GST means Goods and Services Tax which is applied in every goods and product, sold for domestic consumption. GST comes under 101st Constitution Amendment Act 2016. It is a type of indirect tax across India which is applied to replace the taxes levied by the state and central government. The main Chairman of GST is Union & Finance Minister of India Mr.Arun Jaitley and it is governed by GST council. GST will be mandatory from 01-07-2017 in all over India. To reform the indirect taxation in India the Goods and Services tax is introduced. As we think from the Consumer side then it a great advantages by reducing overall tax burdens from goods. Currently, it has been estimated that there is no tax for moving goods from one state to another or state borders as it reduced the paper works also to a large extent.
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GST is also benefitted in the reduction of various indirect taxes including the state wise value added taxes, customs surcharge, additional service tax etc. Other fees like interstate transportation charge for moving goods are also likely to be ignored with the help of GST.
Goods and Services Tax includes the following Sub taxes like –
- Luxury tax – The tax which applied to the products which are unnecessary or non-essential is called Luxury Tax. This type of tax is called indirect tax and only implies to the people who purchase those products.
- Entry Tax – This tax is started on September 1,2000 and applicable during the movements of the goods from one state to another.
- Value Added Tax – A tax which is implied on every amount of a product by which that product value has been increased at every moment of its production.
- Central Sales Tax – The CST or Central Sales Tax is a type of fees in sales which is applied in the in between the state commerce and trading.
- Advertisement Tax – Amount of fees taken from the advertiser for the displaying of advertisement in form of hoardings, wall paintings, balloons etc.
- Corruption Tax – The offence which has been done by the officials with the internal revenue or its agents is known as Corruption Tax.
- Central Excise duty – The central excise duty are those tax or fees levied on those products which are manufactured in India and reserved for consumption in home purpose.
- Food Tax – The VAT which is collected in the restaurant after purchasing any food is called food tax.
- Entertainment Tax – Entertainment tax is a fee imposed by Govt. of India on Films while it gets wide release in India.
- Octroi – Octroi duty is basically an indirect tax which is applicable in Gujarat and Maharashtra. This is a tax collected from the product which is manufactured in other states and get enter into another state for selling purpose.
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Impact of GST on Indian GDP –
GDP or Gross Domestic Product is a measure to calculate the annually or quarterly market value on all the final goods and services. It also helps to check the current economic condition of a country or any region. So after implementation of GST in GDP, there will create some impact which is discussed below.
- Only one tax rate will be applicable in the whole unified market in terms of implementation of tax and across the state’s transaction of goods with remains seamless.
- On a survey in India, it has been found that total 10-12 types of tax are applied for the road transporting business. So GST will help in reducing the transportation cost by excluding those other taxes.
- After the implementation in India, it has been observed that the cost of exporting goods and products become competitive due to nil effect of taxes on that goods.
- GST will help in increasing more revenue to the Govt. and will be more reliable in decreasing the corruption.
- A Finance Ministry report mentioned that the program of “Make in India” will get benefited with the help of GST as there will be an availability of input tax structure on capitalistic goods.
- has declared the GST rates like 5%, 12%, 18%, 28%, if they kept it like this then it will be ok. But if GST rates on Goods and service finalized on 5% and 12% then the cost of services will reduce on the other hand if it is fixed on 18% and 28% the cost will get increased.
GST is applied on all transactions like import, export, lease, transfer, other services etc. Some of the main benefits of GST are listed below-
GST – Benefits in Indian Economy –
- The main aim of GST is to maximize economic gain & minimize compliance pain.
- GST helps in removing the extra indirect taxes- CST, SAD, CAD, VAT, Tax upon Tax & other excises.
- Increase the production, demand, and supply of various goods.
- The manufacturing cost of products is going to be reduced because of lower tax such that the rate of consumer good also comes down.
- Compare to the current tax structure the GST tax model is very efficient and reliable so there will be less amount of tax compliance.
- It can boost up the Indian Economy in a fast way.
- Now the public has to pay less amount of money for the same thing which they purchased earlier in a very high rate.
- Through GST the Tax upon tax will get removed.
- The black money of the Traders and also the businessman is totally getting control under mandatory check.
- Public has to pay lesser amounts of taxes against any goods and services.
GST on Daily Life –
As we know that the daily life products are very important to ourselves. So if the GST is implying on household goods and services then there will create some differences among the current price of the products with the GST added price. Here we will map out some of the difference happening after the GST scheme.
Now if you are going to any restaurant suppose you are spending RS 1000 on that and you have to pay about 18.5% as service Tax and VAT. So the total payable amount is RS 1185. Under GST scheme the VAT will be fixed at 18% or above, so approx. to 20% bill rate your payment amount will be at least RS 1200.
Readymade clothes will be cheaper
When you are going to buy a fashionable branded cloth you have to pay excise duty + Vat (7.5% +5%)=12.5% on an amount of Suppose RS 1000, the total amount to be paid is RS 1125. After the GST scheme applicable the tax is fixed at 12% so you have to pay total 1120 for the same amount only.
Phone Bills will be expensive
Presently suppose on any bill amount of RS 1000 you have to pay 15% tax, after that the Total Payable amount is 1150. After the application of GST the phone bill tax will be get fixed at 18% so you have to pay at least RS 1180 for the same.
Mobile phones price will increase
Currently for buying an imported mobile phone of price RS 10000 you have to pay RS 11280 at the rate 12.8 %. But after GST scheme the same thing you have to buy at the rate of 18% so the net payable amount for the same will be RS 11800.
Four wheelers will be cheaper
Suppose you are buying a Car worth RS 5Lakhs for that including VAT and excise fee 12.5% you have to pay RS 6.25 lakhs. After the GST scheme the rate will be fixed at 18% and the amount will be decreased to 5.9Lakhs only. Those four wheelers which is less than 1500 CC will get an average amount of RS 40000 – RS 50000 less in purchase rate.
Home Appliances will be cheaper
At present the home appliances is selling at a tax rate of 24.5% on the base price and after the implementation of GST you need to pay only fixed 18% tax rate on the same.
Online Products comes under tax scheme
As the online e-commerce sites are coming under GST so the production rates of the online sites will also get increased.
Jewelry will be increase
Tax department declared that under GST scheme 6% of tax will be implied to every jewelry purchase whether currently only 2% of tax is involved in a purchase.
Grocery items will decrease
Currently on the above products we have to pay up to 9% of tax but after GST scheme it is fixed at 5% i.e. the oil, spices, dal, tea and coffee will become cheaper.
Tobacco and Aerated Drinks will be costly
Current Tax rate of Tobacco and drinks is allotted to 21% while after implementation of GST we have to pay at 28% of the tax rate.
Current Tax rate is reasonable from the range of 15% – 21%. But after GST scheme the whole thing will be getting fixed at 18% only.
Price reduction items:
- Goods like shampoos, chocolates, Outside Eating, Two Wheeler, Cars, DTH
Price increasing items:
- Luxury cars, Tobacco products, Aerated drinks, Textiles
So these are all about the GST pros and cons after implementing in Indian Economy. But if we see overall scenario then the GST will benefit the GDP of the INDIA. The current condition of the Indian economy will be increased efficiently after the implementation of GST. All the black money will be kept under control and thus it helps in the development of our country.