New Delhi: India is all set to witness its biggest tax reform since independence in few hours as the Good and Services Tax or GST will be implemented from the midnight.
New reforms come with new questions- If you have been wondering what GST is all about, well, this might save the day:
What is GST?
One Nation One Tax- GST or Goods and Services Tax is applicable on supply of goods and service which will replace the current taxes of excise, VAT and service tax.
Why is GST needed?
Currently with different states there are different laws which give rise to various problems, especially when businesses sell to different states. Also, most businesses have to pay and comply with 3 different taxes – excise, VAT, and service tax.
With implementation of GST, uniformity in taxation across the country will be ensured. This reform gives equal footing to the big enterprises as well as SMEs. The aim of GST is thus to simplify tax hurdles for the entire economy.
Who will have to pay GST?
GST being an indirect tax, it will be ultimately borne by the end consumers, just like in the current process, GST will be paid by all manufacturers, sellers and service providers such as telecom providers, consultants, chartered accountants etc.
What kind of GST will be implemented in India?
India will implement the Canadian model of Dual GST, i.e., both the Centre and State will collect GST.
There will be 3 types of GST:
CGST- Collected by Centre
SGST- Collected by State
IGST- Applicable on inter-state sales. It will help in smooth transfer between states and the Centre.
What are GST proposed rates?
Though GST rates are yet to been passed by the Lok Sabha.
The proposed rates are:
How GST will affect your pocket?
Expect reduction in prices of :
- FMCG goods such as shampoos, chocolates
- Eating out
- Small cars
Increase in prices of:
- Luxury cars
- Aerated beverages