GST or Goods and Services Tax in India is the only kind of tax imposed from manufacturer to consumer. It is indirect kind of tax. It is imposed on the supply of goods and services all over India. The consumer has to pay the tax which is only imposed by the last dealer. Hence, the consumer is set free from paying taxes charged by the previous dealers. It will be applicable from July 1, 2017.
There are many taxes which are subsumed into GST at both center and state level. The taxes which are subsumed at Centre level are:
- Central Excise duty
- Service tax
- Special additional duty of customs
- Additional excise duty
- Countervailing duty
The taxes that have been subsumed at State level are:
- Purchase tax
- Sales tax
- Octroi and Entry tax
- Luxury tax
- Taxes on battling, lottery, and gambling
- Entertainment tax
- Central sales tax
GST was first time discussed by Kelkar Task Force report on indirect taxes around 13 years ago. There will be both Central GST as well State GST. Let us check out the benefits of GST.
- Benefits to consumers
There will be no hidden taxes. So, there will be complete transparency as there will be only one tax from manufacturer to consumer. There will be a relief from burden in overall tax payment. With efficient gains and lessened leakages, the overall price of any commodity would go down.
- Benefits to business industry
Payments of taxes, returns, registrations will be made online. There will be uniformity in the payment of taxes. There will be an improvement in the competition. Hence, it will benefit both manufacturers and exporters.
- Benefits to State as well as Central Government
Efficiency in revenue will increase with improved control over leakage.