Did you know why GST in India? what are their major reasons? What is the history? How is it implemented? If not do not worry we have all the answers.
GST is one of the biggest taxation reforms in India aiming to integrate State economies and boost overall growth by creating a single, unified Indian market to make the economy stronger. GST is a comprehensive based indirect tax levy of goods as well as services at the national level. Its main objective is to consolidate multiple tex levies into a single tax thus subsuming an array of tax levies, overcoming the limitations of existing indirect tax structure, and creating efficiencies in tax administration.
GST is consumption or destination based tax levied on the basis of “Destination principal”. It is a comprehensive tax regime covering both goods and services, and be collected on value-added at each stage of a supply chain. Further, GST paid on the procurement of goods and services can be set off against that payable on the supply of goods and services. Simply put, Goods and Services Tax is a tax levied on goods and services imposed at each point of supply. GST is a national level tax based on value-added principle just like State level VAT which was levied a tax on the sale of interstate goods.
The essence of GST is in removing the cascading effects of both Central and State taxes by allowing setting-off taxes throughout the chain, right from the original producer and service provider’s point up to the retailer’s level. GST is thus not simply VAT plus service tax, but a major improvement over the existing system of the VAT and disjointed Services Tax ushering in the possibility of a collective gain for the industry, trade, and common consumers as well as for the Central Government and the State Governments.
Gst, as a well-designed value-added tax on all goods and services, is the most elegant method to eliminate distortions and to tax imposition.
History Of GST In India
2004: In 2014 Kelkar Task Force recommended national Goods and Services Tax (GST).
28/2/2006: Union Finance Minister, Shri P.Chidambaram, while presenting the Central Budget (2006-07 and 2007-08), announced that GST would be introduced from April 1, 2010.
19/12/2014: NDA Government tabled the Constitution (122nd Amendment) Bill, 2004 on GST in the Parliament.
06/05/2015 and 03/08/2016: The Lok Sabha passed the Bill on 6th May 2015 and Rajya Sabha on 3rd August 2016.
08/09/2016: On 08/09/2016 Subsequent to ratification of the Bill by more than 50 percent of the States, Constitution (122nd Amendment) Bill, 2014 received the Assent Of The President On 8th September 2016 And Became Constitution (101st Amendment) Act, 2016.
22/03/2017: Central GST legislation were introduced in Lok Sabha. CGST, IGST, UGST, and GST (Compensation to States) Bill, 2017.
CGST-Central Goods and Services Tax Bill, 2017, IGST-Integrated Goods and Services Tax Bill, 2017, UTGST-Union Territory Goods and Services Tax Bill, 2017 and GST-Goods and Services Tax (Compensation to States) Bill, 2017.
29/03/2017: Lok Sabha passed these bills
12/04/2017: President’s assents on 12th April 2017, the Bill were enacted.
01/07/2017: Government is endeavoring to roll out GST by 1st July 2017, by achieving consensus on all the issues relating thereto. It is geared to attain July 1 deadline for implementation of GST across India.
Info: France was the first country to implement GST in 1954. Within 62 years of its advent, about 160 countries across the World has adopted GST.
Related: How To Make GST Tax Invoice
Framework Of GST In India
India is a federal country, both the Centre and States have been assigned the powers to levy and collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual 12 GST was therefore proposed keeping in mind the Constitutional requirement of fiscal federalism.
Along with the amendment to the Constitution, to empower the Centre and the States to levy and collect the GST, four legislations were given assent by the President, which are:
- The Central GST Act, 2017
- The Integrated GST Act, 2017
- The GST (Compensation to States) Act, 2017 and
- The Union Territory GST Act, 2017.