What is GST - Introduction
WANT TO KNOW
WHAT IS GST
?
The One Hundred and Twenty Second Amendment (122nd) to the Constitution in 2014 brought GST to the fore. It seek to facilitate the introduction of Goods and Services Tax (GST) in India. The amendment(s) conferred powers to the Parliament and state legislatures to make laws to levy GST on the supply of goods and services on the same transaction.
Why GST is introduced ?
GST aims to end multiplicity of taxes. Before the implementation of GST, different taxes at various levels were charged, like entry tax levied on the entry of goods in local areas. This led to a complex, indirect tax structure full of hidden costs which eventually ended up burning a hole through the pockets of business owners while also giving them mental trouble of having to deal with and maintain records of multiple taxes. GST aimed to end that.
What is the GST Structure ?
The proposed dual GST aims to tax a taxable event simultaneously by the Centre and State(s). So, the Centre, as well as the States will be empowered to levy GST, right from the manufacturing stage to the end of the line at the consumption stage. It will be ensured that GST will only be charged on the component addition at each stage, ensuring no ‘tax on tax’ in the country.
The benefits of GST
GST aims to simplify the indirect tax structure in the country. It also aims to make the industry more competitive, domestically and internationally, by effectively reducing the cost of production and consequently the inflation in the economy.
GST will result in far better tax compliance than the country has ever seen due to a robust IT infrastructure. In order to incentivize tax compliance by the business owners, seamless transfer of input credit tax from one stage to another will be done in the chain of value addition.