GST : Goods and Services Tax | All you need to know

Goods and Services Tax is a Tax which is collected on all goods and services. It is a successor of VAT which is Value Added Tax. This Tax is given by the customers or the consumers who are buying those goods or taking the services to the person who is the businessman who is the provider of those Goods and services.

This tax collected by the seller of those Goods and services than given or collected by the government. Why this Tax is named as Goods and Services? As it is applied to all the products selling by the seller and all the services by them.

Features:-

Some of the features of Goods and Services Tax are written below:-

1. This tax is to apply on the “Supply” of goods and services. The previous tax system use to collect money on the manufacture of those goods and services but not it will applied only when it will be sold or supplied.
2. The principle which govern this Goods and services tax is destination based consumption taxation. Earlier it was based on the principle of origin Based Taxation.
3. It have a dual system of taking Goods and services tax which are divided into two parts:- CGST for central government and SGST for state governments. Imported goods and services will be called as IGST which is Integrated Goods and Services Tax.
4. The rate of GSTs of both central and state government will be decided mutually by the agreement of state and central governments.
5. GST will be collected on the basis of various slabs of rates like 5 percent, 12 percent, 16 percent etc.

Launch and implementation date of GST:-

The goods and services tax came into effect on 1^st July, 2017. That’s why 1^st July is celebrated as GST day.

Objectives and Aims:- Below written are some of the objectives and aims which are the reason behind the implementation of the Goods and Services Tax. These are:-

1. To eliminate the Cascading effects which is known as Tax on Tax.
2. To exempt the small start-ups and business to come out of the vicious cycle of tax in multiple levels which increased the registration threshold.
3. To ease the tax burden on business and increasing the ease of doing businesses.
4. To make the process of filing taxes more convenient and virtual for the people.
5. To replace many taxes and unify it into one.
6. To lower the tax burden on consumers and also the business ventures and increase more consumption.
7. To help and boost in the economic development of the country by raising the GDP of the country.
8. To curb the problem of tax evasion by the people in the country and reducing the challenges on the common public of the country.

Progress and advantages:-

The goods and services tax launched by the prime minister of the country, Narendra Modi in 2017 have many advantages which are written below. These are:-

1. This created a unified and single market in the country where is there only one tax collected from the people.
2. This helped the small ventures and business who are not gaining a certain limit of turnover to not burdening them with various taxes of the supply chain in the industry which encouraged many people to take the risk and do start something of their own and more business creation and successful campaigning of make in India campaigns.
3. Making the payment of taxes and all related activities virtual which can be done anywhere and this helps in more safe and secure activities with a transparency.
4. It helped in reducing the price of the goods and services as now consumers are only required to pay the tax avoiding the multiple layers of taxes.
5. Business growth lead to the rise in economy and more opportunities and job creations for the young people of the country.
6. This is based on the principal of destination based tax which is about favoring consuming states. This helped in improving the all over investment mechanism of the country stronger.
7. An advantage of entering the international market is now possible which a difficult route was earlier.

Facts:-

1. According to the report by the finance ministry of the country there is more tax compliance in the country now. The Good and services tax collection crossed one lakh rupees crore mark in May 2023.
2. According to some of the reports it have been found that because in eliminated the cascading effects. It reduced the cost of some products.
3. According to the report of the world bank, the india’s rank on the basis of ease of doing business was on 130^th in 2016 and in 2022 it is 63^rd.
4. More business are getting launched in India which overall are responsible in increasing and uplifting the economic condition of the country. More people are becoming self-employed and this is a reason of becoming less dependent on the government.

Way forward:-

There are many suggestions or we can say methods to go ahead with this. There are good changes but it do needs reforms. Below written are some of the methods of taking this forward.

1. There can be reduction in the various tax slabs which are categorized under Goods and Services tax. This will help in reducing tax evasion.
2. We know many people do not pay taxes which is a crucial element to grow our country and if more people will give taxes, this will lower the burden and that’s why the suggested measure on this can be there should be more stricter laws to prevent the tax evasion. We can use technology and data oil to figure out the fraudulent activities.
3. There should be more trust between the center and state government which can only be done by listening to each other problems and then acting on that.
4. Making students and young population aware of these taxes is very important and forms an important part of making them financially literate.