Of late, there has been a swirling wind around goods and service tax (GST) that is debuting its hold on the Indian economy. It has been a long-winded path for GST to finally pass out ceremoniously. The Indian government has reformed the tax system by adopting a dual GST model. The model has conveniently replaced the various multiple cascading taxes that are levied by both the State and Central Governments. It unifies all these taxes under one umbrella as a unified indirect tax, resulting in ‘one nation, one tax’.
Let us understand the broad classification of GST.
|Array of taxes levied by GST are:
CGST: Central GST is applicable for supplies within the State and the tax revenue collected will be shared to the Centre.
SGST: State GST is applicable for supplies within the State and the tax revenue collected will be shared to the State.
IGST: Integrated GST is applicable for inter-state and import transactions. The tax revenue collected is shared between the Central and State Governments.
|Taxes subsumed by GST
GST aims at unifying the market by bringing uniformity in tax rates across the country to make compliance easier.
It facilitates seamless movement of goods among states and reduces the cost of goods and services manufactured locally. Thus, it is a boost to Indian exports.
|Crucial compliance requirement after GST implementation
Amidst all the other factors, compliance is a cause of concern for SMEs (Small and Medium enterprises).
From registrations to billing, paying taxes and gaining refunds; post GST, SMEs must opt for the electronic system.
|Benefits of GST:
||IGST collection from imports rises about 60% in just one month of GST
|Conclusion: GST onboard
After the complete consensus of GST, compliance is expected to be streamlined with the convergence of multiple taxes into one tax law. The cumulative effect of carefully handling grievances has already led to a positive impact. Moreover, while the thesaurus of interpretations is still making its way through its twists and turns, the Indian economy has entered the era of a unified taxation under one umbrella called the GST.