Goods and Services Tax (India)

 

Goods and Services Tax (India)

Goods and Services Tax (GST) is an indirect tax (or consumption tax) levied on the supply of goods and services in India. It is a comprehensive, multistage, destination-based tax: comprehensive because it covers all indirect taxes except some state taxes. GST is applied at each stage of the production process, but is refunded to all parties at different stages of production except the final consumer, and is collected as a destination-based tax. If not of the same point of use and origin as the previous taxes.

Goods and services for tax collection are divided into five different tax slabs - 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholics, and electricity are not taxed under GST and instead are taxed separately by independent state governments, according to the previous tax system, there is a special rate of 0.25% on coarse precious and semi-precious stones and 3% on gold. In addition, some items like aerated drinks, luxury cars and tobacco products are subject to 2% cess or 2% cess of GST. Before GST, the statutory tax rate for most items was around 26.5%, after GST, most items are expected to be in the 18% tax range.

This tax came into effect from 1st July 2017 by the Government of India by implementing the One Hundred and First Amendment to the Constitution of India. GST replaced the multiple taxes levied by the Central and State Governments.

Tax rates, rules and regulations are governed by the GST Council which consists of the Central Government and the Finance Ministers of all the States. GST is meant to change most of the indirect taxes into federal taxes and therefore is expected to reshape the country's .4 2.4 trillion economy, but that implementation has been criticized. The positive results of the GST include the travel duration of the interstate movement, which has been reduced by 20% due to the scattering of interstate check posts.