The term GST stands for goods and services tax. It is an indirect tax levied on the sale of goods and services. The goods and services tax was introduced on 1 july 2017 by the former President of India, Pranab Mukherjee, and Prime Minister of India, Narendra Modi.
GST has replaced many direct taxes levied at multi stages, which include Excise duty, Sales tax, VAT, Duties of Customs, Entry tax and many more. Multiple taxes had led to cascading effect because at each level tax levied on preceding level tax rather on the manufacturing cost of goods or services alone. The summation of tax at all levels came up with only two authorities for imposing tax like CGST, SGST and IGST, together named as GST. The terms CGST, SGST, and IGST differ with residents of a particular state or not and applied on goods or services accordingly.
GST has been classified into 5 slab tax structure for collection of tax are 0%, 5%, 12%, 18% and 28%. Tax imposed on each of goods or services depends on the category to which it has been classified. There were also services or products like petroleum products, alcoholic drinks, luxury cars, tobacco products and more are not included in any of the tax slabs but taken care by the respective departments and the tax rate can be high or low for these items when compared to indirect tax.
The proposed tax structure may benefit for some industries not for other industries. If we can look at the tax slabs and classified goods or services under each slab some can be considered very high and some can be low, however it depends on the kind of services. The basic needs or items kept under low tax slab rate and luxurious items were under high tax slab rate.
- No tax will be imposed on goods and services like milk, chicken, egg, newspapers, handlooms, bags, grains, cereals, vegetables, small hotels and lodges, some rough and semi-precious stones and more.
- 5% tax will be imposed on goods and services like plastic waste, rubber waste, coir cordage, ayurvedic namkeens, idli, dosa, cullet, paper waste, mangoes pouches, aircraft tyres, flour of potatoes, jute twine and others.
- 12% tax will be imposed on goods and services like textile caps, synthetic filament yarn, rayon, sewing thread, porcelain items, marble idols, non-electric of base metal and others.
- 18% tax will be imposed on goods and services like disposable goods, computer monitors, kitchen gas lighters, letter clips, staples, office articles, air craft engines, poster color, electrical boards, panels, conductors and others.
- 28% tax will be imposed on goods and services like dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, motorcycles, race club betting, cinemas, private-run lotteries and more.
The Finance Minister Arun Jaitley introduced the GST bill. A committee of 22-members was formed to make sure for smooth rollout of the tax structure. A nonprofit organization named “Goods and Services Tax Network”, GSTN proposed to be formed for creating a website for all concerned parties related to GST, namely stakeholders, government and taxpayers. Also making this technology driven, activities like registration return filing, application for refund and response to notice to be done on the GST portal. By the introduction of GST a unified tax structure in the country has been made.