Introduction of GST : Goods and Services Tax commonly known as GST was introduced in India on 1st of July 2017. GST is introduced to eliminate the multiple different flows of taxes levied by central and state government. The GST is governed by GST council under Finance Minister of India. In this article, we would give brief and essential pointers on GST India for better understanding What is GST?
What is GST? How does GST works?
Goods and Services Tax or GST is one indirect tax in one whole nation and would be only one single tax on supply of goods and services right from manufacturer to the consumer. The GST on products is distributed into five slabs i.e. 0%, 5%, 12%, 18% and 28%. In general, GST has cut down many indirect taxes that were levied previously in India into one unified tax.
Like discussed, What is GST? would eliminate the various taxation schemes and would be unified into one single tax. However, for the better understanding let’s take an example of how the process would work from the consumer end.
Earlier before GST the pattern of Tax system was
Raw Material Purchase Manufacture Wholesaler Retailer Consumer
(VAT) (VAT + Excise) (VAT) (VAT)
Also, there are some value additions on the products.
Now GST will eliminate all those taxes and merge into 1 tax right from Manufacturer to the Consumer of a product.
History of GST:
GST in India has their body and the reform process was started in 1986 by Mr. Vishwanath Pratap Singh. The chronology of this indirect tax system from the suggestion to the proposal of Introduction of GST in India is as follows:
- In 1999, former Prime Minister Atal Bihari Vajpayee and his committee had set up a draft and designed GST Law model.
- In 2002, the government formed a task force under Mr. Vijay Kelkar to recommend tax reforms and in 2005; the Kelkar committee suggested that GST must be implemented to improve the tax structure.
- In 2006, former Finance Minister P Chidambaram continued the work on GST and proposed the introduction of GST in 1st of April 2010
- In 2008, Economic Committee (EC) finalizes dual GST structure to have different legislation and levitation.
- In 2013, the standing committee tables its reports on GST and GST Bill was re-introduced in Parliament by former finance minister P. Chidambaram.
- In 2015, GST Bill was passed in Lok Sabha but failed to pass in Rajya Sabha
- In 2016, the Amendment Bill was passed in both Lok Sabha and Rajya Sabha with the approval of former President, Pranab Mukherjee.
- In 2017, four supplementary GST Bills were passed in Lok Sabha and are approved by the Cabinet.
- GST was launched at midnight on 1st of July 2017 by the former President of India, Mr. Pranab Mukherjee and Prime Minister of India, Narendra Modi.
So, we hope that now it is clear that What is GST? How does GST works?