GST: Everything You Need To Know About the Avant-garde Bill

Since a long time, innumerable news and rumours have been revolving around the much awaited tax reform of India: GST. After a lot of debate and hard work, four bills finally got a green flag from the parliament. These four bills are: Integrated Goods and Services Tax (IGST), Central Goods and Services Tax (CGST), Union Territory Goods and Services Tax (UTGST) and GST (Compensation to States). The government will be rolling out the red carpet for this bill on the July 1, 2017. 

According to our esteemed Finance Minister, Arun Jaitley, GST bill in India is a revolutionary bill which will benefit all. A separate GST council has been established which will be responsible for carrying out all the functions pertaining to this bill. This council will be headed by the finance minister and would ensure that the bill is rolled out in the intended manner. 

Here are all the pointers that you need to know about GST:

 

GST is an indirect taxation system that has been set rolling with the intention to merge the majority of indirect taxes into one a single tax. The main objective behind bringing GST tax in India is to eliminate the double taxation system which has been prevailing since time immemorial and to pave the way for a common national market. The GST bill in India would empower the Centre and the various states to levy tax on manufacture, sales and consumption of various goods and services within the geographical boundaries of the country.

The GST would be governed by Goods and Services Tax Council (GSTC) which was be leaded by the Finance Minister. It will comprise of various Union Ministers, State Finance Ministers and Minister of State (Revenue). This model is brought into action with the main intention to harmonise the different aspects of GST between the Centre and states. 

It won’t be wrong to say that the biggest issue which is being faced by GST is to establish coordination between various states and the centre in order to ensure that uniform tax rates are levied on the various goods and services. 

GSTC has decided upon a four-tier uniform tax slab across various commodities. The GST tax in India would be levied at the rates of 5%, 12%, 18% and 28%. An additional cess on the highest rate would be charged for luxurious and demerit products.

Necessary goods and food items will not attract any tax under the GST bill in India. These items have been kept under the category of zero-tax slab in GST. 

The various states have agreed for GST’s implementation on one clause that any revenue losses which a state might occur as a result of GST would be duly compensated. However, Arun Jaitley confirmed that no additional taxes will be charged to compensate states but they will be compensated according within the guidelines of the existing structure.

Central Goods and Services Tax (CGST) would empower the central government to levy tax on intra-state transfer and supply of goods and services. The centre only would collect the CGST as well. Integrated GST (IGST) is levied on inter-state trade of goods and services. This will also be levied and collected by the centre only. Compensation GST bill, as the name suggests, will be providing compensation to states for any revenue loss that they might have incurred post implementation of GST bill in India. UTGST will levy and collect tax pertaining to intra-state trade of goods and services by union territories.

The GST will be rolling out soon and it will subsume various indirect taxes like Central Sales Tax, Excise Duty, VAT, etc. under one common tax umbrella. This will foster transparency and self-policing within the system.