What is GST and how will it affect You? Must Read
What is GST and how will it affect you?
What is GST?
(Source: PIB)
The Goods and
Services Tax (GST) is meant to be a unified indirect tax across the
country on products and services. In the current system in India, tax is
levied at each stage separately, by the Centre and the State, at
varying rates, on the full value of the goods. But under the GST system
that is set to be introduced, tax will be levied only on the value added
at each stage. It is a single tax (collected at multiple points) with a
full set-off for taxes paid earlier in the value chain.
Thus, the
final consumer will bear only the GST charged by the last dealer in the
supply chain with set-off benefits at all the previous stages.
What is State GST and Central GST?
(Source: PIB)
For
transactions within a State, there will be two components of GST -
Central GST (CGST) and State GST (SGST) - levied on the value of goods
and services. Both the Centre and States will simultaneously levy GST
across the value chain.
In the case of inter-state transactions,
the Centre would levy and collect the Integrated Goods and Services Tax
(IGST). The IGST would be roughly equal to CGST plus SGST.
Why was GST established?
(Source: PIB)
GST
was established to subsume various indirect taxes levied at different
levels, with the idea of reducing red-tape, plugging leakages and paving
the way for a transparent indirect tax regime.
How will GST affect the common man?
(Source: The Hindu)
The
impact of GST on the prices of goods and services will largely depend
on the item in question. It will also depend upon the respective State
governments and their intervention with respect to controlling prices of
essential commodities. Milk, for example, which is likely to see a
spike in prices after GST is implemented, can still be sold at cheaper
rates, if the State government offers a subsidy on it.
How will GST help in getting rid of tax evasion?
(Source: The Hindu)
A
comprehensive IT system, GSTN, will allot universal GST numbers
(similar to PAN) to all manufacturers, traders, stockists, wholesalers
and retailers. This will simplify the administration of indirect taxes
and plug leakages. The government also plans to incentivise tax
compliance by traders.
Whether GST will be beneficial for the poor
or not only time can tell. Prices of vegetables and fruits are likely
to rise under the GST regime and services such as eating at restaurants
will get more expensive. What will likely get cheaper are items such as
clothes, as cascading taxes at various stages of manufacturing would no
longer apply to them.
Is GST going to benefit people below the poverty line?
Answered by Grant Thornton India LLP
With
respect to people living below the poverty line, while there might not
be a direct impact of GST as such since basic necessities like food are
unlikely to attract GST, increased collections of GST with a larger tax
base should provide an impetus to the government to allocate more money
toward social and poverty alleviation programmes. Thus, GST should
benefit all sections of the society. Additionally, GST, being a
nationwide tax, could lead to possibly higher inflation in the first few
years of its introduction but would gradually increase the overall GDP.
How will GST affect tax deductions of a salaried person?
(Source: The Hindu)
GST
is an indirect tax collected from customers who buy manufactured goods
or services. So whether you are earning a salary or not, as long as you
buy something, you’ll be paying tax.
Which are the items that could become costlier and which are those that could become cheaper?
Answered by Deloitte Haskins & Sells LLP
Broadly,
services are expected to become costlier under the GST regime, as the
expected GST rate would be higher than the existing service tax rate of
15%. Clearly, GST is expected to bring down prices of indigenously
manufactured goods on account of current effective indirect taxes
(central excise @ 12.5%, State VAT @ 5%-15% etc.) being higher as
compared to recommended lower GST rate @ 5% and standard GST rates @ 12%
and 18%. Thus, price of certain category of goods may come down
depending on the effective rate of indirect taxes being paid at present
and the tax brackets under which goods are classified under GST.
Source: TheHindu.com
Sharing is Caring...
QMaths Official Online Test Series
What is GST and how will it affect You? Must Read
Reviewed by Admin
on
2:43:00 PM
Rating:
Reviewed by Admin
on
2:43:00 PM
Rating:
