Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is imposed on every value addition.
In simple words, Goods and Service Tax is an indirect tax imposed on the supply of goods and services. Earlier, there were so many taxes which were imposed on goods such as entry tax, octroi, Excise, VAT. Similarly, entertainment tax, service tax, luxury tax were levied on services. GST has replaced many indirect tax that previously existed in India. Now, there will be only single tax and it will make dream of One Nation, One Tax feasible.
Goods and services are divided into five tax slabs – 0%, 5%, 12%,18% and 28%. Alcoholic drinks and Petroleum products are taxed separately by the individual state governments. There is a rate of 0.25% on semi-precious and rough precious stones and 3% on gold. In addition a cess of 22% or other rates on top of 28% GST applies on few items like aerated drinks, tobacco products and luxury cars.
The GST replaced existing multiple cascading taxes imposed by the state and central governments. The tax rates, rules and regulations are governed by the Goods and Services Tax Council which comprises finance ministers of centre and all the states. GST will improve the collection of taxes as well as boost the development of Indian economy by removing the indirect tax barriers between states and integrating the country through a uniform tax rate.
GST is also mainly technologically driven. All activities like registration, return filing, application for refund and response to notice needs to be done online on the GST Portal. This will speed up the processes.
There are 3 taxes applicable under GST:
- CGST: Collected by the Central Government on an intra-state sale
- SGST: Collected by the State Government on an intra-state sale
- IGST: Collected by the Central Government for inter-state sale (Integrated GST)
The Goods and Services Tax was launched at midnight on 1 July 2017 by the former President of India, Pranab Mukherjee, and Prime Minister of India, Narendra Modi. The launch was marked by a historic midnight (30 June – 1 July) session of both the houses of parliament convened at the Central Hall of the Parliament. Though the session was attended by high-profile guests from the business and the entertainment industry including Ratan Tata, it was boycotted by the opposition due to the predicted problems that it was bound to lead to for the middle and lower class Indians. After its launch, the GST rates have been modified multiple times, the latest being on 18th January 2018, where a panel of federal and state finance ministers decided to revise GST rates on 29 goods and 53 services.