GST – GOODS AND SERVICE TAX
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Nitika, BBA LL.B. Lovely Professional University, Punjab
Goods and service tax is a single tax which means “ONE NATION, ONE TAX for the betterment for the people of economy. The goods and service tax is implied on sales, manufacturing and usage of goods and services from manufacturer to consumer. France was the first country to implement the goods and service tax. Talking about the present scenario, 159 countries have adopted the GST law to provide the goods at a normal rate by setting some norms and for the growth of economy. This goods and service tax is comprehensive, multi-stage, destination based tax. The goods and service tax will be applicable on the entire manufacturing chain i.e. from purchase of raw material to production of goods to store them in warehouse to suppliers for sales and to make it available to consumer at a normal rate. It is a system of input tax credit which will allow sellers to claim the tax already paid, so that the final liability on the end consumer is decreased.
GST IN INDIA:
The Goods and service tax in India was launched on 30th June in midnight 12:00am in Central Hall where famous personalities have been also accompanied and it is the same hall where the first of meeting of eminent leaders related to subject matter of constitution was held on 9th of December, 1946. The Constitution Day which is known as Law Day in present era was also a part of the same central hall in Delhi on 6th of November, 1949.
The first try to setup GST was given by Prime Minister Atal Bihari Vajpayee. He had set up a committee to draft GST law in 2000. In 2004, it was again said that GST must be implemented to improve current tax structure. In 2006, finance minister proposed GST introduction from April 1 2010. In 2007 empowered committee of state finance ministers sat for the forms of joint working group and also for CST to be phased out i.e. rates to be reduced from 4%-3%. In 2008, Election Commission has finalized the dual GST structure so to have a separate legislation. In 2010, the project to computerized commercial taxes was launched but as decided the GST implementation was postponed from April 1, 2010. In 2011, a constitution amendment bill was introduced to enable GST law. In 2012, the parliamentary standing committee had began their discussions on GST but they have stalled it over clause 279-B. In 2014, the GST bill was reintroduced in parliament by the finance minister. And then in 2015 GST bill was passed in Lok Sabha but was said to exclude the petroleum from GST but unfortunately it was not passed in Rajya Sabha. The amendments were made in 2016 and then it was passed in both the houses of parliament and the assent of the president was received for the same. In 2017, four supplementary GST bills were passed in Lok Sabha and Rajya Sabha and were also been approved by the cabinet. Finally, GST was implemented on June 30th at 12:00am or you can say on 1st July 2017 in India to reduce the burden of high rates from the people economy and to provide a same tax to all in country.
There were approximately 500 taxes before GST which were running at the same time in India but from 1st July every tax was removed keeping in view the better economy aspects. The GST is distributed in 3 types which are as follows:
EXAMPLE OF PRE AND POST CONDITION:
I would like to quote an example to show the condition before and after GST on goods and to show how GST is the preferable.
- PRE CONDITION:
Suppose there is a business of tyres. The manufacturer has a cost of Rs.10000 and when he paid tax of 10%, the cost increases to 11000 Rs. There if we assume, there is no profit then it means that the wholesaler is getting the things at 11000 Rs. Suppose, adding labels will cost 4000 Rs. which means cost for wholesaler is the amount raises to 15000 Rs. And again giving tax 10% means costing 16500 Rs. Again assuming that there is no profit to the wholesaler and he sells the same to retailer at a price of 16500 Rs. Suppose it took Rs.3000 for packing or transporting means it is costing 19500 Rs. to the retailer and giving tax means more addition to raise in amount and it gets to 21450 Rs. Assuming no profit means the customer/consumer is getting the tyre at price of 21450 Rs. This is how the tax was working before the GST.
- POST CONDITION:
Assuming the same example that if the manufacturer has a cost of 10000 Rs. and after paying tax of 10% it becomes 11000. But when it is given to wholesaler than the wholesaler has not to pay the 10% tax again on the purchased price, instead the wholesaler will pay 15400 Rs. after adding 4000 Rs. as labels to the product and tax will be paid by him on 4000 Rs. This has happened in this way that the tax will now only be paid on the additional value i.e. 4000 Rs. and not on the full value which he has received from the manufacturer and when retailer purchases the tyre at 15000 Rs. he added his additional value of transport or packing Rs 3000. Now tax will be paid just on 3000 Rs. i.e. 300 Rs. Therefore, the retailer will sell the same at a price of 18700 Rs. to consumer/customer for final use.
So, the difference between the two is of 2750 Rs. This is how the GST is beneficial to the people of economy.
Goods and service tax is a tax which is made to help the people to reduce their stress and to impose a single tax amongst economy. This tax will help the economy to build a transparency amongst the business cycle and moreover this tax is going to be very helpful in the successful running of corruption free tax administration. GST imposes several low tax schemes for the smaller level business people. This tax will be helpful in regulation of unorganized sector by making it an organized one by removing cascading tax effect, simpler online procedure under GST, defined treatment for E-commerce. GST is the tax which is the reduction in the several layers of tax which was being imposed on the products and raising its prices making it difficult to buy; but by one tax means the things going to be get easier, products going to get cheaper and economy’s condition going to get better. The basic idea of GST is to create a single, cooperative and undivided Indian market to make the economy stronger and powerful. At last, it can be said that GST is going to make possible the taxation burden to be split equitably between manufacturing and services.