Presently, there is a tax slab of 18% on many services and may reach up to 28% for few services in the near future
If you are still finding it difficult to make Goods and Service Tax (GST) payments, it is time to clear the air about it. Here, we shall dwell in detail into the content and findings of GST related studies.
Your guide to Goods and Services Tax
GST, also called one nation one tax, is an indirect tax that is levied on almost all goods and services (indirect in a country in a uniform way. It has a towering presence in the taxation system of India. Here in this entire article, GST in the context of India will be discussed. To date, nearly 160 countries have designed and followed the GST regime.
France was the first country to incorporate the GST regime across the globe. Coming to India, the aforesaid GST regime came into effect from 1 July 2017 by One Hundred and First Amendment of the Constitution of India enacted by the government of India that will affect the country's 2.4 trillion-dollar economy. The GST has replaced all the existing, indirect multiple taxes imposed by the central and state governments.
Benefits to Common Man by GST Regime
The paramount concern in this discussion is common men. Though GST has been implemented in recent years, its hidden benefits for the common man are coming into the limelight slowly and steadily.
From a macro-level perspective, Here is a value chain of activities that will ultimately benefit the common man. Since GST has reduced the tax burden on the manufacturing sector, consequently prices of consumer goods like FMCG, cars, and so on have come down to a great extent. Notably, the consumer has to incur less expenditure on goods produced by manufacturing. In consequence, considering the law of demand, the consumption of goods and services will rise as a result of a fall in price. The increased demand will motivate manufacturers to supply more products. As a result, production will gain momentum. An increase in production will require more employees and there will be more job opportunities for the common man.
Furthermore, check on “Kaccha Bills” shall remove black money in the Indian economy. And The mechanism of the “Unified Tax regime” is built in such a way that corruption shall be minimised that shall ultimately benefit the common man.
However, it is worth mentioning here that only GST alone is not enough. Government has to take different factors into consideration for removing corruption and black money.
Criticism of Goods and Services Tax regime
GST is not the same for all goods and services. Presently, there is a tax slab of 18 per cent on many services and may reach up to 28 per cent for few services in the near future. Consequently, many services like banking, telecom, and airlines will become more expensive in the forthcoming years.
So, the common man has to resize his budget. The domain of GST is still unknown to most businessmen and service providers, due to which they hire tax experts and this leads to an increase in monthly expenses.
Apparently, the concept of GST looks simple. But this is not true in the case of services, as it is difficult to identify the place where service is provided. Many times, the actual benefit is not forwarded to the end consumer in case the seller has selfish motives, and consequently, the resultant benefit is taken away by the seller.
In the case of GST, strict vigilance on profiteering activities is essential, so that the final consumer could enjoy the real benefits of GST. However, this is not true in all cases. Although the bulk of staff in government departments have been trained for GST, this will take more time. The same is true in the case of end consumers, wholesaler, or the retailers
How is the GST regime affecting your life?
GST has been affecting the lives of billions of people every day with rate additions and certain relaxation from previous tax rates. The rate has given a simpler way to see the taxation in the country and the further bifurcation of the GST rate will be introduced as per the government sources. GST has also given a partial way to tax overall GDP ongoing and has come up with the terms at par with various bigger economies around the world. Still, a considerable amount of time will be taken to assess the impact of GST by the economic experts in the coming time.
The author is Managing Director at SAG Infotech
DISCLAIMER: Views expressed are the author's own. Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.