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Jyothika Kavya GST Contemporary Issue in Social

T. Jyothika Kavya
10th Class, R. No. 5, KMHS

Contemporary Issue in Social

Goods and Service Tax (GST)

I. Introduction
Goods and Service Tax (GST) Bill is all over the news these days. It is important for
everyone to understand it completely.

Goods & Service Tax or GST will be levied on goods and services. It will replace all the
various taxes and bring them under one umbrella to make compliance easier.

It will convert the country into a unified market. It will replace the following taxes:

(i) Taxes currently levied and collected by the Centre:

1. Central Excise duty

2. Additional Duties of Customs (commonly known as CVD)
3. Special Additional Duty of Customs (SAD)
4. Service Tax

(ii) Taxes currently levied and collected by the State:

1. State VAT
2. Central Sales Tax
3. Entertainment and Amusement Tax (except when levied by the local bodies)
4. Taxes on lotteries, betting and gambling

II. What is GST?

GST (Goods and Services Tax) is a tax levied when a consumer buys a good
or service.
The current tax regime is riddled with indirect taxes which the GST aims to
subsume with a single comprehensive tax, bringing it all under a single
umbrella.
Which means, Various Taxes like Excise Duty, Value Added Tax(VAT),
Central Sales Tax, Counter vailing duty, Octroi, Luxury Test and Entry Tax
will all be included under a single roof by GST.
The very important Feature of GST bill is that instead of collection of Taxes at
every step, it will be collected in one step. Goods and Services will be treated
equally and will be taxed similarly.
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T. Jyothika Kavya GST Contemporary Issue in Social
III. History of Indias GST
1. In 2000, the Vajpayee Government started discussion on GST by setting up an
empowered committee.
2. In 2009, UPA government opened a discussion regarding it. It was the first
mention of GST. At that time this will was introduced successfully but it
couldnt be passed.
3. December 17, 2014 was an important date for GST because NDA government
made slight changes and redefined it in Lok Sabha.
4. On 6th May 2015, Lok Sabha gave green Signal to GST bill.
5. On 3rd August 2016, Rajya Sabha passed the GST bill with amendments.
6. President signed the GST Bill on 8th September 2016 and the bill became a
Law. After the Presidents consent, Ministry of Finance notified the 12 Sep 2016
as appointment date to implement GST COUNCIL.
7. In their 12th meeting held on 16-March-2017, GST Council clears State GST
and Union Territory GST Laws.
8. On 29 March 2017, all 4 GST bills passed were in Loksabha
9. Finally, GST is implemented from 1st July 2017.

IV. Classification of GST

India is a federal country where both the Centre and the States have
been assigned the powers to levy and collect taxes. Both the levels of
Government have distinct responsibilities to perform, as per the
Constitution, for which they need to raise resources. A dual GST
will, therefore, be keeping with the Constitutional requirement of
fiscal federalism.

The GST to be levied by the Centre on intra-State supply of goods and/or services is
Central GST (CGST) and that by the States is State GST (SGST).

On inter-state supply of goods and services, Integrated GST (IGST) will be collected
by Centre. IGST will also apply on imports.

GST is a consumption based tax i.e. the tax should be

received by the state in which the goods or services
are consumed and not by the state in which such
goods are manufactured. IGST is designed to ensure
seamless flow of input tax credit from one state to
another. One state has to deal only with the Centre
government to settle the tax amounts and not with
every other state, thus making the process easier.

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T. Jyothika Kavya GST Contemporary Issue in Social
V. Salient Features
1. About 2/3 GST Council members come from the states and any decision of
council can be enforced only after it secures the assent of 75% of the members.
2. If states incur revenue losses due to introduction of GST, the centre will
compensate 100% loss for first three years, 75% of the loss on the fourth yeas
and 50% of the loss in the fifth year.
3. Though petroleum products are part of the GST regime, there will be no tax
levied on them and states can continue to levy their value-added tax. In the
beginning, the centre will collect excise tax for some years.
4. All the state and central taxes will be levied through a single tax. As a result
several taxes will be abolished and the practice levying taxes on taxes tax
cascading - will also be abandoned.

VI. Benefits of GST:

1. Subsume all indirect taxes at the centre and the state level.
2. One-Country-One-Tax.
3. Reduce the cascading effect of taxes on taxes.
4. Increase productivity and transparency, increase tax-GDP ratio.
5. Reduce/Eliminate tax evasion and corruption.

VII. I support GST

I, definitely, do support GST because

1. Firstly, introduction of an Goods and Services Tax (GST) to replace the existing
multiple tax structures of Centre and State taxes is not only desirable but
imperative in the emerging economic environment. Increasingly, services are
used or consumed in production and distribution of goods and vice versa.
2. Separate taxation of goods and services often requires splitting of transactions
value into value of goods and services for taxation, which leads to greater
complexities, administration and compliances costs. Integration of various
Central and State taxes into a GST system would make it possible to give full
credit for inputs taxes collected.
3. GST, being a destination-based consumption tax based on VAT principle, would
also greatly help in removing economic distortions caused by present complex
tax structure and will help in development of a common national market.

Thus, India's biggest tax reform -- Goods and Services Tax (GST) -- came into effect
from July 1st 2017. The framework of the tax reform was formed 17 years ago during
Atal Bihari Vajpayee government. The tax reform is now being taken over by the Modi
government marking some historical moves.

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