ONE NATION, ONE TAX (GST)

Goods and Service Tax (GST) is an indirect tax levied by the government at the state and central upon the consumer.

Goods and Service Tax in India

The One Hundred and First Amendment Act 2016 of the Constitution in India or 122 Amendment Bill as per the Constitution of India has implemented on July 1st, 2017, named as the Goods and Service Act. It is precisely written that the taxes would be following the rates of 0%, 5%, 12%, 18% and 28%. The GST is administered by GST council and Finance Minister of India.

GST a Game Changer

  • GST is one tax system which will remove the prevailing taxes and duties which includes the service tax; central excise duty; value-added tax.
  • It will help in reducing the massive power vested in several Indian middlemen at the state borders; liberating internal trade as well as making an ease for doing business and widen the tax base.
  • India boasts to be the fastest growing economy. According to financial architects of the reform, it will strengthen efficiency and growth of creating a common market system.
  • India would follow the four brackets of the tax rate viz. 5%; 12%; 18%; 28%, unlike other countries who follow single flat rate.
  • In India, most of the states act as different countries due to the different tax levied. Therefore, the small factories and warehouses take advantage of such tax breaks. GST would reduce such disparity of tax allotted at various sections.
  • Widening of the Tax net in the economy would definitely pressure the companies to be in the Tax system to claim their credit against the costs.
  • Just as in case of the recent Demonetization, the initial ruffles in the economic activity will be on the implementing GST will be short-lived, but would have long-term benefits.

Goods and Services which are placed in the Tax Slab

 

 

In the tax slab of 5%

Goods

Fish Fillet, Clothing below Rs 1000, Packaged Food, Footwear below Rs 500, Cream, Skimmed Milk Powder, Branded Cottage Cheese, Frozen Vegetables, Coffee, Tea, Spices, Pizza Bread, Rusk, Sago, Kerosene, Coal, Medicines, Stent, Lifeboats, Cashew Nut, Raisin, Ice and Snow, Bio Gas, Insulin, Incense Sticks, Kites, Postage Or Revenue Stamps, Stamp-Post Marks, First-Day Covers, Branded Food, Walnuts, Dried Tamarind, Roasted Gram, Corduroy Fabric Paper Mache Items, Oil Cakes, Duty Credit Scrips, Cotton Quilts(Quilts Not Exceeding Rs 1000 Per Piece),Corals ,Rosaries And Prayer Beads, ,Grass, Leaf and Reed and Fibre Products, Including Mats, Pouches, Wallets.

Services 

Transport services i.e. Railways, Air Transportation, Small Restaurants as well as Textile job work

In the tax slab of 12%

Goods

Clothing above Rs 1000, Frozen Meat Products , Butter, Cheese, Ghee, Dry Fruits In Packaged Form, Animal Fat, Sausage, Fruit Juices, , Ayurvedic Medicines, Tooth Powder, Colouring Books, Picture Books, Umbrella, Sewing Machine, Mobile Phones, Ketchup , Sauces, All Diagnostic Kits And Reagents, Exercise Books And Note Books, Spoons, Forks, Ladles, Skimmers, Cake Servers, Fish Knives, Tongs, Spectacles, Playing Cards, Chess Board, Carom Board And Other Board Games, Wood, Stone, Metals, Marble Idols, Table And Kitchenware, Batters, Including Idli / Dosa Batter, Textile Caps, Sprinklers, Cotton Quilts Exceeding Rs 1000 Per Piece, Statues, Statuettes, Pedestals ,Ceramic Articles, Porcelain Items, Ornamental Articles, Bells, Gongs, Non-Electric Of Base Metal, Animal Carving Material.

Services 

State-run lotteries, Non-AC hotels, business class air ticket, fertilizers. 

In the tax slab of 18%

Goods

Footwear Costing More Than Rs 500, Trademarks, Goodwill, Software, Bidi Leaf, Biscuits, Flavoured Refined Sugar, Pasta, Cornflakes, Pastries And Cakes, Preserved Vegetables, Jams, Sauces, Soups, Ice Cream, Instant Food Mixes, Mineral Water, Tissues, Envelopes, Tampons, Note Books, Steel Products, Printed Circuits, Camera, Speakers, Headgear, Aluminium Foil, Weighing Machinery, Printers, Electrical Transformer, CCTV, Optical Fiber, Bamboo Furniture, Swimming Pools And Padding Pools, Curry Paste; Mayonnaise And Salad Dressings; Mixed Condiments And Mixed Seasonings, Tractor Parts, Raincoats, Medical Grade Disposable Gloves, Computer Monitors(Up To 20 Inch), Custard Powder, Kitchen Gas Lighters. 

Services

AC hotels that serve liquor of room tariffs between Rs 2,500 and Rs 7,500, Telecom services, IT services, Branded garments and Financial services,

In the tax slab of 28%

Goods

All types of Bidis, Chewing gum, Molasses, Chocolate without Cocoa, Aerated Water and other Drinks, Paint, various Deodorants, Shaving Creams, After Shave, Hair Shampoo, Dye, Sunscreen, Wallpaper, Ceramic Tiles, Water Heater, Dishwasher, Weighing Machine, Washing Machine, ATM Vending Machines, Vacuum Cleaner, Shavers, Automobiles, Motorcycles, Aircraft used for Personal Use

Services

Private-run Lotteries, Hotels of Room Tariffs Above Rs 7,500, 5-Star Hotels, Race Club Betting, Movies

Goods and Service tax in Various countries

  • In the year 1954, France was the first country to introduce GST. It was introduced as there were high sales taxes which had intervened an increase in smuggling and cheating.
  • In the year 1989, Japan had introduced GST with consumption tax at the rate of 3% which has increased to 10% in the year 2012.
  • In the year 1986, New Zealand was introduced initially at the rate of 10% later it has increased to 15% by 2010
  • Like India, Canada also had introduced dual GST (State and Central GST) in the year 1991.
  • Singapore had introduced GST in 1994 which eased inflation spikes.
  • In the year 2000, Australia introduced smooth GST at the rate of 10% initially with a current proposal to increase to 15%.
  • Malaysia also introduced GST in the year 2015 after a long 26 years of debate.
  • Few other countries have VAT (Value Added Tax) instead of GST.
  • United States is the only economy who didn’t introduce GST instead enjoy high autonomy taxation.

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