GST Full form is Goods and Services Tax. It is an indirect tax reform system in India, which will transform India into one unified market. The expected date for the applicability of GST is 1st July, 2017. There are many doubts among the people about What is GST. We are explaining GST for you, also sharing the different slabs of GST and which items fall under which slab. We will also explain the impact of GST in Indian Economy.
GST is governed by the GST council and the chairman of the same is Arun Jaitley, the Union Finance Minister of India. You can check out Pros and Cons of GST bill below –
What is Goods and Services Tax and how does it work?
The Goods and Services Tax is a comprehensive, multi-stage tax structure that will be applied on every stage of value addition. Credits of input taxes paid at every stage will be made available in the next value-addition stage, thus reducing the burden of tax on the consumer. Also, duplication of taxes will be avoided under this tax structure.
It is considered to be one of the most crucial economic reforms which will have a great impact on the economy of the country.
GST aims at removing the tax barriers between the different States and creating one single market. Combining the Central and State tax into one singe tax will reduce the amount of revenue loss, avoid cascading of taxes and will widen the tax base.
Impact of GST in Indian Economy and What are the advantages of the Goods and Services Tax?
The impact of GST in India economy will be big. Firstly, application of GST will reduce the transaction costs and thus will increase the competitiveness for the industries. Secondly, it will be easier to administer the concept of GST as compared to the present tax structure. Thirdly, consumers will benefit a lot with the application of the Goods and Services Tax. Because of prevention of leakages and minimized revenue loss the overall burden of tax on the commodities will fall, thus making the commodities cheap for the consumers.
Furthermore, there are many other benefits of GST such as uniformity of the tax structures, efficient revenue collection for the government etc.
Different slab rates under GST
Goods and Services Tax includes 4 different slab rates which are as follows:
- 5 percent
- 12 percent
- 18 percent
- 28 percent
also, different goods and services will fall in different brackets under GST.
As per the Government of India, approximately 50 percent of the regularly used items which include mostly food items will presently not be included under the GST.
GST Application Slabs
The commonly used goods and services are charged the GST rate of 5 percent. Items of basic use fall under this bracket.
Goods and Services Tax under the category of standard goods and services fall under the two slabs. One slab attracts 12 percent rate of GST and the second slab attracts 18 percent rate of GST. Most important, processed foods, readymade garments, ayurvedic and homeopathic medicines etc. fall under the 12 percent rate and manmade fiber, yarn, LPG stoves, electronic toys etc. fall under the 18 percent rate of GST.
Luxury items are taxed at 28 percent rate under the Goods and Services Tax.
Furthermore, there are majorly two institutions under the Goods and Services Tax. First, the GST Council that deals with all the issues regarding the GST. Second, Goods and Services Tax Network (GSTN) whose main aim is to provide Information technology services to the major stakeholders and tax payers.
Concluding, We hope we were able to clear some doubts about What is GST. Keep reading Coworking India Magazine to know more about GST and other valuable information for Startups, Coworkers & Freelancers.
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