Developing Common national
GST is levied at same rate on similar Goods and Services in all the states and
union territories. For example, Computers sold across India are levied GST
(Say) @ 18%. It sets a ground for developing common national market.
Ease of Doing Business: In the pre-GST period,
there were many indirect taxes administered by different authorities. As a
result, a business had to register itself separately under each such Act and
also had to comply with each such indirect tax. For example, Excise Duty, sales
Tax and Service Tax etc. were separately administered. The introduction of GST
has eased the going of business as it will be registered and administered only
under one indirect tax, i.e., GST. Hence, ease of doing business.
No cascading Effect of
paid (Input GST) on purchases of goods and/or services is set off against GST
collected on sale of goods and/or services. As a result, GST is levied on the
difference between sale value and purchase value. In effect, GST does not have
To Simplify Indirect Tax
Regime by having one Tax and Fewer rate of taxes: GST has replaced many indirect taxes
(Excise duty, Sale Tax, Service etc.).The earlier indirect tax regime had been
complex both for the Government and business. Since, GST has replaced almost
all indirect taxes, it simplifies the application and administration of
Better Tax Management: GST, being administered
through computer system beside it being a single indirect tax, has resulted in
better tax management as tax evasion is controlled besides timely collection
of tax. For example,
credit for input GST is granted if the tax payer collecting GST has paid the
tax in government account.
Goods becoming cheaper: Since GST paid (Input
GST) is set off against GST collected (Output GST), GST does not have cascading
effect as against earlier years when there was no set off of indirect taxes.
(e.g. Excise Duty) paid against indirect taxes collected. As a result, goods
and services have become cheaper.
Investments from outside India were not high because of multiple indirect
taxes. Introduction of GST and removal of multiple indirect taxes shall
increase Foreign direct Investment (FDI) in India.
Uplifting GDP: The structure of GST is
such that is levied at every stage of sale of goods and/or services. It means
businesses will be largely through recorded transactions resulting in tax
collection by the government due to recorded sales resulting in uplifting GDP.
Classification OF GST :- GST in levied under
following three categories:
Central GST (CGST):- CGST is levied on
intra-state supply (supply within the state) of goods or services or both along
with SGST. In case of intra-state supply/sale both CGST and SGST is levied at
half of the prescribed rate of tax. For ex., if rate of GST is 18%, 9% will be levied
as CGST and 9% as SGST (or UTGST).
State GST (SGST) or union
Territory GST (UTGST):- SGST (or UTGST) is also levied on intra-state supply (i.e.,
supply within the state) of goods and/or services or both along with CGST. In
case of intra-state supply(sale) both SGST (or UTGST) and CGST is levied at
half of the prescribed rate of tax. For example, if rate of GST is 18%, 9% will
be levied as CGST and 9% as SGST
Note: For the discussion, SGST and UTGST are
referred as SGST.
Integrated GST (IGST):- IGST is levied on
inter-state supply (i.e., supply outside the state) of goods and/or services,
import of goods and/or services into India and export of goods and/or services