GST in Layman’s Term and Its Effects
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GST in Layman’s Term and Its Effects

GST in Layman’s Term and Its Effects

The Nation’s biggest tax regime is going to be implemented from 1st July 2017. GST (Goods and service Tax) is one of the most talked about topic since the GST bill got passed in the parliament. With a lot of confusion among the business class pertaining to this matter, it would be interesting to see what actually comes up in the detailed guidelines once it gets implemented.

The GST will replace many central and state levies into a single national sales tax. It is being said, that it will make the movement of goods cheaper.

GST-Bill

Let us Understand the Concept of Going through the Current Scenario of Tax Bifurcation:

The Indian taxation system is divided into centre and state and in the same manner, the tax is bifurcated as a direct and indirect tax. Income tax comes under direct tax under the jurisdiction of the central government. Indirect taxes are levied on manufacturing and consumption of goods and on service provided, out of which taxes on consumption come under the domain of state government and the rest of the taxes come under the exclusive domain of central government.

GST India

GST is more into the debate because of the tax rates and its seamless flow across the country. The tax slabs decided are 5, 12, 18 and 28 percent. In addition to compensating the loss of taxes by the state government and additional tax would be charged on luxury items, cars, tobacco products and aerated drinks. The decision of which, goods fall in which slab is still to be taken.

ITEMS

TAX (%)

Milk, eggs, fresh meat, bread,  fruits, newspapers, handlooms etc

Tax exempted (0%)

Apparels below 1000, footwear below 500, milk powder, frozen vegetables, coffee, tea, kerosene, coal, medicines, stent, Bio-gas, Insulin, postage and revenue stamps etc

(5%)

Apparels above 1000, Cheese, Ghee, dry fruits, Processed foods, cell phones, Exercise books and notebooks, spectacles, board games etc.  

(12%)

Footwear above 500, Trademarks, Goodwill, steel products, cameras, monitors, Soaps, oil, toothpaste, smartphones etc.

(18%)

All white goods including deodorants, washing machines  and cars

(28%)

The tax slabs are based keeping in mind:

  • Mass public
  • Common man
  • High and elite class
  • Kind of goods

Benefit To consumer

With the implementation of GST, the consumers will be saved from double taxation. Only a single tax is to be paid while purchasing the good that would include taxes of both the central and state government. The consumer will be saved from the burden of indiscriminately increasing taxes of state government.

Economic Impact

Greater taxes would boost government’s revenues that would contribute more funding towards development and wellbeing.

As per experts’ opinion, most of the goods and services will fall under 12% to 18% slab. The real action will start on 1st July 2017, where we will come to know which goods will fall under which slab. The classification of rates would determine how business would grow in comparison to the existing system.      

“One nation, one tax, one market!” is definitely the way forward for a nation that is fast becoming a force to be reckoned with across the world.

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