Professional Documents
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Tax)
Biggest Tax Reform Since
Independence..
Introduction
Introduction of Goods and Services Tax (GST) will
indeed be an important perfection and the next
logical step towards a indirect tax reforms in
India.
The scheme is supposed to be implemented in
India from 1st April 2016, however it may get
delayed since the NDA government does not
have majority in Rajya sabha (The upper house
of parliament or the house of states).
Further, Punjab and Haryana are reluctant to
give up purchase tax, Maharashtra is unwilling
Meaning of Tax
A feecharge("levied") by agovernmenton
aproduct,income, oractivity.
If tax is
levieddirectlyonpersonalorcorporateincome,
then it is adirect tax.
If tax is levied on thepriceof a good or service,
then it is called anindirect tax.
The purpose oftaxationis tofinancegovernment
expenditure.
One of the most importantusesoftaxesis to
financepublic goods andservices, such as street
What is GST?
G Goods
S Services
T Tax
Goods and Service Tax (GST)is a comprehensive
taxlevy on manufacture, sale and consumption of
goods and serviceat a national level under which no
distinction is made between goods and services for
levying of tax.
It will mostlysubstitute allindirect taxeslevied on
goods and services by the Central and State
governments in India.
OBJECTIVES OF GST
One of the main objective of Goods & Service
Tax(GST) is to eliminate the doubly taxation i.e.
cascading effects of taxes on production and
distribution cost of goods and services.
The exclusion of cascading effects i.e. tax on tax till
the level of final consumers will significantly improve
the competitiveness of original goods and services in
market.
Introduction of a GST to replace the existing multiple
tax structures of Centre and State taxes is not only
desirable but imperative. Integration of various taxes
into a GST system would make tax system
Illustration of VAT
What is GST
GST is a comprehensive value added tax on
goods and services.
It is collected on value added at each stage of
sale or purchase in the supply chain.
No differentiation between Goods and Services
as GST is levied at each stage in the supply
chain.
At all stages of production and distribution, tax
is borne by the final consumer.
All sectors are taxed with very few exceptions /
GST Structure
Centre
GST
State
GST
GST to be
levied by
Centre
GST to be
levied by
State
Dual GST
GST to be levied
by the Centre
and the States
concurrently
Illustration of GST
Benefits of GST
Transparent Tax System
Uniform Tax system Across India
Reduce Tax Evasion
Export will more competitive
Hurdles in Implementation
Dispute between centre and Tax over Tax
Sharing
Highly sophisticated IT infrastructure
required .
Issue of taxing financial services and ecommerce is to be appropriately addressed
and integrated.
Political Imbalance