GST also was known as Goods and Service Tax is a type of indirect tax which was levied in India. It has replaced many other regional indirect taxes which were earlier prevalent in the country.
The Goods and Service Tax Act was enacted in the Parliament of India on 29th of March 2017. The Act came into force on 1st July 2017 and was a major revolution in the Indian finance sector.
It replaces the multi-layered, multiple and often complex indirect taxes.
- GST has replaced indirect taxes in many countries. Recently introduced in India, it has replaced VAT, Sales Tax, excise tax and many such complex and multiple taxes.
- GST prevents a cumulative effect of taxation where taxes keep getting added up over the levels.
- Each business needs a unique GST number, which can be applied for online and the process is fairly easy.
- There are few different rates of GST on different products, making the final pricing of the product less complex by avoiding multiple taxes at different rates on different
- GST brings transparency in pricing and to the taxation system.
- Since GST applies to almost all goods and services, it becomes mandatory to record all transactions thereby getting in accountability.
Advantages of GST
- GST aims to remove the cascading effect. This will directly impact on the cost of the services and goods. As a tax on tax is removed in this process, the cost of goods would decrease.
- GST is technologically driven tax and includes activities such as return filing, registration; apply for a refund as well as online response to notice via the GST portal. This means a fast process and less corruption.
GST is a part of the taxation reforms and is a practicable move having far-reaching effects on the economy. This is also a move towards the uniform policies across the world for easier trade.