goods and services tax

GST is not a relatively new idea, the idea of establishing a central unified tax was proposed in 2006 and a finance committee was set up to make a structure for GST which was to be introduced from April 2010, but the bill lapsed. After 2014, the bill was again brought up and passed in Lok Sabha and Rajya Sabha referred it to joint committee of Lok Sabha and Rajya Sabha and later was passed in both houses in 2016 resulting into 101st amendment in the Indian constitution.

After all the formalities done by the GST council, it was in effect from July 1, 2017. July 1 is now called as the GST day. The GST council had members from both central as well as state government. All the decisions were to be made by simple majority or 3/4th majority of all the present members out of which center’s share is 1/3 and that of the state’s is 2/3.

The GST contains many other taxes such as excise duty, VAT, service tax, etc. excluding some items like petroleum and petroleum products and some luxury goods. GST has three basic factors-

CGST which is a part of GST to be imposed by the central government, SGST which is a part of GST to be imposed by the states and then comes IGST which is the integrated GST for imported products and for products imported from states to states.  This whole concept of GST was introduced to ease out the taxation process, the collection of tax and to broaden the tax base. Since GST is a destination-based tax thus tax will only be paid when the final good is sold and this will reduce the numerous steps that delays the transport of goods, and it will make the logistic transport easy and fast.

Recent induction of E-way bill will further ease out transportation since the shipment of goods whose price are above fifty thousand will be registered before the transport into a fastag just like radio tag and this will save a lot of time.

The GST bill was criticized by states whose revenue collection relied heavily on industry products and GST being a destination-based tax the states would lose lots of revenue. On to which the central government promised to pay the compensation in the form of cess. The center said that by increasing the efficiency of states they could see 14% rise in tax collection and the cess will only be paid for five years and later all the states would be collecting more than they were collecting in earlier years. Center decided to collect cess from products which were excluded from GST, the products such as petroleum and petroleum products and similar luxury goods.

In fiscal year 2019, it has been noticed that the collection of all states rose to 9% but did not come up to that level of expectation. This could be the reason of lack of confidence in GST and later the hitting of Corona pandemic hit the revenue sector and all the sectors very badly and the condition became worse. And due to which the revenue expenditure exceeded the revenue receipt by a huge sum.

Aishwarya Says:

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