GST (Goods & Services Tax)

GST is a consumption tax, that means even if the tax is 99% it’s burden is borne by consumer.
Let’s say a company pays excise duty of 10% , obviously company will add 10% to the product price.

Now assume co. pays 99% excise, this 99% will also be added to the product price which has to be paid by the customer. But when 99% tax is included, sale of that product will drastically go down and other taxes which co. was paying say corporate, wealth etc will go down as income of co. will go down.

What GST includes :
CGST (Central GST) + SGST (State GST) + IGST (Integrated GST)

“What is going to happen is on a single product GST will be charged say 20%”

This 20% will be divided into CGST and SGST, say 12: 8 . So 12 rs on a 100 rs product will go to center and 8rs will go to state. This 20% will include majority of indirect taxes.

Integrated GST:
IGST is earlier cst or central sales tax which is charged on interstate sale of goods.

How much is GST ?
Not yet decided

Who decide GST ?
GST council

What is GST Council ?
Council of Central and State Government

Our Finance minister (FM) and  FM (Minister of State) + all FM’s or appointed person of States

How they will decide ?
Through voting, Center have power of 33.3% or 1/3rd while remaining 66.7% is with states. Equal voting percentage. Uttar Pradesh power same as that of Meghalaya .

How proposal in Council will be passed ?
75% votes in favor. So without center no one can dream of passing proposal

Any more crap:
GST is destination based tax, suppose Flipkart delivers product from Delhi to Mumbai, so what is charged in Mumbai will be destination based tax.

So what ?
what is charged in Delhi will be origin based tax. So Delhi will loose revenue, so few manufacturing states have demanded 1% additional levy as they supply products to other states.

What more brother ?
States don’t want petrol to be under gst, reason is 30% tax revenue at present comes from VAT of petrol. Alcohol will not be under GST

Please conclude :
GST is good step as single tax is going to be charged which will include all type of indirect tax, further, earlier adjustment in taxes of center was only done by center and state taxes adjustment was
done only by state. now as there is going to be a single tax rate, with gst council, this set off or adjustment will be easy.
Let me give you one example; earlier a software was considered as good by state and was charged VAT and same was considered services by center and service tax charged by center. Assume a
person paid higher tax at state level, adjustment or set off was possible only at state level. now this problem will be gone.

GST ignites cooperative federalism (our FM said) that is both have to work with each other.
earlier or present structure is confusing having multiplicity of tax. GST will make things lot clearer, if you are any good or service provider you know the exact amount which will be charged as tax.

  1. It’ll be really nice Sir, if you can include why the states are atm not in mood to implement the GST & examples from prominent economies around the world where it has been successful. Apart from that what structural or precedural changes if any are required in GST to make it happen. wrt to recent missions of the govt. like Make in India n digital india how far GST will help in them. That would really be nice.

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