What is GST
In layman's terms GST is simply a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and service. India implemented GST on July 1,2017 as an unified tax for the whole nation which includes an array of taxes like Value Added Tax, Entertainment Tax, Luxury Tax, Central Tax etc.
Objective of GST
The main objective of introducing GST in India is to outplace a lot of indirect taxes. GST is not only simply VAT plus Service Tax but an improvement over the previous system of VAT and complicated service tax. In simple words, introduction of Goods and Service Tax [GST] at the Central and the State level has been considered to be a major step – an important breakthrough – in the sphere of indirect tax reforms in India. GST is aimed at being comprehensive with most of the goods and services included in the GST bill but alcohol and petrol are exempted. The primary objective of the Goods and Services Tax is the unification of the disintegrated tax system of the country. However, it has to be noted that there are numerous other objectives also which the GST has to fulfill in order to succeed. Here we will look into some basic one's to give us a clear understanding of GST
Benefit of GST
1.No cascading of taxes: Ensuring that the cascading effect of tax on tax will be eliminated. For years this has not been achieved and GST helps in ensuring that there is absolutely no cascading of taxes whatsoever. It is one of the key motive of GST to eliminate the cascading effect of Indirect taxes on single transaction.
2.One nation One tax: this is another main objective of the GST. Before the implementation of this unified tax system the nation's taxing structure was in a complete mess. With numerous types and categories of taxes which fluctuated from time to time and state to stare created a lot of trouble for the taxpayers. GST is aimed at making a unified law involving all the tax bases, laws and administration procedures across the country.
3. Decreasing unhealthy competition: Before GST it was pretty much in the hands of manufacturers and lawmakers to twist the state laws around taxes to give an unfair advantage to manufacturers of their state. This practice resulted in creating a lot of tension amongst rival companies and states. With GST being a uniform tax system such kind of problem will not arise in future.
4. Increasing number of taxpayers: another objective of GST is to ease the system to such a level that people no longer find it tiresome and troubling to file tax returns. This simplified structure is to ensure that more and more people are included under the tax payer domain so that to give a boost to our GDP. More business entities will come under the tax system thus widening the tax base. This may lead to better and more tax revenue collections.
5. Reducing corruption: While the rate of corruption in most areas are up in this country, GST aims at bringing it down at least with regard to the tax system. GST aims at proper accounts handling so that all the tax related task can be done without any corruption. Thereby, GST’s main objective is to eradicate corruption and maintain a corruption free environment in the entire nation.
6. Boost to GDP: GST is aimed at improving the total taxation system. Improving the competitiveness of the original goods and services, thereby improving the GDP rate too. With GST allowing the free movement of goods across the country without any extra tax will have positive impact on the GDP also. GST is said to increase the tax to GDP ratio also.
While these objectives seems very intriguing, the actual impact of GST is a little less than expected because of many issues namely Complete lack of adaptation mechanisms and trained staff and No clear mechanisms to control tax evasion. Work needs to be done in many areas to ensure that the country reaps the benefits of GST and enjoys the fruit bore from it. Yes, it will take time as it is fairly new to the nation but with time the system will get accustomed to it and then we will see the real benefits.
GST will required new work force to cater the need of various filing and registration. Knowledge of GST will give an upper hand to the GST professionals and will provide them with better earnings.