GST Concept | Features | Need / Issues in Pre-Gst Regime | GST - A cure for ills of existing (Pre-GST) indirect tax regime | Benefits of GST | B.Com, CA, CMA, CS

Concept of GST

Goods and service tax means any tax on supply of goods or services or both. Except taxes on the Supply of the alcoholic liquor for human consumption.

Features of GST

1. GST is a value added destination based tax on suppy of goods and services.
2. GST brings uniform tax structure all over India - One Nation One Tax.
3. GST is a dual model  tax structure.
4. GST eliminates cascading effects of tax.
5. GST was a  burden borne by the final consumer.
6. Import will be treated as interstate supply and IGST will be chargeable along with basic customs duty However export will be treated at zero rated supplies and no IGST is payable.

Need for GST / Issues in Pre-Gst Regime 

1. Center and states were separately taxing goods and services and there were many taxes.

2. There was multiplicity of rates. Law and procedure. This cause heavy compliance burden.

3. Imposition of tax on tax (cascading effect) was another serious problem which leads to inflation.

4. Pre-GST there were tax nakas at every inter-state border creating bottlenecks in inter-state transport of goods.

5. Tax levied by one government was not available for set-off against the tax levied by another government.

6. Double taxation of certain transactions as both goods and services.

7. Each state has separate VAT law which had divided the nation into various economic States.

GST - A cure for ills of existing indirect tax regime

GST has been enacted with effect from 1st July 2017 and removed the inefficiencies and complexities of the erstwhile indirect taxation system.

1. Taxes levied by different governments (i.e. state and Central) were subsumed in the GST.

2. GST eliminates the multiplicity and cascading of taxes which results into overall reduction in tax incidence.

3. Removing cascading effects of CENVAT and Service Tax, it can be possible maintain the lower price of that product and will be more demand so increase the turnover of the entity.

4. GST is easy to understand and a simple tax structure will bring more taxpayers and in return it will increase the revenue for the government.

5. Only one tax needs to be paid under the concept of 'One Nation, One Tax' which is comparatively easy to understand the erstwhile concept of manufacture or Cell of goods or rendering of services.

Above explanation cleared that, GST a cure for else of existing (i.e pre GST) indirect tax regime.

Benefits of GST

For trade, business and industry

1. Easy compliance – automated procedure with greater use of IT (registration, returns, refunds, tax

payments).

2. Uniformity of tax rates and structures are common across the country.

3. Removal of cascading effect of tax

4. Reduction in transaction cost lead to an improved competitiveness for the trade and industry

5. The subsuming of major control and state taxes in GST

For Central and State Government and Economy

1. Simple and easy to administer with end to end IT system.

2. GST will result in better tax compliance due to robust IT infrastructure.

3. Decrease the cost of collection of tax revenues of the Government and will therefore lead to higher revenue efficiency.

4. Boost to make in India initiative.

5. Creation of unified National markets.

6. Boost to investment, exports and employment.

For the consumer

1. Single and transparent tax proportionate to the value of goods and services.

2. The overall tax burden on most commodities will come down which will benefit consumers reducing product price.