Goods and Service Tax is an indirect tax which the Government of India is planning to levy on all goods and services apart from those exempted by the GST law. The GST taxation laws will put an end to multiple taxes which are levied on different products, starting from the source of manufacturing to reaching the end consumer.
The GST is a dual taxation regime, where the only two components will be Central GST (CGST) and State GST (SGST). Under such nomenclature the total amount of GST for any goods or service will be distributed in both State and Central exchequers.
For the common man, GST will help bringing in the following benefits–
1. Uniformity in Computing Taxes for Goods and Service-
GST will lead to the elimination of multiple excise, CST, VAT, service tax calculations.
2. Uniform Tax Regime-
For both goods and services and less confusion in determining what constitutes a good or what is a service.
3. Elimination of Double Taxation-
Double taxation means the consumer pays tax on an item, on which already government has collected tax from the manufacturer under some other head.
4. More Transparent Pricing-
Currently hidden taxes actually push up the taxes on a majority of goods to anywhere in the 27% to 32% range. But with GST coming in, the % tax number is proposed to be much lesser – however the number has not been finalized yet.
5. More Disposable Income-
In the shorter term, consumers will pay less taxes on goods and services and thereby have more disposable income.
6. Aiding GDP Growth-
The centre and state will also earn more tax from the GST rollout, which will aid in GDP growth (according to most research reports an estimate 1-2%) over then next 3 to 5 years. This incremental income can be used in developing public infrastructure in the longer term.
7. Discouragement of Black Money Practices-
Black money will get stifled and this may lead to more income for the government exchequer. This will then percolate to public spends and better quality of life.