GST : Goods and service tax
GST is one of the biggest tax reforms since Independence(Ministory of Finance)
- So finally on 3rd august in rajasabha and on 8th in loksabha GST bill has been passed.
- So what is the impact of this on us?
- Does the cost actually reduced?
What is GST?
- Now we pay two type of taxes
1. DIRECT TAX : Pays directly to the government .
– –WEALTH TAX
2. INDIRECT TAX : Tax on whichever things we buy
- So from now there will be only one tax GST means only single INDIRECT tax all over the India will be apply.
What are the Advantages of GST
Lets take an example
There are 3 Indians
1. Ram 2. Sham 3. Ghamsham
Ram sells the wood
sham converts the woods into furniture
And Ghamsham in his retail store sells that furniture with more polish.
- Sham buys wood : rs 100 + 10% tax = 110
- Sham sells it for :rs 110+ 90(his price) + 10% tax= 220
- Ghamsham sells it for :rs 220 +80(his price) + 10% tax= 330
- So in this process the total tax is = 10+20+30=60rs
So on every stage there was a tax of 10% and this tax which is applied on every stage is call CASCADING TAX
Lets understands this in GST
- When sham sells the furniture so he can take the REFUND of tax from Government he paid for buying woods.
- So for those woods he was spending : rs110 after REFUND it will cost him :rs100.
110(For woods ) after tax refund that will for rs 100 .
- So sam can sell it for : rs 100+90+10%tax=209(Total price)
- Ghamsham can also apply for refund and sell it for :rs 209 -19(Tax refund)=190+80=rs270
- And for consumer it will be for : Rs 270+27(10%Tax)=Rs297
PRE GST : RS 330 POST GST : RS 297
If storekeeper doesn’t pay tax he can give that product at low cost (Without receipt)
After GST from Manufacturer to retailer all of them can get refund for their paid tax (LESSER TAX EVASION)
So every seller have to give RECEIPT if he wants refund for the paid tax (No black money).
And profit of Government is that before GST less people Gives more Tax now More people will give less Tax
- One more advantage of GST is that theere will same tax structure overall India.
- And this can also reduces the logistic cost
Now this were the advantages of GST
Everything has some Disadvantages also
- So very first question arise that on how much GST will be Set?
- According to finance minister report of 2003 the rate was 12% .
- Now it is discussed between 17-19%?
- So now we pay service tax of 13% it can be increase upto 17-19%
And the question arise .. Does the cost will actually reduce?
NOW WE CAN’T SAY ANYTHING BECAUSE OF INFLATION BUT YES WE CAN SAY THE PRICE WILL BE REDUCED IN LONG PERIOD OF TIME …
HOW MUCH ?
– That can be said after GST is applied
Last but not the List
When GST will be applied allover india?
– It is said that on 1 april 2017
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