It is believed that GST is going to become one of the biggest landmarks in Indian tax system. GST is proposed by the government to remove all the irregularities and complication from all previous tax system. Lok Sabha passed all four GST related bills on 29th March 2017 and set the deadline of final implementation of this special bill from 1st July 2017. After implementation of GST, price of some products is going to be all time low and other may become much expensive. As per new tax policy, there will be four categories i.e. 5%, 12%, 18% and 28%, reason behind this is to impose less tax on daily needs products and maximum tax on luxury products.
Apart from all these cares and efforts there is a lot of confusion and illusion among people and it seems that it will take extra effort to implement this bill. People must know that there are two provision under this law, one is imposed by central government is known as central GST and other that state government imposed is known as state GST. Tax rates will be decided on the basis of revenue generation. Apart from some exempted products, SGST and CGST will be imposed on other remaining products. Both central and state governments are going to share equal amount of revenue generated through tax.
IGST policy is proposed by the government to collect tax in case of cross border transportation. IGST will replace central sales tax, VAT and excise duty imposed by central government. As per new rule you have to pay 12,000 as IGST when product coast is around 1 Lakhs and in current tax system you have to pay 14,500 for same product.
People will see following changes in tax system after implementation of GST.
|#||Product Name||Value and Tax amount under GST (in INR)||Value and Tax amount based on current rates (in INR)|
|2||12% Excise Duty||13,200||NA|
|3||10% profit margin||10,000||10,000|
In current law, there have been major transformation and will be imposed by the government on various products and services.
1. Tax amount will be decreased for wholesaler and retailers.
2. In place of various level of excise duty there will be single tax.
3. Small taxes increases the tax amount on retailers, wholesalers and manufacturer, this tax is going to replace all complicated taxes including sales tax, VAT and other ones.
Implementation and execution of GST bill will change the entire tax system and will be helpful in strength the economy of country. GST calculator will resolve all calculation related issues like time management, data collection and other issues. Users will get instant result with the help of this tool. With the use of calculator, there will be limited chances of any mistake or error whenever user will opt for online mode to calculate applicable tax on goods and services. With this tool user will get opportunity to add or remove tax as per their need. Some useful benefits are outlined below
a. Preventing double taxation of commercial goods is one of the primary objectives of this rule. It is believed that this bill boost the competition among manufacturer to improve the quality of product. These factors will help to grow the economy and GDP of country.
b. It is believed that GST will decrease the inflation, right after implementation of GST.
c. GST will not only help in setting an international standard, at the same time it will improve tax structure not only for manufacturer but for consumer too.
d. It will reduce the tax liability; it is because input tax credit is available against all applicable output tax. As per provision sometimes CGST includes SGST and vice versa and IGST includes CGST, SGST, IGST.
e. After reduction in tax will bring down the manufacturing and production cost of company. So this factor will create competition among all exporters.
a. Under GST there will be downfall in input tax credit not only for wholesaler but for retailers too.
b. After implementation as expected, there will be change in entire tax system.
c. As after deduction in VAT, excise tax, service tax, there will be also be downfall in cost for retailers, wholesaler and manufacturer. Overall it can be said that it will reduce the casting related to procurement.
d. Under the new bill excise on goods will be reduced, reason behind this is that there will be single tax in place of all applicable tax. As we know that generally excise is imposed on capital goods during the production process by manufacturer of product.
In some cases even after implementation of GST, central and state government will impose indirect tax formally known as State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST). Especially in case of interstate transaction seller will be fully authorize and responsible for collecting applicable CGST and SGST from buyer and that amount which will be payable to state and central government respectively.
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