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Goods and Services Tax In India


Goods and Services Tax In India

Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services. It is a comprehensive, multistage, destination based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes. Multi-staged as it is, the GST is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer and as a destination based tax, it is collected from point of consumption and not point of origin like previous taxes.

Goods and services are divided into five different tax slabs for collection of tax - 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. In addition of 22% or other rates on top of 28% GST applies on few items like aerated drinks, luxury cars and tobacco products. Pre-GST, the statutory tax rate for most goods was about 26.5%, Post-GST; most goods are expected to be in the 18% tax range.

The tax came into effect from 1 July 2017 through the implementation of the One Hundred and First Amendment of the Constitution of India by the Indian government. The GST replaced existing multiple taxes levied by the central and state governments.

The tax rates, rules and regulations are governed by the GST Council which consists of the finance ministers of the central government and all the states. The GST is meant to replace a slew of indirect taxes with a federated tax and is therefore expected to reshape the country's 2.4 trillion dollar economy, but it's implementation has received criticism.[3] Positive outcomes of the GST includes the travel time in interstate movement, which dropped by 20%, because of disbanding of interstate check posts.[4]

Journey of GST in India

The GST journey began in the year 2000 when a committee was set up to draft law. It took 17 years from then for the Law to evolve. In 2017 the GST Bill was passed in the Lok Sabha and Rajya Sabha. On 1st July 2017 the GST Law came into force.

 Overview on History of GST

  • 2006 - First announcement of GST was made by the Union Minister during the 2006-2007 budget, that it would be introduced on April 1, 2010.
  • 2009 - Empowered Committee released the first Discussion Paper.
  • 2011 - 115th Amendment Bill was introduced and subsequently lapsed
  • 2014 - 122nd Amendment Bill was introduced in Lok Sabha
  • August 2016 - One Hundred and First Amendment Act was enacted
  • September 2016 - The first GST Council Meeting was conducted
  • March 2017 - CGST, SGST, IGST, UTGST and Compensation Cess Act was recommended by GST Council.
  • April 2017 - CGST, SGST, IGST, UTGST and Compensation Cess Act were passed
  • 1 July 2017 - GST laws, Goods and Services Tax was launched all over India.
  • 7 July 2017 - Jammu and Kashmir state legislature passed its GST

 


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