2. Taxation
A fee charged (levied) by a government on
a product, income or activity. The purpose
of taxation is to finance government
expenditure. One of the most important
uses of taxes is to finance public goods and
services, such as street lighting and street
cleaning.
3. Types of Taxes
Direct Taxes
Income Tax
Wealth Tax
Property Tax
Corporate Tax
Indirect Taxes
Custom Duty
Sales Tax
Excise Duty
Service Tax
4. GST
GST is known as Goods and Service Tax.
GST will replace all indirect taxes
(Service tax, Excise dusty, VAT/Sales Tax)
levied on goods and services by the Indian
central and state government.
5. GST rate of different countries
COUNTRY RATE of GST %
Australia 10%
France 19.6%
Canada 5%
Germany 19%
Japan 5%
Singapore 7%
Denmark 25%
New Zealand 15%
Hungary 27%
Sweden 25%
7. Applicable GST rate
The rate (percentage) of GST is not yet decided. There might be CGST, SGST and
Integrated GST rates. It is also widely believed that there will be 2 or 3 rates
based on the importance of goods. Like, the rates can be lower for essential
goods and could be high for precious/luxury items.
Hon’ble Finance Minister of India Mr. Arun jaitley said that the rate decided by
GST council (i.e 27%) will be too high and it should be around 18%. Earlier, a sub-
panel of the empowered committee of State Finance Ministers had recommended
State GST at 13.99% and Central GST at 12.77%. But the rates will be decided
later.
8. Benefits of GST implementation
The tax structure will be made lean and simple
The entire Indian market will be a unified market
Removal of barriers to trade.
In the long run, the lower tax burden could translate into
lower prices on goods for consumers.
The Suppliers, manufacturers, wholesalers and retailers
are able to recover GST incurred on input costs as tax
credits. This reduces the cost of doing business, thus
enabling fairer prices for consumers.
9. Continue…
It can bring more transparency and better compliance.
Number of departments (tax departments) will reduce
which in turn may lead to less corruption
More business entities will come under the tax system
thus widening the tax base. This may lead to better and
more tax revenue collections.
Companies which are under unorganized sector will come
under tax regime.
10. Dual GST Concept
Indian Government is opting for Dual System GST. This system will have
two components which will be known as
o Central Goods and Service Tax (CGST)
o State Goods and Service Tax (SGST)
The current taxes like Excise duties, service tax, custom duty etc will be
merged under CGST.
The taxes like sales tax, entertainment tax, VAT and other state taxes
will be included in SGST.
11. How GST will change taxation in India?
GST, or Goods and Services Tax, will subsume central indirect taxes
like excise duty and service tax, as also state levies like value added
tax, octroi and entry tax, luxury tax.
The final consumer will bear only the GST charged by the last dealer
in the supply chain, with set-off benefits at all the previous stages.
However, only the Centre may levy and collect GST on supplies in the
course of inter-state trade or commerce. The tax collected would be
divided between the Centre and the states in a manner to be provided
by parliament, on the recommendations of the GST Council.
