GOODS AND SERVICES TAX (GST)
GST stands for Goods and Services Tax. GST refers to a value-added tax which is
being charged on most merchandises and services and sold for native
consumption. It is paid by consumers, but it is submitted to the government by
the industries vending the goods and services. In influence, GST delivers income
for the government.
The companies add the GST to the price of the manufactured
good and a consumer who purchases it pays the sales price along with GST and
then GST is collected by businessman and vendors and they forwarded GST to the
In 1954, France was the first country to implement GST and since then approx.
160 countries have adopted this GST system in various forms like Singapore,
Canada, Australia, U.K., Italy, Nigeria, Brazil, and so on. India joined GST group in
July 01, 2017. Almost all the countries which have adopted GST system have a single
unified system which means that a single tax rate is implemented all over the
country and the countries with integrated GST platform combine central taxes.
For e.g.: Excise duty tax, sales tax and service tax, etc. These countries assemble
tax almost everything at a single rate. Canada is the only country which has dual
As compared to an integrated GST economy where excise is
collected by the federal or central government and after that circulated to the
states in a dual system, the federal GST is implemented along with the state sales
tax. In Canada, individuals have to pay GST as well as PST (Provincial State Tax)
that is implemented to his/her purchase value.
In 2017, India adopted a dual GST set up which has been the biggest reform in the
country’s economy tax structure in decades. The main motto of joining the GST
system is to remove tax on tax or we can say double taxation which flows from
the industrialized level to the consumption level.
Since introducing the GST on
July 01, 2017 by the president of India, Pranab Mukherjee and the Prime minister
of India, Narendra Modi, the nation has applied 05 diverse tax rates:-
0% tax rate implements to certain books, foods, newspapers, hotel services
and homespun cotton cloth under RS. 1,000.
0.25% tax rate will be implemented to rough industrial diamonds.
5% tax rate will be implemented to apparel below Rs. 1,000 such as
packaged food items, footwear under Rs. 500.
12% tax rate will be implemented to apparel above Rs. 1,000, frozen meats,
cutlery, sugar, etc.
18% tax rate will be implemented to various luxurious items containing
pastries, makeup, footwear which costs more than Rs.500, etc.
And at last 28% will be implemented to 50 luxury products and those
considered as “wicked” containing suntan lotion, Indian cigars, cars,
Therefore, In India, applying the GST system is a measure that will be used to
lessen inflation in the long run as prices for merchandises will be lesser.