GST - The game changer or One nation one tax: Part 1

What is GST - it is a simplified tax structure applied on goods and services. It is a version of Value added tax levied at all points in the supply chain. It would be applicable on supply of goods or services as against the prevailing system of tax on the manufacture of goods or on sales of goods or on provision of services. It would be a destination based tax as against the existing system of origin based tax.

 Taxes part of GST- 

Central tax- central excise duty, additional excise duty, service tax, additional customs duty and special additional duty of customs.

At state level- state value added tax, entertainment tax, central sales tax which is levied by the centre and collected by the state, octroi and entry tax, purchase tax, luxury tax.

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Benefits of GST-

For business and industry:

1)      Easy compliance: a robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore all tax payers services such as registration, returns, payments would be available to the taxpayers online, which is no doubtly going to make the compliance easy and transparent

2)      Uniformity of tax rates and structures: GST will ensure that indirect tax rates and structures are common across the country , therefore increasing certainty and ease of doing business, in other words GST would make doing business in country tax neutral irrespective of the choice of place of doing business

3)      Removal of cascading: as it would be a destination based tax instead of origin based tax and will be levied in supply chain so it will harmonize the tax system and bring the minimal cascading effect in the system.

4)      Improved competitiveness: Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.

5)      Gain to manufacturers and exporters: the above mentioned effect will bring down the cost of the products and will increase the competitiveness of Indian goods in the international market

For central and state governments:

1)      Simple and easy to administer: As multiple indirect taxes at the centre and state levels are being replaced by GST. backed with a robust end to end IT system, GST would be simpler and easy to administer.

2)      Better control on leakage: GST would result in a better tax compliance due a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to the other in the chain of Value addition, it will be hard to evade the tax by the traders.

3)       Higher revenue efficiency: GST is expected to decrease the cost of collection of tax revenues of the government and therefore will increase in the higher level of revenue efficiency.

For the consumers:

Single and transparent tax proportionate to the value of goods and services: Due to multiple indirect taxes being levied by the centre and state with incomplete or no input tax credits available at progressive stages of Value addition, the cost of most goods and services in the country today are laden with many hidden taxes. Under GST there would be only one tax from manufacturer to the consumer, leading to the transparency of taxes paid to the final consumer, it will increase the overall tax burden and will benefit the consumers because with it cost of commodities will being down

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Click here for : GST - The game changer or One nation one tax: Part 2

Stay tuned for more information on GST in the next part of this series. This is a super-hot topic for lecturette , GD and interview discussion , so prepare it well on SSB Vision. If you like our efforts please share it with your friends and other defense aspirants. Follow us here for detailed information. Apply for email subscription, so that you do not miss any important update.

About the Author: Vikas is from Chandigarh who is a NCC ‘C’ Certificate holder and has a dream of serving the nation. With this article he wants to help other aspirants for preparing them in general awareness.