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GST (Goods And Services Tax): One Tax, one Market, one Nation

Himanshu Maurya Published:July 14, 2018
This is image of GST

Implementation of the Goods and Services Tax (GST) in India was a historical move. In this article we are going to tell about History of GST, old tax system in india, GST tax slab in india and latest updates in GST ....

What is GST?? ------------- GST is an indirect tax which has replaced many indirect taxes in India.It is replacement of many indirect taxes like Central Excise Law, Service Tax Law, VAT, Entry Tax, Octroi etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017. > *In simple words we can say that GST means Taxes that we are paying to* > *the central and state governments for getting the goods and services*. ## History of GST ## Idea of GST was first suggested by Atal Bihari Vajpayee Government in 2000. In 2004 a task force that was headed by Vijay L. Kelkar the advisor to the finance ministry, indicated that the existing tax structure had many issues that would be mitigated by the GST system. ![10th meeting of GST][1] It took nearly 17 years before GST was finally launched on 1 July 2017.The division of powers between the Centre and states are clearly delineated in the Seventh Schedule of the Constitution, which was amended in 2016 to introduce the GST, which subsumed a number of central and state taxes. A dual GST structure has been designed, empowering the Centre as well as the states to concurrently levy GST on intrastate trade. In addition, an integrated GST (IGST) is designed to tax supplies in the course of interstate trade. ## OLD tax system ## Before going to know more about the GST first we will understand about old tax system of india. In our old tax system, we have two types of taxes- ![type of taxes in india][2] **Direct taxes**- Imposed on persons-paid directly to the government-Income Tax. **Indirect taxes**-Imposed on goods and services-paid indirectly to the government via third person-service Tax. e.g-when you go to the restaurant and pay the bill to the owner of the restaurant then owner pay service tax to owner is third person here. Indirect taxes levied by central govt. as well as state govt. ![different taxes in india][3] **Major indirect taxes levied by central govt are:** **Excise duty**-it is charged on manufacturing. **Service tax**-it is charged on provision of services. **CST**-it is charged on interstate sale of good i.e when goods are sold from one state to other **Custom duty**-it is levied on imports and exports of the goods **Major indirect taxes levied by state govt are:** **Vat or value added tax** –it is charged when goods are sold within the state **Entertainment tax**-it is imposed on various forms of entertainment e.g. on movie tickets **Luxary tax**-it is imposed on luxary hotel rooms etc **Octroy/entry tax**-on transfer of goods ## Various types of GST ## Goods and services tax are divided into four types- ![type of taxes levied by govt of india][4] **WHAT IS CGST :** Central goods and services tax is levied by the central government .This duty is imposed on transaction teking place in intrastatei.e within one state **WHAT IS SGST :** State goods and services tax is the duty levied by state government. This duty is imposed on intrastate transaction ie within one state **WHAT IS IGST :** Integrated goods and services tax is imposed on interstate transaction (i.e between two states )and imports.This duty is collected by central government and further distributed among various respective states **WHAT IS UGST :** Union territory goods and services tax is levied on supply of goods and services taking place in five union territories in India namely Andaman and Nicobar islands ,Dadra and Nagar Haveli ,Daman and Diu and Lakshadweep and Chandigarh. *Delhi and Puducherry UTs already have their own legislatures, so SGST is applicable to them.* ## Various GST Tax Slabs in India ## In india GST Tax slab are divided into 5 different parts- - **No Tax(0% tax)** All the goods and services comes inside this slab have zero tax. **Goods:**-milk, fruits, vegetables, sindoor, bangles, handloom, besan, flour, eggs, stamps, printed books, judicial papers, newspapers bread, salt, bindi, natural honey, curdand etc **Services:**- All hotels and lodges who carry a tariff below ₹ 1,000 - **GST Tax Slab of 5%** **Goods:**- fish fillet, frozen vegetables, milk powder, coffee, coal, fertilizers, tea, bread, kerosene, ayurvedic medicines, agarbatti, sliced dry mango, insulin, cashew nuts, unbranded namkeen, lifeboats, Apparels (< Rs.1000), Footwear (< Rs.500), etc **Services:**-Small restaurants along with transport services like railways and airways, Standalone ACs non-ACs Restaurants and those which serve liquor, Takeaway Food, Restaurants in hotels with a room tariff less than ₹7,500 (no input credit for these restaurants), will come under this category - **GST Tax Slab of 12%** **Goods:**-cheese, ghee, pickles, sausage, fruit juices, namkeen,tooth powder, instant food mix, cell phones, sewing machine, Plants including Pickle Murabba, Chutney, Jam, Jelly , Umbrella etc **Services:**-Business class air tickets will attract a tax of 12% under GST, state-run lotteries, non-AC hotels - **GST Tax Slab of 18%** **Goods:**-footwear costing more than Rs 500, trademarks, goodwill, software, bidi patta, biscuits (all categories), flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, etc **Services:**-Restaurants located inside hotels with tariffs of ₹7,500 and above, outdoor catering(input tax credit to be available) , IT and Telecom services and financial services along with branded garments will be part of this tax slab **GST Tax Slab of 28%** **Goods:**-sunscreen, pan masala, dishwasher, weighing machine, paint, cement, vacuum cleaner. Other items include automobiles, hair clippers, motorcycles **Services:**-State authorised private-run lotteries, hotels with room tariffs above Rs 7,500, 5-star hotels, race club betting, and cinema are all under the highest tax slab of 28 per cent. What is HSN Code?? ------------------ HSN (Harmonized System of Nomenclature) is an 8-digit code for identifying the applicable rate of GST on different products as per CGST rules. > *For turnover upto 1.5 crore in previous financial year number of digits in HSN = 0* > *For turnover 1.5 crore- 5 crore in previous financial year number of digits in HSN = 2* > *For turnover More than 5 crore in previous financial year number of digits in HSN = 4* Latest update in GST rate for goods and services ------------------------------------------------ **Rates for 29 Goods and 53 Services have been revised** - **Goods at 0%:**- De-oiled rice bran and parts used to manufacture - **Reduction from 28% to 18%:**- Old and used motor vehicles(medium and large cars ans SUV) without ITC Bio-fuled public transport buses - **Reduction from 28% to 12%:**- Old and used motor vehicles (other than medium and large cars and SU) without ITC - **Reduction from 18% to 12%:**- Drip irrigation system, sprinklers, Services of construction of metro / mono-rail, Biodiesel, Sugar boiled Confectionery - **Reduced from 18% to 5%:**- LPG (for household use), Raw materials and Consumables needed for Launch vehicles/satellites, Mehendi paste in cone - **Reduced from 12% to 5%:**- Velvet fabric( Without Refund of ITC), Articles of straw, of esparto or of other plaiting materials - **Reduced from 3% to 0.25%:**- Diamonds and precious stones - **Increased from 0% to 5%:**- Rice bran (other than de-oiled rice bran) - **Increased from 12% to 18%:**- Cigarette filter rods Benifits of GST --------------- - **Decrease in inflation:**- According to the government, GST has led to a decrease in inflation due to the reduction in cascading effect (tax on tax) of taxes and overall reduction in prices. With an intent to curtail the inflation, the Government has taken various measures under the new regime including finalization of rates which are aligned to existing rate structure for most items and introducing an anti-profiteering clause in the GST law. - **Reduction in black transactions:**- Due to the ‘non-intrusive’ and transparent tax system, the GST has led to a reduction in black transactions, according to the Ministry of Finance. Notably, GST is a self-regulating on-line tax system. - **Boost to Make in India:**- The government’s initiative of Make In India has also received a big boost under GST, as IGST provides protection to the domestic industry. Further, certain taxable supplies are taxed at the rate of 0% rather than at the standard rate of 15%, in case of export related businesses. - **More informed customer:**- The ministry of finance states that GST has led to more informed consumers due to the simplified tax regime, and the reduction in multiplicity of taxes. Some other benefits are- - **Ease of doing business** - **Increase in Government revenue** - **Online simple procedure under GST** - **Reduce paper work** - **Regulating the unorganized sector** - **Uniform SGST and IGST rates to reduce the incentive for tax evasion** - **Uniform prices throughout the country** - **Transparency in taxation system** [1]: [2]: [3]: [4]:

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