8 things to know about the GST Bill in India

The Goods and Services Tax (GST) is the biggest game-changer in the paradigm of India’s indirect tax structure since the economy opened up some 25 years ago.

 The GST in India is said to be an answer to many financial problems. The Goods and Services tax or what is more commonly referred to as the GST is expected to replace the indirect taxes which are levied by the State and the Central Governments and provides a much more streamlined alternative.
Business owners will also find India as a unified market who want to bring a lot of black money right into the mainstream economy. The tax is supposed to be implemented at every step of value creation.
Our previous tax structure had a value added tax structure on both the state and central levels. VATs cover only sales and sellers and is not allowed to claim the credit against VAT which is paid on earlier purchases.

It does exclude a number of other taxes which covers luxury and entertainment tax within the states. Once the goods and service tax is implemented it would mean a cascading sequence of tax credits. At each stage, the seller would be able to set off his taxes. Thankfully, the consumer, at the end of the line, having to bear the cascading effect of the taxes till now, would only have to bear the taxes levied by the last dealer.

Here are the eight things to bear in mind about the GST Bill in India,

•    The GST is an indirect taxation where most of the current taxes are merged into a single taxation system.
•    Now that the the GST Bill is passed, it will allow both the Centre and the states to charge an indirect tax on the several things like the manufacture, sale, and the consumption of goods and services across the country.
•    Saying it in a nutshell, the GST would bring together all taxes in one basket all levied by state and Central government and unify them into a single-tax sturture thus eliminating the system of multiple taxations and also promote the concept of one nation, one tax.
•    The GST is governed by the GST Council which is governed by the Finance Minister. The finance mister Mr. Arun Jaitley's says that once all taxes are removed and the cascading effect of the taxes is removed, the prices of goods will also come down substantially.
•     A smooth GST rollout is a challenge in itself, as it needs a coordination between the states and the Centre to ensure that there are uniform tax rates for all goods and services.
•    The GST council has put forward a system of a four-tier uniform tax slab of 5, 12, 18 and 28 per cent on goods and services, along with an additional cess on demerit goods which includes tobacco products, luxury cars, and aerated drinks.
•    The Food items which have been kept in the zero-per cent slab is not expected to attract any extra taxes. As of now, the petroleum products too which are under the GST will also remain in zero tax slab.
•    With the GST being levied there are many taxes which will be subsumed such as, Centre-level taxes which includes the Sales Tax, Excise Duty, and the state-level taxes like the luxury tax, the Value-added Tax (VAT), Entertainment Tax and so on.
Thus, the above important points on the GST proves that it is one indirect tax for the entire nation, which will ensure that India remains, one unified common market.

What is the difference between a VAT and a GST?

With the advent of GST, the rules of the old vat are not depended upon anymore as most businesses are required to apply for GST registration. The difference between the Vat and GST lies in the way the extra taxes are filtered and how all the taxes will no longer be separated.

To know more about the difference between the current taxation and the new GST tax in India you will have to know more about the GST tax. 

GST is actually a tax policy that means one market all around the country. This system actually reduces the complicated structure of taxation as it creates a common market. This also reduces the burden of a tax payer as it brings down the indirect tax and also the import and exports taxes.

The business that has an income lower than 20 lakhs is not required for registration in GST.

GST removes the cascading effect of several taxes that the tax payers pay.

In India, the GST tax will finally replace almost all the indirect taxes and encourage a common market with an easy tax structure and simple tax payment. 

The cost levied on all the commodities will drop, thanks to the GST implementation as it does away with the tax on tax syndrome.

Differences Between the Vat and GST

The VAT and service tax are taken separately as VAT is considered separately for goods and separately for service while the GST is common for both of it, making it simpler to follow.

The several indirect taxes together increases the tax and with every state having their own tax rate, increases the amount of tax rate as the goods are transported from one state to another. This results in a cascading of taxes and with the implementation of GST, such problems can be avoided.

GST will also do away with the differences in the structure of taxation between the states and this will lead to single indirect tax.

Central and state governments

GST will make the tax compilation better and seamless with the transfer of input tax credit from one stage to another.

GST will also be reducing the tax collection of the government and hence lead to higher revenues.

Consumer

Due to a high tax rate on every item and the increasing value when it reaches the consumer flummoxes them as they do not understand the exact process of the implementation of taxes as it is a real complicated process.

Thankfully the overall tax burden will reduce considerably and the consumer’s burden will also reduce significantly.

The GST is implemented and it will leave an impact in the every sector. Some of these impacts can be temporary in some of the others it is permanent. 

The impact is actually expected at a high rate as the transformation in the game of tax will either see a slight or a huge leap in the world of business and of course it all depends on the different category of business. Every sector will feel a different kind of repercussions.

How is GST beneficial for the country? How would it help to improve the country's economy?

The GST goods and service taxes is a bill that has been recently passed and it makes your tax structure easier and helps in doing away with all the extra taxes from a business.

GST helps manage your taxes easily and can throw in a lot of clarity on what you are paying for and what is the number of taxes that you are paying. It leaves out all the unnecessary taxes you have been paying along without knowing much about it. 

With GST all the taxes are paid and all the complexities are done away with. It is a consumption based tax which depends on the sale, manufacture and also the consumption of good and services at a national level. 

With the rise in Global trade, GST has almost achieved a global standard. It brings out a qualitative change in the tax system and helps redistribute the burden of taxation equitably between both manufacturing and services.

Will GST Bring about an Improvement in the Economy? Let us find out

Some of the direct benefits of GST can be listed as follows,

·         It removes bundled indirect taxes including the VAT, CST, service tax, CAD, SAD, and also the excise.

·         A simplified tax policy, a great change from the the current tax structure.

·          Doing away with the casacading effect of taxes.

·         Slashing down of manufacturing costs as the burden of taxes lowers down considerably on the factoring sector. Hence prices of consumer goods will come down.

·         The common man will be greatly benefited as they will have to pay less money.

·         Both the demand and consumption of goods increases.

·          Increase of demand leads to increase in supply, which will ultimately lead to a rise in the production of goods.

·          The black money circulation also gets controlled, especially circulated by the traders and shopkeepers will be checked thoroughly.

·         A sharp reduction in the price gap between the organized sector.

·         The warehouse/logistics costs will be controlled across both the operational and non-operational segments. The best psart of this is it will improve operational profitability by the almost 300-400 bps.

·          The 7th Pay commission will also boost demand and fund inflow, especially in the consumer durables sector. It is expected to rise during the end of this year.

The indirect tax in the country has improved the model of their supply chain and systems thanks to the multiplicity of taxes and costs involved. The total tax collection in India including both the direct and indirect is Rs. 14.6 lakh crores and from that about 34 percent of that comprises indirect taxes and with Rs. 2.8 lakh crore comes from excise and another Rs. 2.1 lakh crore comes from the service tax. 

Thus, with the implementation of GST, the entire indirect tax system in India is transformed and going in the right direction, at least as far as the economy of the country is concerned. The tax revenue expectedly will change the face of the country’s economy and will help bring at par with the other economically prosperous countries of the world.

How will the GST impact Indian capital markets?

Not many radical economic changes have impacted the Indian Economy as much as the Good and Services tax(GST) since 1947. and it plays an important role in the economy of India. GST is levied on the manufacture, sale and also the expenditure of goods and services

 The chief purpose of GST is to unify indirect taxes and create a common market. The Finance Minister of the country, Arun Jaitley says that the GST bill will revolutionize the economy of India and helps in the economic integration of India. Thus the GST also is a way to make the cumbersome tax process uniform, which is levied on goods and services across the country.

Certain Facts of GST which you should know about

Currently, the tax scenario is like this, there are multiple indirect taxes which are levied on goods and services which are a deterrent to the growth of India’s economy. 

There is not one but numerous taxes in the forms of CST, Entry tax, VAT, Excise duty, Entertainment tax, Customs duty and Stamp duty and any other have divided the Indian market. This scenario means that introduction of GST will result in economic growth. 

GST is sure to impact positively on the Indian economy. Some of the sectors of the Indian economy are more impacted upon in comparison to another sector under GST.

After the GST implementation, it has removed all the indirect taxes and formed a single common market which results in an efficiency of supply chain and an economy of scale in production It can also give leeway to improved trade and commerce.

GST will also do away with the rapid effect of taxes rooted in the cost of production of products or services and will provide the required credit throughout the value sequence. 

This will particularly minimize the expense of natural products and will raise the importance of the ‘Make in India’. The long value sequence can be found in basic products to final consumption stage with functions distributed in different states which include the FMCG, consumer resilient, pharmaceutical, vehicles and also technological innovation products which are the ones which will bear the major brunt of the GST application. 

GST will help the business to flourish in India. The expense of tax conformity and deal price will be substantially resolved with the transformation of current several taxations into single GST. So you get a tax program which is stable, clear and definitely foreseeable, it will draw both local and foreign investors in droves to India and this also means lucrative job opportunities.

Goods and services tax (GST) has started being implemented from July 1.

There are certain expectations from this tax reform that it will boost the Indian economy and a major shift will be seen from unorganized to organized sector.

However, you would expect to experience near term hiccups for the next one or two-quarters.

According to a few market experts, job creations may prove to be a problem.

Whatever the consequence the GST is said to create a major economic transformation, the effect of which will spread far and wide.