GST Act and Rules
GST was implemented across the country since July 2017. Many of the agencies and financial organizations across the world have forecast an increment of up to 2% in the GDP of India after the implementation of the new taxation structure.
9 important sub-classifications of GST rules are:
- Registration
- Return
- Refund
- Composition
- Invoice
- Payment
- Input Tax Credit
- Valuation
All these components of GST ensure that it is implemented successfully even on a micro-economic level.
Five tax slabs of GST are:
GST council comprises of:
Ministers from both the Central and State Governments; put these services and products under specific tax slabs.
What is good about the GST?
- GST act brings transparency in the structure of tax and removes needless bottlenecks from the system so that the whole process is smooth for manufacturers and service providers.
- The Taxation scheme which was functioning prior to GST where the end customer is required to pay tax on taxes on which he or she is not aware. Taxes are charged in different forms at multiple times and at different rates. As a result, sometimes product cost becomes double its original manufacturing cost.
- In the case of GST, the tax levied at the point of consumption only due to which not only cascading effect diminishes of different taxes, but also bring a kind of mobility in the industry. GST helped in minimizing the tax evasion and corruption which is taking place at many levels.
- In the previous taxation structure, there is a total of 17 State and Central Taxes such as the Value Added Tax (VAT), Excise duty, Sales Tax, Service Tax and many more, but after the implementation of GST, all these taxes subsumed in GST.
- Opting a taxation system where collection of tax takes place at the time of purchasing or buying a product will bring more efficiency and significant dynamism in the industry. Levying of single tax means, there would not be any ambiguity regarding the complex taxation strategy under the GST Act.
- The Constitution of India has given exclusive powers to both Center and State to collect taxes as per their domains. It has made India more economically fragmented even it is a single entity politically.
- GST Act would create an economically unified country that would act as a uniform playing field for all competitors and give the opportunity to people from all over the country to market their products at competitive prices. This would allow customers to buy standard products at not-so-high prices.
How GST Rules affect the industry?
End customers were the biggest gainer from this new taxation regime (GST). It not only makes the whole country a level-playing field but also entitled to get products of good quality at the same cost irrespective of the place they are living in.
Secondly, it also reduced the cascading of taxes and only GST is applicable which makes the product available at lower prices.
After the implementation of GST, both Central and State Government would not able to implement additional tax without facing the backlash of consumers. It brings more transparency.
Impact of GST rules on the Government
- A huge percentage of industries and businesses did not function under the taxation umbrella. But after GST, it is mandated for all industries and businesses to get their business registered and come under tax framework. It improves the overall efficiency of the system and increase transparency.
- GST brings down the grey market and reduces the generation and propagation of black money. It becomes easier for the watchdogs of the government to track the details of defaulters. This encourages the masses also, on the other hand, to follow rules and pay taxes according to tax slab on the fall.
- It also improves the ease of doing business in India by attracting foreign investors to come and set up their manufacturing units in the country.
- GST makes it possible; one country, one market, companies would be able to sell their products all over the country at the same price without having any effect on their profits.
