5 Facts about GST
Goods and Services Tax is a major Tax reform policy in India. There are 5 Facts about GST that Everyone Needs to Know. Most of the economists have a positive view point against GST implementation. The Indian government is contributing its continuous effort to make this place a better place to live in. Here are some Facts about Goods and Services Tax which every Indian citizen should consider before forming their own point of view. GST Rates in India is 5%, 12%, 18% & 28% and the government has kept a large number of items under 18% tax slabs but did you ever wonder the reason behind this? Well, here we are presenting few advantages of GST that worth a look.
GST Rates List
|5%||Edible oil, spices, tea, coffee, sugar (except instant), Sweets/Mithai (Indian Sweets), Coal (instead of current 11.69%), Life-saving drugs|
|12%||Computers, Processed food|
|18%||Hair oil, toothpaste and soaps (currently at 28%), Capital goods and industrial intermediaries|
|28%||Small cars (+1% (petrol) or 3% (diesel) cess), Consumer durables like AC and fridge, luxury & sin items such as BMWs, cigarettes and aerated drinks (+15% cess)
High-end motorcycles (+15% cess)
Petroleum products, like petroleum crude, aviation turbine fuel, , high speed diesel, motor spirit, natural gas, will be brought under the realm of GST from the date as may be informed by the government on recommendation of the Council. Alcohol for human consumption is not under the reach of Goods and Service Taxes. To fetch more details concerning the Facts about GST have a look at the underneath section.
5 Facts about GST
- GST and its Benefits
Goods and Service Tax is a transparent Tax that also decreases various indirect taxes. With GST execution a business premises can present the tax applied in the sales invoice. With the help of this, the customers will be able to know the amount of taxes they are paying on the product / services they bought / consumed. Under GST, all the goods will be sold at one price and the tax will be same. As we know that previously, people from different states need to spend different amount to purchase the same product because the state imposes tax on its own. After the GST is implemented, Central Excise Duty, Additional Excise Duty, Service Tax, Additional Custom Duty (CVD), Special Additional Duty of Custom (SAD), VAT / Sales Tax, Central Sales Tax, Entertainment Tax, Octro Andy Entry Tax, Purchase Taxes, luxury tax will not be imposed.
- What will be Cheaper?
After the implementation of GST, the VAT and service tax has been removed on the transaction. As a result, buying a home will be more affordable than it was ever before. Also, the restaurant bill will be reduced. Previously VAT and other taxes were imposed on goods and services in every state at different rates. Under GST, only one tax will be charged and it will be beneficial for your pocket. Products like consumer durables, microwave ovens, fridges, washing machines will be more affordable. Previously, 12.5% excise and 14.5% VAT was charged but under GST, only 18% tax will be charged. Apart from the purchase, freight will be 20% cheaper, which will be benefited by the logistics industry.
- What will be Expensive?
Tea-Coffee, Canned Food Products will be more expensive. If we talk about the services, the mobile bill, credit card bill is going to be expensive too. Previously, 15% tax on services (14% service tax, 0.5% Clean India Cess, 0.5% agricultural welfare cess) was imposed. After GST, it will increase to more than 18%. Under GST, tax will be charged on MRP, which is being considered after imposing discount. Where, James and Jewelry are determined to be expensive as it takes 3% duty, this percentage will increase to 17% after GST. Readymade garments will also be expensive because at present it takes 4 to 5% VAT which will be 12% after GST.
- Impact of GST upon Country’s Economy
Hit by inflation, the country is going to bear it for some more years. It is estimated that after the introduction of GST, the country is going to face increase inflation for nearly 3 years. After GST, the people will offer 18% service tax on everyday services. However, prices of petrol-diesel-gas will not be influenced through GST. Only three tax will be levied on goods and services after the GST is implemented, first CGST that is Central GST which will be recovered by the central government. Second SGST i.e. State GST which will be recovered by the state government on its business. If any business activity takes place between two states, then IGST, that is Integrated GST will be recovered. It central government will recover the tax and it will be divided in equal proportion in both the states.
- More Transparency
Under GST, the tax burden will be equally distributed between manufacturing and services. This can be done through lower tax rate by increase Tax base and reducing exemptions. Under GST, Central GST and State GST will be charged on manufacturing cost and will be collected on point of sale. This will be profitable for the people as prices will drop down which will help companies as consumption will rise. According to the committee, many businesses do not show sales yet, after the implementation of GST, online entry will be done for every transaction will the help of which, the government will be able to control tax evasion.