As said, the Goods and Services Tax (GST) will reform the taxation system as it will bring a revolution in the tax structure. How? Since there are two forms of taxes in our country: Direct and Indirect tax; GST will replace the indirect taxes levied by the Central and State Governments and provide for a single tax system.
GST in layman language:
In GST, tax will be implemented at every step right from buying the raw material to manufacturing the product to further selling it to the retailer and then to the consumer. This whole process presents India as a unified market to business owners and also aims at bringing a lot of black money back into the mainstream economy. This will help in the development of the country.
The GST will be levied at rates ranging from 0% to 28%. There is a four-tier tax structure of 5%, 12%, 18% and 28% with lower rates for essential items and highest for luxury and de-merits or unhealthy goods. Nearly 81% of goods are kept in the slab of 18% and only 19% of the goods will be in the tax slab of over 18%.
Taxes like central sales tax, service tax, octroi tax, lottery tax, central and additional excise duty, customs tax, entertainment tax, purchase tax, lottery tax, advertisement tax, state VAT etc will all comprise of one tax system, called GST.
India will have 3 types of GST:
As per experts, things that will become costlier:
Tobacco, aerated drinks, textiles, commercial vehicles like trucks, mobile phone calls, branded jewellery, restaurants, online ticket booking, banking services.
As per experts, things that will become cheaper:
Buying a home, entry-level cars, two-wheelers, SUVs, paint, cement, electronics like water heaters, air coolers, fans, lighting; food items, personal care, entertainment, FMCG goods like toothpaste, shampoo, chocolates.
Items exempted from GST or will have 0% tax:
Foodgrains, cereals, milk, fresh meat, fish, chicken, eggs, butter, curd, fresh fruit and vegetables, flour, besan, bread, salt, jaggery, honey, stamps, judicial papers, newspapers, handloom, printed books, etc.
There will be one nation, one tax system. The number of tax paying population will rise, transparency will increase, which will curb corruption and it will help in the increase of country’s GDP.