Goods service tax :- full detail

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What is the GST bill, and how will it affect the life of a common man?

The Rajya Sabha has passed the GST bill on August 3, 2016, but the Lok Sabha has already passed it. After some formalities this bill will become a law. This tax will replace all existing indirect taxes. With this, the decrease in prices of commodities in the country as well as the gross domestic product is expected to increase by 2%. The Government has been targeted to implement it from April 1, 2017 in the whole country. In this article, we have tried to tell which items will be expensive after the implementation of this tax and which cheaper, how it will work and what challenges are there before the governments in implementing it.

What is GST Bill? (What is GST Bill?): -

The GST bill is a major step towards improving the tax structure of India. Goods and Service Tax is an indirect tax law. GST is an integrated tax that will look at both goods and services. With the introduction of the GST bill, the entire country will be transformed into a unified market and mostly indirect taxes such as central excise, service tax, VAT, entertainment, luxury, lottery tax, goods and services. Wala cess and surcharges etc. will be included in GST. Now the entire type of indirect tax (GST) will take place throughout India.

Why is the object and service tax (Why GST Bill is Important?): -

According to the Indian Constitution, the Central Government has the right to impose taxes on the production of the state government and the goods and services, mainly for the sale of commodities. When the merchant produces production under the present tax system, then exports, customs and sales, when it sells the goods inside the country. In this way, in the current system, it has to be taxed at every stage. That means tax is levied on tax under the present tax system of India (this is called the Cascading Effect). Therefore, the main aim of bringing government goods and services tax is to eliminate all these indirect taxes and tax the same tax in the entire country.

What is the structure of GST?

GST will work like this:

Phase I: (Manufacturing)

1. An entrepreneur buys leather worth Rs. 100.
2. Includes indirect tax of Rs. 10.
3. He prepares the shoe from this leather.
4. It costs Rs 30.
5. When the shoe is ready, it costs 130 rupees.
6. Now it is taxed 10%.
7. At the current price of 10% to 13 rupees.
8. Since the tax of 10 rupees was given at the time of buying the leather, hence he will now: 13-10 = 3 rupees.

Second step: (Wholesaler):

1. Now near shoe wholesaler. He pays 130 rupees for buying shoe.
2. Added its profits of Rs 20 and Rs 150 for a fixed price.
3. Now it will take 150 to 10% tax = 15 rupees.
4. Since he has already paid the tax of Rs 13, he will do it = 15 -13 = GST of Rs 2.

Step 3: (retailer): -

1. Wholesale seller sold the retailer (Retail Business) to the shoe at Rs 150.
2. The retailer packed it and added 10 rupees to its profits. Now the cost is 160 rupees.
3. This 160 will take 10% tax, which is 16 rupees.
4. Tax payment of 15 rupees has been paid to the level of wholesaler, so now that (retailer) will make only 16 -15 = 1 GST

What is the total GST?

1. The shoes will be calculated in three steps - 10 + 3 + 2 + 1 = 16
2. Now the final price for shoes is fixed: 150 + 16 = 166 rupees

Which taxes will be eliminated after the GST arrives?

Central Taxes: -

1. Central Excise Duty
2. Duties of excise (on drugs and other related products)
3. Additional Duties of Excise (tax on specialty products)
4. Additional Duties of Excise (Taxes on Clothing and Textile Products)
5. Additional Duties of Custom
6. Service Tax
7. Cess and surcharges imposed on goods and services

state tax :-

1. VAT
2. Central Sales Tax
3. By purchasing
4. Luxury Tax
5. Recreation tax
6. Taxes on advertisements
   Taxes on lottery, gambling and betting
7. Ces and surcharges imposed on goods and services

GST impact on common people - (Impact of GST on General Public)

What will affect the consumers after the GST is implemented. On the basis of only one tax in place of all kinds of taxes, goods will be cheap. In fact, those items will also be affordable, which are taxed at both VAT and excise duty. But the items which are currently just taxing, which means that VAT, service tax or excise duties are applicable, can be expensive because the rate of GST (potential rate is 17-18%) will be more than current tax.

Things to be cheaper due to GST:

1. Cars
2. utility vehicles
3. Two-wheelers
4. Movie tickets
5. Fans & Lighting
6. Water Heater
7. Air cooler
8. Paint
9. Cement
10. Television
11. Fridge
12. Mobile handsets
13. Buying a Home

Items that are expensive due to GST: -

1. Air Ticket
2. Hotels and restaurant bills
3. Mobile bill
4. Train tickets
5. Cigarette
6. Clothing and Garment
7. Branded Jewelery
8. Coreier Services
9. Taxi / cabs

Items outside the realm of GST:

1. LPG
   Petrol
2. Diesel
3. Air Fuels
4. Natural Gas
5. Alcohol

Impact of GST traders - (Impact of GST on Businessmen): -

At present, traders have to pay different types of indirect taxes such as sales tax on the sale, service tax on providing service and excise duty on the production of goods, etc. This requires traders to keep in mind the various types of tax laws and follow them which obstacles in their way of doing business, as well as taking care of these laws is a very difficult task as well.

What are the benefits of GST?

1. There will be uniformity in indirect taxes through goods and services tax in the country.

2. With its implementation, the GDP of the country can increase by 2%.

3. Recovery of tax evasion as well as tax recovery is also going to increase.

4. Transparency in tax rates through GST will come because everything will be online.

5. Tax disputes will be reduced and there will be no scope for tax laws and regulators.

Challenges before the GST: -

1. The big question is what will be tax slab for GST.

2. How will the compensation to the states be compensated? If the compensation is met, will the state accept it?

3. Who decides to increase or decrease the tax?

4. Government machinery is not ready to implement the GST, who will train and staff when it is time to talk about it.

5. There is also a question about the tax sharing between the state and the center.

6. There are disagreements between the states and the Center in this case, which products should be excluded from the GST.

7. Question: What are the benefits of GST?
   Answer: Currently, only one item is sold in different states at different prices. The reason for this is that the number and rate of tax on different taxes in different states is different. Now it will not happen. Wherever everything is being constructed, the GST will be recovered and after that there will be no further tax, no sale or any other tax for it. This will get things in the country at the same price. In which states the tax rate is very high. Those things will be affordable in such states.

8. Question: Who will compensate all the tax on GST by the hands of the states?
   Answer: With the introduction of GST, the central government, business, shopkeepers and consumers will benefit almost everyone. Although the states may have to suffer some loss from them, the central government will compensate the 100% of the losses they will suffer for three years. The central government will compensate 75 percent for the fourth year and 50 percent for the fifth year. The central government has also agreed to provide a guarantee for the compensation to states in the constitution. For this, 122 amendments have been made in the Constitution.

9. Question: What will the government gain from GST?
   Answer: After GST is implemented, the country's GDP growth is expected to grow by about two per cent. This will be because the theft of tax will stop because tax is now levied at many levels, there is more chance of rigging, rigging. Due to the GST taxation is now convenient and easy, more and more traders will show interest in filling tax. This will increase the income of the government. Even traders will be able to get their business right when they get rid of the hassles of different taxes. There will be less controversy over tax.

10. Question: How GST will be recovered?
    Answer: Recovery of GST will be online. It will be recovered only at the production level of the item. Once the tax is collected for any item, its information will be available at all the centers of GST. After that there will be no further tax to the supplier, shopkeeper or customer on that item. If the goods are going from state to state, then it will not be taxed. That means the long lines of trucks that are visible on the border / border will disappear.

11. Question: Who will decide the rate of GST?
    Answer: GST council will be constituted to take GST related decisions. The GST Council will be the representatives of both the Central and the State. Its chief will be the Union Finance Minister while the State Finance Minister will be the member. The GST Council will make recommendations on the rate of GST, tax exemption, tax dispute, tax scope and other arrangements.

By @amanpathak