Today everyone is talking about Goods and Services Tax (GST). It is the most compact, simple yet confusing system of taxation to be rolled out in India from 1st Day of July,2017 and will demolish number of wide indirect taxes such as Value Added Tax (VAT), Service Tax and Excise.
Most of us are talking about complex parts of GST without understanding it’s basic nature. Today I am trying to make you understand the benefits of Goods and Services Tax (GST).
First of all we need to know what GST is all about and how it is different from current tax system?
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As per a definition concluded by me:
“Goods and Services Tax (GST) is not a tax, but a wide taxation system which includes various indirect taxes, assembled under one canopy to reduce multiplicity of taxes, mitigate cascading effects and to boost the overall investment conditions benefiting the development of the country.”
Features of GST:
1. A dual tax (CGST & SGST) will be levied on the same taxable event by both the Central and the State Government.
2. The tree of GST has been divided into 3 branches: CGST, SGST & IGST.
3. The taxable event under GST will be ‘SUPPLY’ of goods/services.
4. GST will be a destination base tax.
Benefits of GST:
When we talk about benefits of anything, we talk about stakeholders and for GST there are three types stakeholder:
(i) Simpler tax system
(ii) Reduction in prices of goods and services due to elimination of cascading
(iii) Uniform prices throughout the country
(iv) Transparency in taxation system
(v) Increase in employment opportunities
(i) Reduction in multiplicity of taxes
(ii) Mitigation of cascading/double taxation
(iii) More efficient neutralization of taxes especially for exports
(iv) Development of common national market
(v) Simpler tax regime-fewer rates and exemptions
(i) A unified common national market to boost Foreign Investment and “Make in India” campaign
(ii) Boost to export/manufacturing activity, generation of more employment, leading to reduced poverty and increased GDP growth
(iii) Improving the overall investment climate in the country which will benefit the development of states
(iv) Uniform SGST and IGST rates to reduce the incentive for tax evasion.