Even though it has been more than two years since the GST bill was implemented, there is still much doubt about the bill and what it stands for. You might be asking yourself, what exactly is GST? What are the GST rates for certain categories of products?
It is natural to have doubts regarding the bill and be confused about it; after all, this has to be one of the most impactful tax changes in the history of independent India. For your better understanding of the tax system, here are ten things you must know about the bill.
10 Facts About The GST Bill
- An indirect tax: GST is essentially an indirect tax, implying that the ultimate tax on the consumption of a good or the usage of a service is to be paid by the consumer himself/herself. While traders have to pay a certain amount of tax at each stage of production, they can deduct these taxes from the tax paid by the consumer on a product or service.
- Centralized: While the states get a GST category of their own (SGST), the GST rates are fixed by the GST Council and are consistent throughout the country. This helps prevent unnecessary complications during inter-state trading.
- Lower ceiling: Much like VAT, GST, too has a lower ceiling. However, for GST, the ceiling is twenty lakhs. This implies that a company has to be registered to pay GST only of the annual turnover of the business is twenty lakhs per annum. This also makes sure that small businesses aren't weighed down by huge amounts of taxes and aren't discouraged from carrying out their entrepreneurial goals.
- Division: While the GST is hailed as a uniform tax, it has several categories of its own. The GST is divided mainly into three categories: Union GST, State GST, Union Territory GST, and Integrated GST (for inter-state trading). This ensures that each state gets a fair share of the taxes it collects and that the center isn't the only one getting all of the taxes.
- Online payment: A debated feature of the GST bill and reform is that GST is payable online, not in any government office. While this feature is hailed because it removes the chances of corruption and red-tapism, it is also criticized, with the criticism being that a lot of places that are taxable might not have access to the internet.
- Inter-state remuneration: Before the GST regime, traders were hesitant to engage in inter-state trading because they were not compensated or remunerated for the taxes they had paid on the production and manufacture of a good. Under GST, remuneration is available even if you trade inter-state, encouraging businesses to venture out.
- Compensation to the consumer state: Under the GST regime, the entire tax collected for a product has to be given to the consumer state or the state where the product is being sold and bought. It doesn't matter where the product is made and/or assembled, the end state has the right to the GST collected on the product or service.
- Replaces several state and central taxes: GST, acting as a uniform tax, has replaced several taxes on both the state and central levels. Some of these taxes include excise duty, cess, entertainment tax, and luxury tax. By replacing these taxes, GST ensures that the collection and filing of taxes are smoother for businesses and, therefore, encourages them to abide by the time periods and laws.
- Equality of taxation: GST is to be imposed on every business that has a turnover of more than twenty lakhs. It does not matter how big or small the business is; it is liable to pay taxes. This law ensures equality in the leveling of businesses so that no business is discriminated against, either to its advantage or to its disadvantage.
- Exemptions and decisions: It is important to note here that the GST is not implemented on goods considered necessary for individuals' well-being. Some of these items include fruits and vegetables.
