INTRODUCTION:
Goods and Services Tax (GST) was passed by the Indian Parliament as a part of the One Hundred and First Amendment to the Indian Constitution. It was an imposition of an Indirect Tax and came into effect on July 1, 2017. The Indirect Tax is imposed on the supply of goods and services.
FEATURES OF GST:
The Tax is used in the majority of states. (Comprehensive)
The Tax is imposed at every process of production. (Multi-Staged)
The Tax is collected from the point of consumption rather than a place of origin. (Destination-Based)
The Tax is divided into five different Tax Slabs i.e., 0%, 5%, 12%, 18%, and 28%.
The Tax does not include petroleum, alcohol and electricity within its purview. These products are subjected to provisions of the State Government.
It provides a special rate of 0.25% on products that are rough and semi-precious in nature and 3% on gold.
It further applies a cess of about 22% or about 28% on items like aerated drinks, tobacco products, and luxury cars.
The Statutory Rate for most of the goods earlier was 26.5% but with the GST it has come within the range of 18%.
The rules and regulations for it are passed by the Goods and Services Council. It consists of ministers of finance from the Central Government and State Governments. It was meant to replace the slow tax rates and indirect taxes in the form of a federated tax. It is expected to reshape the Country’s economy up to $2.4 Trillion but received harsh criticism. Its positive outcomes include the travel time in the movement of interstate that dropped by 20% with disbanding of the interstate check post.
HISTORY:
The Indirect Tax period was started in 1986 by the then Finance Minister, Vishwanath Pratap Singh. Under the Government of Rajiv Gandhi, the Modified Value Added Tax (MODVAT) was introduced. Later under the Prime Minister P V Narsimha Rao and the then Finance Minister introduced Value Added Tax (VAT) at the State Level.
The GST was proposed in 1999 by Prime Minister Atal Bihari Vajpayee and the then economic advisory panel. The Economic Advisory Panel included IG Patel, Bimal Jalan, and C. Rangarajan. A committee was set up to design a model on GST under the leadership of the then Finance Minister of West Bengal, Asim Dasgupta. The committee was also asked to put the logistics and technology of the GST Network. It was aimed at providing a regime of Uniform Taxation. In 2002, a committee headed by Vijay Kelkar was asked to suggest reforms for Tax. The committee suggested bringing GST as a reformation against the policy that already existed as advised by the 12th Finance Commission.
With the defeat in the 2004 Lok Sabha Elections, the implementation of GST was put on hold. But surprisingly, then Finance Minister P. Chidambaram proposed the GST to be implemented in 2006. It was put due for April 2010 however, Asim Dasgupta resigned from the committee admitting that 80% of the plan was made out. The 115th Constitutional Amendment, Bill in March 2011 bring out the GST. Then GST was referred to the standing committee of parliament that was headed by Yashwant Sinha. The report was submitted in October 2013 but with the objections of the then Chief Minister Narendra Modi, the bill was subjected to the postponement. The act of Narendra Modi was claimed to be the reason for the failure of GST.
In the 2014 Lok Sabha Election, the BJP-led NDA government came to power and GST Bill was presented by then Finance Minister Arun Jaitley. The bill was set to come into effect in 2017 but eventually came in 2016 through an amendment and implementation was set for 2017. The GST was launched at midnight on July 1, 2017, by the President of India and the Government of India. The session was attended by High Profile Guests from various industries. The tax was strongly opposed by the UPA-led Congress, Communist Parties of India and DMK. It was claimed that there is no difference between the GST and the system existing before GST. The argument was put forth that tax on goods of common use would affect the middle class and lower class.
GST REGISTRATION:
According to the Rules of GST, it was mandatory for the registration of—
- Individuals registered under Tax Services.
- Non-Resident persons liable to pay Tax
- Casual Taxable Person
- All E-Commerce Aggregators
- Individuals supplying Goods
- Input Service Distributors
- A business having an annual turnover of Rs. 40 Lakhs.
- The turnover of Rs. 10 Lakhs for the business located in the hilly and northeastern region of the country.
GST Registration shall be done via GST Portal and submit the required documents. Once the registration is completed the GSTIN shall be issued by Central Government which determines the liability to pay tax. The process could be completed within 6 days. Any such operation that is being carried out without GST Registration shall be liable for heavy penalties as laid down.
CONCLUSION:
GST Registration helps in the selling of goods online and across the country. It also acts as proof of valid Legal Entity Registration. The GSTIN Number can help in opening a bank account and increasing the brand value of the business. The people who do not pay tax shall be liable to pay off 10% of the due amount and the minimum is Rs. 10000. If you are not filing for GST deliberately then a fine would be 100% of the tax levied. The GST Registration is important and we should welcome it with open hands as it would act as a booster to the Indian Economy.
Also Read – https://www.bankbazaar.com/tax/gst-registration.html
