International Journal of Academic Research and Development

International Journal of Academic Research and Development

ISSN: 2455-4197
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www.academicsjournal.com
Volume 2; Issue 6; November 2017; Page No. 633-635

GST: One nation, one tax, one market

Navneet Kaur
Lecturer of Commerce, GMN PG College, Ambala Cantt., Haryana, India

Abstract
The Goods and Services Tax (GST) is a vast concept that simplifies the giant tax structure by supporting and enhancing the
economic growth of a country. GST is an indirect tax system which replaces taxes like service tax, excise duty, Value Added Tax,
turnover tax, etc. GST is a value added tax to be levied on both goods and services, at both the centre and state level. This is a
single tax which will be levied on the product or service which is sold. The Goods and Services Tax has revolutionized the Indian
taxation system. The GST Act was passed in the Lok Sabha on 29 th March, 2017, and came into effect from 1 st July, 2017. This
paper highlights the impact of GST on the Indian tax system. GST will improve the collection of taxes as well as boost the
development of Indian economy by removing the indirect tax barriers between states and integrating the country through a uniform
tax rate. Before GST, tax on tax was calculated and tax was paid by every purchaser including the final consumer. The taxation on
tax is called the cascading effect of taxes. GST avoids the cascading effect as tax is calculated only on the value added at each
transfer of ownership. The GST seeks to create a national market for goods and services by subsuming multiple taxes at the
national and state level, thereby creating a paradigm of one nation, one tax, one market.

Keywords: goods and services tax, tax system in India, GST in India

Introduction into a unified tax. As the name suggests it will be levied on

The GST is likely to change the whole scenario of current both goods and services at all the stages of value addition. It
indirect tax system. It is considered as biggest tax reform since has dual model including central goods and service tax
1947. In the summer of 2016, the Indian Congress approved (CGST) and state goods and service tax (SGST). CGST will
the Goods and Services Tax (GST) legislation to simplify the subsume central indirect taxes like central excise duty, service
current multilayered federal, state, and local indirect tax tax, central sales tax and special additional duty on customs,
structure. The GST bill will unify at least ten types of indirect whereas indirect taxes of state governments like state vat,
taxes into one tax to be collected at the state and federal luxury tax, tax on lottery and gambling will be replaced by
levels. The GST, countrywide single taxation system which SGST. Integrated goods and service tax (IGST) also called
has been in the making for 15 years, was launched by interstate goods and service tax is also a component of GST. It
President Pranab Mukherjee and Prime Minister Narendra is not an additional tax but it is a system to examine the
Modi by pressing a button in an hour – long special function interstate transactions of goods and services and to further
in Parliament attended by MPs, state finance ministers, GST assure that the tax should be received by the importer state as
Council members and other dignitaries. Under the existing GST is a destination based tax (Sehrawat M, and Dhanda U,
structure, at each point of sale, additional taxes are applied to 2015) [1].
the after – tax value of each good and service. The implementation of GST in India help in removing
The main purpose for the GST is to eliminate this economic distortion by current indirect tax system and
compounding effect by fixing the final tax rate, where goods expected to encourage unbiased tax structure which is
will fall into one of four rate categories of 5, 12, 18, and 28 %. indifferent to geographical locations [2].
This paper presents an overview of GST concept, explain its
features. The paper is more focused on benefits of GST. Features of GST
 Applicable to all transactions – GST would be applicable
About GST to all transactions of goods and service.
The concept of Goods and Services Tax popularly known as  Taking and utilization of credit – If the recipient of goods
GST. The GST will have a dual structure, which means it will or services is a registered dealer, he will normally be able
have two components – the Central GST and the State GST. to claim a credit for the amount of GST he has paid,
GST is expected to simplify tax administration, ensure ‘Ease provided he holds a proper tax invoice. The rules for
of Doing Business’ and promote ‘Make in India’. taking and utilization of credit for the Central GST and the
GST is an indirect tax which will subsume almost all the State GST would be aligned.
indirect taxes of central government and states governments  Cross utilization of ITC – Cross utilization of ITC between

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the Central GST and the State GST would not be allowed many as 178 items of daily use shifted from the top tax
except in the case of interstate supply of goods. bracket of 28 % to 18 %, while a uniform 5% tax was
 Registration – Dealers will have to register for GST. These prescribed for all restaurants, both air – conditioned and non-
dealers will include the suppliers, manufacturers, service AC, Finance Minister Arun Jaitley said after the GST council
providers, wholesalers and retailers. meeting. Currently, 12% GST on food bill is levied in non –
 Periodical returns – The tax payer would need to submit AC restaurants and 18% in air – conditioned once. All these
common format for periodical returns, to both the Central got input tax credit, a facility to set off tax paid on inputs with
and to the concerned State GST authorities. final tax. Restaurants in starred – hotels that charge Rupees
 Exempted Goods and Services – Under GST certain goods 7500 or more per day room tariff will be levied 18% GST, but
and services may be declared as exempted goods and the ITC is allowed for them. The restaurants in hotels charging
services. less than Rupees 7500 room tariff will charge 5% GST, but
will not get ITC.
GST brings benefits for all Only luxury and sin goods are now in the highest tax bracket
Common Man Friendly and items of daily use have been shifted to 18% bracket [3].
1. Huge number of items are either tax exempt or in 5% tax Prices for several groceries, household and personal care
bracket. products will come down after the Goods and Services Tax
2. Maximum benefits to the poor and the common man. (GST) Council slashed taxes on several consumer goods
3. Level playing field for small traders in any part of the segments from existing 28%. “ The decision of moving daily
country. essentials items to 18% GST rate will result in higher
4. It would bring down the prices of goods and services. consumption, as the benefits of lower GST rates will be
passed on to the end consumer and will make these items
Advantages for Trade and Industry more affordable,” said Vivek Gambhir, Managing Director,
1. Common procedures for registration, duty payment, return Godrej Consumer Products. Some things get even less taxing
filing and refund of taxes. – 2 items moved to 12% from 28%, 13 items to 12% from
2. Seamless flow of tax credit from manufacturer/ supplier to 18%, 8 items moved from 12% to 5%, 6 items moved from
user/ retailer to eliminate cascading of taxes. 18% to 5% and 6 items from 5% to nil from November 15 [4].
3. More efficient neutralization of taxes to make our exports
more competitive internationally. One Nation, One Tax
4. Benefit of exemption / composition scheme for a large The GST has been limping ever since its premature and hasty
segment of small scale suppliers to make their products birth 4 months ago. Some kind of surgery was performed in
cheaper. Guwahati; even this exercise to make the GST regime people
– friendly will not do because what is needed is a complete
Benefits to Economy revamp and not just patchwork. This time, the GST Council,
1. To create a unified common national market. under the leadership of FM Jaitley, has shifted high visibility
2. To make India a manufacturing hub. items of common use such as chocolates, shaving creams,
3. To boost investments and exports. granite etc. to lower slabs. The GST seeks to create a national
4. To generate more employment by increased economic market for goods and services by subsuming multiple taxes at
activity. the national and state level, thereby creating a paradigm of
“one nation, one tax, one market”.
Simplified tax structure Ehtisham Ahmed and Satya Poddar (2009) studied and found
1. Reduction in multiplicity of taxes now leviable on goods that GST introduction will provide simpler and transparent tax
and services, leading to simplification. system with increase in output and productivity of economy in
2. Simpler tax regime with fewer exemptions. India. But the benefits of GST are critically dependent on
3. Harmonization of laws, procedures and rates of tax across rational design of GST [5].
the country.
4. Common system of classification of goods and services to Conclusion
ensure certainty in tax administration. Under GST regime the burden of taxation will be allocated
fairly between manufacturing and services via lower tax rate
Creating One Economic India resulting in increased tax base and minimized exemptions. It
1. Freedom of movement of goods and services. is anticipated to help in establishing an effective and
2. Consumers to benefit by increased competition. transparent tax administration. It is expected to remove the
3. Level-playing field for producers & consumers across the cascading effect of taxes and help in establishing of common
country. national market. GST becomes a reality today building a new
4. Strengthening the sense of nationhood and unity. India through One Nation, One Tax, One Market.

In the biggest GST so far, tax rates on over 200 items, ranging References
from chewing gum to chocolates, to beauty products, wrist 1. Sehrawat M, Dhanda U. Gst In India: A Key Tax Reform
watches, cut from November 15, 2017 to provide relief to International Journal of Research – Granthaalayah. 2015;
consumers and businesses amid an economic slowdown. As 3(12):133-141.

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2. Kumar N. Goods and Service Tax in India–A Way

Forward Global Journal of Multidisciplinary Studies,
2014, 3(6).
3. www.tribuneindia.com
4. The Economic Times Featured Articles from The
Economic Times, 2017.
5. Ahmed E, Poddar S. Goods and Service Tax Reforms and
Intergovernmental consideration in India, Asia Research
Center, LSE, 2009.
6. https://en.m.wikipedia.org
7. www.jctindia.org

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