The Goods and Services Tax (GST) is a Value-added Tax (VAT) was proposed to be an extensive indirect tax levy on sale, manufacture, and consumption of goods including services at the national level. This will supplant all indirect taxes imposed on services and goods by the Indian state and central governments. It is created to serve as a platform to boost overall growth and integrate state economies. It will form a unified, single Indian market to create a more grounded economy.
Basically, the Goods and Services Tax is an indirect tax that brings a large portion of the taxes levied on most merchandise and services, on production, sale, and consumption of services and goods under a solitary domain at the national level. Presently in the marketing system, taxes are imposed separately on various goods and services. The Goods and Services Tax (GST) is a consolidated tax based on a steady rate of tax fixed for both services and products and it is payable at the last point of consumption. As each stage of purchase or sale in the supply chain moves, this tax is accrued on value-added products and services, and this is done through a tax credit mechanism.
The GST Model and Rate
A dual Goods and Services Tax system is planned to be set into action in India as initially proposed by the Empowered Committee under which the Goods and Services Tax will be separated into two parts:
• Central Goods and Services Tax (CGST)
• State Goods and Services Tax (SGST)
Both State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) will be levied on the taxable estimation of a transaction. All products and services, asides a few ones, will be incorporated into the Goods and Services Tax system and there will be no discrepancy between products and services. The GST framework will combine additional excise duty, central excise duty, state VAT entertainment tax, services tax etc all under one banner.
The Goods and Services Tax is expected to be introduced with a rate of 14-16 percent. After combining the GST rate, the Central and the States government will make a decision on the CGST and SGST rates. Presently, a rate of 10 percent is imposed on services and the rate of indirect taxes levied on most goods will be around 20 percent.
Benefits of the GST Bill
The introduction of the Goods and Services Tax is very imperative in the growing economy of the India as a whole. It is an established fact that in the production and distribution of products, services are increasingly consumed or utilized and vice versa. Separation of taxes for products and services which is the current taxation system needs a division of exchange values into the value of products and services for taxation thereby leading to greater administration, complications including compliances costs. In the Goods and Services Tax system, after the integration of the taxes, it will enable the equitable splitting of the taxation burden on production and services.
The GST will be imposed only at the final junction of consumption considering the Value Added Tax principle not considering the production to the retail stage. This will assist in expelling economic distortions and thereby bringing development to the national market.
Also, it will help in building a corruption-free and transparent tax administration. At present, a tax is levied on when a manufactured product moves out from the production factory, and the imposed levy is paid by the manufacturer. Also, it is levied again at the sales or retail outlet when sold out.
For the Central and State Governments
According to research by economic experts, India will gain a massive $15 billion yearly by implementing the GST. This is due to the fact that it will create more employment opportunities, promote more exports, and boost growth. Also, it will equitably split the taxation burden between production and services.
For Individuals And Companies
In the Goods and Services Tax system, taxes for both Central and State governments will be collected at the sales point. Both State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) will be charged on the production cost. People will benefit from this as prices tend to come down and lower prices imply more consumption; and more consumption implies more production, eventually helping companies grow.
The Real Estate Sector
Property transactions would need a structured review and rates of registration fees and stamp duties. Various levies would be filtered out thereby reducing the extra cash siphoned on ground. Flexibility will be given to the states to levy stamp duties at a very small rate. At present, the real estate sector is heavily stricken with tax and thus the tax burden will greatly be reduced regarding the input tax on real estate activities such as procurement of products and services for undertakings like apartment and complexes construction.
Stamp duties are imposed on multiple levels like booking agreements, development agreements, and so on when buying a property. Also, the cost of stamp duties is invariably high. All these siphons a customer’s pocket. The property taxes are remitted to the government.
After the implementation of the bill, many citizens will have financial peace of mind as they would be saving much money. Additionally, transparency will assist them in discovering the bureaucratic processes that slow work rate and add hurdles. These processes could eventually be dealt with legally or directly. Also, several processes would speed up to the advantage of an average man who invests his life-long earnings in buying a property.
From all indications, GST is an important tool in actualizing the standard economy India yearns for. If pursued with a holistic approach, lots of transparency will be experienced in all sectors.