Mrs. Nishanthi.S 21.6.

2017, Wednesday

Assistant Professor

GST is a transformational tax reform in our country

since independence. It is an indirect tax that is
imposed on goods as well as services. GST is
particularly designed to replace the indirect taxes
levied on goods and services by the Centre and
States. GST can be termed as One Tax, One Nation
and One Market. GST is a highly compliance driven
law. GST is one indirect tax for the whole nation,
which will make India one unified common market.
GST is a single tax on the supply of goods and
services, right from the manufacturer to the
consumer. Under this system, a single product will be taxed at the same rate in every corner of
the country and so honorable Prime Minister Narendra Modi hailed it as a GREAT STEP BY
TEAM INDIA that will help transform the economy, bring in TRANSPARENCY and bring in the
system of ONE COUNTRY ONE TAX. But still it does not mean that every item will be charged
at the same price. Evidently the daily essential will be charged at a lower rate than the luxuries,
but a single luxury product or an individual necessity good will be charged the same rate
throughout the country. More than 160 countries have already introduced GST/ National Level
VAT. Canada and Brazil only have dual GST.

CURRENT TAX SYSTEM AND PROPOSED TAX SYSTEM:

CURRENT INDIRECT TAX STRUCTURE PROPOSED DUAL GST MODEL

The following items will be replaced by GST which is currently imposed by Centre:-

Central Excise duty

Duties of Excise (Medicinal and Toilet Preparations)
Additional Duties of Excise (Goods of Special Importance)
Additional Duties of Excise (Textiles and Textile Products)
Additional Duties of Customs (commonly known as CAD)
Special Additional Duty of Customs (SAD)
Service Tax, Central cess and surcharge

The following items will be replaced by GST which is currently imposed by State:-

State VAT
Central Sales Tax
Luxury Tax
Entry Tax (other than those in lieu of Octroi)
Entertainment Tax (not levied by the local bodies)
Taxes on advertisements
Taxes on lotteries, betting and gambling
State cess and surcharges, as they relate to supply of goods or services
Stamp Duty & Registration Fees

The proposed tax system will take the form of dual GST which is concurrently levied by
central and state government. This will comprise of:

Central GST (CGST) which will be levied by Centre

State GST (SGST) Which will be levied by State
Integrated GST (IGST) which will be levied by Central Government on inter-State
supply of goods and services.

GST IMPLICATIONS

Under the current, non GST regime the indirect tax rate on goods is 27%-32% and on services
its 15%. Under the proposed GST regime the expected GST rate would be 18%-22% where the
cost of goods will go down and the cost of services will rise. The products like Groceries, Two-
Wheelers, Small Cars, SUV, Consumer Electronics, Movie Tickets etc., will get cheaper and
products like Air-Ticket, Mobile Phone, Insurance Premium, Eating-Out etc., will get costlier.
Among all Petroleum products, Entertainment and amusement tax levied and collected by
panchayat /municipality/district council, Tax on alcohol/liquor consumption, Stamp duty,
customs duty, Tax on consumption and sale of electricity are exempted.
EXAMPLE

CONCLUSION

To conclude it is very encouraging that the GST bills are finally passed and on its way to become
to make a nation proud. The rudimentary planning behind introducing GST is to convert India
into a single market. This might have a positive impact on GDP of India and help to boost the
Indian economy. One of the biggest taxation reforms in India the Goods and Service Tax (GST)
-- is all set to integrate State economies and boost overall growth through a lower tax rate by
increasing the tax.