Goods And Service Tax (GST)

Goods and Services Tax (GST) is a proposed system of indirect taxation in India merging most of the existing taxes into a single system of taxation. The Constitution Amendment Bill for Goods and Services Tax (GST) has been approved by The President of India post its passage in the Parliament (Rajya Sabha on 3 August 2016 and Lok Sabha on 8 August 2016) and ratification by more than 50 percent of state legislatures. 

The Government of India is committed to replace all the indirect taxes levied on goods and services by the Centre and States and implement GST by April 2017. In simple words, there won't be any Value Added Tax(VAT) or service tax or luxury tax, there will be just one form of tax: Goods and service tax, where we will pay the tax once and get relaxed.
Introduction of goods and service tax may reform the economy of the nation. It will even boost the business of exports and import within the nation. One can easily transfer their goods from one state to other without paying any state tax or entry tax or going through a bunch of paperwork. They can simply pay the tax once and be free from all the tax burden and save a huge amount of time.

After the implementation of GST, there was a huge impact on our lives, business throughout the country. Pricing of products and services will vary and there will be a need for economic optimization.

Question Remained: Will this form of indirect taxation work in India? Well just a heads up, even America, a nation with the most successful economy, doesn't have this system of tax. I guess we just have to wait and watch if this new system of taxation works or not !!

After effects of GST: 
  1. No more hidden taxes: Earlier consumers used to pay taxes without even knowing. For example, invoices used to quote VAT charged by the state and sometimes service tax payable to the centre but did not provide a breakdown of central taxes charged on the commodity. With GST, people can be assured that the commodities have been taxed at a single tax bracket, split between the centre and the state.
  2. Check on price rise: GST replaces the cascading effect of taxes with input tax credit. Under the new tax regime, the tax paid for inputs is taken off taxes to be paid for the final product, or output. This way more people pay taxes instead of the consumer bearing the burden of taxes levied at every step of manufacturing.
  3. Traders go digital: In GST, it will be important to ensure that an invoice for input services is received at the place where the credit of such services is eligible. Therefore, businesses need to analyse procurement of services and amend their contracts with service providers as needed. Similarly, contractual terms with customers will have to be reassessed and revised, if needed.
    Traders will have to train their employees as well as stakeholders, vendors and any other party involved in your business to sensitise them about the compliance requirements imposed by GST.
  4. Check-posts removed: With GST being a destination-based tax, border check-posts at state limits have become obsolete and were done away with. The first thing it did was do away with the long line of trucks stranded at the state borders waiting to be cleared by these check-posts.
    With no toll booths to cross, goods carriers are transporting their cargo swiftly between states. Cutting the delay in delivery of goods has helped save crores of rupees in lost time. The process will be further streamlined with the release of E-way Bill in a few months time. With the provisions already drafted, it will be rolled out once the E-way software is developed.
  5. Price change of essential commodities: No change was observed in the prices of essential commodities as they were kept in the zero percent tax bracket under GST. Luxury cars made in India saw a decline in their prices, though, as they were categorised in the lower tax bracket under GST.
    Motorcycles with engines bigger than 350cc were taxed at a higher rate than before under GST. Gold also saw a marginal increase in tax rates it would attract, as did telecom services. The already dearer hybrid cars would also attract more taxes under GST.