overall GST that must be paid.
Retailer: The retailer will need to pay GST on the product that has been purchased from the distributor as well as the margin that has been added. However, the tax that has been paid by the retailer can be reduced from the overall GST that must be paid.
Consumer: GST must be paid on the product that has been purchased.
ADVANTAGES OF GST:-
Decrease in the cost of goods :- Eliminating tax on tax effect.
Ease of doing business
Reduce tax evasion
Tax system becomes more transparent ,regular and predictabe.
Better Revenue Structure
Minimised Compliance
Smooth and quick online processing
DISADVANTAGES OF GST:-
Lack of computer Knowledge
GST Scheme has increased the cost of operation
Increased tax liability on SMBs :- before gst excise duty was taken on businesses whose turnover is above 1.5 crore but now 40 lakhs or above.
Penalties for non-GST-compliant firms
THESE ARE NOT COME UNDER GST:-
Petroleum crude
High-speed diesel
Motor spirit (commonly known as petrol)
Natural gas
Aviation turbine fuel and
Alcoholic liquor for human consumption.
Gst applies to the following transactions only:-
•Resale.
•Use in manufacturing or processing.
•Use in certain sectors such as the telecommunication network, mining, the generation or distribution of electricity or any other power sector.