GOODS AND SERVICES TAX popularly known as GST is trending
right now in India because it is the greatest reformation brought in Indian
economy after demonetization. In India, GST came into effect from July 1 2017. There
will be consistency in laws, rates of assessment, and methods crosswise over
states. This kind of taxing policy is introduced in order to simplify the tax
structure existing in India particularly with respect to indirect taxes. Not
only simplifies, it also brings transparency, reduces corruption as the number
of tax departments will decrease and cost of doing business for manufacturers,
wholesalers, and retailers. Indian items would be more focused in the global
markets. It replaced the origin based tax structure with its destination based
structure which means the cascading impact of tax assessment will be moderated.
The last cost of most goods will be bringing down when tax collection is at the
new GST rates. Moreover, a colossal section of small scale retailers might be
either excluded from charge or may profit by low assessment rates in view of
the exacerbating plan. Shoppers will additionally profit if buys are produced
using these small scale retailers. According to the government sources, the
introduction of GST in Indian economy will increase India’s GDP by 2%.
To many people, GST means substituting one tax for
several indirect taxes across the nation. In simple terms, it means “one nation
one tax”. But in reality, it is not so. Firstly, it is of categories that is
Central GST and State GST (Dual GST model of Canada). Unlike many other
countries having one GST for all types of commodities, India is having multiple
tax rates for different types of commodities. Starting from 0% to 28%, India
has, at present, 5 different tax slabs which are 0%, 5%, 12%, 18% and 28%. The
28% GST slab rate is the highest in the world. Moreover, there are three
distinctive cesses at 1%, 3% and 15%, to be exacted on specific goods falling
under the 28% tax rate.
No duty on things like dairy, meat and poultry items, natural
honey, fresh vegetables and natural products, bread, flour, besan, bindi,
sindoor, bangles, prasad, salt, bangles, handlooms, daily papers, printed
books, stamps, legal papers and so on.
5% tax rate includes items
like cream, skimmed drain powder, angle filet, solidified vegetables, marked
paneer, pizza bread, rusk, sabudana, tea, coffee, lamp fuel, coal,
prescriptions, stents, rafts and so on. These are the things of regular use.
12% tax rate section
constitutes things like spread, cheddar, ghee, solidified meat items, bundled
dry natural products, namkeen and bhujia, wieners produced using creature fats,
Ayurvedic drugs, shading and picture books, tooth powder, incense sticks, cell
phones, sewing machines, umbrellas and so on.
The category of 18% tax slab
contains things, for example, enhanced refined sugar, baked goods and cakes,
cornflakes, pastas, jams, soups, sauces, protected vegetables, frozen yogurt,
prepared to make nourishment things, tissues, mineral water, tampons, steel
things, note pads, camera, screens, speakers and so forth. These are likewise
the mass merchandise and ventures things, including FMCG (Fast Moving Consumer
The most noteworthy 28% category
includes cocoa free chocolates, molasses, biting gum, chocolate covered wafers,
waffles, paint, circulated air through water, container masala, shaving creams,
facial cleanser salves, antiperspirants, cleanser, sunscreen, color, water
warmer, clay tiles, backdrops, clothes washer, measuring machine, dishwasher,
ATM and candy machines, shavers, vacuum cleaners, hair scissors, cars,
motorbikes, yacht, air ships for individual utilize and so forth. These are the
things of ultra extravagance, bad mark and sin products.
Some have recommended that multiple
tax rate is disadvantageous to the GST and would kill a portion of the upsides
of a uniform tax structure. Actually multiple tax rate structure in India is
inescapable for a few reasons.
Supporting the GST Council’s
choice to go for multiple tax rates under the proposed Goods and Services Tax
(GST), Finance Minister Arun Jaitley said that the different tax rates were to
guarantee that there would be no inflationary impact because of its execution. One
can’t anticipate that the government will require tax on hawai chappal and BMW car
at a similar rate, he included.
Ideally, there ought to be
one standard GST rate. But it is only possible if the country is developed. As
India is still in developing stage, we cannot expect a single GST rate. Unlike many
developed countries having single GST rate, our country do have substantial
portion of population lives below the poverty line. In the event that the tax rates
on goods and services, right now at 4-5%, are expanded to 12 to 18%, there
would be a sharp increment in the inflation.
Concerns have been raised
with respect to the disarray and multifaceted nature when selling dairy items.
For instance paneer–the Indian cheddar is tax-exempt if sold without marking
and bundling yet is charged 5% GST if sold in a container with branding. This
additionally raises significant worries about the cleanliness of paneer since
casually delivered paneer is tax-exempt and bundled is saddled. Comparable
concerns have been raised in regards to sweetened milk which is by and large is
under 5% classification however if it is added with pulp goes under 28%
Each idea has both positive
and negative viewpoints. Just based on some negative viewpoints, a framework
can’t be simply detached which has numerous enormous long haul advantages.
In this manner the GST ought
to be generally acknowledged and bolstered in light of the fact that like the
Demonetisation Policy, this will likewise think of flying hues. As effectively
stated, “GST resembles that one somewhat costly and bitter pill given by
the specialist rather than different pills”.
Finally, GST with multiple
tax rates cannot definitely be a bane but at the same time it cannot be a boon
either. But in the present scenario of Indian economy, the multiple tax rate
system of GST is a good attempt by Indian government towards the progress of Indian