What is GST & What are its Advantages & Disadvantages – Complete Details
In New Delhi, the central government has presented the GST bill in Rajya Sabha yesterday. The bill is supported by Congress and other opposition parties like BSP, JDU after some major change by the Government:
1.One percent of the Interstate Transaction Tax has been removed. There was one present additional charge on the trade between the states is mentioned in the original bill.
2.Before change, first three-year 1oo% compensation, in fourth year 75% compensation and fifth-year 50% compensation, now the state will be compensated for 100% losses for five years.
3.To resolve the dispute a new agreement has been made, in which the voice of state will be strengthened.Before GST the dispute resolution was based on voting, in which two third of the votes were from the state and one-third of the center.
There will be a new provision is added to the bill by the government to ensure to the state and the common people will be no harm.
After the four major change, the bill has been presented by the government. Do you know what is the GST, what will be the advantage of GST?Learn how this bill will work? Know, if GST is passed then what will be cheap and expensive?
What is GST?
Good and Service tax(GST) is an indirect tax.In this system, a similar tax is imposed on goods and service. Where GST is not applicable, different taxes are imposed on goods and services. If the government applies this bill from 2016, then only one tax will be levied on every item and every service i.e. only taxes such as VAT, excise, and service tax will be charged.
What will be its Advantages?
According to the Constitution, the Central and the State Governments may impose taxes on goods and services accordingly.
If a company or factory produce its product is a state and sell in other states then the company has to pay various taxes for both states due to the price of the product is hiked. if GST is applicable the price will be reduced.
According to a report by the National Council of Applied Research, the GST implementation could increase the country’s GDP by one to two to two percent.
Which Products will Apply to It?
According to the 122nd Amendment of the Constitution passed in 2014, GST will be applicable to all types of services and goods except Alcohol.
How will it work?
There are three part of GST: – Centre GST, State GST, and Integrated GST
Central and Integrated GST will be implemented by the central government while the state GST will implement the state governments.
If GST is like VAT then why it Needs it?
Although this is a tax like VAT, but its implementation does not take many other types of tax.If GST is applicable then VAT and CENVAT will end.
Same Price of Goods in Any State
The Good and Service tax will be the biggest benefit to the common man after implementing this bill. To buy any goods in the entire country, the same tax will be paid. That is, the price of any item in the entire country will remain the same. Like a car, if you buy in Delhi, its price is different, while in other states, it costs a different price to buy the same car. In GST, any goods will be available in any state at the same rate.
The Decrease in a Tax Dispute
If this applies, then many times tax relief will get rid of it. This will reduce the chances of manipulation by the Tax Department officials while recovering the tax. Taxes will not be required by the same person or institution many times, only taxes will be collected from this tax. Apart from this, there will be a reduction in prices in many states where revenue will increase in many states.
The price of The Goods will be Reduced
With the implementation of this, the tax structure will be transparent, which will reduce tax disputes to a large extent. After the implementation of this, the VAT, entertainment tax, luxury tax, lottery tax, entry tax etc. will also end to the states. At the time of buying the goods, people have to pay 30-35 percent tax on that, it is likely to fall further to 20-25 percent.
– Companies and businessmen will also benefit if GST is implemented. There will be no problem taking the goods from one place to another. When the cost of making the goods decreases, the goods will also be cheaper.
Who will be Damaged
The Center will benefit from the implementation of Good and Service tax but the states fear that it will harm them because, after this, they will not be able to recover a lot of tax from which their earnings will be reduced. Significantly, half the budget of several states runs from petrol and diesel. Keeping this in view, the Center has given relief to the states, giving them relief in the initial years on these items. Whatever the disadvantages of the states, the Center will compensate them for five years.